ankit punani 11bsphh010131docshare01.docshare.tips/files/12490/124909706.pdf · 2016-05-28 ·...
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Ankit Punani
11BSPHH010131
MAGNUMOPUS
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2 | P a g e
INDEX
Serial no
Content
Page no
1 Introduction / Origin & Genesis of the brand
with associated brand stories and timeline
2-16
2
Structure & Corporate Management of brand
with principal executives and brand managers
16-22
3 Brand portfolio with a detailed analysis with
STP
23-35
4 Advertising Agencies associated with the brand
and covering all strategic brand campaigns
35-42
5 Market environment including sectoral &
industry analysis
43-51
6 Application of BCG Matrix, Porter’s five forces,
Mckinsey 7 s on the brand
52-69
7 Costing & Pricing analysis of brand portfolio
70-72
8 Consumer Behaviour elements related to the
brand and history of brand ambassadors and their
description.
72-74
9 Brand repositioning campaigns (if any) and the
reasons for it .
74-81
10 Competitor analysis including market shares and
brand rankings as per interbrand /super brand
etc.
82-94
11
Future and Recommendation
95-107
12
Bibliography
108
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3 | P a g e
Introduction / Origin & Genesis of the brand
A Brand is the "name, term, design, symbol, or any other feature that identifies one
seller's good or service as distinct from those of other sellers." Initially, Branding was
adopted to differentiate one person's cattle from another's by means of a distinctive
symbol burned into the animal's skin with a hot iron stamp, and was subsequently used
in business, marketing and advertising
Branding started in Sweden in the middle age (476-1492) when the ruling economy
was the agrarian and commodities were extracted from the natural world: animal,
mineral, vegetables, etc.
A brand was the action of burning a symbol into the flesh of a Norse in order to
signify ownership of the animal. Entomology tells us that the word ―brand‖ is a
degenerate of the old Norse word ―brandr‖.
The Vikings may have spread the word ―brandr‖ in England, where it was eventually
incorporated into daily language. Similarly this action was adopted in the late twelfth
and early thirteenth centuries, through the practice of abjuration. The practice of
abjuration meant rejecting or exiling a criminal from England forever. To
communicate the status of the exiled person to the world-at-large and in order to
identify them as not trustworthy, abjurers‘ thumbs were branded with an ―A.‖
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4 | P a g e
In trade law, the term trademark is used instead of the word ―brand‖. Patents and
Trademarks were legally recognized for the first time with the establishment of the
Venetian Patent law in 1474. The meaning of a brand was later registered in the
dictionary in 1552 as ―identifying mark made by a hot iron‖. It was in between the mid
16th century and the beginning of the 19th that the word ―brand‖ began to be related
to trade, emotions and trust. A trademark was a symbol that would differentiate the
goods between manufacturers. The oldest brands which exist today were introduced
into the market in the 18th century and are from the alcoholic drinks sector. This is
due to the fact that these products are non-perishable (because they are alcohol
based) and thus needed a distinguishing name/symbol so that they could be
marketed over a wider area and during a longer time period. Some examples of the
oldest brands include ―Twining 1706‖, ―Schweppes 1798‖ and ―Ballantine‘s 1809‖.
Even though the first brands had been launched, it was not legally possible to patent
something in the U.S. until after the establishment of the Constitution in 1790 and in
France with the establishment of the patent law one year later in 1791. In the
preindustrial era (1760-1830), agriculture still formed the foremost source of income
and employment and most ―consumers‖ produced their own food products. By the
end of this era, in 1827, the word brand was broadened and registered in a
dictionary as ―a particular make of goods‖.
A consumer who perceives a brand as superior is willing to spend more money on it.
But how is a brand defined? Kotler (2007, p.636) defines a brand as a ―name, term,
sign, symbol or design or combination of them which is intended to identify the goods
and services of one seller or a group of sellers and to differentiate them from those
competitors‖. This evidence is supported by Doyle and Stern (2006, p.164) who add
that ―a brand can be defined as a specific name, symbol or design ... [and] is used to
distinguish a particular seller‘s product‖. This assumption reveals that the function of
a brand consists of differentiation and identification.
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5 | P a g e
Volkswagen: Commodity, product, company, brand?
Hollensen differentiates between a brand and a commodity by stating that ―Branding
is associated with added costs in the form of marketing, labelling, packaging and
promotion. Commodities are ‗unbranded‘ or undifferentiated products.‖ Doyle and
Stern distinguish the difference between a product and a brand, by saying, that a
product ―is anything that meets the functional [tangible] needs of customers. In this
context, one can say that a commodity represents basic, unbranded products such
as Steel or other raw materials. However, products represent the next level, in this
case it is automobiles. As a result, the brand level, which has intangible benefits, is
represented by a particular brand in the automobile industry: Volkswagen, the
―people‘s car‖.
However, as Randall describes, Volkswagen is a company brand which means, that
the ―name of the company identifies the brand.
The Group
The Volkswagen Group consists of two divisions: the Automotive Division and the
Financial Services Division. The Automotive Division, in turn, comprises two
business areas: ―Passenger Cars and Light Commercial Vehicles‖ and ―Trucks and
Buses, Power Engineering‖. They combine with this structure the Passenger Cars
and Light Commercial Vehicles segment and the reconciliation to the Passenger
Cars and Light Commercial Vehicles Business Area. The activities of the Automotive
Division are centred on the development of vehicles and engines, the production and
sale of passenger cars, commercial vehicles, trucks and buses, and business
comprising genuine parts, large-bore diesel engines, turbo machinery, special gear
units, propulsion components and testing systems.
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6 | P a g e
The Financial Services Division, which corresponds to the Financial Services
segment, combines dealer and customer financing, leasing, banking and insurance
activities, and fleet management.
The Volkswagen Group with its headquarters in Wolfsburg is one of the world‘s
leading automobile manufacturers and the largest carmaker in Europe. In 2011, the
Group increased the number of vehicles delivered to customers to 8.265 million
(2010: 7.203 million), corresponding to a 12.3 percent share of the world passenger
car market.
In Western Europe over one in five new cars (23.0 percent) comes from the
Volkswagen Group. Group sales revenue in 2011 totaled €159 billion (2010: €126.9
billion). Profit after tax in the 2011 financial year amounted to €15.8 billion (2010:
€7.2 billion).
The Group is made up of twelve brands from seven European countries:
Volkswagen, Audi, SEAT, ŠKODA, Bentley, Bugatti, Lamborghini, Porsche, Ducati,
Volkswagen Commercial Vehicles, Scania and MAN.
Each brand has its own character and operates as an independent entity on the
market. The product spectrum extends from low-consumption small cars to luxury
class vehicles. In the commercial vehicle sector, the product offering ranges from
pick-ups to buses and heavy trucks.
The Volkswagen Group is also active in other fields of business, manufacturing
large-bore diesel engines for marine and stationary applications (turnkey power
plants), turbochargers, turbo machinery (steam and gas turbines), compressors and
chemical reactors, and also producing vehicle transmissions, special gear units for
wind turbines, slide bearings and couplings as well as testing systems for the
mobility sector.
The Group operates 100 production plants in 18 European countries and a
further nine countries in the Americas, Asia and Africa. Each working day, 501,956*
employees worldwide produce some 34,500* vehicles, are involved in vehicle-related
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7 | P a g e
services or work in the other fields of business. The Volkswagen Group sells its
vehicles in 153* countries.
It is the goal of the Group to offer attractive, safe and environmentally sound vehicles
which are competitive on an increasingly tough market and which set world
standards in their respective classes.
Introduction about Volkswagen India With its headquarters in Pune, Maharashtra (India), the Volkswagen Group is
represented by three brands in India: Volkswagen, Audi and Skoda. The Volkswagen
Group is completing 10 years of its India journey which began with the entry of the
Skoda brand in 2001, Audi brand and Volkswagen brand in 2007. Each brand has its
own character and operates as an independent entity in the market.
Group India is a part of Volkswagen AG, which is globally represented by 9 brands-
Audi, Bentley, Bugatti, Lamborghini, Scania, Seat, Skoda, Volkswagen Commercial
Vehicles (Volkswagen Nutzfahrzeuge) and Volkswagen Passenger Cars. The
product range extends from low consumption small cars to luxury class vehicles and
trucks. The
Group operates 60 production plants around the world. In total more than 370,000
employees produce more than 26,600 vehicles or are involved in vehicle-related
services each working day. The highest volume brand of the Group is Volkswagen.
Europe‘s most successful car brand has made successful inroads into the Indian
market. Volkswagen presents itself in a variety of segments as a premium
manufacturer of high-volume models. As a first step, the Volkswagen brand
launched the globally successful Passat in 2007. To expand its portfolio and cater to
the mid segment, Volkswagen launched one of the brand‘s bestselling models, the
Jetta, in India in July 2008. Both the sedans are being assembled locally. The iconic
New Beetle and the high-end SUV Touareg were introduced in December 2009. Also
available is the high-end automobile Phaeton.
From December 12, 2009 the new Pune plant has started rolling-out the hatchback version of the Volkswagen Polo.
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8 | P a g e
The made-in-India Polo was presented to the general public for the very first time at
the Auto Expo 2010. The launch of this premium hatchback in March, brought
access to one of the Indian passenger car segments with the highest-volume unit
sales.
Skoda entered the Indian market in 2001. Its plant in Aurangabad, which assembles
a total of eight models including the Audi A6 and Audi A4 as well as the Volkswagen
Passat and Volkswagen Jetta, has been
instrumental in this achievement. For Indian customers, the name of Skoda stands
for high-quality, robust yet affordable cars in the compact, lower mid-size and
midsize ranges. In terms of models, the Skoda product offering in India ranges from
the Fabia through the Octavia, the Laura to the Superb. Skoda lifted the veil off its
international bestseller SUV Yeti for the first time in India at the Auto Expo 2010.
Audi offers high-end models of interest to Indian customers. With the A8 and the Q7,
the A6, the A4 and not forgetting the R8, the TT and the recently introduced Q5, Audi
offers top-quality, technically brilliant cars with an exclusive flair in the relevant luxury
segments. Audi‘s positioning as a leading manufacturer of such high-class vehicles,
both assembled in India and imported through Audi India, will be systematically
pursued in future. At Auto Expo 2010, Audi also unveiled the Audi Sport back
Concept – a five-door model offering a glimpse into Audi's future design vocabulary.
Recognizing the importance of an extensive dealer network towards scripting a long-
term success story, the brands of the Volkswagen Group are setting up dealerships
spanning the entire country with Volkswagen, Skoda and Audi having in total around
120 dealerships across the country today. They are not only laying the foundation for
a substantial increase in sales but also doing the groundwork for offering a first-class
all-round service, taking customer satisfaction to the highest level. Keeping this in
mind they launched their first Group.Logistics Service facility recently that would help
make their dealer network become more efficient and smoothen the entire process of
service. In the period between January 2009 and December 2009, the three brands
of the Volkswagen Group have together sold around 19,000 vehicles in India, an
increase of 1.4% over 2008 in a year marked by recession in the auto industry. A
crucial element of the Volkswagen‘s strategy is to establish a long-term presence in
India is the Group‘s production facility near Pune in the Chakan Industrial Park.
The investment with a total sum of around INR 3,800 crore (580 million Euros) is the
biggest investment of a German company realized in India so far. The plant, one of
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9 | P a g e
the most modern in the Volkswagen Group has a high level of vertical integration –
not least attributable to the high share of local suppliers. The recruitment is of some
2,500 employees at the end of 2010, primarily from the region itself. With the
investment, the vertical integration of suppliers and the employment of people
Volkswagen will thus demonstrate its commitment to the new site. Simultaneously
Volkswagen contributes to a positive development of the economy of the region and
of Maharashtra at the same time. The new plant was inaugurated by The
Honourable Governor of
Maharashtra, His Excellency Shri. S. C. Jamir, and Prof. Dr. Jochem
Heizmann, Member of the Board of Management of Volkswagen
Aktiengesellschaft with responsibility for ‗Group Production‘ end of March 2009 and
has begun building the Skoda Fabia compact car in May 2009. The launch of Polo,
the hatchback car, is a visible testimony to Volkswagen‘s vision of ―Mobility - Made in
India‖.
The following figure gives a clear overview about endorsing brand strategy:
Figure 1 – Endorsing Brand strategy
As a source brand, Volkswagen acts as the ―parent brand‖ of the other brands. Audi,
Seat, Lamborghini and the others are called by their own name. This is necessary, in
order to attract different target groups and to maintain its own brand image.
Figure 2 – Source Brand Strategy
GOLF LUPO JETTA POLO
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10 | P a g e
Brand Inventory
HISTORY: Volkswagen, which means the people's car, was established by Adolf Hitler
and Ferdinand Porsche in an effort to make a cost-effective automobile for the
people of Germany. Porsche went on to later success with a line of luxury
automobiles. The original designs for the Volkswagen Beetle were made in
1931; however, it wasn't until 1938 that the car was actually introduced to the
public. The factory was based in Wolfsburg, Germany, and all cars were
branded with the VW logo. The history of the Volkswagen brand is filled with
conflict, and the company nearly closed its doors shortly after its launch.
When in 1937 the company known as "Gesellschaft zur Vorbereitung des Deutschen
Volkswagens mbH" was founded, no one could have guessed that it would one day
be Europe's largest carmaker. The history of the company - with all its trials and
tribulations- is first and foremost a story of impressive success.
On May 28th, 1937 the "Gesellschaft zur Vorbereitung des Deutschen Volkswagens
mbH" company is founded, and on September 16th, 1938 it is renamed
"Volkswagenwerk GmbH". In early 1938, in what is today Wolfsburg, work begins on
construction of the Volkswagenwerk plant which is to house production of the new
vehicle designed by Ferdinand Porsche.
After the end of the Second World War, in mid June 1945, responsibility for
Volkswagenwerk is placed in the hands of the British Military Government. Under the
management of Major Ivan Hirst, mass production of the Volkswagen Beetle is
started. On March 8th, 1950 the Type 2 goes into production, expanding the
company's product range. The Volkswagen Bus, still today known to many as the
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11 | P a g e
"VW Bully", soon creates rising demand thanks to its multifunctional capabilities. In
1956 a separate manufacturing base for the Transporter is established in Hanover,
at the same time setting down the roots of today's Volkswagen Commercial Vehicles
brand. In 1973 the Passat is the first model of the new generation of Volkswagen
vehicles to go into production - with front-wheel drive, a water-cooled four-cylinder
engine and a range of engines up to 110 bhp. The Passat is built in line with the
modular strategy, by which standardised components usable in a range of different
models provide significant rationalisation.
In January 1974 the first Golf is built at the Wolfsburg plant. in June 1983 production
of the second-generation Golf begins. The car is designed for a largely automated
assembly process, and in the specially erected final assembly hall, designated Hall
54, robots are deployed for the first time in vehicle manufacture.
With the production launch of the Lupo 3L TDI, the first production car to offer fuel
consumption of just three litres per 100 kilometres, in July 1999, Volkswagen once
again makes automotive history. In August 2002, at Volkswagen Slovakia, mass
production of the Touareg, a luxury-class off-road vehicle, is started, marking the
Volkswagen brand's move into an entirely new market segment.
In December 2002 the "Auto 5000 GmbH" company, operating a plant at the Group's
site in Wolfsburg, starts production of the Touran compact van. A special collective
pay model has been developed, aimed at implementing lean production and
involving flat hierarchies, team working, flexible working hours and the deployment of
more process expertise by the workforce.
In 2003 production of the fifth-generation Golf is started, embodying a new
dynamism in its design and engineering.
It is the goal of the Group to offer attractive, safe and environmentally sound vehicles
which are competitive on an increasingly tough market and which set world
standards in their respective classes. The Group consists of eight brands:
Volkswagen, Audi, Bentley, Bugatti, Lamborghini, SEAT, Skoda and Volkswagen
Commercial Vehicles.
