In case you haven't heard, Kia has a car they want to show you. You may have seen NBA All-Star Blake Griffin jump over it in the 2011 Slam Dunk contest, or in a plethora of other places, as Kia seeks to shove its new Optima into every conceivable placement spot. For a company with a reputation for, well, uninspired styling, the redesigned Optima is a welcomed change. If you want to snag the premium edition of the car, you'll need to be prepared to fork over more than $26,000.
At the top of the market are makes like Audi, BMW, and Lexus. Kia plays a respectable role at the low end, and they do a good job of it. Budget-conscious consumers gladly sacrifice the styling of more expensive vehicles for the affordability and dependability of a Kia. For what many used cars cost, consumers could get a brand-new Kia, warranty and all.
However, it seems that Kia is no longer satisfied with the low-end of the automotive market any longer, and its rising price tag is slowly moving them into what branding guru Al Ries calls the "mushy middle" of the market.
Ries warns brands to stay away from the mushy middle, and for good reason. "As a market matures, it tends to fragment into two different markets, usually at opposite ends of the scale," says Reis. "There just isn't much action in the middle of the market." Simply put, the middle of the market is where brands go to die.
The high and low ends of a market are like black and white. Companies can easily define themselves as a luxury or discount brand. However, the middle is an amorphous gray. Defining a middle-of-the-road brand is much more difficult. For example, Walmart's brand is based built on cheap products. Target's brand is built on more expensive, higher-quality goods. Then you have Kmart, which was never able to establish a strong foothold for its brand in the middle of the market and filed for bankruptcy in 2002.
The problem with a big price tag for Kia vehicles is that it's pushing them into the danger zone. Kia has a brand — and a strong one at that — built on producing affordable, reliable vehicles. A $26,000 car does not fit into that brand image.
It's mystifying as to why Kia would want to leave its position at the low end of the market. Low-end brands can still be winners. Nobody tells Bic razors that its brand of cheap, disposable razors is a joke. They're king of the low-end market for razor blades. Kia can be the same for economical vehicles.
Sales for Kia continue to grow, and more power to them for that. They've done a lot in recent years to really improve the look and quality of their cars. Nevertheless, short-term growth is not indicative of long-term sustainability, especially when the growth comes at the expense of brand integrity. If Kia wants to remain a strong force in the automotive market, they will need to focus on dominating with economical, reliable cars and leave the high-end cars to the luxury brands.