Marketing of the New Volkswagen Beetle

Problem Statement

Volkswagen has to reintroduce the Beetle in order to revive sales. However, given the past success of the Beetle as well as the current scenario in 1998, positioning of the brand is a key problem. Vanzura, the Marketing Director of Volkswagen is faced with the difficult task of deciding what really is the target market for the new Beetle.

Situation Analysis

Customers - The younger generation would appreciate the Beetle the most, but they are the ones that cannot relate to the emotional bond that the Beetle is trying to revive. The older generation may prefer cars with more seating such as mini-vans.

Competition - The Beetle is to be placed in the small car sector. This sector is currently very competitive and is experiencing a decline anyway. Beetle cannot offer their car for less than $18,000 which makes the car the most expensive in the segment. Beetle faces competition from domestic brands such as Chevrolet's Cavalier as well as Ford's Escort. They also face competition from Japanese car manufacturers.

Company - Volkswagen is experiencing a decline in sales and if things continue to move the way they are, Volkswagen will be a thing of the past. After the old Beetle was shut down, Volkswagen began to lose more and more market share. Volkswagen needs this new Beetle to revive interest in their company. Product - top of the line technology, excellent engineering and safety features as well. Visual appeal is very strong. Promotion - people already have an emotional attachment to the Volkswagen's "People's car" motto but now the car is being marketed as "personal car"

Alternatives

Position the car in the older consumer's segment. This would ensure greater sales as people would have a previous emotional attachment to the car. However, the problem is that these people may have families and children and hence may need a more appropriate car such as a minivan.

Position the car for both the segments - older and younger. This way both segments can purchase the car. However, the company has very limited advertising funds and hence they will not be able to spend advertising dollars for both the segments. Also, by targeting both the segments the company would be confusing customers and hence it's best to focus on one group.

Recommendation

Position the car in the young consumer's segment. The problem would be to try and create an emotional attachment to the car as these people have never been exposed to the 'people's car' before. The advantage would be that this car is geared for young people anyway. The car's design, style etc. will appeal the most to this age group of people and hence this would be the ideal segment to the sell the car to. The advertising campaign should try to create an emotional bond with this segment (just like they had done with the old Beetle). The advertising campaign can try to bring old memories of the parents of this group and how they valued the car. This way the parents will approve the decision of buying the new beetle.

There is a good possibility that the younger generation will appeal to this form of advertising: The company could advertise specifically to the young consumer market by making the car's style, comfort, speed, latest technologies stand out. These are the features will be beneficial to market to the young consumer's group. Visual effect would certainly attract young fashion aware/ educated generations and hence advertising in magazines such as Vogue and Automobile magazines would help. Association with films such as "Herby fully loaded" would also help.

Implementation Plan

Volkswagen has done their homework by pre-advertising the car and by letting reporters take free rides in the car to experience the real fun of driving a Beetle. Now, the company should make a six month advertising campaign using print as well as television media. They should be careful not to offend the older age group which already has an emotional attachment to the Beetle. But instead should create ads which salute the old generation but appeal to the young generations.

The company should allocate more money in the first 4 months and then less in the next 2 months towards the advertising expense. This way the advertising can start with a bang, increase sales and later taper down. Once the sales are up, the company can consider getting a new advertising budget for the next six months. Within a period of 12 months, the sales of the new Beetle will sky rocket and this car would be the leading car in the United States.

*Sources used are only the Harvard Business School marketing case "The New Volkswagen Beetle".