RH Consulting LLC Consulting Reports

Client: KIA Motor Company

Conducted by: Ran Huo Date: 04/13/2016

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Executive Summary Key Challenges:

• Based upon the result from our survey and Perceptual Map study, KIA has problems in its brand and consumer perceptions. Among the six brands we studied, KIA ranks at the bottom in term of its consumer preference. KIA is struggling with its current position in the market. Do nothing scenario is no longer feasible, if KIA would like to maintain its competitive advantage over other auto brands. Brand repositioning is inevitable for KIA to improve its brand perception and consumer preference.

• KIA delivers on several favorable attributes (affordable, fuel-efficient, and environment-friendly, easy to maintenance), but struggles to deliver on attributes that are highly correlated with consumer preference (safety, smooth driving experience, feel respect from others, feel cool and young, and has all the features consumers want). In addition, KIA struggle to find a low cost but high value way to successfully reposition its brand.

Recommendations:

• Alternative 11 has been highly recommended to effectively improve KIA’s consumer preference and brand perception with low cost.

• Launch a TV commercial with the characters’ demographic segment similar to KIA’s target market to improve the consumers’ perception and make consumer positively perceive KIA’s driving experience.

• Add features and establish KIA’s brand communities on social media to frequently communicate/interact with consumers, and thus to

improve the consumer’s perception and make consumer positively perceive KIA as “offering them all the features they want”.

• Reach out and establish sponsorship with emerging NBA star Andrew Wiggins, and thus to improve the consumers’ perception and make consumers positively perceive KIA as a cook and young car brand.

• Invest on extensive R&D to improve car safety, while create “crash lab” in high density urban area to allow consumers to self experience the

reliability on safety of KIA’s brand car, and thus to improve the consumers’ perception and make consumers positively perceive KIA as “a safe and reliable car brand”.

• Manufacture and promote KIA’s limited edition car models, while establish virtual and realistic “KIA SE Car Owners Club” to demonstrate

the exclusivity and scarcity to club members and thus to improve the consumers’ perception and make consumers positively perceive KIA as a car brand that “makes them feel respect from others.”

1 Please see part 3 and appendices for detailed explanation 2 'KIA Motors Corporation' n.d., MarketLine/Medtrack Company Profiles, EBSCOhost, pp. 5, viewed 13 April 2016.

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Table of Content I. Introduction .................................................................................................................................................................................................................. 3 II. Overview ..................................................................................................................................................................................................................... 3 III. Perceptual Mapping Findings & Recommendation ................................................................................................................................................... 4

A. KIA’s current standing on Perceptual Map & Strengths and Weaknesses ............................................................................................................. 4 1. Findings: .............................................................................................................................................................................................................. 4

B. Available Gaps & Spaces for KIA to reposition ..................................................................................................................................................... 5 1. Findings: .............................................................................................................................................................................................................. 5

C. Three alternatives & our recommendations ............................................................................................................................................................ 6 1. Findings: .............................................................................................................................................................................................................. 6 2. Recommendation: ................................................................................................................................................................................................ 6

D. Make KIA’s driving experience smoother .............................................................................................................................................................. 7 1. Findings: .............................................................................................................................................................................................................. 7 2. Recommendations: ............................................................................................................................................................................................... 7

E. Make KIA has as many features as consumer wants .............................................................................................................................................. 8 1. Findings: .............................................................................................................................................................................................................. 8 2. Recommendations: ............................................................................................................................................................................................... 8

F. Make KIA much cooler & younger ......................................................................................................................................................................... 9 1. Findings: .............................................................................................................................................................................................................. 9 2. Recommendations: ............................................................................................................................................................................................... 9

G. Make KIA much safer ........................................................................................................................................................................................... 10 1. Findings: ............................................................................................................................................................................................................ 10 2. Recommendations: ............................................................................................................................................................................................. 10

H. Make KIA’s consumers feel more respect by others ............................................................................................................................................ 10 1. Findings: ............................................................................................................................................................................................................ 10 2. Recommendations: ............................................................................................................................................................................................. 11

