The case under discussion in this assignment is “The New Beetle”. This case is focusing on the issues that the marketing team, public relations team and advertising agency of Volkswagen, is having in terms of positioning and pricing the new product. Volkswagen is the parent company of car brand “Beetle”. This case is embedded deeply into the marketing problems of an organization. It looks into the dilemmas that the managers have to face in terms of perfectly positioning their brands.
As has been mentioned in the case, this positioning is of particular importance to Volkswagen because it is currently that is in 1998, in recovery stages in the United States of America. The product that they have unveiled (The New Beetle) has gained significant amount of press, media and public attention. Even though this increase in publicity is an opportunity for the organization to regain its original sales volume and profitability, it is also a risk. This is because it is creating hype and is raising expectations of the customers from the German automobile maker as well as from the brand itself.
This means that in case New Beetle is anywhere below the expectation of the consumers, even the original brand equity will suffer. Given the current situation that Volkswagen of America is in and considering the limitation of finances that the management is facing, such a loss of brand equity is utterly unacceptable. Through five main questions, this case analysis will be presenting different dimensions of the New Beetle case with the purpose of easing Liz Vanzura, Charlie Waterhouse and Steven Keyes to take the necessary brand positioning decisions. . The meaning of the VW brand It is mentioned in the case that Volkswagen currently has a significant degree of brand equity in United States of America, which it does not want to lose. The first question then that the marketing and related departments need to ask is: “What is the meaning of the Volkswagen Brand? ”
This is from where I have sourced the referencing. If you do not trust this site, kindly send a link of the site that you trust or your teacher has provided] discusses in the case that Americans have had because it is present and is wrong because. Obviously you know of a special attachment with the models, Beetle and Rabbit,by Volkswagen and that there is still a nostalgia attached to these brands.
Most information that has been retrieved about the VW brand is through the market research of Arnold communications. According to the research, the first and foremost meaning attached to Volkswagen is of German engineering. The automobile brand VW, being of German origination depicts the meaning of performance and excellent engineering.
Proving this point further, Hundley (2007) says that everyone is Europe knows that the food and romance are best left to the French and the Italian and that for the mechanical matters. The same rticle notes the potential there is for employment in the engineering sector in Germanysince it is growth and excellence oriented. Supporting this point, Knapman (2013) says that even more than the quality of the German automobiles is the reputation that suggests that they are the best car makers in this world.
The brand equity of the German cars have has also been taken by Volkswagen which means that the brand VW signifies excellent engineering, effective and durable mechanics and a good drive.
Substantiating further on this point, it has been pointed out in the case that originally when VW found its success in America, people loved the car because of its drive and the identity that the car gave to the individual. The drive element of the VW cars obviously was reinforced by the perception that it was German and the moment. Minutes, hours, for example. “it means the people used the car. The word has changed for you because you had difficulty understanding it]after people started trying the car, they were assured of the quality drive that they could have.
The second [This second means the 2nd time] element of the VW brand meaning then is the good drive that the consumers had. Moving on to the identity that the VW cars provided to the customers, it can be seen through the case that the consumer thought that VW was “their”.
The car was the member of the family and something that the individual could rely on and be proud of. The example of the finance worker is given in the case. He says that he bought VW because he has a conservative job but when he gets out of work, the car provides a sense of fun and that it provides the individual with confidence. This means that the meaning of the VW brand is of an emotional element. The positioning then of the brand has been done more on the emotional appeal that it has for the customers rather than the functional appeal. This makes the brand a reliable one by the customers for a longer period of time.
Another extremely important meaning that the VW brand has is that of affordability. It has been identified that currently that the marketing team is having a problem in pricing the new Beetle and one of the criticisms in raising the price is that the consumers have an affiliation with the VW cars that they are affordable [I do not understand why you have highlighted this line]. For example, for a number of customers, VW car was the first car that they had in their lives meaning that for people who could not afford a car, VW was still a “good” [inverted commas have been used to emphasize on good – this is a normal practice in English]option.
Thus the fourth element of the brand meaning of VW is that the car is affordable and is focused to be a part of the lives of the masses. The element of the brand meaning is extremely important because cars are generally a big investment and that for most people pricing of the car is the final and the most important deciding component of the purchase. Hence, the VW brand has a meaning of affordability. Last but not the least, the serviceability of the VW brand is an important element that gives the brand that meaning [The question is “what meaning does VW brand has? How do you want the question to be answered without using “the meaning of the brand”, “the element that gives brand its meaning” and similar other words? ]. It has been shown in the case study that VW gave its first advertisement in a newspaper where a person was very luxuriously and peacefully getting his VW serviced showing that the customers of VW never have to concerned about the maintenance and the repairs of their VW because once you have purchased an affordable VW, the company will make sure that you have no problems.