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12 | P a g e
PRODUCT RELATED ATTRIBUTES: Stylish sleek design German engineering Performance Luxury Reliability Comfort Speed Safety
VOLKSWAGEN BRAND PORTFOLIO: Volkswagen includes a plethora of brands catering to different market segments.
Volkswagen has small car segment, middle size/sedan, Suv, Luxury sedan and
commercial vehicles.
The small car is targeted towards youth and small families, who need a fun filled
ride at the same time keeping it under budget. Volkswagen small cars are highly
performance oriented, keeping alive the thrill and adrenaline of driving a small car. It
has following variants under this segment.
Fox
Polo
Cross polo
Polo GTI
Golf
Golf estate
Golf GTI
Golf R32
Golf plus
Beetle
New beetle
New beetle cabriolet
Mid size/ sedan/ luxury: These sedans are targeted towards the executives and
families who do not mind spending extra buck for a top notch comfort and
performance.
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13 | P a g e
It has following variants.
Jetta
Eos Scirocco
Passat
Passat estate
Passat R36
Passat CC Suv/muv: Targeted towards adventure seekers and big families. Volkswagen suv‘s
boast of ―civilization and wilderness‖. These are suv‘s with the design of a genuine
sports car.
Tiguan
Touran
Sharan
Touareg
Touareg
Touareg R50 Commercial vehicles: The commercial vehicles are targeted towards people who
love expedition, outdoor enthusiasts, artists and professional carriers.
Caddy
Transporter
Caravelle
Crafter
Caddy life
Multivan
California
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14 | P a g e
Ultra luxury: For the rich and affluent with swankier lifestyles. Phaeton
BRAND EXPLORATORY Customer knowledge: Volkswagen has successfully leveraged its history and tradition of excellence along
with innovation to become one of the most famous and recognized carmaker in the
world. Beetle was a phenomenon. Till today customer talk about beetle. Typical
consumer brand associations for Volkswagen might be ―heritage‖, ―stylish‖,
―powerful‖, ―elegant‖, ―performance‖, ―sporty‖.
Sources of brand equity: The Volkswagen name one of the oldest in the history of
car makers, is no doubt is an important source of brand equity. But being a German
car is a key source of brand equity. The symbol with two v crossing is a known
symbol all over the world. The fact that it‘s a German engineered car adds a ton to
its brand equity, Germans are the best engineers in the whole world.
Volkswagen does not make use of the celebrity endorsers much but recently they
hired―Andrew flintoff and kevin pieterson as a brand ambassadors for luxurious 4x4,
the touareg.
Sponsorships: Official car supplier for the England cricket team.
Games: Volkswagen cars are the exclusive vehicles in pc and psp games like gti
racing, need for speed carbon and test drive unlimited.
Philanthrophy: Volkswagen has environmental friendly programs in which
‗Volkswagen de mexico awards research funds and prizes for species protection.
They also have blue motion technology which reduces fuel consumption and thereby
reducing the emissions. Apart from these Volkswagen has a variety of initiatives for
the safeguard of our environment, from waste disposal to vehicle recycling. One can
get a fair amounf of detail about these environment friendly issues by visiting their
official website.
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15 | P a g e
Volkswagen Mental Map
Principal Competitors: Bayerische Motoren Werke AG; DaimlerChrysler AG; Fiat
S.p.A.; Ford Motor Company; Fuji Heavy Industries Ltd.; General Electric Company;
General Motors Corporation; Honda Motor Co., Ltd.; Hyundai Group; Isuzu Motors
Limited; Kia Motors Co., Ltd.; Mazda Motor Corporation; Mitsubishi Group; Outboard
Marine Corporation; PSA Peugeot Citroen S.A.; Saab Automobile AB; Suzuki Motor
Corporation; Toyota Motor Corporation; Volkswagen AG; AB Volvo; Yamaha
Corporation.
Structure Of The Group
Volkswagen AG is the parent company of the Volkswagen Group. It develops
vehicles and components for the Group‘s brands, but also produces and sells
vehicles, in particular Volkswagen brand passenger cars and light commercial
vehicles. In its function as parent company, Volkswagen AG holds direct and indirect
interests in AUDI AG, SEAT S.A., ŠKODA AUTO a.s., Scania AB, MAN SE,
Volkswagen Financial Services AG and numerous other companies in Germany and
abroad. More detailed disclosures are contained in the list of shareholdings in
accordance with sections 285 and 313 of the Handelsgesetzbuch ( HGB – German
Volkswagen
Stylish
Heritage
Powerful
Sporty
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16 | P a g e
Commercial Code), which can be accessed at www.volkswagenag.com/ir and is part
of the annual financial statements.
Volkswagen AG‘s Board of Management is the ultimate body responsible for
managing the Group. The Supervisory Board appoints, monitors and advises the
Board of Management; it is consulted directly on decisions that are of fundamental
significance for the Company.
ORGANIZATIONAL STRUCTURE OF THE GROUP
Volkswagen AG and the Volkswagen Group are managed by Volkswagen AG‘s
Board of Management in accordance with the Volkswagen AG Articles of Association
and the rules of procedure for Volkswagen AG‘s Board of Management issued by the
Supervisory Board. Within the framework laid down by law, the Group Board of
Management ensures that Group interests are taken into account in decisions
relating to the Group‘s brands and companies. This body consists of Board
members, the chairmen of the larger brands and selected top managers with Group
management functions.
Each brand in the Volkswagen Group is managed by a board of management. The
Group targets and requirements laid down by the Board of Management of
Volkswagen AG or the Group Board of Management must be complied with to the
extent permitted by law. Matters that are of importance to the Group as a whole are
submitted to the Group Board of Management in order – to the extent permitted by
law – to reach agreement between the parties involved. The rights and obligations of
the statutory supervisory bodies of the relevant brand companies remain unaffected.
The companies of the Volkswagen Group are managed separately by their
respective managements. In addition to the interests of their own companies, each
individual company management takes into account the interests of the Group and of
the individual brands in accordance with the framework laid down by law.
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17 | P a g e
The Board of Management of Volkswagen AG comprises nine members. Each
Board Member is responsible for one or more functions within the Volkswagen
Group. Prof. Dr. Martin Winterkorn is the Chairman.
The work of the Board of Management of Volkswagen AG is supported by the
boards of the brands and regions as well as by the other group business units and
holdings.
Chairman of the Board of Management of Volkswagen AG
Prof. Dr. Dr. h.c. mult. Martin Winterkorn Member of the Board of Management of Volkswagen AG, with responsibility for 'Group Research and Development', Chairman of the Supervisory Board of AUDI AG, Chairman of the Board of Management of Porsche Automobil Holding SE Members of the Board of Management of Volkswagen AG
Dr. rer. pol. h. c. Francisco Javier Garcia
Sanz
Functional Responsibility
'Procurement'
Prof. Dr. rer. pol. Dr.-Ing.
E. h. Jochem Heizmann
Functional Responsibility
'China'
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18 | P a g e
Christian Klingler
Functional Responsibility
'Sales and Marketing'
Member of the Board of Management of
the Volkswagen brand
Functional Responsibility
'Sales, Marketing and After Sales'
Dr.-Ing. E. h. Michael Macht
Functional Responsibility
'Group Production'
Prof. Dr. rer. pol. Horst Neumann
Functional Responsibility
'Human Resources and Organization'
Dr. h. c. Leif Östling Functional Responsibility 'Group Commercial Vehicles'
Hans Dieter Pötsch
Rupert Stadler
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19 | P a g e
Functional Responsibility 'Finance and Controlling', Chief Financial Officer of Porsche Automobil Holding
Chairman of the Board of Management of Audi
AG
The Supervisory Board headed by Chairman Dr. Ferdinand K. Piëch has 20
members.
The Supervisory Board of Volkswagen AG comprises 20 members and conforms to
the German Co-determination Act Chairman of the Supervisory Board
Hon.-Prof. Dr. techn. h. c. Dipl.-Ing. ETH Ferdinand K. Piëch
Chairman
April 16, 2002*
Members of the Supervisory Board
Berthold Huber
Deputy Chairman
First Chairman of IG Metall
May 25, 2010*
Dr. Hussain Ali Al-Abdulla
Vice Chairman of Qatar Holding LLC
April 22, 2010*
Khalifa Jassim Al-Kuwari
Chief Operating Officer of Qatar Investment Authority and Qatar Holding LLC
May 03, 2011*
Jörg Bode
Minister of Economic Affairs, Labor and Transport for the Federal State of Lower
Saxony
November 04, 2009*
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20 | P a g e
Jürgen Dorn
Chairman of the Group Works Councils of MAN SE
January 01, 2013*
Annika Falkengren
President and Group Chief Executive of Skandinaviska Enskilda Banken AB
May 03, 2011*
Dr. Hans-Peter Fischer
Chairman of the Board of Management of Volkswagen Management Association
(VMA)
January 01, 2013*
Uwe Fritsch
Chairman of the Works Council at the Volkswagen AG Braunschweig plant
April 19, 2012*
Babette Fröhlich
IG Metall,
Department head for coordination of Executive Board duties an planning
October 25, 2007*
David McAllister
Minister-President of the Federal State of Lower Saxony
July 01, 2010*
Hartmut Meine
Director of the Lower Saxony and Saxony-Anhalt Regional Office of IG Metall
December 30, 2008*
Peter Mosch
Chairman of the General Works Council of AUDI AG
January 18, 2006*
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21 | P a g e
Bernd Osterloh
Chairman of the General and Group Works Councils of Volkswagen AG
January 01, 2005*
Dr. jur. Hans Michel Piëch
Lawyer in private practice
August 07, 2009*
Ursula Piëch
April 19, 2012*
Dr. jur. Ferdinand Oliver Porsche
Member of the Board of Management of Familie Porsche AG
Beteiligungsgesellschaft
August 07, 2009*
Dr. rer. comm. Wolfgang Porsche
Chairman of the Supervisory Board of Porsche Automobil Holding SE
Chairman of the Supervisory Board of Dr. Ing. h. c. F. Porsche AG
April 24, 2008*
Stephan Wolf
Deputy Chairman of the General Works Council of Volkswagen AG
January 01, 2013*
Thomas Zwiebler
Chairman of the Works Council of Volkswagen Commercial Vehicles
May 15, 2010*
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22 | P a g e
Key Executives For Volkswagen India Pvt Ltd.
Name Board
Relationships Title Age
Gerassimo
Dorizas
No
Relationships
Managing Director and President --
Hans-
Jaochim
Rothenpieler
No
Relationships
Managing Director for Engineering - VW
Saschen
--
Maik
Stephan
No
Relationships
Managing Director of Volkswagen Group
Sales
--
K. K. Swamy No
Relationships
Managing Director and Vice President 57
Frank Tuch No
Relationships
Head of Group Quality Assurance -VW
Group
--
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23 | P a g e
Brand Portfolio
Brand positioning
De Chernatony (2006) describes the positioning of a brand as ―ensuring that
customers instantly associate a brand with a particular functional benefit…‖ (p.37). In
addition to this, Kapferer (2004) states that positioning a brand means emphasising
the competitive advantages and characteristics, which differentiates a brand from the
others, whilst at the same time making it appealing to consumers. This definition
suggests that brand positioning defines the strategic approaches in order to
differentiate a brand from its competitors. Elliott and Percy (2007, p.236) add, that
―positioning establishes the link in the consumer‘s mind between the brand and
category need, why you want the product‖.
De Chernatony defines three characteristics of a brand positioning strategy:
1) The strategy should be centred on the brands‘ attributes.
2) Positioning is about influencing the consumer‘s perceptions, not about
the development of a brand.
3) The positioning strategy should focus on the consumers‘ values and
expectations of a brand, not the attributes valued by the company itself.
However, these characteristics neglect the competition as an important factor in
positioning a brand. Major competitors and their brands‘ attributes and values need
to be identified in order to offer distinctive advantages.
In addition to this, Kapferer determines four questions in order to be able to position
a brand These questions are concerned with the brand promise and the consumer
benefit, the target groups, the occasion when the product will be consumed and the
definition of the major competitors.
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24 | P a g e
This approach represents the way of proceeding in order to positioning a brand as it
considers the consumers as well as the competitors.
Both of the aforementioned approaches by de Chernatony (2006) and Kapferer
(2004) do not consider all of the attributes of a product or brand. Nevertheless, it is of
outstanding importance to choose only one or two benefits of a product which can be
transferred through a positioning statement. Choosing too many messages can
confuse consumers, and as a result, prevents them from buying the product.
Elliott and Percy define a format of a positioning statement as follows:
“(Name) is the brand for (target audience) that satisfies (category need) by offering
(brand benefit)”.
As the authors assert, for the target audience the brand ―satisfies why they need it,
provides a motivating reason for considering it, communicates the optimum benefit
and is consistent with category motivating behaviour‖. This concludes that a
Positioning Statement consists of communicated benefits and the resulting
motivation for a customer to purchase the product.
Positioning statement of Volkswagen
According to Elliott‘s and Percy‘s (2007) approach, VW‘s positioning statement could
be defined as follows:
Volkswagen is the brand for most segments of society, across boundaries and
social barriers that satisfies the need for secure, reliable and high-quality
vehicle transportation, by offering attractive top of the range family cars as
well as luxury automobiles.
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25 | P a g e
This statement represents the characteristics of the brand Volkswagen. It is a multi-
brand which targets nearly every segment possible by offering cars in every price-
range and for every possible use . When Volkswagen is translated, it means
―people‘s car‖, which also supports the targeting of every segment and is congruent
with the company‘s mission. Furthermore, Volkswagen is known as a reliable and
high-quality vehicle manufacturer, and is also known for durability, reasonable prices
and good trade-in value .
Positioning statement in comparison with competition
In order to compare Volkswagen‘s positioning strategy with the competition, the main
competitor, Toyota will be analysed.
The positioning of Toyota is described as ―Moving Forward‖ (Toyota, 2010). This
statement embodies the spirit of the constant innovation of the company. It lends the
associations of quality and technological capability to the brand. As Doyle and Stern
(2006) state, Toyota is deeply committed to a customer orientation and focuses on
outstanding quality. The company‘s production system is keeping costs comparably
down. Toyota sells its products under Toyota, Lexus, Hino and Daihatsu brands
(Marketline, 2010b) and places special emphasis on the development of hybrid cars
(Toyota, 2010).
Based on this information, Toyota‘s positioning statement can be described as
follows:
Toyota is the brand for environmentally aware car drivers all over the world
that satisfies the need of reliable, secure and innovative automobiles by
offering high quality cars for comparatively low prices.
The German Volkswagen and Japanese Toyota are in a battle for world leadership in
this industry.
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26 | P a g e
Volkswagen places particular emphasis on the high price range which attracts
consumers from nearly every sector, and supports this by stating that the company‘s
cars are reliable, secure and of a high quality.
In comparison to this, Toyota emphasises the environmental factor by producing
hybrid cars and comparatively low prices. With regards to technological questions
about the future of the automobile, VW and Toyota disagree with each other.
Volkswagen invests in the diesel engine (blue motion technology), whereas Toyota
believes that hybrid technology is the future.
Nevertheless, according to Kapferer (2004), positioning does not clearly represent all
of the benefits and values of the brand, and it is particularly difficult to differentiate
between one positioning statement and the other, especially in this case, when the
same product is offered.
Volkswagen - Brand Analysis
This section emphasises and critically analyses theoretical concepts which can be
used to analyse consumer and stakeholder perceptions such as brand identity,
brand image, brand equity and brand personality. These concepts will be applied to
the brand Volkswagen. For the purpose of clarity: the primary research necessary for
this chapter was conducted in Germany, because the researcher is German and
therefore wanted to explore the perceptions of the German market in particular.
Thirty German people participated in the questionnaire. The results will be evaluated
in the following sections and presented in the brand pyramid.