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I. Introduction Through a bid process, RH Consulting LLP won a contract by the automobile brand, KIA to conduct a comprehensive research project in order to analyze its current standing in terms of consumer perception and thus to recommend strategies and tactics on how to improve its brand perception by brand repositioning. Based on the findings and discussions from the meeting with KIA, our consulting firm decided to conduct a research project by adopting the methodology and analytical tool of Perceptual Mapping. The detailed processes and methodology are covered in-depth in the appendices. The data gathering process was majorly qualitative through focus groups discussion and conducting survey study. The data analyzing process was majorly quantitative through Factor Analysis on SPSS. The primary objectives for the consultation are including: • Identify the target segment and marketing problem for KIA • Complete an integrative analysis through Perceptual Mapping tool • Understand the current brand perception of KIA and identify strengths & weaknesses • Make clear recommendations and tactics on how to solve the problem This report serves the purpose of summarizing consultant’s findings and recommendations to KIA. II. Overview As a South Korea based automobile brand and manufacture, KIA expended its market to the U.S. in 1994. During 1992, KIA Motors established its US subsidiary, KIA Motors America (KMA). The takeover of KIA Motors by Hyundai Motors in 1998 marked the beginning of a rapid turnaround. In a wide-ranging restructuring program, non-performing affiliates were closed down and sold-off, and initiatives were put in place to implement management innovation, improve sales performance and maximize customer satisfaction. 2 In the customer centric era, KIA is committing provide its customers with exceptional product and service quality. According to the SWOT analysis conducted by MarketLine report (2015), KIA has strong brand recognition, which is one of its most important strengths. The company has been taking many marketing initiatives in order to establish a creative and dynamic brand as a global top-tier auto manufacturer through sponsoring some of the world's premier sporting events such as FIFA, Asian Games, NBA, and UEFA. Furthermore, the company has been serving as the major sponsor for the Australian Open since 2002, and renewed its sponsorship agreement till 2018.3 However, according to the SWOT analysis, KIA is also facing the threat from “stiff competitions of large global companies”. KIA Motors faces strong competition from large automotive manufacturers across various markets, in which some of its key competitors include Daimler, Fiat Chrysler Automobiles, Ford Motor, General Motors, Honda Motor, Mazda Motor, PSA Peugeot Citroen, Toyota Motor, Volkswagen, SsangYong Motor, and Suzuki Motor, among others. 4 The intense competition is gradually and negatively impact KIA’s brand perception. In an attempt to help KIA improve its brand perception among its target market, RH Consulting conducted a comprehensive research using the tool of Perceptual Mapping to identify the current standing of KIA in terms of consumer preference. The detailed findings and recommendation will be demonstrated in the following parts. 2 'KIA Motors Corporation' n.d., MarketLine/Medtrack Company Profiles, EBSCOhost, pp. 5, viewed 13 April 2016. 3 'KIA Motors Corporation' n.d., MarketLine/Medtrack Company Profiles, EBSCOhost, pp. 14, viewed 13 April 2016.4'KIA Motors Corporation' n.d., MarketLine/Medtrack Company Profiles, EBSCOhost, pp. 14, viewed 18 April 2016.

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III. Perceptual Mapping Findings & Recommendation

A. KIA’s current standing on Perceptual Map & Strengths and Weaknesses

The Perceptual Mapping result is based on the result of a survey study of 1,000 samples from KIA’s target market. The survey study included 6 auto brands and 9 attributes that we collected from our focus group study. 1. Findings:

Preference Ranking: Figure 1 shows us KIA’s current standings on the map in terms of consumer preference. As we can see here, KIA is currently standing at the decreasing side of the preference vector on the map and ranks at the bottom in terms of consumer preference. In order to successfully reposition KIA, we should consider positioning KIA at the increasing side of the preference vector like where VW and BMW stand. As a result, ideally we are going to position KIA into the northeast quadrant of the map.

Strengths & Weaknesses: Figure 2 shows us KIA’s strengths and weaknesses from the nine attributes we put in our survey study. As we can see from the map, KIA’s strengths are including: easy to maintenance, affordable price, and environmental friendly. At the same time, KIA’s weaknesses are including makes consumers: feel unsafe, have rough driving experience, feel unsatisfied with the features, feel uncool & out of date, rarely feel respect from others, and most importantly do not prefer this brand. We would like to find a way to help KIA conqueror its weakness and leverage its strengths.

Figure 1: Consumer Preference Order Figure 2: KIA Brand Strengths and Weaknesses

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B. Available Gaps & Spaces for KIA to reposition After learning and understanding the current stand, strengths, and weaknesses of KIA, we are going to demonstrate what gaps5 and spaces6 are available for KIA to reposition. 1. Findings:

Gaps: Figure 3 shows us available gaps for KIA to reposition. As we could see from the map, there are 5 gaps that are available for KIA to reposition. Gaps labeled in red number 1 and 2 are the gaps we would like to avoid position into, because they are at the decreasing side of the preference vector. We are going to reposition KIA into the gaps labeled in green number 3, 4, and 5. By positioning in these gaps, KIA will improve its consumer perception dramatically.

Spaces: Figure 4 shows us available spaces for KIA to reposition. As we could see from the map, there are 6 spaces that are available for KIA to reposition. Spaces with cross marks are the ones we would like to avoid, whereas spaces with check marks are the ones we would like to position into. Similar to gaps, preferably, we would like to reposition KIA into the spaces at the increasing side of the preference vector, so that it will help KIA to improve its consumer perception enormously.

Figure 3: Gaps Figure 4: Spaces

5 Gaps are the distance between two brands’ 90-degree lines, which drop on the preference vectors. 6 Spaces are the shaded area between two brands’ 90-degree lines, which drop on the preference vectors.