Altogether, the meaning of the VW brand is made up of the following elements: * Excellent engineering * Good drive * Identity and a family member * Affordable * Serviceable 2. The appeal of The New Beetle Next important thing is to look at the appeal of the New Beetle is for the consumers. In explaining this element, the various elements of the car and that of the appeal as well will be discussed. A “Very” strong Heritage
In the letter that a Chicago Tribune automotive reporter, Jim Mateja wrote to Piech regarding the overwhelming reception of the New Beetle, Mateja said that, “You (VW) have the opportunity to get what most people in life don’t – a second chance to regain the fortune you enjoyed when the VW Beetle was one of the most popular cars in the universe despite being butt ugly, cramped, and lacking most of the essentials of the vehicle motoring, from gas gauge to radio. The line above depicts deep connotation regarding the equity and perception of VW Beetle that the consumers have. For starters is says that the New Beetle, because of the Old Beetle has an appeal so strong that VW actually has a chance to regain the fortune (sales) that they once had in America. This means that one clear element of the appeal of the New Beetle comes from the old Bette. The Old Beetle made such a place in the hearts, minds and homes of the consumers that they are super excited about the New Beetle and its launch.
Another thing that this statement of Mateja says is that even though Beetle lacked most of the “essentials” it still made it to the top cars of the world. This happened because the people accepted the original Beetle whole heartedly for what it was. The same is true for the New Beetle as well. The consumers in the New Beetle are not looking for extraordinary specs like they would do in a BMW or a Mercedes. Rather they are attracted towards the New Beetle because the consumers “love” the car. Specifications of the car
First of all, the appeal of the new Beetle comes from the fact that it is more “humanly” The research that has been conducted by Arnold Communication shows that people at that time had a love for round shapes that were closer in representing shapes such as the human eyes, faces and heads. In fact, the research said that the sharper shapes appeared to be less friendly and therefore were less preferred by the consumers. Furthermore, the New Beetle is appealing because it offers counter elements and more features than the original Beetle which means that apart from being the car that the consumers nce loved, the New Beetle has been engineered top of the line. The engine was water cooled rather than gas cooled as it originally was, it offered air conditioned and side airbags as well as a storage space. Furthermore four wheel disc brakes were installed so as to provide better security and better control to the drivers. Finally, an important aspect about the New Beetle is the colours that that cars is present in. The colours unveiled so far have been bright and vibrant those have attracted attention just like that.
Once the first sight of the consumer has shifted then, the charm of the VW brand as well as the heritage and the brand identity of the New Beetle would do the job! The bright colours moreover also have a strong appeal for individuality and confident people who want to appear strong, bright, bold and independent. Appeal of Individuality Car consumers in America were found to be more concerned about how people see the individual behind the wheel rather than how the individual views him or herself.
This means that the design of the car had to be such it that evoked a sense of excitement, envy and interest when people saw [I do not understand the problem with “saw”. Kindly recommend] somebody else driving the new Beetle. Originally VW Beetle was positioned and perceived to be a “people’s” car in the United States of America where people had competition likes “how many people could fit and travel to a picnic spot in a Beetle”. This perception with the New Beetle however has changed. Today the New Beetle is the “personal” car of the people.
This is in fact because of two things: the first thing is that the Americans were generally found to be struggling to achieve individuality and a small car such a Beetle with distinct shapes and retro colours would help the customers in achieving that. Secondly, the car itself has been positioned to have a very strong individuality. The brand identity of the car is so strong and runs so deep in American history that the person owning the brand is automatically inflicted by some of that brand identity and individuality.
For the American consumers the brand identity factors meant a great deal of individuality. 3. Why the positioning decision is termed “Mission Impossible? ” The New Beetle case has started off with showing that the marketing team is in major trouble regarding the positioning of the brand (Lal, 2005). As far as brand positioning is concerned Keller (2008) says that “Brand positioning is the process through which the marketer or the brand manager tries to create an identity or a brand image in the minds of the target consumer market. This essentially includes the management of the 4Ps of marketing that is, the management of the product, the price, promotions and finally the placement of the product (Sengupta, 2005). Anandan (2009, p. 147) says that, “Brand positioning is defined as the act of designing the company’s offer and image so that it occupies a distinct and valued place in the target customers’ mind” So basically, the New Beetle’s 4 Ps have to be manipulated in such a way that they create a distinct image of the brand in the minds of the consumers. The product design of the New Beetle has been under consideration for four years.
