Upmarket Strategy Analysis: Ritz-Carlton Reserve and Hyundai Equus

This take-home quiz requires an analysis of the upmarket strategies of Ritz-Carlton and Hyundai. Students are tasked with playing the role of an independent consultant, evaluating the potential success of the Ritz-Carlton Reserve and the Hyundai Equus. The analysis should leverage course concepts su...Read More

TAKE HOME QUIZ
General Guidelines
The take home quiz serves a dual purpose. First, it allows me see how well you are able to
integrate and apply the course material covered in class to a new type of situation. Second,
it allows you to synthesize the material and use it to construct thought pieces or opinions on
an issue. And, an opinion that is well grounded is likely to carry more weight. I hope that you
will use this as an opportunity to practice coming up with such an opinion.
To accomplish these two objectives, I typically give a set of readings and ask you to come up
with a position statement or a thought piece. What I look for is your ability to use
frameworks and concepts discussed in class to arrive at this “position statement” or a “point
of view”. Thus, after reading the news stories, you might believe that the strategy being
followed by the company is likely to lead to success (or not) and you might have reasons for
these beliefs. However, in stating your position, you need to provide a logical analysis of the
situation using concepts discussed in class.
Some points to keep in mind:
1. You will be graded on your ability to integrate and apply course concepts to the
situations/issues described.
2. I look for logically constructed “position statements” or “observations” where one
idea follows systematically from the previous one. I am very picky about how
arguments are constructed and how they are expressed. Therefore, please pay
careful attention to the logical flow of ideas. It helps to keep in mind where you are
going so that you do not lose track of the main points you wish to make and
supporting arguments all lead to that point.
3. Communicate clearly. Brand managers have to be good communicators. Clarity of
thought is often a precursor to good communication. Likewise, poor communication
of ideas suggests muddy thinking. So, I pay special attention to how well you are
able to communicate. If you were writing an op- ed piece for the South China‐
Morning Post– commenting on this case – think about how would you write it and
give me the equivalent.
4. Don’t forget the footnotes and citations. Proof read your work.
5. I don’t have a fixed page limit but a 5-page document (single spaced) would be in
the ballpark. This does not include appendices, references, etc. You will have 1 week
to work on an assignment. It is due on December 9th (midnight – 11:59 pm ).
Question
Attached are a few articles describing how two companies are attempting to move
upmarket. The first, is the Ritz Carlton. It is attempting to reinvent itself by going even more
upmarket with its new offering “The Ritz Carlton Reserve”. There are many articles on the
web pertaining to this issue. However, the ones included here are representative. The
second company is Hyundai with its launch of the Equus. Please read these articles and play
the role of an independent consultant. How could you use the course concepts discussed so
far to come up with a position statement about the likely success of these strategies for the
two companies. Given below are a few tips on what you can bring to bear on this issue:

a) Brand equity frameworks to assess the strengths and weaknesses (e.g., Keller’s model to
build brands, Aaker’s model components etc.) of each company. Use it to discern any
potential problems are likely to arise
b) Consumer knowledge structures about the brands in question (awareness –
recall/recognition; user imagery, attributes central to the brand, attitudes); Associative
network models, negative associations that might exist)
c) Competitive set, priming, context effects etc. – how will this change with the upmarket
move. What will it do to the product line?
d) How will the move upmarket fare – what is the objective here (changing target market,
profits, satisfying needs, line extension etc..) and what are the potential risks when it comes
to erosion of brand equity.
Good luck!

RITZ CARLTON ARTICLES
IS THE RITZ CARLTON REINVENTING ITSELF OR LOSING ITSELF?
Ritz-Carlton Dresses Down
Aug 07, 08 | 12:10 am
There's a new look in Ritz-Carlton lobbies across the country: casual elegance.
Particularly at the newer Ritz-Carlton resorts, the formal, somewhat stuffy style for which
the brand is known is being updated with a look that is more relaxed and in keeping with the
properties' settings. At the Ritz-Carlton Grand Lakes, Orlando, Fla., for example, the dress
code for staff is a Tommy Bahama shirt with a collar. No tie. And the interior design, while
still redolent of silk, damask, and marble, feels more relaxed than the typical urban Ritz-
Carlton.
Ditto for the spectacular but similarly dressed-down Ritz-Carlton, Lake Las Vegas. Here, the
Mediterranean design aesthetic is completely different.
How far is too far? According to one Ritz-Carlton spokesperson, “We're not going to lose our
core customers by allowing people to come to the dining room in flip-flops and crop tops.”
Reinventing the Ritz-Carlton
On this winter morning in 2007, a strategic planner, Mark Miller, from a boutique ad agency
has tacked up art from dozens of advertisements for luxury hotels in the Ritz-Carlton Hotel
Company’s Maryland offices. He has done it to prove an absurd truth: nearly every brand in
the category uses the same imagery, the same tonality—everything but the same models.
He gives the company’s executives time to absorb the scene, then issues a challenge. “Which
of these ads,” he asks, “is yours?”
The question is very relevant. Not long before, Simon Cooper, Ritz-Carlton’s president and
COO, and Bruce Himelstein, senior vice president of sales and marketing, had arrived from
parent company Marriott eager to liberate Ritz-Carlton from the coat-and-tie formality that
had characterized the chain since its 1983 inception. One obstacle, as Mark Miller had so
vividly identified, was its dated and old marketing formula. But that stale imagery was
symptomatic of a deeper, more fundamental problem: how to invigorate a brand freighted
with a concept of luxury as it existed in 1927, when the original Ritz-Carlton opened in
Boston?
The hotels themselves stood firmly in another era, their heavy drapes closed against the
sunlight. The public spaces within were dark, full of wood and marble, and overtly
masculine. Their dining rooms served the usual American standards with gracious formality
but little verve. And every property looked more or less identical: a cross between an
Italianate mansion and an English country manor that had been outfitted by Donald Trump.
Until a guest emerged blinking into the bright Phoenix morning, he could have been in
Philadelphia…or Tysons Corner, Virginia…or most any Ritz-Carlton in the world. “We had no

sense of place,” remembers Herve Humler, a 25-year veteran of the company and now the
president of Ritz-Carlton International.
Until Simon Cooper’s ascendance as COO, that’s just how Ritz-Carlton wanted it. “What
worked initially was, build all the hotels the same so that people will recognize them,” says
Himelstein, and such uniformity served it well. From 1983 to 1993, the brand grew from a
single hotel to 30, while stamping an image of tasteful opulence on the consciousness of
American travelers. Then the ground shifted. As wealth proliferated among the young, the
innovative, and other demographic categories not typically associated with blue blazers and
Hermès ties, a different group emerged: one favoring experiences that were unique,
authentic, and not easily available for purchase. That might mean a trip to the sold-out
Masters Tournament, a day of skiing on a pristine mountaintop, a glimpse of a celebrity. It
didn’t mean a stay in one of the dozens of carbon-copy Ritz-Carltons around the world, no
matter how polite the doorman.
The very predictability that consumers had found so desirable was now a hindrance to
attracting a new generation. These “discerning affluents,” as Miller calls them, were willing
to sacrifice the comfort of a familiar setting for an experience they could talk about back
home. “What they want,” Miller says now, “is to collect stories.”
Toward that end, Cooper and Himelstein engineered one of the swiftest—and arguably most
important—corporate makeovers in recent hospitality history, a paradigm shift that inverted
Ritz-Carlton’s long-standing relationships to product and place. The first of the new Ritz-
Carltons opened as something of an experiment in April 2003, in a retrofitted civic
incinerator in Washington, D.C.’s Georgetown neighborhood. Another followed that New
Year’s Eve in a restored Modernist landmark in South Beach.
These properties looked like no Ritz-Carlton before them—and felt different, too. Flexibility
came above bellhop livery and dress. Sense of place subordinated continuity with the brand.
To some loyalists both inside and outside the company, the changes seemed jarring, almost
profane. When Team One was awarded the account in late 2004, replacing a conglomeration
of various agencies, Miller found a chasm between those who believed the new approach
would ultimately save Ritz-Carlton, and those who saw it as the road to ruin. “People who’d
been with the company for years felt strongly that the dark wood and chandeliers defined
the brand,” he says.
But Cooper had seen the future, and it didn’t include heavy drapes. His team of outsiders
forged ahead. South Beach and Georgetown became models for the next wave of Ritz-
Carltons, which were integrated into singular sites such as Bachelor Gulch, Colorado;
downtown New York; Moscow, just off Red Square; and Beijing’s Financial Street. All of them
use setting and local culture to determine design components, such as a cowboy bar in
Bachelor Gulch and a feng shui–inspired floor plan and tea apothecary in Beijing.
Older properties followed suit. Many of the formal dining rooms have been replaced by jazzy
restaurants run by celebrity chefs, including Eric Ripert, Dean Fearing, Gordon Ramsay,
Laurent Tourondel, and Wolfgang Puck. Today’s Ritz-Carltons are asked by Cooper to
emphasize singular experiences (or “scenography,” in the Miller lexicon). In Cancún,
scenography means an Aztec fire ceremony every Saturday. At the Lodge at Reynolds

