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COMPANY HyundaiCard was established in 2001. In Aug 2005 HyundaiCard established a strategic alliance with GE Consumer Finance.

So, HyundaiCards largest shareholders became Hyundai Motor (31,6%) and GE Consumer Finance (43%). HyundaiCard focused on its customer needs, developed new credit card products, and provided different online marketing campaigns. Its customer segmentation strategy focused on its customer needs: Lifestyle Influences Activities. That why HyundaiCard formulated Alphabet Marketing named M, S, W, U, K and A, based on consumer lifestyle. The customized marketing approaches included Alphabet Credit Cards having unique and creative designs. HyundaiCard also diversified its product line and expanded into the premium market via the introduction of the Black and the Purple cards. HyundaiCard scoured the world for top artists and designers to help create strong brand identity, incorporating unique, contemporary elements that resonate with todays consumers. HyundaiCards also diverse marketing strategy was integration of online and offline channels. Thus, to carry out an effective marketing strategy and increase profits, HyundaiCard focused on customer value and online interaction through e-CRM. The company also strengthened its internal administration regarding customer service and guaranteed safe online business. Long-term strategy in order to transform itself from an automobile manufacturer into the worlds leading provider of additional services related to automobile business. The companys goal was to strengthen its financial services, retail businesses and Internet fields, etc. PROBLEM In the competitive South Korean credit card market, a review of the past decade of HyundaiCards marketing strategies and evaluation of anticipated possible difficulties of being a market follower revealed several challenges for senior management. Despite a tremendously successful creative business model based on customer needs, innovative products and integration of online and offline customers, the companys performance had not progressed in the past seven years . HyundaiCard had difficulty relating its creative business model to the strong personas of the leading players in the credit card industry. How could HyundaiCard, a market follower, successfully position itself as a market leader? Could HyundaiCards marketing strategy keep enhancing its competitive edge in the market? What future strategy would be best for HyundaiCard?


CURRENT PERFORMANCE Sales: HyundaiCards sales growth in 2004 to 2008 was growing. The 2008 sales was 42,7 trillion won. Margins: Operating revenue was increasing from 2003 to 2007 while the 2007 operating revenue was 1121,3 millions of Korean won or 1109,5 thousands of U.S. dollars. Profits: Net income was increasing from 2003 until 2006, but in 2006 to 2007 the net income was decreasing from 281 millions of Korean won to 234,4 millions of Korean won or 299,5 thousands of U.S. dollars to 249,8 thousands of U.S. dollars. MARKET DEMAND Market size which describes the number of customers in the market and the amount they purchase is 89.565.000 in 2007 (Exhibit 10). Growth rate: It was not until year 2000 that the market saw an annual growth rate of 80% and more than 100 Million cards issued. Between the 1990s and 2002, the number of credit cards issued in South Korea increased tenfold (10x), from 10 million to 100 million. The Korean credit card market was characterized by rapid growth and was the first preference of payments (Exhibit 8). But since 2003 to 2007 the growth rate number of Credit Cards per person was stagnant between 3,5 to 4,1 (Exhibit 10). In 2004 to 2008, the growth rate from number of card issue was approximately 0.08%. Potential: Potential market for credit cards can be seen from economically productive population which in 2007 was approximately 24.216.000 (Exhibit 10). COMPETITION & INDUSTRY Competitors: The Korean credit card market was characterized by intensified competition. The major monoline credit card issuers were Samsung Card, LG (Shinhan)

Card and HyundaiCard. The major competitor of HyundaiCard were LG (Shinhan) Card and Samsung Card. Industry

Credit card penetration in South Korea was quite high. So, Rivalry Among Existing Firms was high. Credit card companies had taken a customer-focused view and retreated from the mass marketing approach. In order to increase profits, credit card companies focused on the fact that customers had to be willing to use their cards often. The key to profits was frequent card usage. The average South Korean cardholder held 3,78 credit cards in 2008 which means the Determinants of Buyer Power was High. Even though the use credit cards was the most common mode utilized by South Koreans to pay for products and services, but the substitute products was many and have total preferences about 61,30 (Exhibit 8).