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C. Three alternatives & our recommendations By understanding the available spaces and gaps for KIA to reposition, here comes the question “Which space should we position into and why”. We present three available alternatives for KIA to consider positioning into. Each of them has its merits. 1. Findings: Alternative 1: Short Distance Movement As we could see from figure 5, we could move short distance on map and reposition KIA into the nearest favorable space. By repositioning into this space, it allows KIA to be on the increasing side of preference vector, which indicates a successful brand repositioning. There are several advantages if we choose alternative 1 and we listed them as follow: • Shorter distance means less money required7 • Leverage KIA’s strengths & conquer its weaknesses8 • Enter a big size space means more flexibility to repositioning • Encounter only diffuse/little competition from Volkswagen 9 , which is good for a newly repositioned brand. Alternative 2: Medium Distance Movement As we could see from figure 6, we could also move medium distance on map and reposition KIA. There are several advantages and disadvantages if we choose alternative 2, and we listed them as follow: • Enter a big size space means more flexibility to repositioning10 • Medium distance requires more money than alternative 1 • Against KIA’s strengths (Not realistic in real world) • Encounter competitions from identically perceived brands (Toyota & Honda), which is not good for a newly repositioned brand.

Alternative 3: Long Distance Movement As we could see here from figure 7, another option for KIA to reposition is to move the longest distance on the map. We also listed several advantages and disadvantages as follow: • Long distance requires an awful a lot of money to invest. • Like short distance move, it could also help KIA to leverage its strengths. • Enter a big size space means more flexibility to repositioning. • Encounter intense competition from Volkswagen (Easily identically perceived). 2. Recommendation:

After carefully considering the advantages and disadvantages of the three alternatives, RH Consulting recommend KIA to apply the low-cost/high-value strategy, which is alternative #1. By moving short distance on the map, it will allow

7 The shorter the distance travelled on map, the less the money is required to invest. 8 Please see appendices for detailed explanation. 9 Please see appendices for detailed explanation. 10 Please see appendices for detailed explanation.

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KIA to position in an ideal spot on the map with less competition and more flexibility to leverage its strengths to generate higher consumer preference, while spend relatively low amount of money. Alternative 1 is the most cost-effective option for KIA’s brand repositioning, and we highly recommend KIA to adopt it as soon as possible. D. Make KIA’s driving experience smoother After considering and deciding on adopting alternative 1, RH Consulting will demonstrate KIA with specific tactics and recommendations based on the Perceptual Map. 1. Findings:

Based on the result of survey we collected from 1,000 samples within KIA’s target market, we find out that participants rated that KIA’s overall driving experience as rough as sand papers. Figure 8 shows us the original and improved perception on this attribute. As we could see, KIA is at the decreasing side of this attribute. The reason why we would like to fix this attribute first is because it is one on of the primary vectors. 11As one of the primary vector, which is group closely with preference vector, in order to improve consumer preference, we strongly recommend KIA to make its customers’ driving experience much smoother. 12 2. Recommendations: • We recommend KIA to launch a campaign on TV in the form of TV commercials around 18:00 to 21:00 time slot. • The TV commercial will feature:

o Driver (attractive male, 25-34 years old) drive a KIA K9 (appealing appearance car) on California’s route number 1 during the sunset. o Passenger (attractive female, 25-34 years old) sits on the passenger seat comfortably, while wearing a light color silk scarf. o A soft and silky smooth music will be played throughout the commercial. o They talk softly and smoothly, like the silk scarf, the road of route number 1, and the silky smooth music.

• The reason why we recommend the above-mentioned features is because we are going you adopt sub-consciousness cues to prime our target audience. Ideally, they will misattribute these silky smooth features to KIA’s K9 brand car. • The reason why we choose this time period is according to the human’s Circadian Rhythm.13 Since this attribute belongs to an emotional attribute, we would like our target audience to focus on the peripheral stimulus (silky smooth music, attractive characters, and silk scarf). 18:00 to 21:00 time slot is the best time, because it avoids human’s “high alertness” hours and just before the “Melatonin release” hour.

11 Primary vectors are the attributes that are highly correlated and closely clustered with preference attribute. If preference vector falls on x-axis, then vectors that are clustered around x-axis are primary vectors. Otherwise, the vectors are called secondary vectors. 12 Since primary vectors are closely clustered around preference vector, KIA should consider investing to improve primary vector first to drive preference. 13 It is a natural body process reflects different body activities during different time periods.

