CASE ANALYSIS

THE NEW BEETLE

SUBMITTED TO DR. ABDUL WAHEED - MARKETING MANAGEMENT MKT611

WEDNESDAY, FEBRUARY 8 2017

DONE BY

GROUP 4 - MBA 2016

AASHISH SHARMA (MBA16001) | ANAND VASUDEVAN (MBA16009) | ISHA PARIDA (MBA16016) |
KARTIKEYA TIWARI (MBA16060) | NICHOLAS WEBER (TRM171003) | SARGAM ARORA (MBA16039) |
SHIVANI GATTANI (MBA16044) | VIVEK RAMADAS IYER (MBA16054)
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SUMMARY

This case talks about the history of Volkswagen, the introduction and re-introduction of their successful model, Beetle in
the year 1949 in America. Despite of Americans being unsure of buying exported automotive due to the expensive repairs
and also after being considered a luxury product for the rich , the launch of Beetle did wonderfully and was proven to be a
success until sometime. However, in the 80s Volkswagen had to stop their production because of their declining sales due
to intense Japanese competition, environmental legislations etc. Beetle was relaunched later in the year 1994.

The relaunch saw some reflections of a new strategic positioning that was underway. They envisioned the new Beetle as
the Bug of the Millennium, by trying to keep intact the status of the once established brand by enhancing a few features in
terms of design and technology. The team also added a four-value positioning such as honesty, reliability, simplicity, and
originality. The marketing team identified a new set of consumers- young, affluent risk-taker individuals; (18-34 year olds)
and Baby Boomers, for whom they decided to keep the nostalgia of the brand equity untouched.

Soon after, there were thoughts and discussions on how to strategically position the brand to drive up the sales and
improve the brand image amongst its competitors.

Below, we have identified the challenges faced by the brand and have thoughtfully analysed the situation by coming up
with a few recommendations for the same.

SECTION 2

PROBLEM IDENTIFICATION

Pleasing both sets of target audience was quite a challenge since they varied from a wide-range of age groups, Gen-X
(18-34 yrs) who believe that the car is a symbol for self-expression and is fun to drive, The Baby Boomers (a slightly older
and educated generation who associate the brand with their emotions and feelings) on the other hand, believed in the
practicality of the car and associated it with nostalgia.

Volkswagen also, constantly had to battle its way through its competitors and other Japanese brands, to recreate its value
in the market. There was a limited budget allotted for media advertisements/promotions. While their competitors spent
$100 million on advertising, the new Beetle spent only $25 million.

Strategic pricing was another factor, which had to be chosen carefully to appeal to both sectors of the targeted audience
and to maintain the brands equity in the market, in the forthcoming years.

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SWOT ANALYSIS

Strengths

The new Beetle represents a famous legacy and took over the mass and the world class alike amid its competition. The
solid brand picture of yesteryears related with the TYPE I Beetle unquestionably goes about as one of its kind. In
addition, the new Beetle in today's period of innovation use its quality of moderate German engineering to give its clients
the delight of a one of a kind driving experience, which the owner can associate with.

Weakness

One of the worries which would keep the advertising unit occupied at work would be the 'toy car' tag. Another
shortcoming of the new Beetle was that it was one of the more expensive cars in the fragment which was in opposition to
its client's impression of reasonableness that they claimed by calling it a peoples car. However, the primary concern
towards the new Beetle was the limited advertisement spending plans which restricted its promotion and reach.

Opportunities

There were a few open doors in the market for the new Beetle which it could explore. The essential being the rise of an era
of carefree customers who needed to communicate their status through the car. Volkswagen could also focus on designing
features specific to new markets.

Threats

Increase in fuel costs and a 5% decrease in sales from the small car section can indicate an impending recession which
could negatively influence the automobile industry. A noticeable rise in competition from bigger automobile
manufactures, could also be stated as a threat to Volkswagen.

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THE ADVERTISING CAMPAIGN

We believe that the advertisements were focused but not widespread. The advertising campaign focused on two major
sections of audiences after an intense marketing research, one being the Gen-X and the other being the baby Boomers.
They came up with a Drivers Wanted campaign on television, which proved to be quite a success, as the loyalty numbers
of the customers increased. Their initiative of co-marketing the new Beetle with Trek and K2, interested a group of young
and adventurous drivers who were ready to invest in the brand. Eventually, with their innovative promotions they could
attract more customers who were young and had a risk-taking attitude. These initiatives helped drive up their sales and
establish a new customer base. These campaigns helped the brand strike chords with the customers lifestyle and
characteristics on a personal level.

SECTION 5

APPEAL TO THE CUSTOMERS

The potential customers could very well relate to the emotional essence of Volkswagen attached to Beetle. There was an
image transition from Peoples Car to Personal Car. People associated the brand with themselves on an emotional and
psychological level. The potential buyers (Gen-X and Baby Boomers), identified certain common characteristics such as
individualism, confidence, and a desire to be the centre of attraction. The round-circular design of the car also proved to
be one of the factors that appealed to these buyers.

SECTION 6

MISSION IMPOSSIBLE

The initial decline in sales, triggered the re-thinking of the position of the brand. After identifying the two sets of potential
buyers (Gen-X and Baby Boomers), they established two important factors to be considered for a re-positioning: play on
nostalgia and appeal to the new generation, which was indeed a massive task. The challenge to cater to the needs and
wants of both these sectors was immense and had to be carefully chosen. Working with a low advertising budget made the
task even more demanding, as it restricted a lot of creativity and thinking. That is perhaps why the campaign was termed
as Mission Impossible, portraying a toilsome situation.

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RECOMMENDATIONS
We believe that planning two different campaigns for Gen-X and Baby Boomers, could prove efficient. In terms of pricing,
we believe that an affordable model with contemporary features could appeal to the Gen-X, whereas a more enhanced,
elite version could seem exciting for the Baby Boomers.

Similarly, while designing the media campaigns, they should design two different sets of campaigns to appeal to
both the sections of potential buyers. Print advertising in magazines and newspapers could be aimed at Baby Boomers
while television advertisements could be aimed at the Gen-X, organising road shows and other promotional events for a
wider reach, could also increase the visibility of the brand leading to an inquisitiveness amongst the potential buyers.

SECTION 8

CONCLUSION
From the above analysis, we conclude that the two important factors to be considered are pricing and media promotions,
that requires thoughtful designing to help marketers keep the brand equity in place and help fix the declining sales.