Brand equity
The term brand equity can be defined as ―a set of brand assets and liabilities linked
to the brand, its name and symbol that add to or subtract from the value provided by
a product or service to firm or to the firm‘s customers‖ .These liabilities can be
divided into five categories:
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27 | P a g e
1. Brand loyalty
2. Brand awareness
3. Perceived quality
4. Brand associations
5. Other proprietary brand assets
In this context, Hollensen (2008) adds, that equity can be seen as the premium a
customer would pay for the branded product in comparison to an identical,
unbranded product. This suggests that brand equity is an additional source of
revenue for a company. In the case of Volkswagen, a consumer buys a car with a
well-known, reputable name on it. The question is: Would you buy exactly the same
car without the branding ―VW‖ on it?
Imagine, you can choose between these two cars (See Questionnaire –
appendix 4)
A typical Volkswagen for £ 20,000: 21/30 (70%)
exactly the same car from an unknown manufacturer for £ 18,000: 9/30 (30%)
This result suggests that people rather buy a car with a name on it, in this case
Volkswagen, than buying a car without a name on it, even if it is exactly the same
car. The price difference of £2,000 can be seen as an added source of revenue,
because this is what people pay for the brand. Volkswagen is one of the oldest car
manufacturers in the world, and because it is a German car, it is a key source of
brand equity. People pay for the brand in order to be assured, that they bought the
right car. Two of the divided characteristics of brand equity by Aakers can be
transferred to the Volkswagen brand:
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28 | P a g e
Did you ever buy a Volkswagen? If yes, would you buy another one? (See
Questionnaire)
Yes: 26/30 (86,6%)
No: 2/30 (6,7%)
Not sure: 2/30 (6,7%)
Brand loyalty People buy Volkswagen cars and stay loyal to the brand (86,6%).
Do you know Volkswagen? (See Questionnaire)
Yes: 30/30 (100%)
No: 0/30 (0%)
Brand awareness People are aware of the brand (100%).
Brand Identity
De Chernatony defines Brand identity as ―the distinctive or central idea of a brand
and how the brand communicates this idea to its stakeholders.‖ In addition to this,
Kapferer states, that a brand identity ―is the common element sending a single
message amid the wide variety of its products, actions and communications.‖ This is
congruent with the aforementioned basic characteristics of a brand: differentiation
and identification. These definitions suggest that the brand identity is developed by
the company and not by the consumers. According to de Chernatony (2006), the
following diagram will help managers to reinforce a meaning behind a brand. This
suggests, that there are many bodies inside a company contributing to the
establishment of a brand identity, and that all these components need to work
closely together, in order to achieve the desired identification.
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29 | P a g e
Figure 3 – The components of
brand identity
In the case of Volkswagen, it is hard to conduct primary research on this topic,
because brand identity develops from the internal decisions of a company. However,
the researcher is of the opinion, that the aforementioned positioning statement is
deeply related to the brand identity. In order to see if the customer‘s perceptions
agree with the brand identity, a comparison between the brand identity and the brand
image will be evaluated in the next section.
Brand image
Kapferer (2004) and de Chernatony (2006) both describe a
brand image as, a set of attributes and messages of a brand
perceived by an individual. These different messages can
consist of the brand name, symbols, advertisements or even
personal experiences of the brand. This suggests that a
brand image is consumer-orientated and brand identity is
company-orientated. However, as de Chernatony states: ―It
is unlikely for two people to have the same image of a
brand, but their images may have common features‖. Volkswagen identifies itself
globally with the symbol ―The Car‖. This brand identity represents the attributes and
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30 | P a g e
values the brand stands for, which were mentioned earlier in the positioning
statement.
But how do the consumers perceive this identity? The first question of the
questionnaire were:
What comes into your mind when you think of Volkswagen? (See
Questionnaire)
reliable: 28/30 participants (93,3%)
high quality: 29/30 participants (96,6%)
comfort: 22/30 participants (73,3%)
expensive: 18/30 participants (60%)
good service: 23/30 participants (76,6%)
others: 9/30 participants (30%)
These results reveal that people associate Volkswagen with reliability and high
quality, which is congruent with the aforementioned positioning statement, and the
identity of VW. The price image is balanced, as Volkswagen is not considered to be
expensive or cheap.
Overall, one can say, that the German people trust Volkswagen and that the true
identity of the company is appreciated by the German consumers. However, this is
just a small scale analysis, which does not necessarily represent all German people
and can therefore not be generalised.
Brand personality
De Chernatony states, that ―Brand Personality focuses on what the brand says about
the consumer and how they feel being associated with it‖. In addition, Kapferer
(2004, p.108) states that ―the way [a brand] speaks of its products or services shows
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31 | P a g e
what kind of person it would be if it were human‖. This suggests that brand
personality can be seen as a reflection of the personality and lifestyle of the
consumer. As Parker (2009) describes, brand personality is a result of direct and
indirect contact with the brand. Direct contact for example consists of individuals,
which a consumer associates with a brand, and indirect contact includes different
attributes and benefits, as well as advertising and price characteristics. Companies
can use symbolic devices in order to establish a relationship between the product
and the consumer.
Complete the Sentence: People drive a Volkswagen, because… (See
Questionnaire)
…they feel secure while driving: 14/30 (46, 7%)
…it is a symbol of status: 15/30 (50%)
Others: 1/30 (3.3%)
If Volkswagen is a symbol of status, how would you describe it? (See
Questionnaire)
luxurious: 9/30 (30%)
self-confident: 12/30 (40%)
sophisticated: 10/30 (33,3%)
educated: 13/30 (43,3%)
others: 0/30 (0%)
If Volkswagen was a person, who would it be? (See Questionnaire)
A politician: 7/30 (23,3%)
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32 | P a g e
A father/mother of a family: 13/30 (43,3%)
A pop Star: 5/30 (16,7%)
A sport star: 5/30 (16,7%)
Others: 0/30 (0%)
In the case of Volkswagen, consumers do not necessarily buy an Audi or a Bentley
just because of the performance of the brand. They buy it because it represents a
certain status and lifestyle. Many participants described Volkswagen as educated
and refined. If Volkswagen was a person, people would describe it as a family
person. However the results suggest, that people feel very secure and comfortable
while driving a Volkswagen, which is congruent with the result in question one. This
means, that Volkswagen represents an emotional, caring member of the family
which, when transferred to a car, means the driver feels comfortable and secure.
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33 | P a g e
Brand Pyramid
Brand Pyramid as a summary of the key functional benefits ―anything that allows the
brand to make a rational claim which has been superbly linked with emotional
rewards through welcomed values, all of which are understood through personal
traits‖. This suggests that the brand pyramid helps to evaluate the brand essence.
This argument is supported by Kapferer (2004), who says that the brand essence is
the summary of the identity and/or positioning of a brand. This means, that the brand
essence is the core of the brand
Figure 4 – Brand Pyramid
In order to build a brand pyramid for Volkswagen, the aforementioned results of the
questionnaire were summarised. Volkswagen‘s attribute is comparable to the
positioning statement, where VW is defined as a car manufacturer who attracts
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34 | P a g e
target groups throughout society. The section ―Brand Image‖ revealed that German
people see Volkswagen as a reliable, high quality brand which produces comfortable
cars. These characteristics can be found in the values and benefits of the brand
pyramid. The results of the questions concerning ―Brand Personality‖ revealed that
people feel secure while driving, that VW is a self-confident and educated symbol,
and also that people associate it with human emotional relationships such as a
family. These characteristics are represented in personality traits and emotional
rewards.
This pyramid summarises the results of the questionnaire conducted in Germany.
Although this diagram does not represent a holistic view of the German market, the
researcher is of the opinion that there will only be small differences between other
German people. ―It is unlikely for two people to have the same image of a brand, but
their images may have common features‖
Reliability,
Loyalty
open-mindedness
Self confident, exciting, safe
safety, high performance, good quality
Vehicle transportation for every segment of
society.
Values
Personality
traits
Educated
Caring
Open-minded
Emotional
Rewards
Attributes
Benefits
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35 | P a g e
Global branding
Hollensen (2008) distinguishes between a local and a global brand. A local brand
consists of individual, local characteristics, whereas a global brand is a single brand
which represents a company or a product internationally, and targets multiple
markets.
―A global brand is an appropriate approach when a product has a good reputation or
is known for quality.‖ This suggests, that global branding is possible when the brand
is built into a cultural stereotype
However, it is impossible to not adjust to local conditions, such as laws and
structures. This is supported by Randall (2000) who asserts, that it is a myth to say
that a global brand is identical in every country. Instead he loosely defines a global
brand as follows:
―[A global brand]…
… is basically the same product or service everywhere, with only minor
variations.
… has the same brand essence, identity and values.
… uses the same strategic principles and positioning
… eomploys the same marketing mix as far as possible.‖
In the case of Volkswagen, the ―Made in Germany‖ model supports the company in
its global branding. Consumers from all over the world associate a robust
performance, high quality and outstanding engineering skills with Germany.
The Volkswagen brand claim ―Das Auto‖ (‗The Car‘) supports this branding strategy.
This slogan has been implemented worldwide since January 2008 (Volkswagen,
2010) and using the German language will uphold and communicate the strengths of
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36 | P a g e
the Volkswagen brand internationally. This claim represents the outstanding value,
quality and safety of the Volkswagen products. ―The united global brand claim will
resonate from the brand‘s source in Wolfsburg to the homes and hearts of
Volkswagen customers all over the world‖ .This evidence suggests that the brand
positioning, strategy and identity can be applied worldwide with only a few
adjustments. This argument is supported by Randall, who states that ―The definition
of the brand … the positioning, the principles of the mix and targeting have one best
solution … it should be applied in every country with changes only where they are
absolutely unavoidable.‖
Advertising Agencies associated with the brand and
covering all strategic brand campaigns
Advertising
To advertise the product better and create awareness about product; Volkswagen
will use different advertisement methods to approach the consumers. The diversity of
advertisement channels will help in reaching the masses of different mindsets.
Advertisement methods used
• Volkswagen will use print and electronic media to introduce the product to
consumers.
• Special events will be sponsored by Volkswagen.
• Use of Billboards, flex signs etc for massive introduction of car‘s launch.
• Special road shows and displays will be set at dealers outlets.
• Prize contest will be conducted to attract people towards the car.
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37 | P a g e
Advertising agency
In 1949, William Bernbach, along with colleagues, Ned Doyle and Maxwell Dane,
formed Doyle Dane Bernbach (DDB), the Manhattan advertising agency that would
create the revolutionaryVolkswagen ad campaigns of the 1950s and 1960s.
The corporate headquarters and factory that produced Volkswagens was located
in Wolfsburg, Germany. Because Volkswagen‘s advertising budget in 1960 was only
$800,000 . DDB‘s bare-bones, black-and-white approach, coupled with a projected
common theme of irreverence and humor, fit Wolfsburg‘s needs well. Each
Volkswagen ad was designed to be so complete that it could stand alone as a viable
advertisement, even without addressing all aspects of the automobile.
Taken as a sign of the campaign's runaway success, research by the Starch
Company showed that these Volkswagen advertisements had higher reader scores
than editorial pieces in many publications, noting that Volkswagen advertisements
often didn't even include a slogan or logo. The 1959 Think Small Volkswagen series
of advertisements were voted the No. 1 campaign of all time in Advertising Age‘s
1999 The Century of Advertising.
Following the success of Think Small, a follow-up ad-campaign titled "Lemon" left a
lasting legacy in America - use of the word "Lemon" to describe poor quality
cars. "Lemon" campaign introduced a famous tagline "We pluck the lemons, you get
the plums.
Volkswagen, whose most notable social media success to date came from "The
Force" viral Super Bowl ad two years ago, is taking a new approach to cultivating
fans with a campaign soliciting their stories on Facebook.
The German automaker — this week is launching Why VW, a platform on which fans
can tell their stories how their VWs fit into their lifestyle. The ad is designed to drive
consumers to Why VW, which will seamlessly exist on a dedicated microsite and on
VW's Facebook Page, where they can tell their stories. So far, such stories include
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38 | P a g e
the tale of a triathlete who decides to help a physically challenged woman compete
in a race and Alex Flynn, a man who is driving his VW cross-country to raise
awareness about Parkinson's Disease. VW worked with ad agency Deutsch and
crowdsourcing firm Poptent on the effort.
Despite VW's commitment to the new platform, though, it's unclear whether the
brand will be back at next year's Super Bowl. In 2011, the brand's "The Force" ad
featuring a pint-sized Darth Vader became one of the most-viewed ads on YouTube
of all time. (It currently has 54 million views.) Comparatively, VW's 2012 Super Bowl
ad, "The Dog Strikes Back," was a more modest success with 15 million views.
Mayer, however, says that Super Bowl 2013 is "still something we're taking a look
at." However, "the strong push in Q4 is the idea of reconnecting people to our
brand."
Print AD’s
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I have always loved when you see a big idea come out of the smallest of ideas. As
Brand Leaders, sometimes we complain about a lot of things: no money, we
don‘t have any new products in our pipeline, our agency keeps presenting the same
old thing and we are too conservative to do the really cool stuff. While many Brand
Leaders are struggling with how to use new media too many times they opt for the
new conventions they see everyone else doing so they say ―Like Us on Facebook‖
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approach that generates 38 likes, or they start their own Twitter account and tweet
out something boring every six months. Instead, you should think about the new
media as liberating in that you can use even more creativity than just trying to follow
along what everyone is doing. If you want your brand to generate more love among
your base of users, finding ways that surprise and delight them is a great starting
point. Consumers will feel more connected with you.
Innovative marketing strategies raise awareness
VW India created groundbreaking campaigns such as the world‘s 1st ‗talking
newspaper‘, which used light-sensitive chips to speak to readers about Volkswagen
as they turned the pages of their morning newspaper. The talking newspaper ad
created a sensation in India, and garnered worldwide attention for taking print
advertising to a new level. In one year, brand awareness more than quadrupled,
increasing from 8 percent to a high of 37 percent. Volkswagen next turned to digital
media to extend its success and create new opportunities for customers to connect
with the brand. Lutz Kothe, Head of Marketing for VW India, says, ―At Volkswagen,
innovation is woven into everything we do. In formulating our digital strategy, we
looked beyond the obvious for innovative ways to engage our audience. We knew
that for many people, their car affects their professional life and their professional
identity affects their car choices. This made LinkedIn a natural choice to connect with
current and potential car buyers among the growing Indian professional population.‖
Why LinkedIn?
• #1 resource for career-minded professionals
• Precise targeting by seniority and geography ensures match with affordability
criteria, dealership locations
Results
• 2,700 product recommendations in 30 days
• 2,300 new followers on VW India Company Page
• 960,000 viral updates about VW car models
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Engaging working professionals on LinkedIn
LinkedIn approached Volkswagen India with an opportunity to be the 1st auto major
to establish a presence on LinkedIn Company Pages. ‗Company Pages‘ provide a
branded home base within the LinkedIn community where businesses can showcase
their company, products, and services in a trusted, professional environment.
Volkswagen India participated in the worldwide launch of Company Pages in
November 2010, and soon thereafter opened up their pages to allow LinkedIn
members to post reviews and recommendations of their car line in India including the
New Beetle, Vento, and Polo. Mr. Lutz Kothe, Head of Marketing & PR, Volkswagen
Passenger Cars says ―We were pleasantly surprised to see how easy it was to
create our Company Page on LinkedIn and start engaging with customers among
the LinkedIn community. Furthermore, the quality of interaction was very high.
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Market environment and Industry analysis
Automobile industry is a symbol of technical marvel by human kind. Being one
of the fastest growing sectors in the world its dynamic growth phases are explained
by nature of competition, product life cycle and consumer demand. Today, the global
automobile industry is concerned with consumer demands for styling, safety, and
comfort; and with labor relations and manufacturing efficiency. The industry is at the
crossroads with global mergers and relocation of production centers to emerging
developing economies.