Plantation, in Georgia, it means serving spiced pecans to guests during check-in, with the
scent of fresh magnolias in the air. The concept can get carried to the point of absurdity— as
at Bachelor Gulch, where the house Labrador retriever is available to accompany guests up
the mountain for an afternoon of snowshoeing—but the point is clear: Let no one ever again
be able to claim that Ritz-Carltons are all the same.
Has the message been heard? We’ll find out this summer when Cooper ups the ante. A new
brand, dubbed the Ritz-Carlton Reserve, debuts with the Phulay Bay resort in Krabi, Thailand.
A second Reserve, Molasses Reef in Turks and Caicos, is slated to open in January 2009, with
as many as 10 more coming by 2015. The idea is to attract sophisticated travelers to
unintrusive, ecologically friendly properties in remote areas, where they’ll bask in site-
specific splendor. To anyone who hasn’t stayed in a Ritz-Carlton in the past five years, of
course, such cultural immersion will seem bewildering at best. This isn’t about the lack of oil
paintings on the walls; the living areas at Phulay Bay don’t even have all their walls. Meals
there are so informal, they’re served on the beach upon request. Even the familiar blue lion-
and-crown logo will be hard to find.
None of this will seem particularly novel to people who frequent the far-flung adventure
resorts that now dot the globe, but it will be quite a stretch for the stalwart Ritz-Carlton
customer. And that’s precisely the idea. If trust in the brand can lure its longtime customers
slightly further into the wild…and a few extreme travelers can be persuaded that creature
comforts don’t detract from the authenticity of their eco-experience, Ritz-Carlton just might
co-opt an entire niche category.
YOU CAN CHECK OUT THE PROPERTIES HERE
http://www.ritzcarlton.com/en/Reserve/Locations.htm
AN ARTICLE ON ONE OF THE PROPERTIES
A Ritz Ups the Ante in Puerto Rico with a Ritz-Carlton Reserve Hotel
Laura Magruder for The New York Times
Pool at Su Casa, part of the new Dorado Beach resort in Puerto Rico.
By BROOKS BARNES
TO reach Ritz-Carlton’s newest and most opulent resort, you drive through a forest of
coconut palms, swamp bloodwoods and flame of the woods flowering shrubs until the road
ends at a wall of water. It’s a fountain of a sort, and behind its soft gurgle stretches Dorado
Beach, a $342 million hotel built along three miles of toasty Caribbean sand. At the center of
the resort, which opened Wednesday, guests will find a labyrinthine infinity pool with a
“bubble bed” in its center, a four-bedroom villa that rents for $30,000 a night and a spa
composed of 22 buildings that sprawl across five acres and includes treatment platforms

built into treetops.
Can these kinds of over-the-top amenities make modern travelers — the status-conscious,
ultra-wealthy kind — take a chance on Puerto Rico?
That is the hope. Resorts catering to 1 percenters pepper the Caribbean, so Ritz-Carlton,
which is using Dorado Beach to introduce its new super-high-end Reserve chain to North
America, knew it needed a lot of wow to get noticed. But Dorado Beach, despite its luxury
and a history featuring Laurance S. Rockefeller, Amelia Earhart and Old Hollywood stars,
must also overcome one dominant and indelible fact: It is in a corner of the Caribbean that
for decades has been more associated with grit than glamour.
True, the “Island of Enchantment,” as Puerto Rican tourism officials market their home, has
improved its reputation in recent years, helped by the Navy’s decision to end bombing
exercises on Vieques and the arrival of a St. Regis resort east of San Juan in 2010. But among
the moneyed guests that Dorado Beach hopes to attract — rooms start at $1,499 a night —
Puerto Rico still ranks low on the must-visit list, according to travel agents who specialize in
the Caribbean. “We still need to get rid of the ‘West Side Story’ image,” Friedel Stubbe, a
Dorado Beach developer, told me bluntly. “It’s not nice to say, but it’s true.”
Ritz-Carlton has some image issues of its own. The chain without question still commands
respect among affluent travelers, travel agents say. But some fans worry that Marriott
International, which fully took over Ritz-Carlton in 1998, has watered down the brand by
opening hotels that are more utilitarian than special, like one in Los Angeles where Ritz-
Carlton and Marriott share an unattractive downtown complex. The Reserve brand, designed
to be a chain of 20 resorts, is meant to plant Ritz-Carlton’s blue flag at the tippy top of the
travel market, which is starting to boom again following four years of retrenchment. Dorado
Beach joins a Reserve property in Krabi, Thailand, which opened in 2009. Herve Humler, Ritz-
Carlton’s president and chief operations officer, says Reserve resorts are in the works for
Oman, Morocco and Mexico.
To make Dorado Beach a success, Ritz-Carlton is leaning hard on the property’s past as a
playground for the rich and famous. We’re not talking about the recent past, when a Hyatt-
owned hotel on the property fell so badly into disrepair that in 2006 it was closed, boarded
up and ultimately demolished. Rather, the era Ritz-Carlton is trying to conjure started in
1920s, when Dorado Beach was still a grapefruit and coconut plantation owned by a woman
named Clara Livingston.
Ms. Livingston, known for carrying a pistol and doting on her two Great Danes, Simba and
Chang-Chang, lived alone on the plantation, running it from Su Casa, a 6,000-square-foot
Spanish colonial hacienda overlooking the ocean. A love of airplanes (she served as a
commander of the Puerto Rican branch of the Civil Air Patrol at one point) brought her into
contact with Amelia Earhart, who became a friend and stayed at Su Casa days before
disappearing over the Pacific Ocean in 1937.
Caribbean Property Group, which owns Dorado Beach with Mr. Stubbe and brought in Ritz-
Carlton to operate it, spent $2 million to refurbish Su Casa, now the villa that rents for

