The Volkswagen brand is based in Germany and is one of most the largest in Europe and attracts a lot of reviews and scrutiny. It is divided into two departments namely: the Automotive and financial service. The “Volkswagen” means the people’s car and was founded by the former ruler of Germany Adolf Hitler with his companion Ferdinand Porsche in 1937 in an attempt to make a cost-efficient car for German nationals. The firm initial strategy was to manufacture the Volkswagen Beetle but it later introduced other brands namely Phaeton and Passat.
In 1938 the company was changed from Gezuvo to Volkswagenwerk resulting in to fall in its share price. In June 1945 immediately after world war II in which British allies won and took over the management of the factory which had been hard-hit by explosives. A British major Ivan Hirst attempted take up the Automobile design and export it to British car manufacturers but no one was interested since it did not meet the minimal technical requirements of an Automobile. The brand was also not appealing to the average buyer and therefore would not be commercially viable to produce it.
Under the management of Major Ivan Hirst the Volkswagen Beetle went into massive production followed shortly by the Volkswagen bus which up to date is still nicknamed the “VW Bully” due to its multifunctional ability.In 1956, the current main plant was set up in Hanover and serves 70% of its production. In 1960, the federal government sold its stake in the company through the stock market which culminated with another rebranding. The company was now known as Volkswagenwerk AG which is a short form of Volkswagenwerk Aktiengesellschaft.The Volkswagen brand was beginning to have a global image and in 1965 it acquired a subsidiary known as Auto Union GmbH which produced Audi models such as the Audi F103 series which appealed most to the rich and affluent.
In 1973 a modern generation of Volkswagen known as Passat with the following specifications went into production. It was a front-wheel drive with a four-cylinder engine which was water-cooled. One year later the first Golf was built at the Wolfsburg plant and 10 years afterward the second generation was launched which was largely automated. In 1982, the company made its first attempt to expand beyond the German borders by acquiring a majority stake in the Spanish car manufacture SEAT, S.A of 51% which was an attempt to reflect its global diversification. From 1985-1995, the company rebranded to Volkswagen Aktiengesellschaft (Volkswagen AG) and acquired another stake in the Czech car manufacturer known as “Skoda automobilová as” and later wholly owned the SEAT subsidiary in Spain. In 1998 & 1999, the Automaker added three prestigious brands to its portfolio namely; Bentley, Lamborgini and Bugatti and also unveiled the Lupo 3L TDI whose fuel consumption were just 3 liters per 100 kilometers.
From 2002 to date the company has restructured into two groups namely: the Audi Brand Group which focuses on sporty brands such as Lamborgini, Audi while the Volkswagen Brand Group is involved with more classic brands such as Bugatti, Bentley and Volkswagen. The Volkswagen history is filled with disagreements and the firm almost closed doors a couple of years after it was launched.
Volkswagen has for long time leveraged its success on history and tradition along with cutting edge technology and innovation to provide the required customer satisfaction and establish itself as one of world’s most famous carmakers. The company is proud to own prestigious brands such as Beetle which is “stylish”,”powerful”,”sporty” and “elegant”. The word Volkswagen is a household name in the motor industry and is an important source of brand equity for the company. Its VW logo is one of the most recognizable logos all over the world and the fact that the car is German engineered adds value to the brand.
Germany is renowned for having the best engineers in the world. The company has recently adopted a new concept to have brand ambassadors who assist in marketing and increasing its presence among the car enthusiasts. It has drafted two famous cricket players namely Andrew Flintoff and Kevin Pieterson for the luxurious Touareg.To increase its brand presence the company has officially sponsored the England cricket team and its vehicles are the only ones in-car games such as gti racing, need for speed carbon and test drive unlimited. In terms of corporate social responsibility the brand has not been left behind and is actively engaged in environmentally friendly programs such as the blue motion technology which drastically reduces fuel consumption and safeguards the environment. Other initiatives include the waste to vehicle recycling program in which was greatly rewarded for reducing carbon emissions into the atmosphere.
To boost quality and production strategy Volkswagen should make good use of these recommendations in the following departments; brand positioning, pricing, distribution and communication strategies.
In an aggressive effort to improve its brand position the company has invested heavily in technology and innovation. Customer environmental sensitivity has increased greatly with environment protection and development being a competition factor. The need to manufacture cars powered by renewable sources of energy such as Honda hybrid cars has resulted in cut-throat competition among carmakers.Lately product differentiation is done through technology and clear product and brand imaging as opposed to the traditional methods of print and press advertisement.Lemos (2007) concluded that Volkswagen could extend its product leadership by improving on its interior design, driving capabilities and quality. Volkswagen could also enhance its customer relations and connect more with women by developing more exclusive products for them.
Innovation has been a pronounced corporate statement for the company with its core value being value and responsibility. The company’s first brand campaign began in 2009 and was later followed by the market launches of new Beetle, Touareg, Polo and Phaeton. The eye-catching brand campaign this year mainly focused on highlighting the exclusive products developed by the company along with their unique features. The present campaign puts more emphasis on the original brand which is Volkswagen. The campaign has been named “The target group (TG) campaign” and it essentially focused on the young, middle class and high-end market whose age bracket falls between 24 to 44 years old. Innovative technological features on Volkswagen models are (Aboutcars.com article,2010), “Bi-Xenon cornering headlamps (Beetle), DSG gearbox (Touareg), TSI technology (Passat), and iconic design (Beetle), electronic stabilization programmer (Jefta) and finally fuel-efficient engine (Polo)”.
