Kraljic Model: Reducing risk perceptions and the 2009 Hyundai Assurance Program

The 2009 Hyundai Assurance Program  is a great illustration of reducing risk perceptions even in B2C (Business to Consumer) situations. Keep in mind that the Kraljic model was originally developed to understand B2B (Business to Business) buying behavior. Kind of like relationship marketing that B2B marketers always practiced and B2C marketers have enthusiastically adopted – more as  technology allowed easy availability of CRM (Customer Relationship Management) and SFA (Sales Force Automation).

So let us understand the 2009 Hyundai Assurance Program that made Joel Ewanick famous. If you think about it the Hyundai campaign addressed the deep job loss risk  anxiety of 2009 without really giving much away. Here is how:

  • You must have a job to get the car: This is sort of subtly put – but very clear. The customer thus has the ability to pay – at the time of taking the car. Initial payments, for the marketer, are assured.
  • What if you leave your job? – the 3 month assurance: In 2009, Americans felt a huge sense of risk of losing their jobs and here is where Hyundai offered to waive upto 3 months of payments. If you think from the organization’s risk taking ability- this is a real cool one. You give out the lease or installment sale knowing that the customer has a job and will be able to make the payments. Just in case the customer loses her/his job the 3 month promise puts a cap on the company’s liability. This would be the worst situation- something that both CFO’s and CEO’s are eager to know.
  • What happens if you can’t find a job in 3 months- just return the car. This again is a brilliant idea in recessionary times. People are feeling the risk but the company must nail down what the exact risk is that the company has to bear. If every buyer/lessee returned the car from the 4th month if every  customer lost their job- then you are probably looking at a far higher unemployment rate than the max 25% in the great depression.  Very unlikely – even if you go back to 2009.

By providing a risk assurance, Hyundai did pretty well with its assurance  program and unequivocally added CSR  to its company resume.

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