Figure8

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As we could see from the map, by making KIA’s driving experience much smoother through the TV commercial, the consumers’ perception on KIA’s driving experience will be improved dramatically. It will help KIA to drive consumers’ preference eventually. E. Make KIA has as many features as consumer wants 1. Findings:

Based on the result of survey we collected from 1,000 samples within KIA’s target market, we found out that participants perceived KIA to have insufficient features that consumers want to have in their ideal cars. Figure 9 shows us the original and improved perceptions on this attribute. As we could see from the map, KIA is at the decreasing side of this attribute, which means customers are not satisfied with KIA’ current offering of features. As one of the primary vectors, which drives KIA’s consumer preference, we strongly recommend KIA to add more features14 to satisfied consumers’ needs. 2. Recommendations: • We recommend KIA to add more visible features to its base/advanced model cars. • Visible features are including but not limited to:

o Automatic and heated seats o Electric sunroof o Multi-position cup holders o Navigation system o Remote start system

• We also recommend KIA to adopt the Social Media Marketing strategy, which is a low cost/ high value strategy. • We recommend KIA to establish brand communities on different social media sites such as Facebook, Twitter, LinkedIn, and etc. • We recommend KIA to hire specialists to manage these communities, and to communicate/interact with members in the brand communities. • We recommend KIA to promote these added visible features to its brand communities and to ask for feedbacks from its brand community’s members. • According to the feedbacks from members, we also recommend KIA to add reasonable features that mentioned by its members to different car models. • Since price is not a primary vector that drives consumer preference, we recommend KIA to raise the price in order to offset its incurred cost due to the adding features.

As we could see from the map, by adding features that consumers’ want, KIA will improve consumer perception on this attribute to the increasing side of the vector. It will finally help to drive up consumers’ preference.

14 Please see appendices for detailed explanation

Figure9

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F. Make KIA much cooler & younger 1. Findings: Based on the result of the Perceptual Map, we found out participants perceived KIA as an uncool and somehow out-of-date car brand. Figure 10 shows us the original and improved perception on this attribute. As we could see from the map, like the other two attributes that mentioned above, KIA is perceived at the decreasing side of this attribute to be uncool and boring. As one of the primary vectors, we strongly recommend KIA to alter its brand perception in order to be perceived as cool & young. 2. Recommendations: • Since KIA has long term sponsoring top-tier sports event & league, we could improve KIA’s perception to being cool and young by leveraging this strength. • Sports are always being perceived as cool, energetic, positive, and young. We recommend KIA to utilize its strength of good relationship with sports leagues to improve its perception through public relation. • For example, KIA’s currently airing commercial features NBA super star Blake Griffin, who is perceived to be the most explosive power forward in the league. However, if you are familiar with him, we know that his personality is not in accordion with his playing style. He is a much humble and silent player on and off the court. These characteristics are perceived to be boring and uncool. We recommend KIA to find someone in the league who is explosive both on and off the court. • After careful consideration, we recommend the emerging and promising star such as Andrew Wiggins. He plays spectacular and flawless game on the court. As a third grader in the league, he is also perceived as smiley beans off the court. He smiles all the time and passionate about everything. He is fun and fashion oriented. As a young star, he is more promising than Blake Griffin to improve KIA’s perception as cool and young. • We recommend KIA to reach out to Andrew Wiggins and establish sponsorship with him. We would like him to use his “reward power” 15 to influence the target audience and in turn to enable them perceive KIA as a cool and young brand. As we could see, by adopting public relation and sponsoring Andrew Wiggins, KIA could possibly improve its perception as being cool and young. As a result, position its brand into the increasing side of preference vector.

15 Reward Power is the process in which we are more easily influenced by an individual who has been rewarded or exalted by others. Mourey, James (2013-08-24). Urge: Why You Really Want What You Want (And How To Make Everyone Want What You've Got) (Kindle Locations 4473-4474). . Kindle Edition.

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G. Make KIA much safer 1. Findings:

Based on the result of Perceptual Map, we found out that participants perceived KIA as unsafe to drive. This is a common perception shared with Asian based automobile brands such as Toyota, Honda (They all at the decreasing side of the vector). Figure 11 shows us the original and improved perception on this attribute. Again, as one of the primary vectors, we strongly recommend KIA to improve this attribute’s perception. 2. Recommendations: • We recommend KIA to improve its safety both perceptually and realistically. • Since extended R&D is one of KIA’s strengths according to the MarketLine company report, we recommend KIA to invest more on R&D to improve its safety level. KIA could consider strengthening its original material, changing into much stronger material, or adding more advanced safety features (more air bags and anti-roll over system). • At the same time, we recommend KIA to improve its safety perceptually. We recommend KIA to adopt the Word-of-mouth to enable consumers to actually talk about its safety. • We recommend KIA to make the “crash lab” real in shopping malls and amusement parks. The purpose is not only to show our consumers’ how safe to stay in KIA’s car while have an accident, but also to engage consumers to talk about KIA’s safety from their own experience. The “crash lab” will use a simulation machine to recover the accident moment. Consumers who participate the simulation will feel the power and thrill caused by the accident. They will sit in a real KIA’s car. The simulation is aimed to stimulate all humans’ sensatory receptors (taste, smell, sight, sound, and touch). • When the consumer complete the simulation and step out of the car safely, we are going to put peripheral cues (KIA’s brand, KIA’s logo, KIA’s car) to try to enable them to misattribute their safety to the KIA brand car. • We are also going to establish a public page on Facebook, which allows our consumers who experience the thrill of our “crash lab” to talk about their story, and shared with their friends and family. Through adopting word-of-mouth, we intended to improve KIA’s perception into the favorable side of the preference vector, H. Make KIA’s consumers feel more respect by others 1. Findings: Last but not the least, according to the result of Perceptual Map, we found out that participants perceived KIA as incapable of making them feel respect from others. Figure 12 shows us the original and improved perception on this attribute. As a primary vector, we strongly recommend KIA to take action improve the perception on this attribute.