$30,000 a night. (Hyatt, if you can imagine, used it as a headquarters for its kids’ club.) The
house, with its sweeping double stairway and clay-tiled roof, is decorated with some of Ms.
Livingston’s original antiques, which were tracked down in the Long Island garage of a
former employee by Eric Christensen, Dorado Beach’s chief executive.
In 1958, Ms. Livingston sold her plantation to Laurance S. Rockefeller, who built a
midcentury-modern hotel, naming it Dorado Beach. When Cuba became a no-go in the early
1960s and Puerto Rico became the new go-to, Dorado Beach was ready and waiting,
attracting stars like Joan Crawford, Elizabeth Taylor and Ava Gardner, who once stayed for a
month. (Ms. Crawford demanded that her room be repainted pink; the hotel complied and
she sent a thank-you note after returning to Hollywood, gushing about “the most
magnificent stretch of beach I have ever seen.”) Other notable guests included postwar
presidents like John F. Kennedy and Dwight Eisenhower.
Hotels often tie themselves in knots spinning yarns about history as they seek to convince
guests that they are staying somewhere special, but Ritz-Carlton isn’t overreaching by
positioning Dorado Beach as a former society hot spot — “recapturing the magic and
essence of that legendary Rockefeller era,” as its public relations chief put it in an e-mail.
Still, will history combined with modern luxury be enough? Even as a commoner, I found
myself a little embarrassed to tell people where I was going when I headed there in late
October. “The Caribbean,” I’d say. “St. Barts?” was one common reply. “No, not quite that
fancy,” was my response. Turks and Caicos was usually their next guess. When I finally
coughed up Puerto Rico as my destination, people tended to give me a sad look. “I hear
drug-related crime there is spiking. Be careful!” one entertainment executive said cheerfully.
After spending two days hanging around the still-unfinished resort, which borders four golf
courses, a children’s water park and an 11-mile nature path, I experienced a different kind of
embarrassment: I had been too quick to judge Puerto Rico as a destination for true luxury.
Even with 1,000 construction workers crawling over it — the guest rooms and spa were
completed, but the rest of the hotel was still a work in progress — Dorado Beach was
nothing short of jaw-dropping.
Outside the glass-walled Mi Casa restaurant, which will feature a menu by the Spanish chef
José Andres (known for Bazaar in Los Angeles), waves crashed dramatically against a rock
break a few hundred feet offshore. In a reflection of Rockefeller’s interest in the
environment, the central part of the new hotel twists in an architecturally ambitious manner
around dozens of mature trees; bridges link various buildings and feature outdoor “hanging
beds” — wide, flat swings billed as perfect spots for napping or reading. Striking
contemporary art, like a monumental photograph of a woman floating underwater by
Quintin Rivera Toro, decorates the walls.
Dorado Beach has 100 guest rooms and 14 one-bedroom suites spread across 11 two-story
buildings. Although building code now requires large setbacks from the water, Puerto Rican
authorities allowed developers to build the new hotel in the footprint of the demolished one
so that every room is directly on the beach. Each ground-floor room has its own infinity pool
and lawn, while second-floor rooms have rooftop pools. All rooms have outdoor showers.
(Since the hotel wasn’t yet open, I stayed at an adjacent condo in an area near where Ricky

Martin and the golfer Chi Chi Rodriguez have homes.)
Aside from the ocean view, Dorado Beach’s most striking feature may be its bar, which has a
theatrical butterflied roof and a sand floor. The hotel’s guests are meant to stow their Prada
sandals and Gucci loafers in little cubbyholes. It may take some getting used to, conceded
Mark Lipschutz, chief executive of Caribbean Property Group, but his goal was to nudge Ritz-
Carlton out of its comfort zone. “I want people saying, ‘I can’t believe they have this beach
bar at a Ritz,’ ” Mr. Lipschutz said.
Every once in a while, though, a piece of the area’s less illustrious past comes into view.
Literally. A drive on that nature trail in an electric golf cart (no cars are allowed at the resort
after arrival) takes you past a muddy golf course closed for repairs. And lurking about a mile
down the shore is the ghost of Cerromar, a 1970s-era lower-end companion to Dorado
Beach that sits closed, a forlorn reminder that the glamour of the Rockefeller years here
ended long ago. (The Pritzker family bought Dorado and Cerromar in 1985 and added the
hotels to their Hyatt chain.)
“We’ll get to Cerromar next,” Mr. Christensen said.
Ritz-Carlton and Caribbean Property Group are making this “major, major bet on Puerto
Rico,” as Mr. Christensen put it, partly because they like the timing. Puerto Rico, they
believe, is on the upswing. In San Juan, a 30-minute drive to the west, the airport is expected
to get an upgrade and JetBlue has deemed it a “focus” of expansion, making travel to the
island from the East Coast even easier. Two years ago, the Puerto Rican government
introduced aggressive housing incentives — no property taxes for five years, no closing fees,
no capital-gains taxes — to stoke high-end home sales.
Dorado Beach has benefited: 14 private residences at the hotel have already been sold, for
$2.5 million to $7.5 million.
Mr. Lipschutz and Mr. Humler also contend that upscale travelers don’t care as much as they
used to about exotic, far-flung locations. With executives finding it harder and harder to
carve out vacation time, accessibility is the new priority. “If people can’t get there quickly,
they aren’t going,” Mr. Lipschutz said.
Dorado Beach may even be able to succeed in rebuilding a bridge to Hollywood. The Puerto
Rican government has adopted deep tax incentives aimed at luring movie production to the
island, and it’s working. “Runner, Runner,” a coming crime thriller starring Ben Affleck and
Justin Timberlake, shot near Dorado Beach recently. Indeed, a recent headline in The
Hollywood Reporter put a wide smile on Ritz-Carlton’s face: “Why Hollywood Loves Puerto
Rico.”
OTHER MOVES
Ritz-Carlton starts a loyalty programme
Sep 15th 2010, 17:13 by A.B. | LONDON

RITZ-CARLTON has bowed to the inevitable and introduced a loyalty programme. The hotel
brand, which is the flagship of the Marriott group, had previously given the impression of
considering loyalty programmes beneath its lordly notice. But with room rates still lower
than in 2008, that position has changed.
"Ritz-Carlton Rewards" are not like any old reward scheme. Oh no. You get a link-up with the
likes of Abercrombie & Kent, Neiman Marcus, National Geographic Expeditions and Vera
Wang, and you can get air miles instead of reward points, if you prefer. You earn ten points
(or two miles) for every dollar spent on room rates. So you'll need to stay nine nights at $350
per night to qualify for a 30,000-point night in a Tier 1 Ritz-Carlton. A night in the Tier 5 hotel
in Central Park, New York, requires 70,000 points.
The relationship with Marriott's own loyalty programme, Marriott Rewards, is a mite tricky.
You can’t be a member of both programmes, but members of Ritz-Carlton Rewards can earn
points in other Marriott hotels—and Marriott Rewards members can earn points at a Ritz-
Carlton.
What strikes me as potentially the most interesting aspect of this new programme is that it
allows Marriott Reward members to spend points at a Ritz-Carlton. That's a sensible way to
bring some fresh blood into the 73 hotels, as there must be a decent number of Marriott
members keen to splash points on a night somewhere special. The group seems to have
realised that, in the case of its top brand, you can't always wait for the masses to come to
you; sometimes you have to go after the masses.
Four Seasons, which is Ritz-Carlton’s big rival, has no plans to introduce such a scheme.
11 December 2008
How The Ritz-Carlton Manages the Mystique
The luxury brand uses hard data on employee and customer engagement to create its image
and ambience -- and to drive measurable results
by Jennifer Robison
PAGE: 1234
Joanne Hanna recently had the pleasure of being a Ritz-Carlton guest, but only after the pain
of a bad experience she had flying -- crammed into coach -- in December. "I had to get to a
conference in New York, but my flights were delayed over and over. I arrived seven hours
later than I meant to, and if I never see O'Hare airport again, it'll be too soon," she says. That
delay meant that she missed all her meetings and had time only to check into her room,
change, and race to the conference's opening-night dinner.