Due to its deep forward and backward linkages with several key segments of
the economy, the automobile industry is having a strong multiplier effect on the
growth of a country and hence is capable of being the driver of economic growth. It
plays a major catalytic role in developing transport sector in one hand and help
industrial sector on the other to grow faster and thereby generate a significant
employment opportunities. Also as many countries are opening the land border for
trade and developing international road links, the contribution of automobile sector in
increasing exports and imports will be significantly high. As automobile industry is
becoming more and more standardized, the level of competition is increasing and
production base of most of auto-giant companies are being shifted from the
developed countries to developing countries to take the advantage of low cost of
production. Thus, many developing countries are making serious efforts to grab
these opportunities which include many Asian countries such as Thailand, China,
India and Indonesia.
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History of Automobile Industry
The evolution of the automotive industry has been influenced by various innovations
in fuels, vehicle components, societal infrastructure, and manufacturing practices, as
well as changes in markets, suppliers and business structures. Some historians cite
examples as early as the year 1600 of sail-mounted carriages as the first vehicles to
be propelled by something other than animals or humans. However, it is believed by
most historians that the key starting point for the automobile was the development of
the engine. The engine was developed as a result of discovering new energy
carrying mediums, such as steam in the 1700s, and new fuels, such as gas and
gasoline in the 1800s. Shortly after the invention of the 4-stroke internal combustion
gasoline-fueled engine in 1876, the development of the first motor vehicles and
establishment of first automotive firms in Europe and America occurred.
During the 1890s and early 1900s, developments of other
technologies, such as the steering wheel and floor-mounted
accelerator, sped up the development of the automotive
industry by making vehicles easier to use. Almost
simultaneously, in America, the societal infrastructure that
would provide fertile ground for the proliferation of
automobiles was being set. Driver‘s licenses were issued, service stations were
opened, and car sales with time payments were instituted. Famous vehicle models
such as Ford‘s Model T were developed during these times and, by 1906, car
designs began abandoning the carriage look and taking on a more ―motorage‖
appearance.
During the 1910s, the development of technologies and societal
infrastructure continued in addition to new manufacturing
practices and business strategies. Traffic lights started
appearing in the U.S. and thousands of road signs were posted
by B. F. Goodrich on over 100,000 miles of U.S. roads. Henry
Ford’s Assembly Line
Model T
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Ford‘s famous assembly line was launched in 1913, which allowed vehicles to be
mass produced and thus achieved economies of scale. Ford also introduced the
concept of using interchangeable and standard parts to further enable the mass
production process. Automakers also started to merge with other companies (e.g.,
GM acquired Chevrolet) and to expand to other markets (e.g., GM of Canada).
In the 1920s, the development of infrastructure, adoption of new manufacturing
practices, and the merging of companies continued (e.g., Benz and Daimler,
Chrysler and Dodge, Ford and Lincoln). In the U.S., the Bureau of Public Roads and
the enactment of the Kahn-Wadsworth Bill helped facilitate road-building projects
and develop a national road system. In manufacturing, mass production methods
became better established, which led to the availability of a wide range of
satisfactory cars to the public. While Ford had focused on a single model, GM
adopted a new production strategy for providing greater product variety, which
helped the company increase their market share by 20% and reduce Ford‘s by 24%.
In the 1930s, several new vehicle brands were developed (e.g., Ford Mercury,
Lincoln Continental, Volkswagen) and trends in vehicle consumer preferences were
established that differentiated the American and European market. In the U.S.
market, consumers preferred luxurious and powerful cars, whereas in Europe
consumers preferred smaller and low-priced cars. Also during this time, GM‘s
product variety strategy continued to give them a competitive advantage over Ford,
allowing GM to continue increasing their market share while Ford kept losing theirs.
In the 1940s, during World War II (WWII), automotive factories were used to make
military vehicles and weapons, thus halting civilian vehicle production. After WWII,
the economies of most European and some Asian-pacific countries, such as Japan,
were decimated; this required the development of new production and business
strategies such as those of Toyota, which began to develop what is now known as
Just in Time (JIT) manufacturing. Most of the first models produced were similar to
the pre-war designs since it took some time for the plants to revamp their operations
to make new designs and models.
In the 1950s and 1960s, more technological innovations, such as fiberglass bodies
and higher compression ratio fuels, allowed vehicle developers to appease the
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growing consumer interest for vehicle comfort, look, and feel. Car designs were
highly influenced by emerging safety and environmental regulations. Vehicle speed
limits and front seat belts became standard, in addition to other features such as
heating and ventilation equipment.
The 1970s were marked by stricter environmental regulations and the oil embargo of
the early 70s, which led to the development of low emission vehicle technologies,
such as catalytic converters, and a 55-mph nationwide speed limit in the U.S.
Foreign cars like the Japanese Honda Civic started appearing in the U.S. market.
The Civic was marketed as a fuel efficient and low-emissions vehicle, which given
the recent high oil prices and strict environmental regulations made it well-received.
Despite the entrance of new competitors into the U.S. market, U.S. automakers
underestimated the threat of foreign automakers to their market shares.
In the 1980s, the U.S. automotive industry began losing market share to the higher
quality, affordable, and fuel efficient cars from Japanese automakers. In response to
this market share loss, U.S. automakers began focusing on improving quality by
adopting different Japanese manufacturing management philosophies, such as JIT.
Although their adoption of JIT and other philosophies helped improve the quality of
U.S. vehicles, it did not fully bridge the gap between the quality of U.S. and
Japanese cars. This gap remained because U.S. automakers tried applying JIT
techniques without a full understanding of the whole Japanese manufacturing
system, while Japanese automakers had decades to develop, refine and master their
JIT approach.
Another significant paradigm of the 1980s was the global nature of vehicle
manufacturing. Automakers started assembling vehicles around the world. This trend
was accelerated in the 1990s with the construction of overseas facilities and mergers
between multinational automakers. This global expansion gave automakers a
greater capacity to infiltrate new markets quickly and at lower costs. The increased
product offerings in many markets led to consumers having a greater variety of
vehicles from which to choose. To this new vehicle buffet was coupled the explosion
of the internet, which made vehicle-related information readily accessible to
consumers. Internet-informed and empowered consumers now wanted a vehicle that
was ―personalizable,‖ inexpensive, reliable, and quickly obtainable. Consumers
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desired vehicles that were less harmful to the environment, which led to the
introduction of hybrid vehicles by Japanese automakers in the late 1990s.
In the last decade, the recent trend of increasing sophistication and empowerment
of the consumer has led automakers to identify new and more specialized markets
within saturated markets with diverse customer bases, such as that of the U.S.
Another trend is to infiltrate new emerging markets such as Southeast Asia and Latin
America, which has further motivated the establishment of production facilities
overseas and the establishment of global alliances and commercial strategic
partnerships with foreign automakers. Of these new markets, China appears to be
the most promising.
Comparison of Basic Features in Three Major Automobile Market
Characteristi
cs US Market European Market
East and South East
Asian Market
Industry
Characteristi
cs
Organizational
and technological
change is the key
characteristics of
the US industry.
Of late, steps are
taken to increase
its global
presence by
expanding global
alliances and
seeking greater
collaboration with
other U.S.
automakers.
Productivity is
more than EU but
The European
automotive market is
comprised of a
concentrated and
sophisticated global
network, which
includes joint-ventures,
cooperatives,
productions and
assembly sites. Like
USA, over capacity,
intense competition
and investment for
technology are general
features. The industry
is driven by MNCs
mainly located in
East Asian market is
mainly driven by
Japanese FDI. Apart
from this, state
sponsored initiatives are
observed in Korea Rep.,
China, etc.
These countries are
making attempt to
develop indigenous auto-
industry base. Others
are driven by MNCs.
Profitability in the
industry is relatively
more than EU
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less than Japan. Western Europe.
Market Share
Ford, GM and
Chrysler makeup
approximately 76
% of U.S.
passenger vehicle
production, while
Japanese
automakers,
Toyota, Honda,
Nissan,
Mitsubishi,
Subaru, Isuzu
represents 18 %,
and European
automakers, BMW
and Mercedes
(division of
Daimler-make up
nearly 2%. )
The EU's largest
automotive producer is
Germany estimated at
30 % of EU's total
production, followed by
France at 19 % and
Spain at 17 %, and the
United Kingdom at 10
% The largest
automakers producing
multiple brands, such
as General Motors,
Ford, Daimler Chrysler,
Volkswagen, Fiat and
Peugeot Citroen. There
are also independent
automakers, such as
Porsche, BMW and
Bertione.
In Japan Toyota, Honda,
Nissan, Mazda etc
dominate the market. In
Korea Rep, Hyundai
acquired Kia and Asia
Motors in 1999, and sold
10 % of its equity to
DaimlerChrysler in 2000;
Daewoo purchased 52 %
equity in Ssanyong in
1998; and GM
purchased 42 % equity
of Daewoo; and in 2000,
French automaker
Renault purchased
Samsung Motors. In
ASEAN region, Toyota,
Hyundai, Suzuki, GM are
major players.
Demand
Pattern
(Domestic
and export)
The US producers
mainly produce for
domestic market
and to some
extent for
Canadian market.
Canada is the
largest market for
U.S. vehicle
exports with
subsidiaries of
U.S. automakers
Consumer demand is
the driving force for
industry in EU. More
models, shorter life-
cycle is the key of
demand pattern which
is similar to USA. New
EU members show an
increasing demand and
many Companies
shifting some of their
production base to
Asian market is growing
relatively slowly but
steadily in post-financial
crisis period. Asia's three
core markets are Japan,
Korea and China. South
East Asian markets are
also growing rapidly. The
compound average
growth rate in ASEAN
countries is expected to
be in the order of 10 to
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accounting for
most of the
imports. The US
big Three
continues to
invest in Canadian
market.
these countries. EU is
gaining through
exporting high value
services such as
design and
engineering. Europe's
bus and truck market is
stronger than Asia
dominated by players
like Volvo, Scania and
Mercedes.
20 percent until 2010; 10
percent in India; and only
4 percent to 8 percent in
PRC; Korea; or Taiwan,
China. In 2010, Japan's
demand will be around
1/3rd of total East and
SE Asian demand.
Korea, Thailand play
major part in exporting
vehicles. AFTA is
expected to increase the
regional export Market
Contribution
to Economy
Motor vehicle
production
represents over 5
% of the U.S.
private sector
GDP in 2002
The automotive
industry represents
approximately 9 % of
the EU manufacturing
sector
In Japan industry
represents 13 % of its
total manufacturing
output and 10 % of
employment. South
Korea is exporting 41 %
of its total motor vehicle
production. It contributed
around 3.7% to GDP in
1999.
Micro Environment
CONSUMERS
Consumers are the main target which needs to be understood and satisfied in the
market. Their purchasing behavior will most likely be an impact affecting an
organization in several unprecedented ways. It is important to understand their
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mindset patterns of purchasing a family car, the basic pattern includes affordability,
fuel efficiency, safety and comfort giving the consumer a mood of acceptance and
appreciation. The main focus of the Nissan will be the low level car owners and low
income consumers. It will also target product to bike owners as they are very unsafe.
COMPETITORS
With strong economic growth and government relaxation on taxes, several
companies are emerging to establish their market position Direct - competitors are
Toyota and Suzuki which have substantial market share.
INTERMEDIARIES
Volkswagen will adopt both distribution channels, direct and indirect. Intermediaries
(i.e authorized dealers of Volkswagen) are important, since indirect distribution of its
product is carried out through them. This will help to further enhance the reach-ability
of the car.
PUBLICS
Publics are the general public who are involved in the reputation of Volkswagen and
its products. Volkswagen has to provide several strategic approaches in order to
stand out with the public opinions. Any critics against Volkswagen would impact the
sales and repute. With such diverse culture, consumers are highly deterred with
public opinions. This very thin line, the public offers, can effect production,
distribution and diversification of Volkswagen. Volkswagen will have to stand out in
their primary objective and not lose that position.
Macro Environment or PESTLE Analysis
DEMOGRAPHIC ENVIRONMENT
Education
The literacy rate of the country is increasing and as a result it has increased the
consciousness in people about safety and quality of travel. People are now more
sensitive about how safe and comfortable is the automobile they are using. With the
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increased awareness in people they have now shifted towards the automobiles
which are according to safety standards and give more comfortable travel.
Population
Population of India is growing at a fast pace and is 240 million . This increase in
population has also increased the number of buyers and expanded the market of
automobiles. Requirement of more automobiles has grown. Automobile industry has
also responded to this scenario. But there is still a huge gap between people
demand and supply of cars. Volkswagen focuses on this gap and is trying to avail
this opportunity to its best.
ECONOMIC
With the rapid growth of national economy purchase power of people has also
increased. Also the priorities have changed a lot. The affordability of cars has
improved and this resulted in huge increase in the sales of cars. This provides
Volkswagen an opportunity to jump into market with strong impact and grab a major
share in automobile industry.
TECHNOLOGICAL
Rapid improvement and advancements in technology impacts the automobile
industry a great deal. It impacts the manufacturing, assembling and furbishing of
automobiles. New technological advancements pace up the operations; results in
more rapid production of cars. Technological improvements also impact
Volkswagen‘s operations a great deal and forces towards technological shift. Nissan
keeps on improving its technological structure with time and has to continue its
strategy of regular improvements.
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It makes it clear that the Indian automobile industry has a lot of un-extracted
potential. Looking at some important indicators it is implied that the growth in this
industry is here to stay for the times to come.
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Some growth forecasts for Indian auto industry
The Passenger Vehicle market of India will even cross Japan by selling about
5 million Vehicles by 2017-18.
The Indian auto exports will be upto $5.62 billion in the year ending March
2011 and the same will grow to $17.64 billion in 2015-16.
India‘s share in global auto exports may also triple by 2016.
India‘s passenger vehicle production projections :
a) In 2010 – 2.6 million Vehicles
b) By 2015 – 5.1 million Vehicles
c)By 2020 – 9.7 million Vehicles
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The above Information gives us a clear cut understanding about the potential that
India has in terms of the future of Automobiles in this country.
Market Share
At present major Indian, European, Korean, Japanese automobile companies are
holding significant market shares. In commercial vehicle, Tata Motors dominates
over 60% of the Indian commercial vehicle market. Tata Motors is the largest
medium and heavy commercial vehicle manufacturer.Car manufacturers in India
dominate the passenger vehicle market by 79%. Maruti Suzuki is the largest car
producer in India and has 52% share in passenger cars and is a complete monopoly
in multi purpose vehicles. In utility vehicles Mahindra holds 42% share. Hyundai and
Tata Motors is the second and third car producer in India
The automobile Industry in India is now working in terms of the dynamics of an open
market. Many joint ventures have been set up in India with foreign collaboration, both
technical and financial with leading global manufacturers. Also a very large number
of joint ventures have been set up in the auto-components sector and the pace is
expected to pick up even further. The Government of India is keen to provide a
suitable economic, and business environment conducive to the success of the
established and prospective foreign partnership ventures. $5.7 billion is the
investment envisaged in the new vehicles projects.
Five Forces Industry Analysis
The Bargaining Power of Suppliers
The two main components in the supply chain for auto manufacturing are
steel and aluminum. The aluminum industry is fairly concentrated with four
companies holding a majority of the market share, around 50%. The steel industry is
somewhat broader with the four top companies possessing 30% of the market share,
the leader holding only 8% (Datamonitor: Global Steel).
Within both the steel and aluminum industries there is little differentiation of
inputs, due to the nature of the raw material. However, these inputs are critical to
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the success of vehicle production. There are minimal substitutions for these
materials, mainly interchanging the two types. When substituting these materials, a
firm will encounter high unavoidable costs. Substituting one raw material for the
other increases costs because the two metals require different handling techniques
(Datamonitor: Global Aluminum). All of these elements increase the bargaining
power of suppliers.
Last, the auto industry holds a significant portion of this raw material market.
Auto manufacturers hold 15% of the iron and steel market and 24% of the aluminum
market (IBISworld: Aluminum). This factor significantly decreases supplier
bargaining power. Overall, we conclude that the suppliers have moderately high
bargaining power in the auto manufacturing industry.
