Free Essay

New Beetle

In: Business and Management

Submitted By zaheerbeg
Words 1524
Pages 7
w 2010

Mission Impossible: Launch of the New Beetle

[NEW BEETLE CASE STUDY]

1. INTRODUCTION
At a time when American¶ were skeptical about the purchase of imported cars, due to lack of availability of spare parts and costly repairs, heightening, Germany¶s existing image problem in the market, Volkswagen introduced the Beetle in 1949 which turned out to be a phenomenal success and envisaged a cult- following by the 60s. However due to factors, such as Deutsche Mark appreciation, declining hatchback popularity, new environmental legislations all led to a dramatic decline in the sales of the Volkswagen Beetle. The sales after peaking in 1968, died out completely by 1981. Subsequently with a renewed focus to leverage a no. of value propositions from the old beetle such as strong heritage value, focus on unique driving experience and delivering German technology at an affordable value, the company decided to re-model the Beetle to incorporate design features such as ± honest, reliable, simple and original to design the New Beetle. After meeting with success through its initial promotional campaigns, the company¶s marketing manager Vanzura had decided to target the Baby boomers with a proposition aimed at µindulging in nostalgia. While rival companies spent upwards of 100 million dollars towards promotional budget, Vanzura would have to content with 25% of the typical budget size, which would further shrink if Vanzura would have to allocate dollars towards promotional expense of the New Passat which had debuted just 5 months ago. With this constraint on its budgetary resources, the company marketing manager set out to decide the marketing strategy to be followed for the new Beetle. y y To illustrate the development of target market segments To link the processes of market segmentation, market targeting & product positioning

2. PROBLEM IDENTIFICATION & ANALYSIS
The fundamental problem came down to targeting a broad customer base by advertising in the televisions or to position itself to cater to a niche category by advertising in the print media. The Old Beetle y Beetle was the most successful car model of its time, more than 21 million Beetles were sold. It was also a huge success in America and had become a true American icon. y The Beetle had a huge fan following in the new generation of Americans. It had become a symbol of individuality and personal style. y Beetle found a place in Disney movies as ³Herbie the love bug´, and also in the lives of the common American as a member of his family. A brief history of VW and Beetle After the launch of Beetle in America, which turned to be great success, VW of America was set up as a subsidiary to VW. A few car models were also launched like Rabit, Microbus and Karmann Gia sport coupe which were successful as well. However Beetle was still the leading car model for VW as it always contributed more than 65% sales (by volume) for VW till 1974. However, due to strengthening of Deutsche Mark, competition from cheaper Japanese brands VW saw its sales declining in US during 1970s. Due to recession in 1982, declining popularity of hatchbacks and inability to comply with the environmental legislation Beetle was withdrawn from the US markets. VW also took a hit and sales dropped to less than 50000 by 1993. In 1994 a campaign was launched to revive VW and a plan for relaunching Beetle in 1998 was also considered.

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Bring back the Beetle ³What are you waiting for Doc? Bring back the Beetle. And hurry.´ This was the opening sentence of a letter to Dr Ferdinand Piech, Chairman Volkswagen AGBoard of management, which appeared in Chicago Tribune. This reflected the enthusiasm and the anticipation prevailing in the market for the New Beetle. But there were some challenges which were to be addressed before the launch. One of the major challenges was to remove the misconceptions about Beetle. Beetle was considered to be a ³toy car´. This image of Beetle needed a repair to ensure the New Beetle is looked upon as a ³Real, Driveable car´. The Beetle did have a segment of potential customers, i.e. the Baby Boomers, but for a sustained growth it also had to look beyond and exploit the appeal which Beetle had in other customer segments. Efforts to retain Baby Boomers were also required because the New Beetle was not a replica of the old Beetle. Thus positioning of Beetle was the key concern for VW. Positioning of the new Beetle with the backdrop of old Beetle¶s image & success coupled with a limited advertising budget was a challenging job and was considered as ³Mission : Impossible´ for a marketer. New Beetle: SWOT analysis Strength: The new beetle enjoys an iconic heritage; it is the successor of a car which enjoyed cult following among the mass and the elite alike during its hey-days. The strong brand image of yesteryears associated with the TYPE I Beetle definitely acts as one of its strength. In addition the new Beetle in today¶s age of technology leverages its strength of affordable German engineering to provide its users with the joy of a unique driving experience, which the owners can associate with it. And finally, its design principles ± honest, simple, reliable and original, which reinforce its penchant to use classic elements and basic shapes with the help of cutting edge technology and modern detail is symbolic of its spirit and historical strength. Weakness: One of the concerns which would keep the marketing unit busy at work would be the µtoy car¶ image which has been tagged to it in the market. However the case exclusively quotes that ³While many people saw the car as more of a toy, the New Beetle had its fair share of fans.´ Another weakness of the new Beetle was that it was one of the more expensive cars in the segment which was contrary to its customer¶s perception of affordability that they attached to its predecessor. However the main concern for the new Beetle was the limited advertisement budget at its disposal and the consequently low ad recall that emanated from it. Opportunities: Notwithstanding the above facts, there were several opportunities in the market for the new Beetle which it could take advantage of. The primary being the emergence of a new generation of fun loving consumers who wanted to express themselves by showing off to the world their car and the confidence associated with it. The nostalgia surrounding the car coupled with innovative promotions and attractive lease financing schemes all represent a favourable proposition for the marketing of the car. In addition, the new Beetle seeks to explore the revelation of people¶s love for round shapes using this as an opportunity to promote its simple yet modern designs. Threats: While the above discussion paints a rosy picture of the new Beetle, all isn¶t well with the car and/or the market in general. A decrease of 5% in the small car segment might be indications of a contract market. This coupled with the propositions of competition from Japanese auto makers, in terms of price and volume represents a growing threat which the new Beetle must look to effectively counter. In addition the loss of exclusivity of dealers meant that the dealers«.

3.

PROPOSITION

Product positioning should ideally answers 3 questions: a) Who are the customers? Since Beetle itself has big target market comprising of the baby boomers & young drivers of age group 18-34 years old with diversified demography. But they have common characteristics such

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as confidence, individualism and a desire to be centre of attraction. Also they love to drive German engine. b) What is the set of needs that the product fulfills? Beetle fulfills the desire to express individuality, superior driving performance with German technology and most important a people car with affordability and reliability c) Why is the product the best option to satisfy those needs? Seeing the history of Beetle and the legacy it has created there was no competitor in this segment. It was neither a small segment car nor a mid size car but the looks of the car put it in the small size car segment. No other brand was able to create the nostalgia that beetle has created with its design. Keeping the above factors the pricing needs to be kept in mind the affordability of the segment being targeted and the similarly the media for covering the Beetle will be a mass media and some extent of print media. If the car is positioned as the people¶s car then the pricing and media to be selected which will cater to the mass market. Since Beetle is falling in midsize segment the pricing of the car in this segment varies from $11,000 to $17,300 for a sedan. The base pricing of Beetle starts from $15,200 which can go upto $18,000 for the luxury model. Since this new Beetle is conceptualized based keeping Beetle spirit and sense of history with the blend of modern technology embedded in its features the recall of the new Beetle is immense.

[4]…...

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