"The gentleman who escorted me to my room at The Ritz-Carlton asked how my day was,
and I told him, the poor guy," says Hanna. "He said he'd be happy to book me into the spa,
or send up a masseuse, or even have a rose-petal bath drawn for me, and I'd have loved all
of that. But there was no time." So he told Hanna to wait a moment, and then he returned
with a scented candle. "I was so touched, I was speechless -- it was so thoughtful and
helpful, like something a friend would do," says Hanna. "So I told the people at the desk. And
now whenever I check into a Ritz-Carlton, there's a candle waiting for me."
Perhaps any hotel employee could figure out that a tired and frazzled guest could use a little
help. And maybe any hotel company with a global database could keep track of a candle-
loving customer. But making sure that every employee notices, cares, thinks, and acts as
thoughtfully as the one who served Hanna -- well, that takes something special.
The Ritz-Carlton calls that something special "The Ritz-Carlton Mystique." It's a way of
conceptualizing the brand's image and the ambience of each of the company's more than 70
worldwide locations. "Mystique" sounds enigmatic, but it's achieved through the most
straightforward of methods: extremely close attention to performance data collection and a
broad educational platform to deliver the findings.
Of course, all companies watch standard business measures and train employees. But The
Ritz-Carlton watches things that most companies ignore, then uses what they learn in a
unique way to create ongoing, top-to-bottom learning. "What we get from the data is
essential," says John Timmerman, The Ritz-Carlton's vice president of operations.
"Everything we learn we use to set strategies, and every strategy is communicated to our
people. That learning environment is how we stay agile in an ever-changing world."
Beyond the data
Agility from education is a complex thing. A company has to determine what data to collect
and how to collect it, but it also has to ascertain what to do with it. Get any of those things
wrong, and the company trips over its own feet. So The Ritz-Carlton concentrates solely --
but obsessively -- on the factors that support the iconic brand.
"We really wanted to make sure that we not only had a great company but that we also had
a sustainable company," says Timmerman. "So we started to benchmark different business
models. We had to have the right outcome measures, so we developed certain business
priority measurements. We call them our key success factors."
The factors are: mystique, employee engagement, customer engagement, product service
excellence, community involvement, and financial performance. Most companies start with
the financials, but The Ritz-Carlton finishes with them. "Financial performance is a result of
the other metrics -- our key success factors," Timmerman says. "Everything else is a
diagnostic metric."
The key success factors are the business priorities, and within those factors, The Ritz-Carlton
reports on absolutely everything -- from the general morale of the restaurant staff in Bahrain
to the number of scuffs on an elevator door in New York. Every day, the company's staff
determines whether they're meeting the key success factors -- and if not, what needs to
change.
Thus, each location and every one of The Ritz-Carlton's more than 38,000 employees turn in
a river of quantitative and qualitative data points. Those bits of data, filtered by the
requirements of the key success factors, are examined to give the company real-time
information that it uses to set and evaluate the business priority measurements that make
up the key success factors. It's a feedback loop of current information, starting and ending
with the priorities.
"When executives focus on the mechanics, they miss the communication," says Timmerman.
The key success factors feedback loop provides the communication that prevents The Ritz-
Carlton's service from being mechanical -- and keeps it personal, for every person in every
location every day.

How they strategize
The Ritz-Carlton starts with a flood of data, turns it into a powerful strategy, then targets
specific actions to obtain its key success factors. But creating the right strategy to achieve
the factors takes as much evaluation as analyzing the data in the first place.
First, The Ritz-Carlton defines the priorities that make up the success factors so that they're
actionable and applicable to all employees. To draft the actions, a cross-functional team --
including senior corporate leaders, field representatives such as human resources managers,
and rank and file employees -- reviews the plan and contributes insights. The company also
uses the data to perform a SWOT (strengths, weaknesses, opportunities, and threats)
analysis to adjust to new information.
"We look at where we want to be versus where we are today -- and where we see the trends
on the horizon," says Timmerman. "Then we frame the key success factors. Then we ask for
input with the SWOT process. It's a very defined process because it's our opinion that if you
can't define it, you can't control it, you can't measure it, and you can't improve it."
The input of frontline staff -- the people who check guests in, serve food, and occasionally
present scented candles -- into the SWOT process is crucial. Their insights are loaded into a
global database so leaders can identify macro-level themes, market specifics, individual
functions, and even corporate blind spots. As a result, the ladies and gentlemen, as all
employees of The Ritz-Carlton are called, feel integrally involved in the business.
"For us, [integrating employee feedback into the process is the] true success because
employees are personally engaged, they're fulfilled, they understand their contribution, and
we're maximizing their talents," says Timmerman. "Involving [employees] in the SWOT
process increases their engagement. And in my opinion, employee engagement
measurements are a barometer of leadership effectiveness."
Once the company has determined the actions for achieving its success factors, the next
step is actually putting them into action. That's the education factor.
How it works
A strategic plan will achieve its goals only if it's understood. And no plan will achieve its ends
if it isn't measured and monitored. So, before long-range plans are put in place, The Ritz-
Carlton goes to great -- some might say extreme -- lengths to teach and learn from
employees. "To be agile in any marketplace, especially one that changes as rapidly as ours,"
says Timmerman, "means being a learning organization."
The Ritz-Carlton never misses an opportunity to teach. All new employees take part in a two-
day cultural orientation before they start their jobs. Then, they are certified after the first 21
days and annually thereafter to ensure that they are delivering brand standards. Every
employee in every location takes part in a daily pre-shift meeting in which actions, events,
issues, and most importantly, The Ritz-Carlton philosophy, are discussed. In this way, no one
is left in the dark about what a priority means -- and everyone understands his or her role in

shaping it. "That helps us all adjust to changes," says Timmerman. "And change is constant."
A byproduct of daily learning is that the ladies and gentlemen who actually deal with guests
are reminded to, coached on how to, and have a method for relaying customers' faint
signals. Even the most subtle guest reactions are noticed and fed into the river of data that is
distilled into the business priorities. As a result, the hotel can pick up on information that
might have been easily missed and have a built-in plan for delivering that knowledge to
others.
Furthermore, every hotel, function, and division has access to the key success factors as well
as very specific revenue and profitability measures. Thus, every day, those ladies and
gentlemen can see how well they're performing against their targets, each of which rolls up
to the company metrics. "So what you have is complete alignment, [and employees can see
how] all the key success factors that are at thirty thousand feet translate down to ground
level," says Timmerman.
Yet none of these approaches are very long term. Through trial and error, The Ritz-Carlton
realized that unless the issue involves a capital improvement, action items should be
designed to be accomplished within 90 days. Furthermore, having learned in the strategy
evaluation process that hotels do very well when they focus their attention on just a few
things, The Ritz-Carlton makes sure every business unit has no more than three priorities.
"[Any objective] longer than ninety days turns into ongoing committees that drink coffee and
produce meeting minutes but not a lot of results. And once you go beyond the top three
priorities, you start to really diffuse your resources, your bandwidth," says Timmerman. So
the company set a mandate that every employee must work on something to improve
customer, employee, or financial outcomes, with visible results within 90 days.
Engaging employees
"At the end of the day, our bottom line is in the hands of our front line," Timmerman says,
which is why the company is meticulous in hiring and developing its staff. The Ritz-Carlton
aims to hire only the very best of the very best -- they select just 1 out of every 20
applicants, and that's after applicants are pre-screened for job requirements.
But fit to role is only part of the employee equation. The other is employee engagement,
because engagement is the cornerstone of every Ritz-Carlton success factor. Employee
engagement first came to the company's attention because of its correlation to performance
measures that have profit consequences; Gallup research has shown that hotels with
increased employee engagement scores have lower management turnover, fewer safety
incidents, and higher profitability and productivity. (See "Feedback for Real" in the "See
Also" area on this page.)
The Ritz-Carlton has conducted employee satisfaction measurements for years because it
understood the crucial role that employees play in satisfying guests. But there's a big
difference between engagement and satisfaction, so the company began using Gallup's Q12
employee engagement metric in 2006.
The Ritz-Carlton has an extraordinary number of engaged workers, with an overall

engagement ranking in the upper quartile when compared to all the workgroups Gallup has
studied. And its employee turnover is low enough to be legendary: a mere 18% compared to
the luxury-hotel industry average of 158% for line-level workers, 136% for supervisors, and
129% for managers. "We like turnover to be between fifteen and eighteen percent," says
Timmerman, "because fresh voices are valuable too."
Engaging guests
The other side of the employee engagement coin is customer engagement. Like employee
engagement, customer engagement has strong linkages to important profit outcomes:
Gallup research has shown that fully engaged customers deliver a 23% premium over
average customers in share of wallet, profitability, revenue, and relationship growth. (See
"Manage Your Human Sigma" in the "See Also" area on this page.)
When it first measured customer engagement in 2004, The Ritz-Carlton scored above the
80th percentile against business-to-consumer companies in Gallup's customer engagement
database. For most companies, this would be an outstanding result, but outstanding wasn't
good enough for The Ritz-Carlton -- or, frankly, for the extremely selective luxury hotel
market. So the hotelier used what it learned from the success factor feedback loop to teach
the ladies and gentlemen to provide the perfect, and perfectly subjective, engaging
experiences. And it worked: The Ritz-Carlton's overall customer engagement score now
ranks above the 90th percentile.