Share Position HyundaiCard was the countrys fourth largest credit card company. Since LG Card and Shinhan Card were integrated, LG Card was South Koreas largest credit card company and at the end of 2008, market share reached 24%. Shinhan Card was the largest card issuer in Asia and No.10 in the world. In 2008, Kookmin Card was the market leader in the industry. Samsung Card was Koreas third largest card issuer. MARKET SHARE Market Share: Hyundai Market Share was 9,96% in 2006 (Exhibit 14) Share Potential: The average South Korean cardholder held 3,78 credit cards in 2008. So, HyundaiCard share Potential was 100% divided by 3,78 was 26,45%. CUSTOMER NEEDS Customer Needs: Lifestyle Influences Activities Purchase Behavior: Korean paid for many purchases with credit cards, even small purchases of a few dollars at convenience stores. Private consumption with credit cards amounted to approximately $210 billion in 2006 (40% or higher of private final consumption). Card purchases of goods and services were on an upward trend, accounting for as much as 45.7 per cent of private consumption expenditure in 2002 (Graph 1). Graph1. Credit card purchases1 as a percentage of private consumption

All credit card purchases of goods and services; flows. Supervisory Service of Korea

Sources: Bank of Korea; Financial (

Customer Profile: Customers like to easily use its credit cards almost anywhere they went. Customers of Credit Card were Male and Female who use credit card for all purpose such as driving, dining out, flying, or even shopping. The customers were varying from university student, premium-level, and VIP customers. COMPETITIVE POSITION & VALUE Product & Service: HyundaiCard launched Alphabet Card: M, S, W, U, K and A. HyundaiCard also diversified its product line and expanded into the premium market via the introduction of The Black and The Purple cards. HyundaiCard intended provide effective tailor-made services through its website for HyundaiCard consumers. The finance shop (Exhibit 13) was the place that enabled HyundaiCard customers to enjoy allin-one service, getting financial consultation services, and enjoying an ambience created by world-famous designers. Cost of Purchase: interest payments on purchases made at alliances stores. Customer Value: HyundaiCard make creative business model which provide prediscounted and provide more diverse data for financial services and added value. SWOT ANALYSIS Strength

HyundaiCard was the countrys fourth largest credit card company. Sept 2004, HyundaiCard won first place in Service Quality Index for the Credit Card HyundaiCard M had the largest subscriber base of any credit card in Korea.

HyundaiCard was named Koreas Most Admired Company for the second consecutive year out of all Korean credit card companies (2007 and 2008). HyundaiCard ranked number one in the National Customer Satisfaction Index (NCSI) for the third consecutive year (2005, 2006, and 2007). HyundaiCard was also selected number one in the Credit Card category of Net Promoter Score (NPS) HyundaiCard website traffic almost caught up with the top three credit card companies in 2005 and 2006


HyundaiCard suffered from minimal customer count (i.e. number of cards distributed) The web traffic of the HyundaiCard website was low in comparison with several competitors in spite of an aggressive marketing campaign in 2003 and 2004. HyundaiCard was slowly becoming a brand name in the international markets. Compared to other major credit card companies, Hyundai entered the Korean credit card market late (latecomer) Low brand awareness Weak marketing communication Weak card services HyundaiCard had fewer customer and sustained moderate losses


The Korean government encouraged consumers to use credit cards to stimulate private spending and secure more taxes. The Korean government made the acceptance of the credit card mandatory and penalized stores not accepting the credit card.


Under the strict control of the Korean government, adding new members swiftly and redistributing cards to expired members proved very difficult. The Korean credit card market experienced a rapid expansion in the number of cards, reduced standards for issuing cards, etc. There is growth in the number of late payments and users with bad credit history. The industry underwent an adjustment period, with many credit card companies forced to change the way they did business.

