Can you go from a discount car manufacturer to one that sells models over MSRP? Kia must think so because Kia dealers are routinely charging thousands over MSRP. The question is, “will people continue to be dumb enough to pay so much money for a Kia?”
I went car shopping recently and made the mistake of stopping at a Kia dealer here in SW Florida. The SUV had an MSRP of $36K, but the dealer marked it up to $51k. As I walked out, I heard one shopper say, “you’re kidding; it’s a Kia, for God’s sake.” That product positioning bug again.
Defining product positioning is a crucial segment of any marketing strategy for any brand. You can, however, reposition if the market has opportunities. The repositioning process is very similar to the original positioning process, but it has a different starting point. The initial positioning process focuses on creating a new position or market niche for an offering that wasn’t there previously. On the other hand, the repositioning process evaluates the established position of a product, service, or brand and focuses on how to alter the positioning–and, with positioning, market perceptions–to improve competitiveness.
To change market perceptions, repositioning may involve changes in the tangible product or its selling price, but this is not always required. The new positioning and differentiation are often accomplished through changes in the promotional message and approach. It is very common to see companies launch marketing campaigns focused on repositioning a product or service, but few changes are made to the product or service itself. These repositioning efforts often focus on getting a current target segment to take another look at a product or service and see it from a new perspective. Repositioning often aims to shift market perceptions to make an offering more appealing to a broader swath of the market.
While repositioning is quite common, it carries risks and complexities that marketers must consider. Repositioning happens after initial market perceptions have already been established. Effective repositioning isn’t just creating something new. Instead, it is trying to preserve what is suitable from the existing market positions and build or shift thinking toward something new. Repositioning offers the opportunity to make something new and better than what you had previously, but it also has the potential to undermine or weaken market perceptions.
The question then becomes can Kia reposition the brand into the higher prices SUV segment? Last year Kia’s Telluride was the number one selling SUV in the US. Dealers were adding market adjustment fees that were five digits, and many consumers were dumb enough to pay it because they wanted the SUV and believed they would miss out. Now Hyundai’s Palisade has taken over the role as the number one selling SUV, but I would argue that Hyundai is better positioned than Kia.
Kia has lost control of its brand due to money gauging dealers they can’t control. Compare that to Subaru, whose US President sent out a letter to all dealers saying that “charging customers over MSRP is not what our brand is about and needs to cease immediately.”
Your brand is your promise to your customers. They are expecting from you when buying your goods or services. Pricing is just as important to brand equity as other differentiators. One function of a price is that it conveys a quality message and, therefore, can influence your brand’s conceptual place in the target consumer’s mind. What are shoppers going to think about Kia with inflated prices?
Kia will pay a considerable price for allowing its dealers to rob customers with faux par markups. After all, it’s still just a Kia.