HumanSigma
But a few years ago, The Ritz-Carlton stopped managing customer and employee
engagement separately. The company understood the dynamics and profit potential of
employee engagement and customer engagement, which is why it made each a key success
factor. But the performance potential of managing both factors holistically -- a process
Gallup calls HumanSigma -- caused the company to reconsider its approach. "Our employee
and customer engagement scores are as important as our financial data," says Timmerman.
Gallup research shows that companies that score above the 50th percentile on either
employee or customer engagement tend to deliver 70% higher financial results than
companies that score poorly on both measures. But companies that score above the 50th
percentile on both employee and customer engagement measures outperform companies
below the 50th percentile on both measures by 240%. (See "How Employee and Customer
Engagement Interact" in the "See Also" area on this page.)
That's a significant performance differential, so The Ritz-Carlton leaves little to chance
regarding HumanSigma. Senior leaders incorporate HumanSigma targets into their corporate
strategy and action plan, and they review those targets like they review sales and financial
results. "We wanted employee and customer engagement to have the same importance as
sales, marketing, and financial goals, so we made it part of the senior leadership agenda,"
says Timmerman. "We integrate that data into our leadership performance profile, so we
look at customer relationship management as part of the leadership metrics. That way,
employee and customer engagement really get traction."
Candles
So leaders carefully track HumanSigma, which personally affects individual employees, so
that they can perform according to the business priority measures, thus ensuring the key
success factors, which maintain the world-famous brand. And all of this changes a little bit,
every day, to fit the needs of customers.
It's mind-bogglingly complex, but the end result is quite simple. One cold day in December,

an exhausted traveler's day was transformed by the gift of a candle from a thoughtful
employee. That candle required the compassion of a single employee, but was predicated on
millions of data points. That's the quintessence of business agility.
And though that candle cost very little, it's worth a fortune. Hanna was enchanted by The
Ritz-Carlton Mystique, as are all people. But that candle caught her at a deeply emotional
level, making her a passionately engaged customer. The hotel can count on getting all of her
future business, which means several thousand dollars of extra revenue, assuming she
remains as engaged as she is today (which, she says, is "a pretty safe bet").
If even a tenth of its guests experience the same sort of magic that Hanna felt, the
company's careful data analysis will pay for itself. If a quarter of them do, The Ritz-Carlton's
commitment to engagement will return a magical experience for its guests -- and an
enormously healthy return on investment to the company.

HYUNDAI ARTICLES
CAN HYUNDAI SELL PRAGMATIC PRESTIGE
By MIKE RAMSEY
THE WALL STREET JOURNAL, September 19. 2010
Hyundai Motor Corp., known for dependable, low- cost though unexciting cars, wants to‐
move its brand upmarket. But first it needs to contend with customers like Joe Murphy.
Last year, the 50- year-‐ old sales executive in Dallas spent $42,000 on a Hyundai luxury‐
model. Called the Genesis, the sedan came with heated and cooled leather seats, a powerful
V8 engine and other features typically found in a Lexus or Mercedes.
One thing it lacked was prestige. People often asked Mr. Murphy about the car, but when he
told them it was a Hyundai they lost interest, he said. Last month, he traded it in for a
Mercedes.
Hyundai's $55,000 Equus
Mercedes's $91,600 S550
Mr. Murphy's experience illustrates the challenge Hyundai faces in the U.S. The South
Korean company has advanced from one that once sold trouble- prone vehicles to a leader‐
in quality surveys. Its market share has soared, hitting 4.7% in the first eight months of this
year, up from just 1.4% in 2000.
To keep gaining share Hyundai says it must draw from a wider and richer audience. The
Genesis, launched in 2008, was the company's first move to change how Americans see the
brand. Genesis—which doesn't sport a Hyundai badge on the front— has been modestly
successful, selling about 1,200 a month, a bit more than a third of what General Motors Co.'s
similar- size Buick LaCrosse sells.‐
Now, Hyundai plans an even costlier sequel. John Krafcik, chief executive of the U.S. unit,
said the accolades given the Genesis by car reviewers and some buyers grant Hyundai
"permission" to make a $55,000- plus sedan called the Equus. "The Equus is like a beacon‐
for the brand," Mr. Krafcik said.
The new model, set to go on sale in November, comes with all the bells and whistles of an
$91,600 Mercedes, including electric back massagers, a 17- speaker surround-‐ sound‐
system, suede roof liners and a free Apple iPad containing the owner's manual. But the
Equus's price is meant to attract the pragmatic wealthy. Hyundai expects to sell only 2,500
to 3,000 of them a year in the U.S.
The strategy of offering luxury cars at a lower price mirrors what Toyota Motor Corp. did
when it launched its Lexus line in the early 1990s, except that Hyundai isn't creating a new
brand. "We are proud that this is a Hyundai," Mr. Krafcik said of the Equus.

Some branding experts say the strategy has risks. "It will be harder to do under the Hyundai
name than a separate luxury brand," said John Grace, a principal of BrandTaxi, a consulting
firm in Greenwich, Conn.
Volkswagen AG's attempt to move its namesake brand upmarket isn't encouraging. VW in
mid- 2003 introduced the Phaeton, a loaded sedan starting at $68,000. But sales never took‐
off and the model failed to raise the company's image. VW pulled the Phaeton from the U.S.
in late 2005. (VW's luxury Audi brand, meantime, which has its own showrooms and identity,
has seen sales climb 13% since 2005.)
Hyundai has two goals with the Equus: to lure affluent buyers and to raise the company's
image among less- wealthy customers who remain wary about the brand's cheaper models.‐
Both are key to Hyundai's future because the company has few other avenues for U.S.
growth. It has launched cars in most major market segments except for pickups and large
sport- utility vehicles. While these vehicles‐
make up a third of the market Mr. Krafcik said the company isn't interested in making them
because it focuses on high- mileage models. Also,‐ Nissan Motor Co. and Toyota have had
mixed results in entering the pickup and large- SUV categories.‐
AutoNation Inc., the largest owner of auto retailers in the U.S., recently added two Hyundai
stores. In the past it wasn't interested in the brand because sales volumes were low, but that
has changed, said Mike Maroone, AutoNation's chief operating officer.
"Their quality went from some of the lowest in the country to among the best," Mr.
Maroone said. "The product cadence and the big niches they are filling is just awesome."
Mr. Maroone is intrigued by the Equus, comparing Hyundai's effort to that of Lexus in the
late 1980s. "They will underprice it for the market by $15,000 or $20,000," he said. "It's a
high- end car that attracts a different audience than what they had."‐
To address the concern that some luxury- car shoppers may not want to visit a Hyundai‐
store—and that displaying a $55,000 model next to a $13,000 compact may not be an
effective strategy—the company is experimenting with a new sales and service model for its
Equus. Interested buyers will call a dealership and a sales person will visit the consumer's
home to show the car. And for service, a driver will drop off a loaner car at the owner's
home and take the Equus to the dealership.
"The Equus gives us to opportunity to pilot very cool ideas," Mr. Krafcik said.
Hyundai faces challenges beyond boosting its image. Its sole U.S. plant is near capacity,
which prompted its recent announcement that it will move production of its Santa Fe SUV
from the Montgomery, Ala., factory to a new plant in West Point, Ga., owned by affiliate Kia
Motors Corp. On Wednesday, Hyundai said it would build a $150 million North American
headquarters in Fountain Valley, Calif.
The company also has experienced an exodus of talent. Two top marketing executives were
picked off this year by a resurgent GM.
2. Hyundai Equus may have rough ride into luxury market

