The New Beetle Case

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It’s funny the things we remember. The things we hang on to, the first day of school. A first dance. A first kiss. Some things are simply unforgettable. What if quality never went out of style? What if originality still meant something original? What is simplicity, honesty and reliability came back again? Imagine a new Volkswagen….

Mission Impossible: Launch of the New Beetle

Introduction
At a time when American’s were sceptical about the purchase of imported cars, due to lack of availability of spare partes 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 bloomers with a proposition aimed at ‘indulging 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. 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
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. •The Beetle had a huge fan following in the new generation of Americans. It had become a symbol of individuality and personal style. •Beetle found a place in Disney movies as “Herbie 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.

Bring back the Beetle
“What are you waiting for Doc? Bring back the Beetle. And hurry.” This was the the opening sentence of a letter to Dr Ferdinand Piech, Chairman Volkswagen AG Board 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...
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