The Bargaining Power of Buyers
Buyers in the automotive industry are new car dealers. In India, the top four
new car dealers hold only 14% of market share (IBISworld: Vehicle Wholesalers).
Autos are highly related to the buyer‘s success and extremely price sensitive. The
wholesalers value their relationship with dealers because the latter can influence the
marketing of the product. This results in a stronger bargaining position of the buyers.
Buyer knowledge also plays a role in increasing power due to the growth of widely
available vehicle information.
It is difficult for buyers to purchase perfect substitutes from different
companies. Dealers can purchase different products within the same segment, but
supply of specific models is limited to the manufacturing company. This limits ability
of buyers to incite bidding competitions between suppliers. Overall, the bargaining
power of buyers is relatively low due to the high number of dealers in the industry,
regardless of their value to wholesalers and increased knowledge.
Threat of Potential Entrants
High barriers to entry discourage potential competitors from joining the
automobile manufacturing industry. In order to benefit from economies of scale
there are elevated costs associated with developing high volume inventory, which in
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turn deters new entrants. Another factor is that automotive manufacturers are
required to comply with increasing environmental regulations, requiring substantial
investment in research and development. Even within a smaller competitor in the
Indian market, like Volkswagen, spending on R&D falls between $.5 million and $1.5
million annually. The combination of these factors results in a very low the threat of
potential entrants.
Threat of Substitute Products
Some of the substitutes for automobiles include public transportation,
motorcycles and bicycles, all of which are significantly lower in price. Performance
of these substitutes can be measured by convenience and reliability. Public
transportation can be more convenient than automobiles due to traffic constraints
and/or limited parking. Motorcycles and bikes also offer this convenience due to
increased maneuverability and their compact size. Switching costs of substitutes
can be low but could pose inconveniences such as selling a car or other mode of
transportation. Despite all of the benefits of substitutes, consumers continue to be
loyal to the automotive industry. As usage of these substitutes has been increasing,
so has the demand for automobiles, resulting in a very low category threat
assessment.
Rivalry Among Existing Firms
The automotive industry consists of fewer than ten major competitors. The
industry continues to grow (2006 saw greatest revenue growth in nearly a decade),
while operations rely on high levels of capital investments, resulting in high fixed
costs (IBISworld: Vehicle Wholesalers). Exit costs and barriers are also high, all of
which increase rivalry among firms. Rivalry is increased again through low buyer
switching costs. There is also little brand loyalty in the majority segments of the
industry, forcing producers to compete largely on price. This means that producers
continually compete for market share, and rivalry is high in the automobile
manufacturing industry.
Overall Assessment
In the automobile industry, the bargaining power of suppliers, threat of
potential entrants, and threat of substitute products is low. These forces can be seen
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as opportunities for higher profits. Supplier power is moderately high and rivalry
among existing firms is high. These threats are difficult to work around and reduce
profits. The major issues facing the industry are factors influencing the costs of raw
material inputs and the economic environment.
Industry Segmentation and Demand Issues
The automobile industry is segmented primarily into four main categories,
small, midsize, luxury and sport. The largest segment of the market is midsize
vehicles, which accounted for 48.3% of US sales in 2006 (IBISworld: US Automobile
Manufacturing). Overall sales in the automotive market declined slightly in 2012 and
industry analysts are saying 2013 could signal another year of decline (Road
Ahead). Sales remain strong in India in spite of these challenges, which presents an
opportunity for Volkswagen to appeal to the shrinking market demand for domestic
vehicles and increase their market share.
The market for automobiles is segmented into three purchasing groups:
households, corporations and government. Households make up about 73%,
corporations represent about 17%, with the US government purchasing 10% of
vehicles sold. The majority of discretionary vehicle purchases come from
households. Demand from this group tends to vary with economic fluctuations more
than the corporate and government market segments.
Volkswagen is the leading car manufacturer in Western Europe, but has yet to
take hold of a significant market share in India Marketing at VW is focused on
younger generations. They project a strong brand image of a distinctive, fun to drive,
import vehicle. Through their image development they have managed to appeal to
younger customers more so than many of their European competitors. The price
range of Volkswagens is also more suited to younger individuals and families,
surpassing the idea that European comfort is only for the wealthy. Volkswagen sales
have been partially limited in India by maintenance and reliability issues. However,
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their strong brand identity could help them gain more market share in the US if these
problems can be mitigated and new customer segments reached.
Internal Resources
One of Volkswagen's main strengths lies in its presence in the Western
European market. They own the largest share of this region at nearly 20%, followed
by French-based PSA (13.3%) and Ford (10.8%). VW is also the market leader in
Brazil (24%), Argentina (27.1%) and South Africa (22%). These impressive numbers
help enhance the brand image while also bolstering confidence among investors.
The VW brand also gains strength from its impressive portfolio, which includes high-
end automotive names Audi, Lamborghini, Bentley and Bugatti. Specific
Volkswagen models such as the Beetle, Golf and Jetta are also highly recognizable
names among consumers. This diverse group provides VW with stable revenues
while presenting opportunities to move into new markets (Datamonitor - Volkswagen
AG).
Volkswagen also operates 32 production plants across the globe. The
flexibility of these plants is a major asset, allowing them to produce products from
multiple brands in one location. A global production network will help reduce costs
while making it easier to respond to fluctuations in demand and dynamic market
trends.
Volkswagen's glaring weakness resides in the United States. Their market
share in the US pales in comparison to their performance in the rest of the world. In
the light vehicle and passenger car category, VW holds about 1.4% of the US
market, as mentioned earlier. This unimpressive figure brings their portion of the
global market down to 9.7%, trailing General Motors, Toyota and Ford. Within the
US, Volkswagen does business mainly in the sedan sector, and is almost
nonexistent in minivans, SUVs and pickups. In addition, the company had to
recently recall some of their vehicles due to defective ignition coils.
Another disadvantage of VW is their less-than-stellar profit margins. Their
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average margins for the 2002-06 periods stood at 2.3%, well behind their Japanese
counterparts Honda (8%), Toyota (9.1%), and Nissan (9.1%). Net profit margins
were also lower than the competition during the same period. Volkswagen stood at
1.6%, whereas Honda, Toyota and Nissan were at 4.7%, 5.9%, and 4.5%
respectively. These weak operating margins are due largely to high labor costs and
operating inefficiencies (Datamonitor – VW AG).
Another success factor grid was done using characteristics that consumers
(drivers) look for in a car company. These factors include, along with their weighted
value, price of vehicles (.25), quality of vehicles (.25), vehicle safety (.25), cost of
ownership (.2), and style/look of vehicles (.05). Once again, Toyota came out on top
as the overall leader, almost an entire point ahead of the nearest competitor.
Volkswagen, once more, was not able to separate itself as a clear leader in any
category . Our ratings for each category were based on company safety ratings,
passenger car prices and a small survey of car owners. Volkswagen did rate high in
overall style of their vehicles, even though it was not the leader among their
competitors, giving them the opportunity to possibly gain ground in the US market
with continued innovative designs. Obviously, though, it will require much more than
a chic look to build VW‘s US customer base.
Opportunities in the Industry
After a thorough review of the automobile industry, it is apparent that each
company has its own lines of cars that fit a particular segment in the industry. What
might not be as apparent is that Volkswagen is the last large automobile
manufacturer that does not have a hybrid vehicle on the US market. Hybrid vehicles
are becoming increasingly popular with the growing concern for the environment.
Toyota exceeded the one million mark for hybrid vehicle sales in 2007, according the
company. Their popular Prius has been on the market for ten years and has set the
benchmark for future hybrid vehicles: ―Sales of Toyota hybrids climbed from just
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18,000 in 1998 to 312,500 last year (‘06), according to the company‖
(academic.mintel.com).
Developing a hybrid model is in Volkswagen‘s best interest because
consumers are changing their opinions on vehicle feature necessities. With ever
increasing gas prices, consumers are buying more efficient cars that fit their
everyday needs. Volkswagen can use their already formidable global market share
and integrate hybrids to bolster their lagging US share. As they are one of the last
brands to utilize the popular technology, VW will find themselves losing more and
more ground with each passing year. The future is alternative power and if
Volkswagen does not join the revolution the company will be the left only crumbs as
the hybrid pie is split up.
Conclusion
The average person can't come along and start manufacturing automobiles. The
emergence of foreign competitors with the capital, required technologies and
management skills began to undermine the market share of many automobile
companies. Rather than looking at the threat of someone buying a different car,
there is also need to also look at the likelihood of people taking the bus, train or
airplane to their destination. The auto industry is considered to be an oligopoly. Many
suppliers rely on one or two automakers to buy a majority of their products. If an
automaker decided to switch suppliers, it could be devastating to the previous
supplier's business. The bargaining power of automakers are unchallenged.
Consumers are very price sensitive, they don't have much buying power as they
never purchase huge volumes of cars
Indian automobile industry has achieved splendid achievement in the recent years.
India is on the peak of the Foreign Direct Investment. The attractiveness of the
Indian markets on one hand and the stagnation of the auto sector in markets such as
Europe, US and Japan on the other have resulted in shifting of new capacities and
flow of capital to the Indian automobile industry. India is a significant manufacturer of
automobiles and auto-parts. Global auto majors such as Japanese auto majors
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Suzuki, Honda and Korean car giant Hyundai are increasingly banking on their
Indian operations to add weight to their businesses .The car industry would see a
massive capacity building in low-cost locations like India as manufacturers shift base
from developed regions. Although the sector was hit by economic slowdown but it
doesn't effect the overall production of automobiles. In recent times, India has
emerged as one of the favourite investment destinations for automotive
manufacturers. The Indian auto industry is likely to see a growth of 10-12 per cent in
sales in 2010.Competition in the country's auto sector is likely to increase due to
increasing penetration of global original equipment manufacturers
Market/Product Matrix
At VW each of our individual products (Jetta, Vento, Passat,) serve different
markets dictated by the automobile industry. The industry classifies autos based on
size and style. We use these classifications as the title for our markets. At VW we
are mostly concerned with the Subcompact, Midsize, Sporty Coupe, and Van
markets. Two of our passenger cars fit into the Subcompact market. This is the
Jetta. Within this market our product caters to a mostly urban, young and usually
college educated crowd. In the Midsize market we have the Passat. This customer
is a little bit older but still in an urban setting.
Volkswagon‘s market share of the entire industry is just over 2%. Which
means that each of its cars will not have a very large share in their individual
markets. The Passat and the Jetta sell very well and actually have relatively large
shares in their perspective markets. As well as these cars do they are meager in
comparison to some of our competition.
One of our competitors is Honda. Honda competes in all of the markets we
do and more. The Honda Accord is in the midsize market and has a huge share of
the market. This kills the Passat, our midsize car that came in at 32 (mavel.com).
VW and Nissan both are competing in some of the same markets. VW and
Nissan share interests in the Subcompact, Midsize and maybe the Van market.
While Toyota has eight markets that serve our competitors and seventeen models of
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cars to select from. They differ from Volkswagen by having the sporty, full-size,
truck, and SUV models. Toyota, like Honda, has a much greater piece of the pie
than does VW.
One of the larger competitors for VW is Ford. Ford is a powerhouse in the
automotive industry, and is a direct competitor to VW, with only a few of its market
segments.
Even though these two cars fall under the same category, they vary
considerably. When comparing Ford and VW market segment Ford is far superior
the VW. They offer more segments, and contain a larger market share in all the
automobiles made compared to Volkswagen. Ford has been selling in the United
States since the early 1900‘s, Where as Volkswagen didn‘t really start to compete
until 1980‘s.
By comparing Volkswagon to some of the bigger companies in the auto
industry it is obvious that VW has a very small portion of the market in just about any
segment in which it competes. This is important to note when plugging VW‘s product
into the BCG Matrix, which evaluates products based on market share and the
growth of the market.
We know that market share is relatively small, but what about growth? In the
Sporty Coupe segment numbers for the industry are way down. Combine that with a
small market share for the Beetle and we have a Dog. The midsize and Sub
Compact segments are up in growth and the Jetta and Vento are both selling very
well. Based on interpretation of market share these could be classified as either a
Star or Problem Child.
SWOT & TOWS Analysis
Volkswagen (VW) was chosen because it demonstrates how a successful company
experienced great difficulties in the early 1970s, but then developed a strategy that
resulted in an excellent market position in the late 1970s. The TOWS Matrix shown
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in Figure 1 will focus on the crucial period from late 1973 to early 1975. The external
threats and opportunities pertain mostly to the situation VW faced in the United
States, but a similar situation prevailed in Europe at that time.
Weaknesses and Threats (WT)
A company with great weaknesses often has to resort to a survival strategy. VW
could have seriously considered the option of a joint operation with Chrysler or
American Motors. Another alternative would have been to withdraw from the
American market altogether. Although in difficulties VW did not have to resort to a
survival strategy because the company still had much strength. Consequently, a
more appropriate strategy was to attempt to overcome the weaknesses and develop
them into strengths. In other words, the direction was toward the strength-opportunity
position (SO) in the matrix shown as Figure 1. Specifically, the strategy was to
reduce the competitive threat by developing a more flexible new product line that
would accommodate the needs and desires of the car-buying public.
Weaknesses and Opportunities (WO)
The growing affluence of customers has resulted in 'trading up' to more luxurious
cars. Yet, VW had essentially followed a one-model policy which presented a
problem when the design of the Beetle became obsolete A new model line had to be
introduced to reach a wider spectrum of buyers. In order to minimize the additional
costs of a multi product line, the building block principle was employed in the design
of the new cars. This allowed using the same parts for different models that ranged
from the relatively low-priced Rabbit to the higher priced Audi line.
Another weakness at VW was the rising costs in Germany. For example, in 1973
wages and salaries rose 19 per cent over the previous year. Similarly, increased fuel
costs made the shipping of cars to the United States more costly. This situation
favored setting up an assembly plant in the United States. However, this also
created some problems for VW because it had no experience in dealing with
American organized labor. To overcome this weakness, VW's tactic was to recruit
managers from Detroit who were capable of establishing good union relations.
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Strengths and Threats (ST)
One of the greatest threats to VW was the continuing appreciation of the Deutsche
Mark against the dollar. For example, from October 1972 to November 1973 the
mark appreciated 35 percent. This meant higher prices for the buyer. The result, of
course, was a less competitive posture. Japanese and American automakers
obtained an increasingly larger share of the small-car market. To reduce the threats
of competition and the effects of the unfavorable exchange rate, VW was forced to
build an assembly plant in the United States.
Another strategy for meeting competitive pressures was to build on VW's strengths
by developing a car based on advanced-design technology. The result of this effort
was the Rabbit, a model with features later adopted by many other car
manufacturers.
The oil crisis in 1973-1974 not only caused a fuel shortage, but also price rises, a
trend that has continued. To meet this threat, VW used its technological capabilities
not only to improve its engines (through the use of fuel injection, for examples), but
also to develop the very fuel-efficient Diesel engine. This tactic, which was congruent
with its general strategy, helped improve the firm‘s market position.
Strengths and Opportunities (SO)
In general, successful firms build on their strengths to take advantage of
opportunities. VW is no exception. Throughout this discussion VW's strengths in
research, development, engineering, and its experience m production technology
became evident. These strengths, under the leadership of Rudolf Leiding, enabled
the company to develop a product line that met market demands for an economical
car (the Rabbit, successor to the Beetle), as well as the tastes for more luxurious
cars with many available options (Scirocco and the Audi line). Eventually the same
company's strengths enabled VW to plan and build the assembly facility in New
Stanton, Pennsylvania. Thus, YW could benefit from substantial concessions
granted by the state government to attract VW which, in turn, provided many
employment opportunities.
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In another tactical move, VW manufactured and sold small engines to Chrysler and
American Motors. These companies urgently needed small engines for installation in
their own cars and revenues from these sales improved the financial position of VW.