STRATEGIC MARKET PLAN (PORTFOLIO) Differentiation advantage factorrelative importance: 50% importance product quality 30% service quality 40% brand image 30% 100% Cost advantage factorrelative importance: 20% importance COGS 30% Marketing expense 50% overhead expense 20% 100% Marketing advantage factorrelative importance: 30% importance market share 40% brand awareness 40% distribution 20% 100% Competitive Position Index 19,00 8,20 15,0 42,20 Attractiveness rating 60 20 40 Attractiveness rating 60 30 40 Attractiveness rating 60 40 50 Attractiveness score 18 8 12 38 Attractiveness score 18 15 8 41 Attractiveness score 24 16 10 50

Market Forces: 40% Market Size Growth Rate Buyer Power Comp.Envi: 30 % Price Rivalry Ease of comp entry No of comp Marketing acces: 30 % Cust familarity Channel Acces Sales/Services Requirement Marketing Attractive Index

relative importance 30% 30% 40% 100% relative importance 30% 30% 40% 100% relative importance 30% 35% 35% 100% 20,00 15,30 22,80 58,10

Attractiveness rating 40 60 50 Attractiveness rating 50 40 60 Attractiveness rating 40 50 40

Attractiveness score 12 18 20 50 Attractiveness score 15 12 24 51 Attractiveness score 12,00 17,50 14,00 76,00

The existing position of HyundaiCard was in Medium Competitive Position and Somewhat Market Attractiveness, so the strategy that should be implemented is Defensive strategy with strategic focus in managing profits and investing to protect position (Optimize Position). Strategic Market Plans and Defensive Strategies

The suitable strategy for HyundaiCard was defensive strategic market plan to optimize position. A maximize profits strategy was sacrificing volume, share, and sales revenues, as well as reductions in marketing expenses to a level focused primarily on customer retention. A reduced-focus market strategy to more narrowly allocate its resources in an effort to better defend a desired share position and improve the profits derived from this market. A reduced-focus market strategy goes one step further drastically reduce market volume by focusing on certain customers in order to optimize profits. With the average South Korean cardholder held 3,78 credit cards in 2008 means that increasing the number of card subscribers doesnt mean much. Credit card industry more competitive in this sense so HyundaiCard to focus to make customers loyal and give appreciation for customers who are loyal.

From product life cycle, 2009 is the time to optimize position (Defensive Strategy) and Offensive strategies to expand market to become a global player to achieve greater profits (Improve Position strategy). The goal is to find a more profitable combination of margin and market share, one that yields greater marketing profits. When managed correctly, optimizing position at the later stages of the product life cycle should allow the product to produce it maximum profits. MARKETING MIX STRATEGY PRODUCT

Hyundai is suggested to strengthen customer relations through innovation. This includes diversifying business and products through more accurate analysis, on top of continuing creative marketing efforts. In simply analysis through segmenting had already done by Hyundai through its alphabet card, the premium card is the most prospectus one to be improved its customer relationship. Moreover, in this business the key to profits was frequent card usage. By improving customer experience, the premium card holder will use their card more frequent. For example, for improve customer satisfaction (CS), HyundaiCard need to provide audio response system for customer. But also provide directly talk to operators to solve problems related with customer satisfaction in advance. HyundaiCard also can make differences in serve the customers which the VIP cardholder directly talks to operators instead of an audio response system. This customer service improvement in IT infrastructure and operator and product development can strengthen its brand. PRICE HyundaiCard needs to give different fee for each kind of card depends on its card holder type and its card benefit or services. Such as, for VIP card holder the annual card fee can double than university students (HyundaiCard U holder). But this different price must be supported by worth benefit and services from HyundaiCard. PROMOTION HyundaiCard need to be credit card brand that customers would recommend to their friends most. Besides doing penetration via television and radio media, Hyundai Card need to develop marketing strategy by word-of-mouth and improve its online marketing strategy. But word-of-mouth strategy must supported by service excellence and maximal customer experience so HyundaiCard can enhance the brand power of premium cards. PLACE Hyundai is suggested to partner with retailers in all provinces and have partner with many merchandise. By partnering with many merchandise or other parties, HyundaiCard can provide more service and widen its channel. It makes HyundaiCard have competitive advantages. For registration, customer must be provided by easier step and shorter place, such as registering online through HyundaiCard website and when finish, the card will be sent by post. HyundaiCard also can provide registration form and train its entire partner to can serve their customer to be new member of HyundaiCard. The benefit for their partners are having added value by giving discount and other promotions which provided by HyundaiCard and increase their customer loyalty by giving ease of payment. PERFORMANCE PLAN