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2. Recommendations: • After careful consideration on the subject of respect, according to Maslow’s hierarchy of needs, people’s need of respect from others belongs to the needs of esteem16. • Some of the common items will make others respect/ validate including: Wealth, Fame, Possession of scarcity, and etc. • We recommend KIA to improve its consumers’ perception on this attribute through the idea of passion of scarcity. • We recommend KIA to make above-mentioned, featured added car models as limited edition. KIA will only manufacture and sell limited amount of this limited edition cars. Every car will have a certificate, which stress the exclusivity of the car. • For example, the certificate writes “Congratulations. You are the proud owner of our KIA’s SE car owner.” At the end of the certificate, there will be a faction number that demonstrates how exclusive and scarcity this car is (900/1000). • We also recommend KIA to establish a virtual and real “KIA SE owner club”, in which members will enjoy exclusive benefits (annual gift, free trips, tickets to events, and etc.) • We highly recommend KIA to invest money to promote this club on and off line. Facebook public page and twitter fan page are the primary method for KIA to promote this club. • Printed ads and billboard features KIA SE member driving their limited edition car, while enjoying respects from others, is also a good way to promote. By adopting these integrated marketing communication tools, KIA will improve its perception on this attribute, and thus improve its consumer preference. The five recommendations we provided are intended to help KIA to eventually improve the overall consumer preference and successfully reposition its brand.

16 Maslow’s Hierarchy of needs identify 5 levels of human needs: Physiological needs, Safety needs, Love/belonging needs, esteem needs, and self-actualization needs.

Figure12

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Finally, let take a look at the improved preference ranking on the map. After implementing our recommendation, KIA will ideally position in the increasing side of the preference vector, and ranks number 3 among the six brands in terms of consumer preference.

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Appendices 1: About the research

After a series of meetings with KIA, we decided to conduct a research on how to solve KIA’s current consumer perceptions issues. Our research design is based on the analytical tool – The Perceptual Mapping, which tells us the actual positions of KIA and other automobile brands in reality. In order to design the Perceptual Map, we carefully went through six steps and we are going to cover them in detail in the following part.

Step 1: Segment & Problem Based on the result of segmenting & targeting, KIA decided their target segment is: • Demographic:

o Male & Female o Age: 25 – 34 o Ethnicity: Caucasian & Asian o Annual Income: $30,000 + o Generation: Millennial o Life cycle: Young, Single, and looking to mingle and Newly married couples.

• Geographic: o U.S. Midwest o Urban and Suburban area

• Psychographic: o Socio-economic Status: Lower-middle and upper-middle class o VALs: Strivers, Experiencer, and Maker

• Behavioral: o Benefit sought: Environmental-friendly, Fuel efficient, Low acquisition cost, easy to maintenance, safety, looks cool. o Usage rate: medium to heavy user

KIA experiences difficulties in their current performance. It has a hard time retaining their customers, and thus beginning to lose market share to competitors. Its KPIs do not look good in three consecutive quarters, which negatively impacted its sale volume. After discussion, KIA believes it has issues with its current position and decides to reposition their brand. They are eager to see their current standing in consumers’ minds. Step 2: Focus Group In order to learn KIA’s brand perceptions and attributes from their target segment (their consumers), we decided to conduct a focus group to collect their thoughts and perceptions. In order to collect more reliable data, we need to learn our consumers’ language. As a result, we came up with 4 groups. Each group had 8 participants. We had 4 moderators to manage the 4 groups. It took approximately 30 hours. The participants had no idea with regarding which brand sponsored the study. We presented 6 auto brands including BMW, Volkswagen, Honda, Toyota, Ford, and KIA. We also collected 9 attributes from the perspectives of consumers (1 preference attribute, 6 functional attributes, and 2 emotional attributes). See figure for the detailed brands and attributes. Step 3: Design the Survey After learning the consumer language on the 9 attributes, we conducted a survey to collect data from larger size sample. We conducted a 5-7 minutes survey. Like our focus group, participants were brand-blinded. We used close-end questions on our survey, and our survey consisted of three sections: • Screener questions:

o Are between the age of 25 – 34? o Do currently own a car or consider buying a car?

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o The participants needed to answer “yes” to both questions in order to proceed to the next section of the survey. Otherwise, they will be not qualified to respond to the survey.