Location Of Factor
Type Of Factor Type Of Factor
Favorable Unfavorable
Internal Strengths Weaknesses
Strong Brand Portfolio
Strong Focus on research and development
Robust Production Capabilities
Sluggish Performance of the company in few geographical areas
Relatively Low employee productivity
Poor Cash Flows
External Opportunities Threats
Accelerating Global Demand
for vehicles
Increasing demand for Hybrid electric vehicles
Growth potential in India and
China
Global Recession in 2009
Weakening of Global
automotive industry
Environmental Protection Regulations
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Figure 1: VW TOWS Matrix
Internal Strengths: Internal Weaknesses:
1. Strong R & D and Engineering
1. Heavy Reliance on One Product (Although Several Less Successful Models were Introduced)
2.Strong Sales and Service Network
2.Rising Costs in Germany
3.Efficient Production/Automation Capabilities
3.No Experience With the Labor Unions if Building Plant in other countries
External Opportunities: SO: WO:
(Also Consider Risks)
1.Growing Affluent Market Demands
1. Develop and Produce Multiproduct
1. Develop Compatible Models for
More Luxurious Cars with Many Options
Line with Many Options, in Different
Different Price Levels (Ranging from
Price Classes (Dasher, Scirocco, Rabbit,
Rabbit to Audi Line)
Audi Line)
2.To Cope with Rising Costs in Germany, Build Plant in U.S. and other countries, Hiring Managers with Experience in Dealing with Labor Unions
2.Attractive Offers to Build an Assembly Plant in U.S. and other countries
2.Build Assembly Plant Using R & D, Engineering, and Production/Automation Experience
3.Chrysler and American Motors Need Small Engines
3.Build Engines for Chrysler and AMC
External Threats: ST: WT:
1. Exchange Rate: Devaluation of Dollar in Relation to Deutshe Mark (DM)
1. Reduce Effect of Exchange Rate by Building a Plant in the U.S. or any other country
A. Overcome Weaknesses by Making Them Strengths
2.Competition from Japanese and U.S. Automakers
2.Meet Competition with Advanced Design Technology
1.Reduce Threat of Competition by Developing Flexible Product Line
3. Fuel Shortage and Price
3.Improve Fuel Consumption Through Fuel Injection and Develop Fuel Efficient
B. Possible Options not Exercised by VW:
1.Engage in Joint Operation with Chrysler or AMC
2.Withdraw From any foreign land
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Costing & Pricing analysis of brand portfolio in India
Pricing
Pricing of automobiles is a complex issue as it is dependant on fixed cost,
economies of scale, technology and other aspects. Competition and consumer
demand also play important role in this. Currently, most of the automobiles
companies consider price reduction as major strategic move for survival. For price
reduction, companies need to take series of decisions at every stage of production
and selling; starting from managing factors of production and supply chain to
negotiation with dealers. Price is one of the factors that influences sales variability of
products and services significantly.
Companies require appropriate policies to be played intelligently for managing the
series of decisions. Interestingly, reducing prices does not always generate profits. It
should be in combination of other decisions regarding maintaining quality and
marketing of the product. One undesired consequences of considering price
reduction as the main means of obtaining customers, is attracting disloyal
customers, who are attracted by the offer but do not see any other value in the
company. Their life-cycle in the end is short, and they receive a much greater return
from the company than the company can even make up the cost for obtaining them.
Many companies take strategy of different pricing policies for different product
segments of the considering the expected value to the customers through the offered
products. Companies develop innovative strategies to maximize profits without
hurting customers. Pricing is adjusted to the qualities, purchase volume,
development potential, and loyalty and profitability factors.
As the fixed cost is very high, companies look for different models from same
platforms and decide about the total output of each model. The wide range of
outputs along with the degree of economies of scale drive down the average cost of
production. If the auto makers are basing price on average costs, expected
deviations in output in the short run (between model years) could significantly affect
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prices without any change in factor costs. Moreover, higher the fixed costs as a
proportion of total costs, the more sensitive is short run marginal cost to changes in
the costs of the of variable factors of production (for example sudden rise in prices of
steel or rubber). Thus the low proportion of the variable costs in the auto industry
would make short run marginal costs especially sensitive to variable factor price
changes. If firms are short-run profit maximizes prices should respond positively to
changes in variable factor costs (Hoffer, et al. 1976).
In most of the countries, automobile sector is identified to have monopolistic market
(in some countries it is oligopolistic) structure where many players compete for
market share with significant amount of product diversification. As a result of this, in
the long run, most of the players earn zero normal profit and in the short run super-
normal profit. Hence, competition in the short run is intense particularly when product
life-cycle is very short. Moreover, within segment the nature of competition
sometimes is oligopolistic as the number of models under one segment may be
limited in a model year.
Volkswagen Cars
Volkswagen offers 5 new car models in Luxury segment, 1 in Midsize segment, 1 in
Small segment in India. Choose a Volkswagen car to know prices, features, reviews
and photos.
Car Model Avg Ex-Showroom Price
Volkswagen Polo
Rs. 4,80,330
Volkswagen Vento
Rs. 7,28,360
Volkswagen Jetta
Rs. 13,75,475
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Volkswagen Beetle
Rs. 21,47,649
Volkswagen Passat
Rs. 22,25,913
Volkswagen Touareg
Rs. 58,09,445
Volkswagen Phaeton
Rs. 77,20,507
Consumer Behavior elements related to the brand and history of brand ambassadors
and their description.
Consumer Behaviour elements
Type of purchase decision
Automobile industry has a number of producers already in market including
Volkswagen, Volkswagen next will introduce a new image of the company and will
most likely attract consumers as it will be a customized model for the people. Since
any consumer will be a long lasting relationship, it is important that it stands out in
front of its competitors and has a competitive edge. There will be high involvement of
user as it has to make a big purchase decision and also there are competitors like
Suzuki and Toyota etc. giving services to people; so this purchase behavior will be
categorized as Dissonance-Reducing Buyer behavior.
Consumption – Consumer Response
Commute has become a necessity and more roads infrastructure has been
established. More people are interested in purchasing as their needs and interests
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increases. As competition is on the rise so public is more informed about cars. They
are more conscious about the safety and economic features of the car. This
awareness and consciousness is increasing the buying and there is already a gap in
market so production of Volkswagen next will be tremendous.
Quality ,Comfort and safety
Volkswagen has an international image in local market & public mind stands on
good grounds when considering Quality, comfort and Design. The new image will
provide a new quality, price and comfort pattern which will be very favorable to
consumers. Since consumers relationship is going to last, it is important that these
variables are constantly improved. Volkswagen next will be affordable most of all,
and safety should be first priority so that the consumer‘s first impact would be that
this is a car for my family. Design will be unique from the rest of its competitors and
will be designed after evaluating customer buying patterns.
Customer Awareness and Brand Switching
Since this is a high value purchase, it is most likely that the brand loyal consumers
are loyal to the company and believe that the Volkswagen products are much better
than others. The new car will attract our existing customers as it will contain
additional unique features. Volkswagen next aim is to capture the new market of its
level and provide its existing customer a new opportunity to experience a new ride
experience. Volkswagen will provide unique differentiated points to create
awareness and presentations proving the consumers the advantages and luxury it
can provide to a small family. With increase in awareness in consumer minds, it is
imperative that safety features are emphasized and provide core values which the
consumers like to see.
Brand Prospects – Location and Influence
In India, 37% of the population is living below the poverty level which be translated
as earning less than $2 a day and about 5% comes in the bracket of elite class.
Therefore Volkswagen next will provide a very different level of customization to
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different locations which will be favorable to low-income families. Most of them travel
by bikes and buses. Volkswagen will introduce a better shift to its new car which is
Compaq, secure and most economical.
Brand Repositioning Campaigns
Brand repositioning campaigns
In the second phase of its branding process, the campaign is an aggressive
effort at corporate branding – an initiative with central positioning of the
mother brand at its core.
In order to strengthen brand Volkswagen‘s
core value, ‗innovation‘, the brand makes
a loud corporate statement through
a country wide campaign titled
‗Innovations for Everyone‘. The movement
was initiated in India on August 18 and will
run till November. ‗Innovation‘ happens to
be one of the three main assets that the
brand stands for; the other two are ‗responsibility‘ and ‗value‘.
Volkswagen (VW), the largest car maker in Europe, sells its broad model range from
the Fox to the Phaeton in more than 150 countries worldwide. The brand currently
offers the Jetta and the Passat, assembled in Aurangabad, for Indian consumers.
Also available on sale are the new Beetle, the powerful SUV Touareg, the Phaeton
and the Polo.
The target group (TG) of this campaign is essentially the young and progressive
urbanite, as well as new age middle class men who fall in the age bracket of 25-44
years. The media activities of the campaign will be concentrated in areas where the
brand‘s 47 (14 at the onset on 2009) dealers are located.
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VW‘s first brand campaign broke in India on November 11, 2009 and was
accompanied by the market launches of the new Beetle and Touareg. Following this,
the Polo was launched in March, while April saw the launch of the Phaeton. It is
noteworthy that since the eye-catching brand campaign in 2009, the brand has
focused primarily on communicating its individual products and has, accordingly,
highlighted the features of each product. The present campaign, however, appears
to be an effort to promote the mother brand, Volkswagen.
Lending a quick word on this corporate communication, Lutz Kothe, chief general
manager, marketing and public relations, Volkswagen India, elucidates, ―Right from
the very old Beetle up until now, we were always the brand that believed in the
democratisation of innovation. Given this, it doesn‘t make sense for us to innovate
only for some of our products; thus the catch phrase ‗innovation for everyone.
Here‘s a few different takes on creative solutions that started small and grew,
trying to inspire you a little bit while you sit at your desk going “so what can we
do”.
Take a chance. Be inspired.
Volkswagen “Fast Lanes”
When you have very little money, I always say “Act Like a Blowfish” and try to find
a way to appear bigger than you really are. That may require more creativity
than dollars. It might mean something a bit odd, compared to the conventional 30
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second TV ad. If you have no money, tell me you couldn‘t have done this one. It
must have cost only $5,000-10,000 to produce, it is one of the simplest ideas ever
and yet they now have 3 Million YouTube hits. Mainly because it just makes
people smile a little bit. And it fits perfectly with the Volkswagen brand.
What‘s your version of this idea on your brand?
Volkswagen: Think Small
Many marketing and advertising professionals like to call this campaign the gold
standard. Created by a legendary advertising group at Doyle Dane & Bernbach in
1960, the campaign set out to answer one question: How do you change peoples'
perceptions about not only a product, but about an entire group of people?
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Americans always had a propensity to buy big American cars, but even 15 years
after WWII ended, Americans really didn‘t buy small German cars. So what did this
Volkswagen advertisement do? It played right into the audience‘s expectations. You
think I‘m small? Yeah, I am. They never tried to be something they were not -- and
that's the most important lesson we can learn from this campaign. Don‘t try to sell
your company, product, or service as something it‘s not. Consumers appreciate
honesty just as much as they appreciate hot girls in beer commercials.
The ad stands out because this isn‘t what ads are supposed to be like in 1960. It‘s
neither splashy nor dreamy; it has none of those familiar ad images of folks laughing
and frolicking, women‘s hair blowing in the breeze, gorgeous scenery—all those too-
good-to-be-true images that were associated with ads at the time. Moreover, the ad
seems to be speaking a new language: it‘s more straightforward and down-to-earth
than ad copy is supposed to be, but at the same time, it‘s also smarter, sharper, and
more clever.
Just from reading the ad, you feel like maybe you get some sense of the people who
made it, as well as the people who made the car. They‘re not like everybody else;
they seem to be zigging while all others are zagging—which is kind of the way you
see yourself. In a time of conformity and ―keeping up with the Joneses,‖ this ad is
about going your own way. You may or not buy this car, but there‘s something going
on in this ad that you‘re connecting with, and that you might want to be part of.
The Volkswagen ―Think Small‖ campaign is widely recognized as the ad that helped
launch advertising‘s creative revolution of the 1960s. But I think it was something
else, too. It may well have been the first time a marketer successfully launched a
movement behind a brand.
Mind you, it was clearly different from some of the more modern marketing
movements—for one thing, it was much simpler in terms of how it communicated
with the public. Obviously, VW‘s ad agency, Doyle Dane Bernbach (DDB) couldn‘t
use Facebook or Twitter or any of the other marvelous social networking tools that
are now so integral to launching movements; it relied on a series of striking print ads,
some very memorable TV commercials, and a billboard here and there.
But even if VW and DDB weren‘t wired and digitally networked at the time, they did,
nonetheless, have a good ear to the ground. And that enabled them to pick up the
early rumblings of something that was just starting to build at that time—a vague
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dissatisfaction with 1950s consumerism and the prevailing ―bigger is better‖ mindset
about cars. The 1960s counterculture had not yet taken hold, but there was a
restlessness out there—which no one in the mainstream culture had really
expressed prior to this—about big fins and gas-guzzling Cadillacs, and what all of
that represented.
Dominik Imseng, the author of THINK SMALL, a book about the famous ad, notes
that there was something ―un-American‖ about it (and not just because the car was
made in Germany). ―In a way,‖ Imseng says, ―‗Think Small‘ was Ginsberg‘s HOWL
from 1956 as an ad—objecting to the consumerism and materialism of the American
Way of Life.‖
Julian Koenig, one of the ad‘s original creators, said that part of the idea he was
trying to convey was that in buying a Volkswagen, ―You could take an inverse delight
in not having to keep up with the Joneses—in not responding to Detroit‘s planned
obsolescence, in not being part of that repetitive, competitive culture.‖
Certainly, America was ready for an alternative in terms of car choices, and the
Volkswagen Beetle offered that alternative. But a product by itself does not a
movement make. People tend to gather and rally around ideas, and usually those
ideas have to be expressed in a certain way to get folks fired up. This is the reason
why social movements are often associated with iconic images, symbols, or flags; it‘s
also the reason why many movements develop rallying cries, phrases and words
that come to mean something very deep to the people within the movement.
The Volkswagen campaign was rich in the kind of semiotics that can serve as
shorthand for communicating a radical idea to large numbers of people who are
receptive to it. DDB designer Helmut Krone‘s use of white space in the ―Think Small‖
ad was almost an act of defiance, in advertising terms. Why would an advertiser pay
for that space and then leave it empty? Krone was sending a signal to his audience:
―We don‘t care about ad conventions, and neither do you, so let‘s dispense with
unnecessary imagery.‖ Similar nod-and-wink messages could be picked up from the
way the car was depicted in the ads (shrunken down and off-center; in one ad, Krone
even showed the car dented!). Along with the understated style of the copy, it all said
to the ad‘s audience, ―There‘s something going on here, not just in this ad, but in the
culture. Do you get it? Are you part of it?‖
Those who could tune in to those messages, who understood the cultural changes
that VW was talking about and agreed with the basic philosophy behind ―Think
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Small,‖ became the ―true believers‖ of the movement. VW had created a kind of club
to which these people could belong. And those who became part of that club weren‘t
just customers—they were advocates who took up the cause. They came to
embrace VW‘s ideals, identified with the brand, and, in many cases, remained loyal
to it for years and even decades to come.
Why the thinking behind 'Think Small' is still relevant
Today, a half century later, there‘s a lot we can learn from ―Think Small‖—and also
from subsequent groundbreaking campaigns from Apple Computer, Diesel Jeans,
and Dove soap—about how to connect with people in a way that goes beyond just
selling a product. One key point is that for any marketing campaign to go beyond
being just ads and generate something that can credibly be called a movement,
there must be a powerful idea at the core—one that is about a lot more than just the
product you‘re trying to sell. We find one example from (PRODUCT) RED:
THE BIG IDEA
Cause marketing is a partnership between for-profits and nonprofits for mutual
benefit. It offers causes valuable branding and visibility for all concerned.
