Thursday, March 4, 2010

Good Value Pricing

As defined on p. 261 of the textbook, good value pricing is "offering just the right combination of quality and good service at a fair price." Hyundai entered the car market simply trying to offer some of the lowest prices for their vehicles, but now that they've established themselves within the market, they now offer slightly higher prices with much higher value.

First, Hyundai offered "America's best warranty," and now they are introducing Hyundai Assurance. Hyundai states that if you buy a new vehicle now and lose your income within the next year, you can return the car to them. Hyundai is offering these things for still relatively low prices. The warranty shows that they believe their cars to be of very high quality, and the Hyundai assurance represents good customer service as they try to adapt to the changing needs of their target markets. Even though Hyundai isn't the cheapest car manufacturer, the things that they offer for their products make it a "good value" purchase. Hyundai realized that customers valued high quality (warranty) and high service (Hyundai Assurance), but couldn't necessarily afford the more expensive cars, so they created a reasonably-priced product line that offers high value to consumers. Hyundai has created this "customer perceived value" by offering the best warranty in America, and also by becoming the first company to offer a return program for lost income. After Hyundai introduced these things, many competitors followed suit and started offering similar deals. These other companies wouldn't have copied these promotions if they didn't add value to their product. In addition, Hyundai builds goodwill in the commercial using words like "faith" and "An auto-maker that has your back, isn't that a nice change?" Obviously Hyundai feels that these changes (increased product quality, service) add value to their product or they wouldn't have been able increase their product prices and still be able to sell their product

Ian Robertson
Section E


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