• 5-7 Behavioral Questions o How often do you drive your car? o Mostly for what purposes do you drive your car? (Check all that apply) o We would like to assess behaviors with the auto category.

• Perceptual Mapping Questions o We inserted a page break, and provided a specific and clear instruction on the Perceptual Mapping section. o For example: In the next part, you will be presented with a set of auto brands and asked to rate them based on a specific attribute. The question is based on a 1-7 scale, with 1 being very strongly disagree, and 7 being very strongly agree. Please rate each brand to the best of your knowledge. If you are not familiar with a certain brand, please check the “not familiar with this brand” option. o We presented one attribute at a time, and our participants rated each attribute for each of the six brands. o In order to maintain the reliability of the survey outcome, we inserted certain forced questions. E.g. For continuing the survey, please enter number 6 in the textbox. o In order to make sure participants were actively thinking the questions, we framed a negative attribute, as “This car brand is not environment – friendly”.

• Demographic & Psychographic Questions o At the end of the survey, we asked 5-7 demographic & Psychographic questions such as income level, ethnicity, gender, education, employment, Scio-economic status, and etc. o The information we collected will be used to create a marketing campaign.

We created and launched the survey via Qualtrics and used a filling company called “Cint”. Step 4: Collect Data In order to make our result more pervasive, we decided to collect result from 1,000 participants (Psychological sample size). Step 5: Analyze Data – Factor Analysis After getting the results back from our filling company, we conducted Factor Analysis on SPSS to assess the correlation of factor and to find the hidden patterns. Firstly, we plugged in the 1,000 participants’ results into the excel spreadsheet and average the brand rating for each attribute. Please see figure 1 for the result of averaging. Secondly, we entered the averaging data into IBM SPSS to run the factor analysis. Then we use “Total Variance Explained” table to determine our two dimensions as our x- axis and y-axis. (Please see Table 2).

After running the Principle Component Analysis, we could see that the “% of Variance” for factor 1 is 74.6% (higher than 60%), which means our factor 1 (x-axis) could explain 74.6% of our entire data set. It indicates that 76% of our attributes rating clustered around factor 1 (x-axis). In another word, factor 1 (x-axis) represented 76% of our attribute rating. Then we moved on to factor 2 (y-axis), which represented 14% of our total attribute rating. The “Loadings cumulative %” column showed us that our x-axis and y-axis would capture 88.7% of the entire data set. The more the “Loading cumulative %), the less information we lost by using our two-dimension perceptual map. Our rule of thumb is to use the x-axis and y-axis to explain at least 60% of our entire data set.

In order to create the perceptual map, we need to find our attribute coordinates. By running Factor Analysis on SPSS, it gave us the table called “Rotated Component Matrix” (Please see Table 3). Within the table, component 1 is the coordinate on x-axis, while component 2 is the

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coordinate on y-axis. For example, the coordinate of attribute 1 (this car brand makes me leave accident without injuries) is (0.789, 0.106). We found the point on our map and connect it with original point (0,0) with a vector. The vector connecting point (0.789, 0.106) and (0,0) represented our attribute 1. After plotting the attribute coordinates, we need to know how KIA and other auto brands perceived. As a result, we need to find the brand coordinates. Running Factor Analysis on SPSS also gave us the brand coordinates at the end of our data entry table (Please see Table 4). Within the table, factor 1 is the brand coordinate on x-axis, while factor 2 is the brand coordinate on y-axis. For example, the coordinate of BMW on Perceptual Map is (1.76684, 0.17195). By knowing the x-axis and y-axis, and plotting the brand and attribute coordinates, we created our Perceptual Map for Auto Industry (Please see figure 1). Please be noted that: • The vector in red represents the attribute of brand preference • The dotted lines represent the opposite/negative framing of the original attribute (to make the map more spread out and clear). • We labeled Factor 1 (x-axis) and Factor 2 (y-axis) using culinary dishes names: o We labeled the east of x-axis as “Surf & Turf”. Most of our attributes rating are concentrated in this cluster, and are mostly favorable attributes such as: feel cool & young, feel respected by others, has all the features, leave accident without injury. Like “Surf & Turf”, which most of us love, the east of x-axis satisfies consumers’ needs for functionality and emotional fulfillment. o We labeled the west of x-axis as “Veggie Salad”. Compare to “Surf & Turf”, “Veggie Salad” is more affordable. Although it is green and environment-friendly, it is hard to eat (lack of flavor), hard to provide enough energy (lack of protein & Sugar), and hard to enjoy the dining experience (we rarely see people dining out in a fancy restaurant only order a plate of veggie salad. Unless they are in diet). o We labeled the north of y-axis as “Mac & Cheese”. Like “Mac & Cheese”, which is cheep and easy to cook, the attribute in this cluster is mostly the easiness of maintenance. People will find doing the regular maintenance as easy as cooking the “Mac & Cheese”, when the brand have positive value of coordinate on y-axis (The higher, the easier). o We labeled the south of y-axis as “Traditional Pastry”. It has complicated procedures, and people have to follow the instruction carefully. Like making the “Traditional Pastry”, people will find doing regular maintenance hard and complicated and always have a bad experience. After completing the Perceptual Map for Auto Industry, let’s see what we learnt from the map, how we interpret the map, and most significantly what recommendations we could provide. Step 6: Interpret Results – Solve Problem First thing first, let’s take a look at the clustering of the six brands and where KIA stands (Please see Figure 2). We cluster the closely positioned brands together. As we could see from the map, Toyota and Honda are somehow identically perceived. They are direct competitors to each other. Other than that, KIA and the other three brands are mutually exclusive and do not have direct competitors. According to the map, KIA stands in the northwest quadrant of the map, which is “Veggie Salad” and “Mac & Cheese”. Based on the map, KIA is perceived to be a brand associate with less favorable attributes but easy to handle the regular maintenance. KIA stands roughly the exact opposite of BMW in terms of x-axis. It totally makes sense because, unlike BMW, positions as a luxury car brand with most of utilitarian and hedonic values, KIA positions more as a cost-effective and affordable economic car brand. Secondly, let’s take a close look at KIA’s strengths and weakness from the outcome of perceptual map (Please see figure 3). We draw 90-degree lines on all attributes. Based on the map, KIA’s strengths include: • Participants perceived KIA to be affordable in terms of both acquisition and maintenance cost. • Participants perceived KIA to “makes me comfortable with maintenance” in terms of easiness and overall satisfaction of maintenance experience.