(PRODUCT) RED‘s goal is to transform the collective power of consumers into a
financial force to help fight AIDS and other diseases in Africa. (RED) is a brand
licensed to partner with companies such as the Gap, Nike, Starbucks, Converse,
Dell, Apple, American Express, and Penguin Classics, among others. These
companies develop their own product(s) featuring the high-profile (PRODUCT) RED
logo, with a percentage of the proceeds going to the Global Fund to Fight AIDS,
tuberculosis, and malaria.
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Volkswagen to reposition Skoda, other brands in India
Aiming to shock and awe: Volkswagen suspended a Vento from a building during its
launch in New Delhi _ Kamal Narang
German automotive giant Volkswagen is undertaking a repositioning for its group
brands in India to align with its global practice, which may see Skoda moving down
in the pecking order.
The group has three brands — Audi, Volkswagen and Skoda — in the Indian market.
Audi is in the luxury segment. Skoda, however, has taken a more premium
positioning compared to the Volkswagen brand, contrary to the group‘s global
practice.
“It’s a question of how different brands are placed against themselves in the
market. Skoda has a quite high position (in India). In the group, Skoda is little
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bit positioned under Volkswagen. So, we are on the way to make a correction,”
Volkswagen Group Board Member and Executive Vice President Ulrich
Hackenberg said.
Currently, the Volkswagen sells seven brands in India — hatchback Polo, sedans
Vento, Jetta, Passat and Phaeton along with SUV Touareg and the iconic Beetle.
Skoda, on the other hand, has five models — hatchback Fabia, sedans Rapid, Laura
and Superb along with compact SUV Yeti.
At present, on a comparative basis hatchback Skoda Fabia is priced between Rs
4.60 lakh and Rs 8.10 lakh, while Volkswagen Polo is tagged at Rs 4.8 lakh to Rs
6.94 lakh.
Similarly, mid-sized sedan Skoda Rapid is tagged between Rs 6.90 lakh and Rs 9.50
lakh compared to Volkswagen Vento which costs between Rs 7.29 lakh and Rs 9.89
lakh.
In the premium sedan segment, Skoda Laura comes for Rs 12.9 lakh to Rs 18.97
lakh, while Volkswagen Jetta is priced at Rs 13.6 lakh and Rs 18.9 lakh.
In the luxury segment, Skoda Superb is available for Rs 18 lakh to Rs 24 lakh (ex-
showroom Delhi), while that of Volkswagen Passat is available from Rs 22 lakh to Rs
27.26 lakh.
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Competitor analysis including market shares and brand
rankings as per interbrand /superbrand etc.
2012 Production Statistics
Country Cars Commercial
vehicles Total
Australia 205,334 38,161 243,495
Brazil 2,828,273 820,085 3,648,358
Canada 968,860 1,102,166 2,071,026
China 13,897,083 4,367,584 18,264,667
Germany 5,552,409 353,576 5,905,985
India 2,814,584 722,199 3,536,783
Japan 8,307,382 1,318,558 9,625,940
Russia 1,208,362 194,882 1,403,244
South Africa 295,394 176,655 472,049
UK 1,270,444 123,019 1,393,463
USA 2,731,105 5,030,338 7,761,443
Daimler
Daimler Chrysler (DCX) was formed in 1998 in a merger of two of the automotive
industry‘s oldest and most prestigious manufacturers: Daimler-Benz AG and the
Chrysler Corporation. This so-called ―merger of equals‖ was the culmination of a long
complicated family history that in some sense follows the history of the automobile
itself. Because of this prestigious history, DaimlerChrysler enjoys a strong reputation
on both sides of the Atlantic.
Today, DaimlerChrysler employs a total of 384,723 people in 17 countries. Their
products are sold in over 200 countries. Daimler Chrysler is the fourth largest vehicle
producer in the world in terms of units sold behind GM, Ford, and Toyota. In 2004,
DaimlerChrysler sold 4,000,700 passenger vehicles and 712,200 commercial
vehicles. The company is structured into three main automotive groups: the
Mercedes Car Group, the Chrysler Group, and the Commercial Vehicles Division.
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These groups are parents to a total of 12 different brands, including Mercedes-
Benz, Dodge, Chrysler, Jeep, the luxury car Maybach, and the compact
environmentally friendly smart car. In all, DaimlerChrysler produces approximately
126 vehicle models.
DaimlerChrysler has been marginally successful in the United States where the
Chrysler Group has recently been the strongest of Detroit‘s Big 3. In fact, during the
third-quarter of 2005, Chrysler was the only Big 3 Company to earn a profit ($379
million for the quarter). This came in spite of a 21% drop in third-quarter earnings by
DaimlerChrysler worldwide due to increasing taxes. However, during this same
period, DaimlerChrysler increased operating profit by 38%. Analysts have attributed
this odd result to increasing demand for Chrysler and Mercedes products. This
increased demand is evidenced in the U.S. market where the Chrysler Group
produces four of the 20 top selling passenger vehicle models: the Dodge Ram, the
Dodge Caravan, the Jeep Grand Cherokee, and the Jeep Liberty.
As a result of this improved third-quarter performance, Chrysler‘s U.S. market share
has risen to 13.3%. More broadly, the popularity of DaimlerChrysler models can be
seen in the steady rise in revenue over the past three years. From 2002 to 2004,
revenue has increased 22.6% from $157 billion to $192 billion.
Because demand for DaimlerChrysler products has remained relatively stable in the
face of increasing oil prices, their future looks relatively bright. Growth in demand for
passenger vehicles is expected to further slow in North America, Western Europe,
and Japan. Therefore, DaimlerChrysler‘s future depends upon successful marketing
in emerging markets across the globe.
* Note: DaimlerChrysler split to form to distinct entities in 2006-2007.
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Ford
Ford Motor Company (F) was founded in 1903 by automotive and industrial pioneer
Henry Ford in Dearborn, Michigan. Being first to implement a moving assembly line
for automotive manufacturing, Ford was able to more efficiently mass produce their
products than their competitors. In 1908 the Model T was introduced and went on to
sell over 15 million vehicles, firmly establishing Ford as the major player in the early
automotive industry with 50% market share by the 1920s. The company went public
in 1956 and since then has grown to be a significant presence in the global
automotive market.
The Ford Motor Company product portfolio includes cars, trucks, and SUVs from the
following brands: Ford, Lincoln, Mercury, Mazda, Aston-Martin, Jaguar, Volvo, and
Land Rover. In addition to its core automotive business, Ford has a finance division,
a parts and service division, and they also currently own Hertz Corporation, the
largest car rental business in the world. Relative to other massive automotive
manufacturers in 2003, Ford was number two domestically and globally (behind
GM), in terms of number of vehicles sold.
Ford‘s outlook is challenging. In the 3rd quarter of 2005, Ford posted a pre-tax profit
loss of over $1.3 billion in their Automotive operations, with a $1.1 billion loss in
North America. The current losses for 2005 are due to a number of reasons: (1)
rising costs of commodities, namely steel and energy, have increased manufacturing
costs considerably; (2) ongoing and rising health care costs, particularly ‗legacy‘
benefits paid to retirees and their families; (3) bailing out major parts supplier Visteon
from bankruptcy; and (4) vehicle sales lagging by 81,000 units compared to the
same point in 2004, in spite of unprecedented ―Employee Pricing‖ sales offered
during summer 2005. Sales are especially lagging in the profitable SUV and truck
markets where demand is dropping due to escalating gasoline prices. This loss is
disappointing given the positive trend seen in net income for the past two years. The
negative net income seen in 2002 was due to the costly safety recall of defective
Firestone tires used on numerous Ford and Mercury trucks and SUVs.
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Ford‘s poor performance in 2005 and dark outlook were reflected in the downgrading
of their credit ratings by both Standard & Poor and Moody‘s to ―junk‖ status in late
spring 2005 - from BBB- to BB+ and Baa3 to Ba1, respectively. The volatility of
Ford‘s stock, in terms of its Beta rating, is in the neighborhood of 1.6 which indicates
that investing in their stock has fairly high risk. In the face of poor performance and
negative trends, significant steps must be taken in the near future to ensure the long
term viability of Ford Motor Company.
Elements of company-wide restructuring have been announced and implementation
begun. Part of the restructuring involves reducing personnel, mostly from white-collar
positions. In more long term restructuring, the company needs to shed over-capacity
in manufacturing. Shedding over-capacity involves closing down and consolidating
manufacturing facilities. These closures are prevented by agreements made with the
United Auto Workers (UAW) through 2007. A key element in Ford‘s success is its
relationship with the UAW and ability to get concessions from the union.
Concessions over healthcare costs, which cost upwards of $2000 per new vehicle
sold, and plant consolidations are required for Ford to be leaner, more efficient, and
more cost-effective in its business.
In addition to organizational restructuring being vital to the future success of Ford,
the company realizes the need to reestablish their market share, particularly in the
U.S. domestic market. They have begun attempts to do this with the introduction of
many new vehicles to freshen and invigorate their product line. Ford has announced
plans to increase its hybrid vehicle production tenfold to 250,000 per year by 2010.
This could be viewed as an attempt to position itself as the domestic leader in the
rapidly growing hybrid market in the U.S.
If the organizational restructuring comes off well and new product offerings are a hit
with consumers Ford stands a good chance to see another 100 years as an industry
leader.
General Motors
After its organization in 1908, General Motors (GM) proceeded to acquire seven
companies by the end of 1909. Today, the company‘s brand names include many of
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the beginning acquisitions including Buick, Cadillac, Chevrolet, GMC, Oldsmobile,
and Pontiac, as well as newer acquisitions and creations including Holden, Hummer,
Opel, Saab, Saturn, and Vauxhall. GM is the largest automobile manufacturer in the
world, selling nearly nine million cars in 2004, which equated to a 14.5% global
market share.
As of the end of 2004, GM reduced its projected earnings for 2005 by over 50% from
previous projections, which reflects its low expectations for the company in the near
future. Investors have also lost faith in the future of GM; the current stock price is
selling at a fraction of the book value. GM‘s debt has been steadily downgraded and
stood at BBB- as of the end of 2004 according to Standard & Poor‘s ratings.
According to their Letter to Stockholders, GM‘s main problems consist of ―global
overcapacity … falling prices … rapidly escalating healthcare costs … unstable fuel
prices … [and] increasing competition.‖
The effects of these troubles can be seen quantitatively through the ratios. GM‘s
debt ratio illustrates that their overall debt nearly equals their assets; their current
ratio shows that they have more liabilities than assets in the upcoming year; and the
return on sales and equity are very low in comparison to industry standards. Each of
the five ratios places GM among the worst three out of the ten sampled companies.
While these ratios in no way provide a complete measure of a company, they do
illustrate that GM is currently struggling to keep up with its competitors.
GM‘s main problem is their failure to remain cost-competitive in the global market. To
address this, GM has reworked deals with both American and European unions
which will reduce its cost of labor. To increase revenues, GM is focusing on
increasing market share in growing countries such as India and China. They are also
offering more hybrids to increase their fuel efficient offerings, which is a fast growing
market in America and has been one of the main ways that foreign manufacturers
have increased their market share in GM‘s primary markets.
It will take some time for GM to become profitable again. In the first three quarters of
2005, GM has seen losses continue to grow well past $1 Billion and their credit
rating has been reduced to junk status.
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However, GM still has the largest market share in the world and the capability to
become successful again. If GM can reign in escalating costs and offer cost-
competitive products, the automobile giant will be in position to once again assert its
dominance of the market.
Honda
Honda Motor Co. (HMC) was established by Soichiro Honda in 1946. It originally
began producing motorcycles in the mid 20th century and began manufacturing
automobiles (the Honda Civic) in 1972. After the original Civic‘s inception, Honda
produced many variants of this highly successful vehicle, such as the four-door
sedan, wagons, hatchback, coupe, and more recently the hybrid. Honda currently
has two automotive brands (Honda and Acura) and it produces over 20 other vehicle
models, such as the Accord, Element, Insight, Odyssey Minivan, Pilot SUV, and
Ridgeline Truck, in addition to producing motorcycles and power products.
Since Honda began producing automobiles it has been a leader in producing fuel
efficient and low emissions vehicles. In 1977 and 1983, Civic models ranked first in
U.S. fuel-economy tests. Honda has also introduced hybrid vehicles such as the
Insight, Civic, and Accord, in 1999, 2002, and 2004, respectively, with the 2006
Insight being the most fuel efficient car of 2006.
Currently, Honda ranks sixth in sales within the automotive industry. They have
overseas plants in over 12 countries including the U.K., Italy, Brazil, Taiwan,
Indonesia, Malaysia, Thailand, Nigeria, U.S., and Canada. Honda has been
increasing their production capacity worldwide in response to their steady growth in
total sales over the last few years. From 2002 to 2003, Honda increased sales by
95,000 units, and from 2003 to 2004, sales increased by 259,000 units. With this
growth in sales Honda has seen a commensurate increase in its revenues (see
Figure 7 in Appendix A). In China, they saw approximately a 50% increase in sales
from the fiscal years of 2003 to 2004, and they expect sales to keep increasing.
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In the future, Honda has stated that they will keep improving the fuel efficiency of all
their vehicles. They will continue to expand their production capacity in Asia, due to
the expected increases in demand in those regions. In the U.S., they plan on
launching new models targeted to younger people to create a new base of loyal
customers. Given Honda‘s past record on delivering high quality and fuel efficient
vehicles, their strong position in the current market, their strategic direction for the
next few years, and the rising costs of fuel worldwide, it is evident that Honda will
have a strong presence in the automotive market in the future.
Hyundai
Hyundai Motor Co. (HMC) was established in Korea in 1967. The company‘s first
model (Cotina) was released, in cooperation with Ford Motor Company, in 1968. In
1998, Hyundai acquired a 51% stake in Kia, but has since reduced its share to 37%.
In 2004, Hyundai was South Korea‘s largest car maker and the world‘s seventh
largest car maker selling 2.3 million units. Hyundai currently offers about a dozen
cars and minivans, as well as trucks, buses, and other commercial vehicles. Some
popular entries in their product lineup include the Accent, Sonata, Tucson, Elantra,
Santa Fe, and Tiburon, which all earned the title ―Best Bet‖ in Jack Gillis‘ The Car
Book 2005.
Hyundai‘s outlook is on the upswing. Hyundai‘s parent company, Hyundai Motor
Group, began investing heavily in the quality, design, manufacturing, and long-term
research of its vehicles starting in1998. This investment paid off in 2004 when
Hyundai tied with Honda for initial brand quality in a survey from J.D. Power and
Associates. Hyundai‘s increase in both quality (named ―Best Value Car Award
Winner‖ – Smart Money magazine 2005) and safety (received ―Automotive
Excellence in Safety Award‖ – Popular Mechanics 2005) along with its low prices will
allow it to continue to grab new market share. Reflecting this trend of low prices and
increased market share, in 2004 Hyundai reported a dramatic increase in annual
revenues to 50.7 billion dollars and only a small gain in net income to 1.78billion
dollars.
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Hyundai‘s growth is fueled by increasing international sales. From January-
September 2005, sales in Russia increased 100% and sales in the U.S. increased
10% year-on-year. To meet this new demand, Hyundai has been investing in
manufacturing plants in North America, India, China, Turkey and research and
development centers in North America, Japan and Europe. In June 2004, Hyundai
opened its first plant in the U.S. In 2006, Hyundai plans to start construction on a
new production plant in Europe.
Counteracting these positive international sales trends, Hyundai has recently run into
trouble in its domestic (Korean) plants. In August 2005, the production of 25,683
vehicles was delayed due to a strike by the company‘s unionized workers. Later that
week, Kia‘s workers joined the strike causing Kia to delay the production of 21,273
vehicles. The economic effects of these strikes have yet to be reported. If Hyundai
can overcome these recent strikes, the company‘s future outlook is promising.
Maruti Udyog
A license and Joint Venture agreement was signed between the government of India
and Suzuki Motor Company (SMC) in Oct. 1982 to launch Maruti Udyog Limited
(MUL). Today, MUL offers 11 models, including the Maruti 800, Omni, premium
small car Zen, international brands Alto and WagonR, off-roader Gypsy, mid size
Esteem, luxury car Baleno, MPV, Versa, Swift, and Luxury SUV the GrandVitara
XL7.
