The New Beetle: Volkswagen's Management Problem

This paper is case study of The New Beetle form harvard business school. It is for marketing research class. This paper define Volkswagen's Management problem and the question that design for solve the problem. =======================================================================

The idea of Volkswagen (VW) Beetle was designed so everyone can have a car of their own. Volkswagen kept that idea in mind to build New Beetle. When Volkswagen tries to bring New Beetle to public, management’s problem was to know the consumer’s expectations for New Beetle. They need to use marketing research to find out who will in their target market and what target market preferences are.

After first step, then another problem is how management going to use those data to help them to understand what improvement does New Beetle needs in order to meet consumer’s expectations and management needs to know the demand on New Beetle. At last, management needs to position New Beetle in positive image in order to get high sell in market.

Marketing research objective: In order to solve management problems, there are few objectives that Volkswagen’s managements need to focus on when they doing their marketing research. To Begin with they need to (1) Identify the target market, (2) Find out what the target market’s preference of small car, (3) Find out customer expectations from new Beetle, (4) Know what the reasons are that people want to buy New Beetle.

The Volkswagen New Beetle was introduced to U.S market in 1998 (Wikipedia.org). Before launching the New Beetle, the team needed to design New Beetle to look like the original Beetle in order to bring back people’s memory about one of the most successful cars in the world. The New Beetle takes style and shape of the original Beetle to become a stylish and fashionable compact car.

Key factors: There are different ideas between original Beetle and New Beetle. To compare their key factors in order to find out what management style is going to be and consumer’s motivation to buy New Beetle. And marketing group will have challenging to face to raise the passion of salesman to sell The New Beetle.

Original Beetle: (1) Capable of transporting two adults and three. (2) Low price which people can afford. (3) The first car in people’s life. (4) Use air cooled engine New Beetle: (1) include modern standard package in the car such an A/C, CD changer, airbags (2) Offers German excellent engineering design for good handling to improve driving performance. (3) In 1994 consumers linked emotional to new Beetle after North American International Auto Show (Wikipedia.org). (4) Link people’s feeling and position it in fashionable compact. (5) Medium high-price strategy in the compact car segment. (6) Looks small in outside but inside is roomy for everyone.

Marketing Research Recommendation There are four methodologies I think will help team discover new idea and also can find new insights of the New Beetle. And mixing those information will help raise the sales goal (1)Focus Group & In-depth Interview:

Who: Age which is between 17 and 55 years old. Focus group specially includes, industrial/art designers, people who went to the auto show What: information do we want to get from consumer: (a) Consumers want more form New Beetle (b) Industrial/art designers, their opinion to help New Beetle improvement (c) Consumer Preference (d) Key factors of buying decision When: one to two months after the auto show Where: At least 5 cities in US, recommend in SF, LA, Detroit, NY, Houston Way: Thought a marketing research agency Why: Collect more in-depth opinions of specific groups and then to improve New Beetle to meet customer’s desire. (2)Secondary Research: Who: Age segment from 20 to 60 years old, Gender does not matter, prefer high level education at least college degree What: information do we want to get from consumer: (a) Education level (b) Lifestyle and living expense (c) Consumer’s opinion about auto market and market trend When: Past 4 year’s consumer reports and articles about automobiles Where: Wall Street Journal, Industry reports from marketing research companies Way: Website and print sources Why: can find out and figure out the consumer needs and interests for car.

(3)Online survey: Who: All ages, as long as they can go online What: information do we want to get from consumer: (a) Consumer insight and what is in their mind (b) Key decision criteria for buying a car When: One year Where: VW website Way: Online survey, e-mail survey. Why: To get source for primary research (4)Phone Interview Who: People who are either interested or not interested in New Beetle, from 18 to 40 years old. When: 1.Monday to Friday from 6 PM to 8 PM. 2. Weekend after 10 AM Where: Marketing Research Company’s database Way: Random calling by marketing research company Why: Use different methodologies to know about consumer’s feeling about New Beetle.

Pro V.S Con in different method Research MethodProsCons Focus group & in-depth interview-Synergism -People might feel Security -Structure -More scientific scrutiny-Cost might be high -People might misjudge -Might get misrepresentation during Interview

Secondary research-Less time -Sometimes is more accurate -In some situation might be only way to get data-No control to data collection - Sometimes might not be accurate -Information might not be in correct form -Might not meet data requirements -Data may be old

Online Survey-Low cost -No interviewer so consumer can be highly interactive -Sample control -Can get information from the whole world -Fast turnaround-Might be big problem for error response -Privacy issue -Do not know who respond the survey -Might be low response rates

Phone Interview-Interview less likely to have bias -Less sample bias due to non-response -Higher response rates -Absence of administrative costs -Wide distribution possible-Need capable interviewer -Not appropriate for some personal or sensitive issues -Limited duration -A mount of data that can be collected is relatively less

Existing marketing information Current marketing research situation Who: male, female, young, old, rich, people who work more than 40 hours per week, highly educated people, internet and industrial designers What: information do we want to get from consumer: (a)Specialization (b)The new design which will be accepted by consumer (c)What potential customers consider Where: Nationwide Way: On street interviews, interview with industrial designers Pros: (1) In person interview can find out interviewer’s idea and their preference. (2) On Street and face to face interview can know interviewer insight Cons: (1) Some people might not give true opinion (2) Sample size might be small so we will not get so many data.

Problem and Missing information: (1) Problem part: (a) How to choose sample? (b) What is the sample size going to be? (c) How to choose interviewers? (d) How many sample sizes do we need? (e) Where will be the time and place for street interview? (2) Missing information (a) Did not provide acceptable error percentage (b) Need to know interview questions/ survey questions? Because the response will be effected by how question is designed