The carmaker has grabbed a bigger share of the U.S. market as its quality and reputation
have improved, but the sedan's $60,000 price may steer consumers to rival models from
Lexus, Mercedes and others.
Hyundai’s Equus is designed to compete with the likes of top Mercedes and Lexus sedans. It
will be sold at about 250 of the carmaker’s dealerships rather than through a separate
dealer network. (Anne Cusack, Los Angeles Times / August 30, 2010)
At first glance it's hard to discern who made this new luxury car. The long sloping hood
evokes a Mercedes- Benz‐ S class. The bisected grill bears a touch of the BMW 7 series. The
galloping horse hood badge hints of the "winged B" on a Bentley.
With a dark burled wood dash and steering wheel, soft leather upholstery and brushed
metal accents, the spacious interior oozes opulence. The driver's seat has a built- in massage‐
system. The back seat offers a refrigerated compartment to keep drinks cool. A powerful
4.6- liter, V-‐ 8 engine with 385 horsepower sits under the hood. No less than nine airbags‐
keep passengers safe.
0nly the "Flying H" corporate logo on the trunk lid gives any clue to the car's origin. Is
America ready for a $60,000 luxury car from South Korea?
That the question would even be asked represents a remarkable turnaround for an
automaker that once produced some of the worst cars sold in America. Underpowered and
unreliable, the early Hyundais first introduced in the U.S. in the late- 1980s were‐
inexpensive and sold briskly until people learned just how bad the autos were. Similar
dependability issues chased import brands such as Renault and Fiat from the U.S. market,
but not South Korea's Hyundai Motor Co.
Tenacity combined with the introduction of new vehicle designs have spurred sales,
improved reliability and sparked consumer interest. Hyundais are now thought of as well-‐
built, utilitarian autos with a touch of stylish pizazz. This has set the stage for the launch of
the Equus, a luxury car designed to compete with the likes of the top Mercedes and Lexus
sedans. It goes on sale in November.
The success of Lexus, Acura and Infiniti — divisions of Toyota Motor Corp., Honda Motor Co.
and Nissan Motor Co, respectively — "shows that Americans aren't as brand loyal as
traditional luxury automakers assumed," said Eric Noble, president of CarLab, an automotive
product and design consulting firm in Orange.
"The reality is that the same people — namely baby boomers — who made Lexus a success
are the same people who will make any competent luxury carmaker a success in the United
States," Noble said.
Despite its improved image, Hyundai still faces hurdles moving into the refined luxury
market.
Recently, Hyundai has made progress moving upscale with its line of Genesis sedans and
coupes, which sell in the high- $20,000 to mid-‐ $30,000 range, depending on trim levels. Yet‐
even at that price point some owners attempt to hide who built the vehicle by replacing the
Hyundai logo on the trunk lid with a winged Genesis badge that dealers sell from their parts
department.

Len Wahlert, a retired aerospace executive, BMW driver and former Lexus owner, said the
swap is pretty common among the retirement crowd in La Quinta. And that's one reason he
thinks the automaker would have trouble selling cars at roughly twice the price.
"People who shop for cars at $50,000 or more won't buy a Korean car now," Wahlert said. "I
think they will find that shifting up has a ceiling."
Hyundai wants to corral shoppers such as Brian and Shelley Kadison of Beverly Hills. The
Kadisons are about to replace a Mercedes CLS550 that comes off lease early next year.
They're looking to lease vehicles that retail in the $75,000 to $85,000 range, such as the
Porsche Panamera sedan, another Mercedes and perhaps a Jaguar.
Although he knows about Equus, it's not on his list, said Brian Kadison, a business consultant.
"My impression of Hyundai is that they make a decent car and that quality has improved
dramatically over the last five or six years. I would look at an Equus as a curiosity but
wouldn't consider it until it had a track record," he said.
Hyundai isn't helping itself by not spending to establish a separate dealer network for Equus,
something that could turn out to be a "fatal flaw," auto consultant Noble said. Hyundai will
sell the line at about 250 of its roughly 800 dealers. The car will be sequestered in a separate
section or wing of each showroom, often with the Genesis cars, but even the densest of
shoppers will know they are at a Hyundai dealership. Lexus and the other luxury spinoffs of
Asian automakers set up separate dealership networks and offer employees special sales
and service training designed to appeal to wealthy customers.
"True luxury buyers expect more than product. They expect a luxury sales and service
experience, and there is no real way to do that through Hyundai dealers," Noble said. "If you
look at Lexus, everything that Hyundai needs to do is all there. It is an irony because it has
been argued for a long time that Hyundai always copies Toyota, but here is a case where it
doesn't."
Hyundai knows that's a risk and has come up with an innovative solution, said John Krafcik,
chief executive of Hyundai Motor America.
Shoppers won't ever have to set foot in a dealership to purchase or even service their Equus.
Hyundai will bring the vehicle to their home for a test drive. Service is valet- style — Hyundai‐
will get the car and drop off a loaner until the owner's car is returned. Appointments can be
made electronically through the Apple iPad that serves as the owner's manual and is
included with each Equus lease or purchase.
The automaker is looking for what Krafcik calls "affluent pragmatists — Costco shoppers who
will also go on a two- week European vacation."‐
He said these are the people who made Lexus a top luxury nameplate. He believes Hyundai
will also take advantage of a recession- stoked "social stigma" associated with driving‐
expensive German luxury autos such as high- end Mercedes and BMW sedans.‐
The company has set the goal posts low. Hyundai expects to sell just 2,000 to 3,000 Equus
cars in 2011. That's about the same number of Genesis models Hyundai sells in a month, and

barely a quarter of the volume of rivals such as the BMW 7 series, the Mercedes S- Class and‐
the Lexus LS 460.
Hyundai is launching the vehicle at a time when the brand is gaining traction in the U.S.
market. Just a decade ago, barely 7% of car buyers said they would consider purchasing the
South Korean brand. That has risen to 33% now, according to market research firm GfK
Group. Hyundai recently climbed into Kelley Blue Book's top five most- considered auto‐
brands among new- car shoppers, pushing‐ Nissan into sixth place. After scoring among the
worst manufacturers for both initial quality and long- term dependability for years, Hyundai‐
now consistently beats the industry averages, according to J.D. Power & Associates.
Savvy marketing moves have also helped the automaker.
When sales dwindled to just 90,000 by 1998 under the crush of quality problems, Hyundai
considered abandoning the market. It gave the U.S. one last shot by developing a program to
coax consumers into purchases by offering one of the best warranty programs in the
industry. Starting with the 1999 model year, Hyundai provided a transferable bumper- to-‐ ‐
bumper warranty for five years and up to 60,000 miles. It guaranteed the power train for 10
years or 100,000 miles. The automaker also promised buyers five years of roadside
assistance.
To back up the warranty, the company engineers had to design longer- lasting components,‐
particularly the engines and the transmissions.
Chris Hosford, a Hyundai spokesman who has worked for the automaker since 1996, said
this just wasn't a simple repair of one system or an unreliable component.
"That would have been much easier and we could have fixed it faster," Hosford said.
Hyundai engineers looked at virtually every component that went into the vehicles and
redesigned the parts that were failing, he said. They then used what they learned from that
experience to improve Hyundais that were under development.
When Hyundai faced a recession- caused sales decline in 2009, it built on its earlier‐
marketing efforts by adding a loss- protection program. Buyers who financed their vehicles‐
with Hyundai and made the first two car
payments could return the car without damage to their credit rating if they lost their job
during the first year of ownership. Hyundai would absorb as much as $7,500 in lost equity.
The program helped secure buyers nervous about the economy and hasn't cost the
automaker much. Only 100 people returned their vehicles during the first year.
"To get people to buy your car you have to get people to trust you," Krafcik said. "We want
people to think, 'Hyundai — they just take care of you.' "
These moves have paid off. Through the first eight months of this year, Hyundai sales rose
17% to 363,491 vehicles. Its market share in August was 5.4%, making it the sixth- largest‐
auto seller in the U.S. It will likely top 500,000 in annual vehicle sales for the first time in its
24 years in the U.S. market.