Ideally the company has shifted its policy from hi-end features such as flashy headlights to more realistic features like fuel efficiency and this is a deliberate move by the management to appeal to all-inclusive members of the target group (TG).Volkswagen also invested heavily in an interactive and dynamic web portal as an attempt to intensify part of its campaign to reach out to young people and encourage them to share their personal novelty through the web portal.
Kothe and Automotive expert asserted that the website concept was another clear indication of what the company stands for “innovation for everyone”. The Bluetooth technological also enhanced interaction and sharing of information through downloads and internet surfing. Industry experts were quick to praise this initiative but also questioned the potential effects of the campaign with some critics insisting that the overall branding will somehow dilute the brand positioning of the company. Another motor industry critic Honda questioned the innovative platform for their diversification portfolio insisting that Volkswagen models are built in the same mold and would be difficult to differentiate them.
According to Honda(2009) ,” If you like a Touareg, you buy a VW, you like a Polo, you buy a VW.You really cannot like a VW and buy yourself a Lupo.After 70 years of trying to expand one car for everyone, brand VW is back to one. When you do this sort of work, you must stick to the principle you apply to think about cars. You mustn’t display all your cars”. The company also engages in merchandising which involves selling t-shirts and mugs embedded with the company logo to build strong brand equity.
Volkswagen as a group has nine brands spread over several countries in Europe.The brands include Volkswagen, Audi, Bugatti, Bentley, SEAT, Skoda, Scania and Volkswagen commercial vehicles. Each brand in the market operates as separate entity and the products range from low consumption cars to luxurious ones. Pick-ups, busses and heavy vehicles are specialized for the commercial segment. The objective of the firm was to develop high-quality and environmentally friendly cars which are competitive enough in the now flooded market. Some of the Volkswagen’s unique attributes include comfort, safety, style, speed and performance. The Volkswagen products can be categorized according to size and type of fuel consumption. In terms of size it can be analyzed as:
- Small car-this model targets the young people with young families who want to have fun and at the same time keep a tight budget. The small cars have a both a high performance and still maintain the thrill and adrenaline of driving. Brands under this category include Fox, Polo, Golf and Beetle.
- Mid-size/Sedans-This model usually targets executives and families who do not mind spending extra money for leisure. Brands in this group are Jetta, Eos, Scirocco and Passat.
- SUV-This is a model with a sporty design that is best suited for large families and adventurous people. Brands in this category are Tiguan, Touran, Sharan and Touareg.
- Commercial vehicles- Include Caddy, Transporter, Caravelle, Crafter, Caddy life, Multivan and California. They target people who engage in business and outdoor activities.
- Ultra luxury-these are high-end models that are meant for rich people with flashy lifestyles.
In terms of the type of fuel consumption the products are categorized are follows:
- Clean diesel-Volkswagen developed the TDI technology which performs well in the low sulfur diesel-powered engines in the European market. Its greenhouse emissions are 30% lower than a typical gasoline engine. The company was credited with developing a hybrid technology known as diesel-electric which has fuel consumption of 3.3 liters per 100 kilometers. The Jetta TDI which is a “clean diesel” model has tremendously promoted sales in the U.S market to the environmentally-conscious customers. This model has fuel-efficient technology with a 16-valve, four-cylinder engine which reduces carbon emissions by more than 90 percent.
- Neat ethanol vehicles-Volkswagen Brazil developed this type of vehicle whose production was later discontinued to give way room for more modern technology which utilized bio-ethanol as a fuel. The manufacture and sales of this Volkswagen brand went plummeting in the mid-80s due to a drastic decline in the international prices of its key input. This acute shortage was a result of an oil crisis and escalating sugar prices in the global market which lead to a decline in ethanol production.
- Flexible-fuel vehicles-Volkswagen Brazil launched another model known as 1.6 Total Flex which could run on any mix of gasoline and ethanol. This model restored confidence in ethanol-powered vehicles which had dropped after the neat ethanol disaster allowing a rapid adaption of the flex technology. Owing to the gradual acceptance of this technology by customers Volkswagen sold a total of 293,523 flex cars which was a 60 percent increase from the previous year.
- Electric cars-A 60 kilowatts model was unveiled in Frankfurt, Germany in 2009.It was 3.19 in length,3+1 seating configuration and it’s up for production in the year 2013.
- Hybrid electric vehicles-The Company intends to develop compact hybrid electric vehicles such as the Golf 1.4 which are environmentally friendly and emit zero greenhouse emissions. Volkswagen boss Martin Winterkorn asserts that, “future models will fundamentally also be constructed with hybrid concepts”.
Communication and distribution
Majority of the Volkswagen’s information exchange takes place through print and press media. Print media include such publications as magazines, journals and newspapers while press focuses mainly on TV, Radio and sales terminals promotions. All these channels of communication are crucial in increasing the image presence of a company and enabling it to build strong brand equity. Lately, a good company must have a state-of-the-art web portal that is interactive and dynamic to enable the consumer to acquire knowledge and information through the forum. Volkswagen websites are highly informative, interactive and a pleasure to watch. They also contain substantive content such as share prices, support information, and retailers’ and distributors’ services. The retailers and distributors around the world are in constant communication with the parent company. Dealers also have round-the-clock servicing and repair. The brand has also a web portal where consumers can choose and purchase any model they wish. Bodyshops are also available for the affluent who need exclusivity and serenity during shopping.
Volkswagen prices range from affordable to expensive.” A GOLF car ranges around 5,280 – 6,500 pounds, a beetle around 15,100-19,757 pounds, Passat cc around 21,130-31,050 pounds, Tiguan: 18456-23570 pounds, phaeton: 38,670-75,260 pounds, commercial vehicle range starts from 10,750 pounds onwards.” Graham (2008). Volkswagen could do more by increasing the variety of models with flexible price ranges.
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