Product Story and Marketing Concepts: Volkswagen Beetle
Background
For any persons with some automotive interest, one cannot look past the historic icon and product timeline story of Volkswagen and the Beetle. Volkswagen, itself, has had an interesting evolution of the brand since it was first founded in 1937 in Wolfsburg, Germany and is the largest auto manufacturer group in the world today to include the Volkswagen brands among Audi, Bentley, Bugatti, Ducati, Lamborghini, Porsche, MAN, Scania, SEAT, and Skoda (Welskopp, 2020). But, more focus on this ‘coming to’ story deserves to be reviewed through a historical review as Volkswagen was started in mass marketing beginnings of the affordable “People’s Car” in Germany at a time when very few of the German people could afford a car. A Volkswagen is a two-door economy car intended to accommodate five individuals.
Product rebirth /rebrand
VW beetle began experiencing real competition from other cars such as Toyota Corolla between the 1960s and 1970s (Flach, 2016). This was after the Volkswagen had already undergone several upgrades with new regulations related to its emissions would prove a big obstacle to the company. Throughout the 1970s, the company attempted to maintain the competitor’s pace through maintaining its relevance within the consumer’s mind. However, Beetle was sold out to the United States in 1977 with some convertibles made through 1979 (Flach, 2016). By 1985, all countries apart from Mexico stopped buying and manufacturing Beetles. It lasted in Mexico for a long time as it was rendered the city’s iconic symbol and the major taxicab vehicle in the town. However, a law was passed in Mexico requiring that all taxicabs should have four doors, thereby bringing Beetle’s life to a screeching halt.
While Beetle was vanishing in Mexico, Volkswagen was working through resurrecting it globally. In 1991, Volkswagen designers situated in California were inventing a modernized beetle which would influence the brand’s nostalgia through incorporating performance, features and designs relevant to the 1990’s era (Welskopp, 2020). The new Beetle was debuted in the Detroit Auto Show of 1994. It received positive feedback hence moving forward with the production. The first Volkswagen Beetle was produced in 1998. Since 1998, Several other variations were introduced like the modern convertible Beetle and Sporty Turbo S (Welskopp, 2020). in maintaining competition and current market trend, the Beetle’s features have been updated for over the years. Therefore, the publicity, excitement and buzz revolving around the early periods of new Beetle returned the brand to the cult status it enjoyed within its most initial forty years in the market.
Launch of an icon
Mass production of Volkswagen began after the 1945 Christmas hence marking a new period within the manufacturing of the civilian vehicle. At this period, the first type 1 Volkswagen model was introduced, a brand that was sold for over twenty-one million times, rolled off the manufacturing line. However, only fifty-five vehicles were produced by the closure of 1945 (Vega, 2017). This is because the beginning of mass production was largely improvised following shortages in materials which hampered operations within the subsequent months. However, these new vehicles were considered visible symbols for hope and a fresh start for a car plant within the British control.
Psychological segmentation and nostalgia
The small compactor cars manufactured by Volkswagen such as golf, Beetle and polo are focused towards catering for the needs of consumers requiring mobility or those wishing to enjoy a car’s utility. The vehicles targeted their consumers by applying four designs, and they were not fitted with any luxury or fancy component. The cars are also cheaper to acquire and maintain. Marketing played a major role in the process of attaining success within the company. It is the pivotal business function within the Beetle that attracted customers in its methods of producing, communicating and delivering value to customers (Vega, 2017). A major key aspect that was utilized for marketing is advertising. The cars advertisement highly influenced the cognitive feature within consumers in their attempt to rise emotions. With growing technology, the company incorporated the signals paradox. Publications highly influenced consumer sensitivities related to nostalgia sentiments. On consumer’s sensitivity towards nostalgia sentiment, factors like past childhood experience, frequency of event repetition in the past and ageing effects generate a significant and positive impact on clients.