MUL‘s dominant position in the Indian car market and its ability to satisfy its
customers has made it the success it is today (see Figure 9 in Appendix A). MUL
has been the leader in the Indian car market for two decades. Today, MUL holds
about 50% of the total Indian market. For a record sixth year in a row, MUL was
ranked highest in customer satisfaction, according to the J.D. Power Asia Pacific
2005 India Customer Satisfaction Index Study. In 2004, Business World ranked MUL
among the country‘s five most respected companies and the country‘s most
respected automobile company.
As the dominant player in the Indian automobile market, MUL is focusing on entering
new markets in India to increase market share. MUL recently added service
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businesses including sale and purchase of pre-owned cars, lease and fleet
management service for corporate clients, Maruti Insurance and Maruti Finance. In
April, MUL made large investments in a new plant that will produce diesel engines.
Once this plant is operational, MUL plans to increase its role in the diesel segment of
the market, which now accounts for about one-fifth of the total passenger car market
in India.
Competition has become fierce in some Indian market segments, especially entry
level compact cars. MUL‘s major competitor in this market, Hyundai Motor Company,
is aggressively expanding its sales and network across India. MUL has reduced the
price of the Maruti 800 three times this year to keep this model cheaper than those
offered by Hyundai. Even with the planed expansion to new Indian markets, MUL‘s
future success will depend greatly on how well it can compete with its new
international competitors.
Shanghai AIC
The Shanghai Automotive Industrial Company (SAIC) Group, representative of the
numerous up-and comingauto manufacturers in Asia, is a government controlled firm
that produces passenger cars, tractors, motorcycles, trucks, buses, and automotive
parts. SAIC was established in the 1960s, but only started to make a significant
impact in the automotive market upon entering into a joint venture with Volkswagen
in 1984 to manufacture Santana sedans. In 1997, SAIC expanded further by creating
a second major joint venture, this time with General Motors. With approximately 50
plants in the Shanghai area and over 40 joint ventures with global automotive
companies, SAIC is now the largest automotive manufacturer in China. SAIC is not
publicly traded, but has one subsidiary, an auto parts manufacturer titled Shanghai
Automotive Co., Ltd, listed on the Shanghai Stock Exchange.
Although SAIC‘s origins were small, the joint partnerships with Volkswagen and GM
served as a way for SAIC to jumpstart their enterprise in terms of capital, expertise,
and designs. By 2000, SAIC‘s production capacity had reached 400,000 vehicles
and accounted for 45 percent of China‘s car market. In 2003, SAIC produced over
600,000 cars just in the joint ventures with VW and GM, a dramatic increase of
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57%from 2002. That catapulted SAIC onto FORTUNE‘s list of the world‘s 500 largest
companies at number461, with revenues in 2003 of US$11.8B and profits of
US$689M.
However, SAIC has ambitious intents to go beyond the opportunities afforded by
these joint ventures. SAIC plans to develop its own brands and to have them on the
market as early as 2007, with goals of producing 2 million cars in 2010 and 3 million
in 2020. Doing so would make SAIC one of the six largest automotive manufacturers
worldwide. To achieve this semi-independence, SAIC has put great emphasis on
research and development. Among other things, it acquired intellectual property
rights for the Rover 25 and 75 before MG Rover‘s collapse and last year purchased
Ssangyong, a South Korean maker of sport utility vehicles. This purchase makes
SAIC the first Chinese automaker to have a controlling interest in a foreign carmaker,
helping achieve two other goals: expanding beyond China to enter the global
automotive market and getting ahead of its two main local competitors, Dongfeng
Motorand First Auto Works. As a goal for its world market, SAIC aims to hit export
revenues of US$5B in2010.
Despite these ambitious goals, the recent past has been fairly tumultuous for SAIC,
just as it has been for the entire global automotive market. 2003 was an amazingly
prosperous year for SAIC, with production of passenger cars leaping to 612, 216
from only 390,508 in 2002 and with an accompanying 37% increase in revenues. But
sales slowed in 2004, with revenues gaining only 3%. And in the first four months
of2005, SAIC saw earnings drop by 74%. Yet obviously the market potential in China
is huge – as of last year, there were 940 vehicles for every 1,000 drivers in the U.S.,
502 in Japan, and only 8 in China. But because of this high market potential and
relatively low barriers to entry, competition is fierce and oversupply a distinct
possibility. In addition, attempts by the Chinese government to curb spending by
making financing more difficult have reduced sales rates significantly. To be
successful, SAIC will need to adapt itself to the markets it intends to penetrate: in
China, it will need to transition from the traditional Chinese automotive market which
featured lavish passenger cars targeted at government and business officials to the
future market of compact sedans and other smaller, cheaper cars targeted at the
growing middle class. For international markets, it will need to address challenges
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related to branding, R&D, design, and marketing, which established international
manufacturers have had years to work out. SAIC will also experience some growing
pains – it will have to tiptoe through issues of knowledge transfer and intellectual
property as it attempts to simultaneously produce Volkswagens, GM cars, and
vehicles under its own brand. And SAIC will have to follow-through on current plans
to list in an upcoming international IPO. If SAIC can endure these challenges, it has
immense potential both in China and worldwide.
Toyota
Toyota was established as a public company in Japan in 1937. It entered the U.S.
market in 1957, but only became successful with the introductions of the Corona in
1965 and the Corolla in 1968. By 1970, Toyota was the world‘s fourth-largest
carmaker and by 1975 had displaced Volkswagen as the U.S.‘s #1auto importer.
Toyota began auto production in the U.S. in 1984 through a joint venture with GM,
and launched the successful Lexus line in the U.S. in 1989. Since then, Toyota has
continued to grow steadily, becoming the third largest global automotive
manufacturer as of 2003, with sales last year of 7.4million vehicles. Unlike many
other large auto manufacturers, Toyota carries only 4 brands: Toyota, Hino, Scion,
and Lexus; it also has a majority interest in Daihatsu. Known for their quality and
reliability, Toyota cars and light trucks such as the Camry (Best-selling passenger
car in America, 2004),Corolla, Lexus LS330, Prius (Motor Trend‘s Car of the Year,
2004), Tundra (Motor Trend‘s Truck of the Year, 2000), Tacoma (Motor Trend‘s
Truck of the Year, 2005), 4Runner, and Lexus RX300 (MotorTrend‘s SUV of the
Year, 1999) have been extremely successful both in the U.S. and abroad.
In the last few years, Toyota has been able to ride out the automotive storm,
continuing to post impressive results despite the troubles that other companies have
seen. In 2003, net income jumped almost 55%,reaching US$10.8B. And in 2004,
both revenue and net profit increased slightly. Currently, Toyota holds a 6% profit
margin, dramatically higher than any of the Big 3.
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Toyota‘s success is based largely on its forward-thinking, innovative management
style and its rigorous standards of quality. The Toyota Production System is a much-
studied strategy of design and manufacturing which emphasizes streamlining and
elimination of waste – giving rise to the ―just-in-time ―and ―lean‖ manufacturing
movements – and continuous error-checking and improvement. In addition, Toyota
has repeatedly been ahead of the trend in investing in new technologies. Instead of
focusing on reducing labor costs, Toyota has increasingly automated their production
facilities. And with the release of the Prius in 1997, Toyota introduced the first
mainstream hybrid vehicle, cashing in on the demand for fuel economy and reduced
environmental impact. Like the Prius, the Scion line successfully identified and
addressed a new consumer sector, a plan that Toyota will continue to follow. These
strategies combine to give Toyota a significant sustainable competitive advantage.
The results of this entire are clear: in 2005, Toyota won a record-breaking 10
segment awards in J.D. Power and Associates Initial Quality Study, with Lexus
carrying top honors for five years straight. And while75% of Toyota‘s current market
is in Japan and North America, it aims to reach markets in 140 countries and regions
in the future. With new assembly facilities in Thailand, Indonesia, South Africa and
Argentina, Toyota has more than 60 manufacturing facilities in 26 countries. This
allows production in geographic proximity to Toyota‘s future target markets like Asia
and South America. With expansion underway, operations going well, innovative
infrastructure and mindset, and well-targeted high quality products, Toyota is
excellently positioned for future growth and success.
In India
In a country obsessed with mileage, the hike in petrol prices and lately also in diesel
is making every Indian think twice about the mileage factor before they opt to buy a
car. Adding to this is the freefall of the rupee, which is also driving Indians to ask
'Kitna Milega'.The fluctuating fuel prices have even forced automakers to launch cars
that have all upper comforts coupled with the most suitable and fuel-efficient running
machines.
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According to the latest data by Society of Indian Automobile Manufacturers (SIAM),
car sales in India have dropped 18.6 percent in August for the first time in ten
months, owing to the increase in fuel prices.
Despite the industry taking a major hit, automakers are still hopeful with the festive
season coming up. Considering Diwali to be an auspicious time to buy new things,
even price-sensitive buyers are drawn into making purchases, giving a boost to car
sales.
The Indian car market is expecting the launch of several new fuel-efficient cars for
this festival season. Maruti Suzuki is all set to launch its new 800cc car soon. The
upcoming vehicle said to be more fuel efficient and more expensive than the Alto
model.
"Although this will be an 800cc car, technologically it will be more advanced than the
existing two 800cc models. It'll be more fuel efficient, and hence will also be more
expensive than M800 and Alto," a source said to the Economic Times.
"We are getting no support from the market and we hope that the festival demand
will at least be as per expectations...that's why we are launching new models and
getting ready for the festival months," said Debashis Mitra, director-sales and
marketing, Mercedes Benz India, to The Times of India.
Earlier, Hyundai and Maruti Suzuki were the two leading brands that resonated in the
domestic auto mobile industry. It's not the same anymore as other manufacturers
have entered the market with a new line up of vehicles the beat the fuel price hikes.
India Automobile Domestic Sales Trends (Number of
Vehicles)
Category 2003-04 2004-05 2005-2006 2006-07 2007-08 2008-09 2009-10
Passenger Vehicles
1,061,572 1,143,076 1,379,979 1,549,882 1,552,703 1,951,333 2,520,421
Commercial Vehicles
318,430 351,041 467,765 490,494 384,194 532,721 676,408
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Three Wheelers
307,862 359,920 403,910 364,781 349,727 440,392 526,022
Two Wheelers
6,209,765 7,052,391 7,872,334 7,249,278 7,437,619 9,370,951 11,790,30
5
Grand Total 7,897,629 8,906,428 10,123,988 9,654,435 9,724,243 12,295,397 15,513,15
6
Future of the brand and Recommendations
The above mentioned key ratios depict the top line and bottom line of the company which
has seen a considerable growth as compared to 2011. Keeping this in mind the
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company has laid specific emphasis on focussing on key markets such as India and
China which have a huge appetite for automobiles in their respective countries.
Year over year, Volkswagen AG has been able to grow revenues from
€112.8B EUR to €142.1B EUR. Most impressively, the company has been able to
reduce the percentage of sales devoted to cost of goods sold from 93.55% to
93.06%. This was a driver that led to a bottom line growth from €6.8B EUR to
€15.4B EUR.
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Although debt as a percent of total capital decreased at Volkswagen AG over the
last fiscal year to 52.58%, it is still in-line with the Automobiles industry's norm.
Additionally, even though there are not enough liquid assets to satisfy current
obligations, Operating Profits are more than adequate to service the debt. Accounts
Receivable are typical for the industry, with 20.95 days worth of sales outstanding.
Last, inventory levels, relative to its Cost of Goods Sold, are typical for the industry
and have shown a consistent decrease during the last 4 years. This implies that
management is becoming more efficient.
Volkswagen is the No. 1 automaker in Europe. Net sales break down by activity as
follows:
- vehicle sales (90%): 8.4 million vehicles sold in 2011, consisting of individual
vehicles (8 million units, of which 5.4 million are Volkswagen, Skoda et Bentley, and
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2.6 million are Audi, Seat and Lamborghini) and commercial vehicles (0.4 million;
Volkswagen brand);
- financial services (10%): financial services (loans, leasing, insurance), fleet
management, insurance, etc.
At the end of 2011, the group had 94 industrial sites worldwide.
Net sales are distributed geographically as follows: Germany (21.7%), Europe
(43.5%), Asia-Pacific (14.4%), North America (11%), and South America (9.4%).
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Volkswagen Group Strategy 2018- In line with the vision
As Volkswagen pursues its goal of becoming the number one automaker in the world
by 2018, India has become a key component of its strategy. India is currently the
world‘s second fastest growing car market, with shipments expected to more than
double by 2018. As a relatively recent entry into the Indian automotive
market, VW needed to raise brand awareness. To address this challenge,
Volkswagen‘s marketing team focused one of its key brand pillars, innovation, to
make a strong impact throughout the roll-out in India. Innovation was showcased not
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only in Volkswagen‘s product introductions, but also in its communications and
advertising.
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Recommendations
When going back in time, Volkswagen used to be known as the manufacturer of the
iconic "Beetle‖ and the ―Bully‖. In order to successfully leverage its history and
tradition to be innovative and to attract new customers, Volkswagen should ―go back
to its roots‖ when the brand used to be a way of life. This feeling should be
transferred to potential and current customers, without compromising quality.
The lifestyle of many people has changed in the sense that, there is a development
towards an environmentally friendly way of life and Volkswagen should take
advantage of this. Even though Volkswagen already takes necessary steps toward
the protection of the environment, it should emphasise that its Blue Motion Strategy
is competitive to Toyota‘s hybrid engine for example. Volkswagen should aim to
become the economic and environmental leader in the worldwide automobile market.
Volkswagen should expand their different brands on the worldwide market and
emphasise their different price ranges and target markets in order to create customer
loyalty and affection for the brand. Furthermore, Volkswagen should be aware that
there are still new customers entering the market, for example young people. By
targeting this group, Volkswagen has the chance to mature with this audience, which
supports the establishment of customer loyalty. In this context, After Sales Service
plays an important role in maintaining the customers and encouraging repeat
purchase. Volkswagen should aim to improve customer satisfaction and brand image
through enhanced dealer networks and an upgraded service.
Furthermore, Volkswagen did considerably well in surviving the economic crisis, not
just because of their high brand equity and their excellent sales in the last year.
However, in expanding this equity in the future, financial backing could be
established, which could help Volkswagen to become number one worldwide, and
help Volkswagen perform better against the competition.
In the German market in particular, Volkswagen is the ―mother or father‖ of the
automobile industry. As the ―people‘s car‖ it has a special relationship to the German
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customers. This emotional relationship should be expanded by continuing to offer
high quality cars to every segment of society, ranging from young drivers to old, loyal
drivers.
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BIBLIOGRAPHY
History of the Automobile.
http://inventors.about.com/library/weekly/aacarsassemblya.htm; accessed
http://www.iuriel.com/brand-management/the-origin-of-branding/
http://www.autocarindia.com/News/327042,best-of-2012-top-10-car-
comparisons.aspx
https://www.google.co.in/search?q=volkswagen+advertising+agency&hl=en&t
bo=u&biw=1366&bih=624&tbm=isch&source=univ&sa=X&ei=ZPIRUYS5I83Jr
AedzICAAg&ved=0CJIBELAE
http://mashable.com/2012/09/17/volkswagen-stories-why-vw/
http://www.afaqs.com/news/story/31515_Time-for-the-all-new-Volkswagen-
innovation
http://www.cardekho.com/new-volkswagen+cars
http://www.scribd.com/archive/plans?doc=44202303&signup_type=archive
http://www.4-traders.com/VOLKSWAGEN-AG-436737/financials/
http://www.amazon.com/Branding-Positioning-Segmentation-Volkswagen-
ebook/dp/B007NY6TQU
http://articles.economictimes.indiatimes.com/2012-08-
19/news/33272941_1_micra-evalia-mass-market-segment
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