The Volkswagen (VW) of America introduced the New Beetle at the Detroit auto show in January 1998 to get reviews from the automobile press and industry experts. Elisabeth Vanzura, the marketing director of Volkswagen knew that the VW marketing strategy in America would rely on her and the marketing team’s ability to successfully define a target audience, position the product and creating an innovative advertising and media campaign for the New Beetle’s arrival at dealers’ showrooms throughout US.
VW's decision to switch advertising agencies from DDB Needham to Arnold Communications (AC)—was the best option in the company's comeback on the market. However after did some deep research, AC was the one who came up with the "Drivers Wanted" campaign which has deep impact on the sales of VW product in US.
2. Problem Identification
The company’s sales declining and with some marketing difficulties in US market, really impacting on sale and profit of VW sales in US.
Low limited advertisement budget for promotional activities was hurting media campaign for VW resulted in unsuccessful selling of new Beetle, and the marketing manager has to target the market with this low budget.
With many aggressive competitors in USA market, such as Japanese car producers (Toyota, Honda, Nissan) and local automobile producers (Chevrolet, Ford) make VW come back to the market more difficult than ever.
VW heavily rely on one brand product such as The New Beetle, VW will make it even harder to compete to such intense competition among the automobile producers.
3. Market segmentation
New comer / baby boomers
4. Review the Decision Factors (Marketing Mix)
The new Beetle 1998 resemble the older generation Beetle with new modern technology by creating better quality Beetle than Japanese made cars. The car was using the latest of the German Technologies at that time and offer superior driving performance.
The VW products always has an image as an affordable car and also VW product have been looked upon as one which offered the benefits of German engineering affordably and emotionally
Market place is in US
VW marketing team has to maximize the impact of brand with the limited advertising budget. They could spend less than 25% of typical market budget (100 million dollar â€“ budget ) as used for a new car launch by most of the companies. Also there was a pressure of allocation out of this to the New Passat which was launched six months back. The company need to decide as to which media to be considered for mass appeal and reach. Television media had the maximum coverage but the cost of the same was not affordable within the company’s budget. The company had already had a very positive coverage by the press but the same was not sufficient for capturing the market.
The new Beetle price was already on the higher side as compared to the small cars as supplied by the competitors. This would not be helping to most of the young people to purchase it and it may cause problem for the sale of a new brand Beetle. The VW company is also not in a position to reduce the prices as that could affect the dealers margin.
5. SWOT Analysis
• Product history of the Beetle as “People’s car”
• VW found that their consumers are younger, slightly more affluent, and more educated than the average car purchaser; Volkswagen owners are creative, confident, adventurous individuals who enjoy a more active role in driving, and Volkswagen was perceived as the "people's car”, from AC (Arnold Communications) research.
• VW offers unique, individualistic driving experience which cannot compare with other brands
• Affordable and German Engineering
• Inviting dealers to visit German factory
• Successful marketing strategy by creating innovative promotion “Drivers Wanted”
• Volkswagen's decision to switch advertising agencies—from DDB Needham to Arnold Communications (AC)—was a critical step in the company's comeback bid. After all, AC was the one who came up with the "Drivers Wanted" campaign
• Low and limited advertisement budget for promotional events
• Old Bettle model looked tired and old compare to Japanese cars makers
• Appeal the old generation with emotional connection of older Beetle
• Good response from dealers, media and public on launching
• Threads –
• Image as a toy car compare to every day car
• Competitor to increase spending on advertising and promotions
• Sales declined
6. Quantitative Analysis
7. Recommendations and Implementations
a. Better Customer Service and Approached
Approaching new generations of old generation and young generation
Focusing on young generations by:
Targeting old generations by:
Positioning The New Beetle as real driveable car instead of toy car
Creating 2 pricing standard for the new beetle:
1. Creating basic and affordable price car for young generation market
2. New innovation to enhanced VW model for Baby Boomers and other upper market class
Television & Print advertisement should be chosen and VW has to allocate extra budget available. VW was certain that advertising to be purchased in Car & Driver, Motor Trend and Automobile magazines. VW also should look into other options such as purchasing the advertisements in two other magazines: Glamour and Sports illustrated, based on the budget availability. The Print advertising which come up with powerful advertisement, such as: the successful “Driver wanted” advertisement, a Unique driving experience motto, and of “Car is a member of the family (passion)” slogan.
Initial research had indicated that the New Beetle appealed to a number of different consumer segments- Youngsters and Baby Boomers. Vanzura knew from qualitative research that many consumers perceived the New Beetle as a “toy car“ and so a key element of the cars positioning would be to communicate it as a “real , drive able car”.
How retro should the company go in their marketing efforts? The answer to this question would impact not only the image of the New Beetle but also how consumers would perceive the broader VW product line-up which was important to the company’s senior management in Germany. VW should not be treated as the Beetle car brand.
Target Audience: Youngsters (18 to 34 years old)
Based on the research it is very clear that, Potential New Beetle drivers embodied qualities such as confidence, individualism, and a desire to be the center of attention. Moreover, they loved to drive and appreciated a spirited design and German Engineering. The younger generation relates the car to fun, confidence, attract attention without being pretentious.
Why not Baby Boomers?
Baby Boomers may not be the primary target audience though targeting them with a value proposition of “indulging in nostalgia” looks to be one of the most appropriate strategies for the New Beetle due to the following reasons:
(1) Considering the current age of Baby Boomers, they would have changed preferences to larger cars and they may be able to afford them.
(2) If they were attracted by the Beetle when it was initially launched (old Beetle), they would have owned one at that time and hence if they wish they would anyway get the New Beetle. Hence, targeting specifically them is not mandatory/needed.
Launch Medium (Television & Print)