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• Participants perceived KIA to be “Environment-friendly” in terms of fuel-efficiency and compliance with EPA’s “Clean Air” regulations. Based on the map, KIA’s weaknesses include: • Participants perceived KIA to “makes me leave accident with injury”. KIA is perceived to be unsafe. Safety is one of the most frequent mentioned and significant attributes of automobile. By the low rating in safety, KIA’s brand equity and image might be negatively impacted. • Participants perceived KIA to “make my driving experience rough”. KIA is perceived to be not easy to handle and cannot provide drivers their desired level of driving experience. • Participants perceived KIA as not being able to “include all the features that I want”. As an economic car brand, in order to keep the profit margin while not to raise the price, KIA has to come up ways to cut the cost. Here, we define features as core competences (horse power, engine type, indoor space, MPGs, and etc.) and add-ons (heated seats, cup holders, tanned glass, automatic seats, electric sunroof, navigation system, and etc.). KIA is perceived to be insufficiently providing both the core competences and add-on features. • Participants perceived KIA as not being able to “make me feel young & cool”. Both the car itself and brand name limit people to feel young & cool. • Participants perceived KIA as not being able to “make me feel respect from others”. It seems like KIA fail to deliver both of the emotional attributes that included in our survey. • Participants perceived KIA as not being able to be their preferred brands. Thirdly, after understanding the strengths and weaknesses of KIA, let’s see how KIA benchmarks to other brands in terms of preference (Please see Figure 4&5). As usual, we draw 90-degree lines to the vector of preference, and we rank the brands according to their relative locations on the vector of preference. This map provides us a holistic view of preference. As you can see from the map, BMW ranks the top, whereas KIA ranks the bottom, in terms of preference. The good news is we have plenty of space to improve. Here is the question: which spaces are available for us to improve? Fourthly, in order to know which spaces are available for us to improve, we need to first know how many gaps exist among the six brands in terms of preference (Please see Figure 6). As we can see, currently there are 5 gaps exist on the vector of preference (between two 90-degree lines of adjacent brands). If KIA chooses to reposition brand, they need to choose one gap to enter. The decreasing side of preference is called “Red Gaps”, which are labeled in red numbers (1 & 2). The increasing side of preference is called “Green Gaps”, which are labeled in green numbers (3, 4, &5). Currently, KIA stands in the “Red Gaps”. It would be better for KIA to reposition brand into the “Green Gaps”. Finally, let’s answer the question “Which spaces are available for us to improve?” Figure 7 shows us the existing spaces among brands. Basically, we define spaces as the space between two 90-degree lines of adjacent brands on the vector of preference. As we can see, the grey area represents the available spaces. The vector of preference divides the grey area into 10 available spaces. Figure 8 shows us good and bad spaces. Currently, KIA stands at the decreasing side of preference (the northwest quadrant). The preferred quadrant to enter is at the increasing side of preference (the north east & south east quadrant). As a result, according to figure 8, the spaces that are labeled with check marks are the ones we would like to reposition and enter; whereas the spaces that are labeled with cross marks are the ones we would like to avoid. As we can see, we have 6 good spaces that are available for us to enter. Here comes the question again, which one should we entered and why? Three alternatives are available for you and all of them have their own merits. Let’s look at them one by one. Alternative 1: Short Distance Movement Figure 9 shows us our first alternative. As we mentioned, in order to reposition KIA as a preferable brand, we need to try to position KIA into the northeast quadrant, which is also where our preference vector located. As figure 9 shows us, we would like to position KIA into the nearest space within the northeast quadrant. Now, let’s see what’re the benefits if we choose to enter this space?