Industry executives expect Hyundai will attack the luxury market with the same
stubbornness that kept it alive in the U.S. when other import brands fled.
"When I was there people were asking whether Americans would buy a $20,000 Hyundai.
This is the next step in the expansion of the product line, and they will find a niche in the
market," said Finbarr O'Neill, now president of J.D. Power & Associates. He headed
Hyundai's U.S. operations from 1998 through 2003, a time when the automaker was already
figuring out how to move upscale.
And even if the company makes a few missteps along the way, it's shown in the past that it
could make the right moves to correct its course, O'Neill said.
Krafcik agrees: "This is the hardest working car company on the planet. We just do not give
up."
[e-mail]
3. Who'd Buy a $55,000 Hyundai? Surprising Answers May 25, 2010
If you were born before 1990, you might remember the "old" Hyundai. That was the
company
whose first U.S. model, the Hyundai Excel, was barely a step up from a Yugo. The old
Hyundai didn't build cars you wanted to drive; it built cars you could afford.
We're all familiar with the "new" Hyundai. That's the company surprising us again and again
with refined and attractive new vehicles such as the 2010 Hyundai Genesis and the 2011
Hyundai Sonata - -‐ cars that are not only terrific values but also, arguably, class-‐ leading in‐
design and execution. The new Hyundai makes cars you want and can afford.
Until now. The 2011 Hyundai Equus, recently introduced at the New York Auto Show, breaks
new ground by being the first Hyundai you may really want but - -‐ at an estimated $55,000‐
- -‐ probably can't afford.‐
And if you can afford to buy one, would you?
We've turned to the enthusiast community on Edmunds.com's Inside Line for some insights.
Edmunds.com's Inside Line readers are split on the car's appearance; what some find
"attractive" and "beautiful," others call "gaudy" and even "hideous." The sharpest barbs are
aimed at the car's front end, with readers saying, "Why does Hyundai keep screwing up the
grilles on their upscale cars" and "looks kind of like a Chrysler Sebring ... NOT a good thing."
Folks are also divided on the interior. One commenter declares "comparing it to a Lexus LS
interior is laughable," but another claims, "If they slapped a Lexus
badge on it, nobody would think twice about purchasing it." And the ample wood on dash
and door panels is called both fantastic and fake.
Less ambivalent are those who have seen the car, who seem to agree it "looks good in
person, like a mini S- Class," and is "far more impressive ... than in video or print."‐

Looks aside, the Equus debut provokes our readers to debate a bigger question: Is Hyundai
ready to take on the likes of Lexus, BMW and Mercedes?
Several suggest this "is too much too soon" for Hyundai, asserting the carmaker ought to
"give time for the Genesis and Sonata to build up the company image before unveiling this
top of the line model" and should wait to "make it a better car than its competitors and
surprise the consumers."
One observes, "the Equus might be a terrific car and even a terrific value, but most $50K
sedan buyers aren't really value shoppers." Another predicts, "This is going to be Hyundai's
version of the VW Phaeton - -‐ nobody went to VW for their $60K V12 sedan and nobody‐
goes to Hyundai for their $50K+ V8."
Others argue "the point of this car is ... to prove that [Hyundai] can build a 50K+ car" and
"they are not looking at volume but to pamper each customer on a individual level" by
offering cutting- edge perks such as having "most maintenance ... scheduled via the‐
[included] iPad owner's manual, with a valet bringing out a Genesis to drive while the Equus
is being worked on."
Still, at least one reader opines "Audi, BMW, Lexus, Infiniti & Mercedes have nothing to
worry about here. It would be like Rolex worrying about a $20,000 Casio watch - -‐ not in‐
the same league." Another points out, "Since we all know this car will depreciate at least
somewhat faster (if not much faster) than an LS460, the Equus purchased new could actually
cost more to own than the LS."
On the other hand, some believe that, in the wake of the recent recession, this car offers
buyers a chance to "have your cake and eat it too." One reader reports, "I
have owned a Lexus LS and Mercedes S550, and I feel why spend the extra money for one of
them when you can get a Hyundai Genesis or better yet Equus for so much less." Another
says, "I can do without the Taj Mahal showrooms and private breakfast bars @ Lexus, thank
you."
Interestingly, the comments about the car grow more positive as the thread continues. One
sums things up this way: "Given what Hyundai has done in the last 5 years, I wouldn't bet
against them. They might not be BMW or Mercedes, but Lexus should be worried." Another
says, "This seems more Lexus LS than VW Phaeton" - -‐ perhaps the highest praise Hyundai‐
could ask for.
In the end, as one notes, "The mere fact that there are this many comments ... proves that
the Equus is already causing a stir."
And that's the word on the street. - Mark Holthoff, Edmunds.com manager, Customer‐
Support
Photos by Hyundai
1 - The 2011 Hyundai Equus goes on sale in the fall, starting at $55,700.‐
2 - Comparisons on the interiors of the 2011 Hyundai Equus and the Lexus LS are mixed. 3 -‐ ‐
The sharpest criticism of the 2011 Hyundai Equus is for its face.

Posted by Michelle Krebs at 1:44 PM under Commentary , Companies , Featured |
Comments (12) | digg this | Seed Newsvine
4. Hyundai ads will hone in on upscale Equus prospects
Ryan Beene. Automotive News. Jul 19, 2010. Vol. 84, Iss. 6421; pg. 4
LOS ANGELES - Advertising this fall for the high-‐ priced Hyundai Equus will target a narrow‐
group of buyers: males in their mid- 50s with annual household incomes of $100,000 to‐
$125,000.
"They are the people that can afford to spend more but don't see the need to," said Chris
Perry, Hyundai Motor America's marketing chief. That's a far tighter focus than Hyundai used
to promote the Genesis luxury sedan two years ago.
Equus ads will hit the Internet in September, followed by print and TV spots in mid- October,‐
Perry said. At over $50,000, the new luxury sedan will be Hyundai's most expensive
nameplate. Hyundai Motor America CEO John Krafcik characterized the target buyer as "very
similar in mind- set to the original Lexus customers circa 1990."‐
Much of the campaign will be Web focused. Hyundai will bypass broadly visited sites such as
the Yahoo.com home page in favor of social networking sites such as Facebook and Linkedln,
as well as other targeted Web sites. Hyundai also wants to place ads in digital versions of
publications available on Apple's iPad tablet computer. Details of the campaign aren't final.
Perry expects to select a theme and complete negotiations for ad placement in about a
month.
Innocean Worldwide Americas, a subsidiary of the automaker's South Korean parent,
Hyundai- Kia Automotive Group, is handling the creative work. Innocean also produced‐
Hyundai's "Loyalty" campaign for the 2010 FIFA World Cup and its recendy launched
"Hyundai: Uncensored" TV campaign, which kicked off this month. That campaign features
driver reactions to Hyundai vehicles during ride- and-‐ drives held outside shopping malls in‐
Chicago, Los Angeles and Atlanta.
The Genesis was launched in part to elevate the perception of the Hyundai brand in the
United States. The Equus, on the other hand, is more of a niche vehicle with a much lower
volume target man the Genesis - about 2,000 per year. About 12,900 Genesis sedans and‐
coupes were sold in the first six months of the year. The car's price starts at $33,800,
including shipping.
Perry declined to disclose spending for the Equus campaign. He told Automotive News
previously that it would be less than half of the budget for the Genesis sedan campaign,
estimated by sources at $80 million.
http://proquest.umi.com/pqdweb?did=2090275551&sid=5&Fmt=3&cl
ientId=36305&RQT=309&VName=PQD
5. Hyundai Equus owner perks: iPad app, service valet
Mark Rechtin. Automotive News. Jul 5, 2010. Vol. 84, Iss. 6419; pg. 11