With the updated and carefully designed car, the product element has been unveiled to the customers. This means that since the decision has been taken on the product issue and since it has been implemented by the organization, it is not an “impossible” [since you will highlight it again, the inverted commas are to emphasize on impossible. As you can see, it can been emphasized on in the question by your teacher as well and in the case study, it has been written in inverted commas continuously] challenge anymore. Moving on, the placement of the cars was and still will be done through dealership.
In the 1980s according to Lal (2005), there were 600 VW deals in the United States with over 60 exclusive VW dealers. The issue of placement was solved by the organization when VW took all its dealers to Germany. This was done for them to visit the headquarters and thus to allow them to connect with the company and the brand. Most of the dealers were excited about the new Beetle because they had already started receiving advanced orders from the consumers. The conclusion in regards to this is that the issue of placement is not an impossible challenge any more.
The pricing of the car however is a major challenge. First of all, VW has always been an affordable car for the consumers which meant that raising the price could turn the masses that originally bought the cars away from it (because if they had to spend more, why wouldn’t they simply buy a bigger car instead of a smaller Beetle). Secondly, it would also hurt the brand equity for the car that it is for the “people”. On the other hand, lower prices would mean lower margins for both VW and the dealers which would hurt the sales and also the profitability of the organization.
The probability is that Beetle would be priced between 17, 000 to 18, 000 dollars. The issue of “impossibility” rose because on this price the organization was uncertain whether the targeted consumers would buy the product or not and if not, then “who” would buy the car and what impact it would have on the brand equity and identity of VW and Beetle. Apart from the pricing decision, the marketing strategy’s last component was that of promotions. As the case study tells, the 1960s and the 1970s witnessed one of the best advertisements in the history of marketing and advertisements by VW.
In fact, VW also earned a number of awards for its advertisements. However those were the days when VW had over half a million of sales in America. Today the scene was much different as the sales were recovering from a recession and the funds available for marketing, advertising and promotions were scanty. Trehan and Trehan (2007) say that advertising is a means to let the consumers know what product the organization is offering, what it is all about and why the consumers should buy the product.
The issue then is that in the absence of advertising, the sales would be lesser because the target segment would not be made aware of the product appropriately. An important thing to note here is that the relationship between sales and advertisement is an endogenous one. This means that if the sales are low, the company would have lesser funds for aggressive promotions and further because the promotions have been low, the sales will be lower (Park et al, 1988). Thus the company will be stuck in a vicious cycle.
VW definitely does not want to be a part of this vicious circle and therefore Vanzura, the marketing director, faces the challenge that New Beetle needs to be advertised as effectively as possible and to the right audience as much as possible so that she and VW as a company can take the most value out of the scanty funds that they have. 4. What are the advantages and disadvantages of the different positioning options? In terms of the various options that the organization has about positioning the New Beetle, the first issue is on the target segment of the organization.
Vanzura’s concern is whether VW should target the baby boomers, that is, the original Beetle consumers or whether they should target the younger Gen-X generation. In this, the advantage of targeting the baby boomers is that they have experienced the Beetle and have developed affection and a relationship with it. Baby boomers according to Lal (2005) have lived in that era when the Beetle was the “first love” the “first car” and a permanent “family member”, which also had a good resale value and thus was a good investment (Wilson, 2005).
Targeting these consumers would also mean that because of the affiliation that they have with the car, they would be willing and able to pay more. The ability of the baby boomers is also from the fact that they have grown in their life and have grown in their incomes which means that their disposable income have increased and thus can afford the car more easily. On the other hand, the disadvantage of targeting the baby boomers is that the consumers are more mature and therefore less in line with the “bright and vibrant” image of the New Beetle.
The research that was conducted yielded that the baby boomers, which have now become more mature and rich prefer big cars based on the fact that they have families and a smaller car such as Beetle would not be able to fulfil their needs. Secondly, there will only be a very few consumers who would be rich enough to buy a big family car and a personal beetle to express their love for the car. The second option is to position the product for the Gen – X consumers that is, the younger consumers who currently are in the phase of starting their lives.