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Firstly, the shorter the distance on map you move, the less the money you need to invest. Our team is aiming to guarantee our clients ROI as much as we can. In order to achieving that we would like our client to invest the minimum amount of money and to get the maximum amount of return. By entering this space, it allows you to invest limited amount of money, while reposition yourself at the increasing side of preference vector. Secondly, it allows KIA to leverage its strengths while conquer its weaknesses. By moving to this space, it allows KIA to keep strength of “comfortable with maintenance”. Kia might argue that it also eliminates its strengths in “Price” and “Environmental Friendly”. It is true that by repositioning brand, KIA might not have the advantage on price and environmental friendly. However, these two factors are not highly correlated with consumers’ preference. In other words, based on the result of survey, consumers did not associate these two attributes with their preference. The map also confirms our assertion. As we can see from figure 1, these two attributes’ vectors are in the opposite direction comparing with the preference vectors. We could say that consumers care less about price and environment-friendly when deciding their brand preference. As a result, it totally makes sense even if we sabotage our strengths in price and environment-friendly. Thirdly, by moving the short distance, KIA will enter a big size space. It provides more flexibility with repositioning. For example, KIA could choose to invest more on fixing the primary vectors (attributes from x-axis) than secondary vectors (attributes from y-axis). KIA could also choose to invest equally to fix primary and secondary vectors together. The big size space allows KIA to have more options in terms of brand repositioning. We recommend KIA to invest more on fixing the primary vectors, because 74% of our vectors cluster around the primary vectors (x-axis) and it includes the preference vector. Finally, diffuse/little competition is another benefit for moving the short distance. We don’t want to entering a space where filled with identically perceived brands and severe competition. We would like to reposition KIA to a “Blue Ocean” with little or none competition. By entering this space, KIA might meet a little competition from Volkswagen. However, by repositioning brand, we could actually have competitive advantages toward VW. As we can see from the map, VW is perceived more to the secondary vector, which is “comfortable with maintenance”. If we could position KIA to the location that is near to the x-axis (like the position on the map), we could perceived better than VW on other consumer attributes. The “Short Distance Move” alternative is exactly what we recommend to you. I will go over the next two alternatives quickly, and show you why we choose this alternative instead of the other two alternatives. Alternative 2: Medium Distance Movement Figure 10 shows us our second alternative. As we can see, we also enter into a space that is in the increasing side of the preference vector. However, since it travels longer distance than our alternative 1, KIA has to invest more money than alternative 1. In addition, instead of keeping our good perception on “comfortable with maintenance”, if KIA chooses to enter this space, KIA will totally against its good perception with maintenance. So that, completely against strength. This is why we don’t recommend this alternative and it is unrealistic in the real world. It is like creating a completely new brand other than KIA. As a result, it is not what we are looking for. Though it also provides big size space, KIA might face the competition from the closely clustered brands – Toyota & Honda. As a newly repositioned brand, the least you want is to have direct competition to your rivals. Based on that, we strongly recommend alternative 1. Alternative 3: Long Distance Movement Figure 11 shows us our third alternative. As we can see, we enter into a space that is in the increasing side of the preference vector, and it seems more promising than our alternative 1. It is true that by entering this space, KIA will rank number 2 on preference ranking among the 6 brands. However, the longer the distance moved on the map, the more the money it requires. KIA might need to prepare an awful a lot of money and invest them into the brand repositioning. From the ROI perspective, it will generate relatively lower gain considering the amount of investment. It is true that it also leverages your strength, and it also provides a big space. However, you will face the strong competition from Volkswagen. If KIA enters this space, KIA will be easily perceived to be identical brand of VW. This is the least we want to happen right after our brand repositioning. As a result, based on this, we still highly recommend alternative 1. By comparing the strengths and weakness of the above-mentioned alternatives, our conclusion is to recommend alternative 1 to our client KIA. We covered our specific findings and recommendations in the previous part. This is the entire process of our perceptual mapping tool.

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Table 1: Attribute Averaging table

Table 2: Total Variance Explained Table

Table 3: Rotated Component Matrix

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Table 4: Brand Coordinates

Figure 1: Perceptual Map for Auto Industry Figure 2: Brands Clusters

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Figure 3: KIA’s Strengths & Weaknesses Figure 4: Relative Preference Map

Figure 5: Preference Order Map Figure 6: Gaps among Brands

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Figure 7: Spaces among Brands Figure 8: Good vs. Bad Spaces

Figure 9: Alternative 1: Short Distance Movement Figure 10: Alternative 2: Medium Distance Movement

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Figure 11: Alternative 3: Long Distance Movement