LOS ANGELES - Plenty of automakers are taking their owner's manuals digital, but Hyundai‐
is taking things a step further - with an iPad. software application that will enable owners of‐
the Equus luxury sedan to schedule service appointments. Hyundai has developed an app
that will be a standard feature of the iPad given to all Equus owners. The iPad is the new
tablet computer from Apple Inc. The Wi- Fi-‐ enabled iPad is to be given at a follow-‐ up visit‐
to the customer's Hyundai dealership two weeks after a car is purchased.
But that might be the last time the Equus owner sees the inside of a Hyundai dealership.
One of the perks of Equus ownership will be a vehicle valet service, whereby a Hyundai
representative will retrieve the car for service from the owner's home or office and deliver it
after the work has been completed. Setting the scheduling of time appointments will be part
of the iPad app, says Barry Ratzlaff, Hyundai's director of service operations. "Owners were
concerned with their time and how vehicle service is managed, "he says. "We used that
feedback to help improve processes but also as indicators for how it should work with
Equus."
Technology- averse Equus owners also will have access to a dedicated concierge phone line‐
separate from Hyundai's national call center. "If we can give them their time back, that's a
magical equation," Ratzlaff says. "It doesn't matter how nice the dealer facility is, you're still
stuck there while the dealer is working on the car. Sure, there are service loaners, but
vehicle valet leapfrogs the whole scenario." It also leapfrogs the uncomfortable situation of
having the owner of a $60,000 Equus parked in the service drive next to a $10,000 Accent.
The Equus goes on sale this fall. The Hyundai iPad app is from Xtime Inc. of Redwood Snores,
Calif., which specializes in software for auto service departments. The Xtime software will be
in addition to the virtual owners' manual on the iPad. The manual is expected to include
videos of the more complicated aspects of the Equus, such as how to pair a Bluetooth device
or program the adaptive cruise control. But Ratzlaff says there will be no interface between
the iPad and the vehicle.
http://proquest.umi.com/pqdweb?did=2080805161&sid=12&Fmt=3&c
lientId=36305&RQT=309&VName=PQD
6. Hyundai Dealers Saddle Up
Steve Finlay. Ward's Dealer Business. Aug 2010. Vol. 44, Iss. 8; pg. 10
LOS ANGELES - Hyundai Motor America wants many of its dealers to upgrade their facilities,‐
but isn't expecting them to build auto retailing's version of the Taj Mahal. "We are not going
to ask them to build elaborate mausoleums," David Zuchowski, the import company's vice
president- sales, says here at the Automotive Customer Centricity Summit hosted by‐
Thought Leadership Summits. "We want sufficient facilities that can compete on sales and
service," he says. "But dealers who build extravagant dealerships must offset those costs by
charging their customers more."
Consumers go to dealerships "to buy cars, not lattes," Zuchowski contends, referring to
some automotive sales outlets with upscale amenities such as cappuccino bars. Selected
Hyundai retailers will install "dealerships within dealerships" in preparation for fall's U.S.
arrival of the upscale Equus, Hyundai Motor Co. Ltd.'s flagship luxury sedan. It has been sold
in the South Korea home market since 1999. A new version built on the Genesis sedan
platform came out last year.

"We don't want dealers spending $5 million or $6 million on new facilities for the Equus, but
the dealership within a dealership will have a different look, different colors and different
textures," Zuchowski says. "It's a very logical approach."
The Equus will compete with the likes of the Mercedes- Benz S-‐ Class and BMW 7-‐ Series.‐
The sedan will follow the U.S. introduction two years ago of the Genesis, the first foray into
the North American luxury segment for Hyundai, once known only for its low- priced‐
compacts. With the Equus, Hyundai plans to continue its value- pricing strategy. The car is‐
expected to carry a mid- $50,000 base price, less than its competitors.‐
Not all of Hyundai's 800 U.S. dealerships will sell the Equus. Those that do must be stand-‐
alone Hyundai stores. They must agree to build the separate Equus display areas within the
dealerships. "They also had to have done a good job with the Genesis," Zuchowski says. He
expects Equus sales staffers to serve as "product champions" who will work under a different
compensation plan. "It takes an hour to thoroughly explain that vehicle to customers, and
we realize the need to pay sales people for that time."
For prospective buyers who want to check out the Equus but skip a trip to the dealership,
participating dealers will bring the car to them. "A sales valet will come out with the car to
people's home or business," Zuchowksi says. "If it works for Equus, we may spread that
service across the entire line."
The Equus valet treatment will extend to service- department customers, too. The‐
dealership would pick up their car and drop off a loaner Equus. "The service valet has been
tried before, and it is simple to implement," Zuchowski says. "People like the pick- up/drop-‐ ‐
off option.
"The sales valet would be more difficult to implement," he says. "I'm not sure how much
demand for it is out there. I don't want to overpromise or it can get screwed up. The sales
valet concerns me a bit, the service valet not at all."
Hyundai of St. Augustine in Florida is a dealership that already brings vehicles to potential
buyers. "We recognize that a lot of customers don't like to come to the dealership, so we
bring the dealership to them," says General Manager Andrew DiFeo. "It is a low- pressure‐
approach. We are interested in treating the customer right."
Like Lexus and other luxury brands, Hyundai also may offer standard scheduled
maintenance, free of charge, for the Equus and Genesis, says Chang- Hwan Han, senior vice‐
president- America Region for Hyundai Motor Co. Ltd.‐
http://proquest.umi.com/pqdweb?did=2097267601&sid=5&Fmt=3&cl
ientId=36305&RQT=309&VName=PQD
VIDEOS – IF YOU WANT TO IMMERSE YOURSELF IN THE HYUNDAI CASEJ
InsideLine.com video of Karl Brauer and Senior Analyst Jessica Caldwell discussing the
marketing challenges
and advantages Hyundai faces launching the Equus in the United States
http://blogs.insideline.com/straightline/2010/05/debate- can-‐ hyundai-‐ get-‐ buyers-‐ to-‐ ‐
pay- 55000-‐ for-‐ the-‐ 2011-‐ equus.html‐

The Hyundai Equus Story by John Krafcik
A Premium Car From a Consumer Brand
By John Krafcik, President and CEO, Hyundai Motor America
Published Jun 14, 2010
http://www.insideline.com/hyundai/equus/hyundai- the-‐ equus-‐ story-‐ by-‐ john-‐ ‐
krafcik.html
See section under subhead “A Halo for the Brand,” in which Krafcik compares Equus launch
with Volkswagen’s failed Phaeton launch in 2004 and discusses the marketing role of the
Genesis launch in 2008.
2011 Hyundai Equus Full Test and Video
The Ambitious Flagship That Steers Right Down the Middle
By Ed Hellwig, Editor, Inside Line | Published Sep 7, 2010
http://www.insideline.com/hyundai/equus/2011/2011- hyundai-‐ equus-‐ full-‐ test-‐ and-‐ ‐
video.html