Beetle

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CASE INTRODUCTION

At a time when American’s were spectacle 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 actual 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.

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. The fundamental problem came down to targeting a broad customer base by advertising in the televisions or to position it to cater to a niche category by advertising in the print media. In the 1970’s and 80’s Volkswagen sales came to a halt because of events such as appreciation of the Deutsche Mark, the 1982 recession, declining popularity of hatchbacks and environmental legislations. In the 1990’s Volkswagen tried to re-launch the brand by bringing in a new advertising agency called Arnold Communications. Arnold conducted research via interviews and found that the customer attitude had changed somewhat and launched the Drivers Wanted campaign in order to entice the new customer base. This led the sales of VW to increase steadily and by 1997; the company had launched various advertising campaigns and believed a new era of Volkswagen had arrived.

HISTORY

* Volkswagen was formed in 1955 in US.
* Beetle an iconic car 1960’s sold over half a million in 1970. * During 1980’s the Beetle run in the US ended due to National highway act & Clean air act. * During the same period the Beetle sales hit the all time lows due to heavy competition from Japanese brands.

RE LAUNCHING – THE CHALLENGE

* The brand was losing its image.
* Not able to relate to the younger generation.
* Heavy competition from Japanese brands.
* Beetle the “old love” was to be launched as “new affair”.

THE OLD BEETLE

* Beetle was the most successful car model of its time, more than 21 million Beetles were sold. It also was also a huge success in America and had become an true American icon. * Beetle found a place in Disney movies as “Herbie the love bug. * The Beetle had a huge fan following in the new generation of Americans.

THE NEW BEETLE

* The image of past
* The Technology of future
* Honest, Simple, Reliable & original
* Price tag of $18000
* Targeting the baby boomers and Young generation
* German comfort with modern style.

BRING BACK THE BEETLE

There were some challenges which were to be addressed before the launch of the new beetle. * One of the major challenges was to remove the misconceptions about Beetle. Beetle was considered to be a “toy car”. This image of Beetle needed a repair to ensure the New Beetle is looked upon as a “Real, Drivable car”. * Secondly, the Beetle had 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 for other segment of customers. * Also, efforts to retain Baby Boomers was also required because the New Beetle was not a replica of the old Beetle. Thus positioning of new Beetle was the key concern for VW. * And 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 “Mission : Impossible” for a marketer.

ANSOFF’S MATRIX...
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