Topics: Volkswagen, Luxury vehicle, Audi Pages: 16 (2807 words) Published: December 7, 2014

Volkswagen Phaeton

Mission, vision, goals
The mission of Volkswagen Group is to provide a quality product, create a safety environment, and enhance productivity and satisfy customers. If Volkswagen Group achieves the mission, then Volkswagen Group can reach its vision which is focusing on positioning the Volkswagen Group as a global economic and environmental leader among automobile manufacturers. In order to achieve its vision and mission, there are some goals are mentioned to make Volkswagen Group more successful. Firstly, Volkswagen should continue to produce innovative and technological products that can satisfy customers’ need. Secondly, in order to be a leading brand, Volkswagen Group should increase its volume as sales to more than 10 million vehicles a year that is above the average shares of market. Thirdly, Volkswagen is planning to increase its return on sales before tax at least 8% so that Volkswagen can handle or guarantee the difficult market periods. Finally, with Volkswagen organization, it is necessary to have top employers and to build a first-class team to make sure organization will be run very well.

Volkswagen Group is an automotive company established at the headquarters in Wolfsburg, Germany in 1930. There are lots of brands under Volkswagen Group such as Volkswagen, Porsche, Audi, Scania, Bentley, SEAT, Lamborghini and Skoda. Volkswagen is the brand under Volkswagen Group, which manufactures cars for broaden ranges of people who from middle class to upper class. There are various choices for cars that Volkswagen produces such as Polo, Vento, Phaeton, Passat and Beetle and so on. Phaeton is the premium car, which designed for upper class customers, and Volkswagen marked this car as the top-end luxury car. Unfortunately, Phaeton is not so popular in American market, in 2005, “Volkswagen just announced that it was withdrawing its luxury Phaeton model from the U.S. market. No surprise there. In the two years since its introduction in November 2003, VW has sold just 3,715 Phaetons.”1

Reasons cause failure
It makes sense that Volkswagen introduced the bigger and more expensive and probably more profitable cars into American market. Because there are lots of low cost brands from Japan and China enter American market and share market with Volkswagen. Actually, the review of the Phaeton was quite good; Forbes called the Phaeton a "great car."2 It has the standard and classic outlook, expected speed and good horsepower, and also good driving experience. But why Phaeton was failure in American market. There are some reasons mentioned below.

Firstly, Phaeton was failed in U.S market because of its wrong market segmentation. Phaeton is a luxury car that designed for the older and wealthier people, but the market segmentation of Volkswagen is more focus on young generation and provides inexpensive cars. In this kind of situation, the amount of customers that Volkswagen can attract to buy Phaeton is limited.

Secondly, Volkswagen did not do very well on market research and development, because Phaeton is not meet customers’ need and wants. Customers who affordable to purchase Phaeton are groups of people who are old and wealth. But this segment of people who may focus more on brand heritage, they may choose other cars from other luxury brands such as Audi, BMW, Mercedes, Lexus and so on.

Thirdly, the price setting for Phaeton is not so properly. “The price for Phaeton was started at $64,600 base and $94,600 with the W-12 engine,”3 its price was lower than most of its competitors. More specifically, “The BMW 7-Series in 2004 started at $69,300, the Mercedes S-Class started at $74,250, the Audi A8 at $68,500, and the Lexus LS at $55,573.”4 Compare to these luxury brands, the price of Phaeton is not very high, but not low enough to attract customers to choose Phaeton rather than choose other brands.

Fourthly, the dealership experience is unexpected....
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