Growing Up Global

Dec. 21, 2004
Kia America Inc. CEO Peter M. Butterfield talks about building a brand in a truly global marketplace.
Peter M. Butterfield is the first American to serve as president and CEO of Kia Motors America Inc., Irvine, Calif., the fast-growing subsidiary of Seoul-based Kia Motors Corp. In 1988, Kia-America sold 12,000 vehicles from 88 dealerships. This year the division will sell about 240,000 vehicles from 640 dealers and is introducing an ultra-luxury vehicle, the Amanti. Butterfield, named CEO in January after joining the company as vice president and COO in 2001, has ambitious goals for Kia and brings to the top job 25 years worth of experience at Ford Motor Co. and Volvo. Among other things, he has focused on new-product development, customer loyalty and branding.IW: What are some of the things you are doing to get new customers? Butterfield: Part of the challenge that any new brand has that begins in the U.S. is that they have no customers. So by definition, every customer that we get is a new customer. When I arrived two years ago, the customer retention or loyalty to the brand was about 4%. It was lowest in the industry, primarily because of two things: No. 1, we only had two products. So when I arrived, one of the first things we did was extend the product line to a much broader line of cars and trucks. We now have eight products in our car and truck line. Second major issue was our franchise system. Approximately 4% to 5%, or 40 of our 630 dealers were exclusive. The others were dualed with other brands. That lack of focus had a direct impact on sales as well as loyalty to the brand. We launched a major initiative in 2003 called Circle of Excellence, and we have now moved our brand exclusivity at the dealer level to 50%. That 50% are now delivering 65% of the volume of Kia-America. IW: How does the marketplace view Kia? Butterfield: The Kia brand has an image of being youthful, a bit irreverent so to speak, self-effacing, and a fun company to do business with. That's appealing to consumers from their own image standpoint. That's one of the ways that we differentiate ourselves. IW: Are U.S.-based automakers doing anything differently because of your emergence on the marketplace? Butterfield: In general, the U.S.-based automakers are much more conscious of the competitive situation with new entries in the marketplace than they were in the '70s and '80s. I worked at Ford at that time, and I think in general the domestics had so much market share that they underestimated new brands coming into the United States. I don't think that is the case now. I think they're watching any brand coming into the U.S. The question today I would ask is, "What can they do about it?" When I was younger there was this "Buy American" kind of theme. My children don't see that. They don't hear it. It's not an issue with them. For 30 years, we've been talking about a global economy. Well, it really hasn't been a global economy. Today it is a global economy because our children don't differentiate a Honda or a Kia or a Toyota as a Japanese-made or a Korean-made car. They want to buy the product that offers them the attributes that they want.

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