The case states that it will be very difficult for the marketing team of VW to position the New Beetle on the original values in a different setting to a different set of customers. This is because largely the new consumers would have different values of what a perfect car would be and thus it will be difficult for them to decide whether they should spend the money on buying a Beetle or not (This would be even more of a problem in case the price of the car is set at a higher bar than the original Beetle).
However the Gen X consumers have grown up with the idea that Beetle is “love” and is one of the best cars a person can own which means that positioning the New Beetle for Gen X would create a sense of curiosity and myth in the new consumers where they would want to test the product and see what “the hype in the past was all about”. Secondly, the image of the new Beetle that the company wants to keep is more in line with the more bold and confident Gen X consumers. A potential disadvantage of targeting Gen X is that they might not have enough money to afford the new priced Beetle.
Moving on, as far as the positioning of the New Beetle is concerned, an important option is whether to position the Beetle as a NEW car or whether to keep focusing on the nostalgia that the consumers had. In the first case, the company would have an opportunity to gather more customers, even those who previously did not use or like Beetle that much. Secondly, positioning it as a totally new car would give VW an opportunity to correct the wrongs that were originally made. These include the issue of car cooling and air conditioning that the original Beetle lacked.
The disadvantage of this obviously is that the old consumers might be put off by the totally new image of the car and the company may also lose the opportunity of exploiting the existing equity of Beetle that they had previously created. On the other hand, if the company keeps the same image of the Beetle as the original, a potential problem is that the old faults may follow and the new customers may not want to pay for the same image.
Secondly keeping the same image might make it difficult for the Gen X consumers to accept the car on the basis that it was for their “parents” and is not as suited to their more “hip” life. . How would the pricing and media selection choices be affected by the positioning of the car? The positioning of the car as explained above as well has a significant impact on the pricing and media selection of the car. The pricing and the media selection themselves play a major role in communicating the positioning of the brand and thus have to be selected according to the positioning. As Novak and Lyman (1998) put it, brand positioning needs to tie the connection between different marketing tools to create an overall image.
Firstly, the price of the car would significantly depend on the kind of consumers that the company is targeting. For example, if the car is positioned for the baby boomers generations, then a higher price would not hurt as much as it would hurt in the case of the product being positioned for the Gen X consumers. The reason for this as explained in the analysis above is that the baby boomers now have settled in their lives. They all have jobs and probably have families as well and thus they have the ability to afford a slightly more expensive small car.
On the other hand, if the positioning has been decided upon Gen X, then the higher price is likely to be a problem. In terms of the issue of segmentation in positioning of the car, another determinant is that of media. The Gen X consumers uses very different media as compared to the baby boomers. The baby boomers were more into radio, television and print media whereas the Gen X consumers are more into internet and television and much less into print and radio media.
This means that if the Gen X consumers are targeted, print and radio advertisements would be less effective rather than elevision ad campaigns. It would then be vital to use the already scanty funds in a way that the message best reaches the target audiences. Moving on, if targeting is done on the bases of old Beetle’s positioning, then the pricing has to be consistent with the “affordable” image of Beetle and the media needs to be more focused on television commercials and print media whereas in the case that the New Beetle is positioned with a new brand identity and a new brand image, it would be important to create new avenues and the higher pricing (premium) might work.
In any case, pricing and promotions are considered to be extremely important consequents of the positioning strategy of the organization and VW really has to make sure that the positioning that it takes is consistent with its media strategies as well as the pricing strategies. The reason for this is that through the pricing and the media, the positioning itself will be created (Keller, 2008). Through the higher or lower pricing, the consumers will be segmented or made exclusive and similarly through the media strategies, the message would or would not reach the desired customers and create the desired perceptions.
Conclusion Conclusively, through the case by Lal (2005) it has been noted that launching the New Beetle was a major challenge for the marketing department of VW America. As seen, the reasons for this were that the marketers did not want to hurt the existing brand equity and the attachment that the consumers had with the Beetle and they also wanted to save the company from a declining state and re-steer it towards growth and high sales.
As far as the equity of the old beetle is concerned, the analysis shows that people in the past (baby boomers) have taken Beetle to be more than just a “car”. People have been emotionally attached to the Beetle for more than one reason. Fortunately, the New Beetle has received similar reception in terms of the hedonic appeal of the brand. The marketing director Vanzura then, wants to make the best of this hype and does not want to let the chance that VW has today go.
For this the important factors to decide upon are the pricing of the car and the promotions in the light of a major resource constraints which basically limits extensive advertising and promotions by VW. This means that Vanzura has to make sure that the New Beetle is as effective in its message as possible because it can repeat the message through different channels and more frequently.