Monday 26 July 2010

How Does Design Impact on Car Branding: the Example of Kia

I have always been hesitant about commenting on matters of design. As hard as I try, I still find it difficult to articulate in an open forum the principled distinctions between registered designs, unregistered designs, petty patents, copyright, and three-dimensional marks. I suspect that the list could go on, but enough self-doubt for a single paragraph.

It is against this backdrop that I refer to an article that appeared in the May 31 issue of Bloomberg BusinessWeek. Under the by-line of Seonjin Cha, the article, "Kia Turns to Design in a Bid to Move Upmarket", discusses the policy decision by Kia Motors to improve the design quality of its vehicle mix and thereby to realize a greater price premium for its vehicles. In a word, Kia seeks to remake its image from what the summary tag line of the article describes as "long-known as a maker of low-priced utilitarian vehicles" to cars known no less for their distinctive design.

To accomplish this, Kia in 2006 hired vehicle designer Peter Schreyer, who had made a name for himself in connection with the "iconic" Audi TT sports car. Schreyer viewed Kia at that time as " 'just another Asian carmaker' without much character." Since joining the company, he has led the revamping of the product line, namely "the revamped Sorento sports-utility vehicle, the Seoul crossover, and the Forte compact", all characterized by "the tiger-nose" feature [can someone help me on what this feature is, please?]

But the current crown jewel is the introduction of the new Optima sedan (it also sports the "tiger nose" feature), which is intended to compete head-to-head with the venerable Toyota Camry and the Honda Accord sedans, but with a price that is $1,600 less than the perenially popular Camry. And so the question: what do we make of all this emphasis on vehicle design, especially against the background of Kia's results for the first four months of 2010. According to the article, Kia enjoyed a 44% increase in year-over-year retail sales. Is that impressive sales figure due to the improved design of its cars or are other factors at work? The article itself is ambivalent.

"Yes" suggests Schreyer, who describes the Optima as an "Italian suit", distinguished by its "simplistic elegance". A further "yes" comes from an automotive consultant, Eric Noble, who gushes that Schreyer has "transformed the company into an industry in design."

And yet, as the article observes in closing, other factors may be at equally, or even more, at work. Most notably, a Swedish car retailer opined that the main reason for the increase of sales of Kia cars is the seven-year warranty introduced this year, together with the seductive price. Maybe that view is unique to the Swedish market, maybe not. The article tantalizingly does not pursue the issue in other principal North American and European markets.

Branding Can Sure be Lonely Sometimes

The popular wisdom has seemed to be that the rise of the Korean car industry rests on the uber-branding of price and reliability, antipodal to the perception that negative features that seem to be hounding Toyota. Does rebranding, via an emphasis on design styling, ultimately serve the long-term interests of Kia? Rebranding on the basis of design might increase the feeling of passion for Kia vehicles, but passion has a way of both ascending and descending in rapid trajectory.

And so--maybe the answer is "yes". Spotting a potential vacuum in the more up-scale auto mark, the only way for Kia to go is to occupy that branding position, and the only way to do it is by matching or bettering their competition in styling and design as well.

But maybe the answer is "no". In entering the crowded market for the more up-scale vehicle, will Kia lose its ability to compete in emerging markets such as China, Brazil and India? Maybe the greater margins in the up-scale market will make up for a lesser position in this developing markets. Or maybe Kia will somehow manage to merge up-scale design with developing marketing, and manage to succeed in both markets. If so, that might be a world-beating branding strategy and a landmark contribution for the role of design in achieving this goal.

1 comment:

  1. The automobile market is awash with poorly differentiated brands. It is good therefore that Kia has embarked on a policy of design enhancement. But do its latest models really stand out from the pack? I suspect not, and that it is probably factors like warranty deals and price (also known inter alia as "value for money") which prevail in today's difficult market.

    Emotional attachment has always figured large in the automobile market. People, by and large, need to feel good about their purchase. To many, a car is just a means of getting from A to B, the more economically the better - and this is the market that Kia serves. Whether Kia can ever scale the ladder of preference to become a brand of choice, rather than an alternative means of transport, will be driven by factors like design - and marketing.

    It is not impossible, and there are signs that the music hall joke that was once Skoda is getting there. Could Kia be next?

    Tom Blackett