Volkswagen divides consumers into various market groups basing on the personal characteristics, social class and lifestyle that influences their buying decisions. The Beetle taught Indians on how to pronounce Volkswagen name, towards ensuring that they are comfortable with the product. The size and safety within the car were made relevant basing on the fact that most Indians utilized their vehicles for a hideout from family members and other safety purposes (Flach, 2016). Also, the Volkswagen brand was positioned in locations where it had higher chances of getting purchased. The Volkswagen also utilized all gathered information from client insights on their product to manufacture around their needs. For instance, when the company realized that the Indians valued chrome, they incorporated chrome as a feature within their car to encourage consumers to pay for their services before utilizing the feature.
The Volkswagen group targeted nine segments of individuals that included metropolitan educated individuals, elites, middle class, young progressive and new business owners. This constituted about forty-six per cent of the total car market. Audi was rendered a luxurious Volkswagen product, and it was therefore made to target high-class individuals rather than the less fortunate citizens (Vega, 2017). Thus, towards acquiring a market share, the company focused on psychographic segmentation. After figuring out the needs of various consumers in all income, social and age groups, Beetle managed to produce vehicles that catered for the needs of every individual in a given population. For instance, in India, the company entirely aimed at car buyers searching for hatchbacks, sedans and SUV.
Marketing mix
Volkswagen marketing mix does not incorporate aspects of promotion, product, place and price within their marketing mix. However, Skoda was rendered a less premium vehicle, whereas Audi was considered a premium product (Vega, 2017). Amongst all Volkswagen brands, Audi is one of the cars that are considered most luxurious. However, not all brands are suitable across all countries forcing the company to revamp their marketing tactics through beginning to focus on the marketing mix. To be successful in the market, it was also important that the company determines the segmentations with lower chances of changing the strategy used in its marketing mix. Therefore, the psychographic approach is the only marketing segment that will not be affected with the marketing mix variables as the consumer’s lifestyle, values and attitudes do not change within the strategy.
Geographic segmentation
A market may be segmented on demographic aspects such as education, age and generation, geographic such as size, region and city, psychographic like interests, activities and hobbies, and behavioristic such as sensitivity, price and brand. Most of Volkswagen clients are generally young and more educated individuals as compared to other car purchasers (Jones & Richardson, 2017). Also, they are more affluent, and they tend to enjoy the active driving role. Therefore, the Volkswagen market is segmented centred on the households, especially demands for small vehicles and big vehicles. It should also be segmented based on price-sensitive households and vice versa. However, with the younger generation getting more affluent, they are more likely to become less price-sensitive as compared to other families within their age.
Price trends and product maintenance
The new Volkswagen is competing within the small-sized car industry in the market with immediate competitors being Saturn, Chevrolet cavalier and ford escort. Sentra and corolla are also competitors within the same field. The estimated price range for new Beetle is expected to be between seventeen thousand and eighteen thousand dollars (Jones & Richardson, 2017). The total sales of Beetle competitors and the Volkswagen Jetta and golf will generate a complete market sale of 1,225,009, which is rendered a 5% decline (Jones & Richardson, 2017). Therefore, for the Beetle to sell 55000 vehicles, they would require a market share of 4.5%. When the competitor’s sales are summed up with the same price, the market share will become smaller, with only about 210,050 cars getting sold, bringing a 5% decline Flach, 2016). Therefore, to sell about 55000 cars, the Beetle would require a market share of 26.2%.
The Beetle is not expensive to maintain as they annually have an average cost of $612 for maintenance and repair, $526 average on compact cars and $652 for all car models (Jones & Richardson, 2017). The vehicles are serviced yearly on chassis grease, valves, carb tune, timing and oil. Therefore, the cars can be said to be reliable as their reliability is predicted to be above average with a rating of three out of five.
Product end
The Volkswagen was ending its output in the production of Beetle in 2019. According to the company, the production of the current third-generation Beetle wagon will stop at a plant set in Puebla in July of 2019. Also, the American Volkswagen group illustrated that there are no immediate plans of replacing the brand as major automakers have retooled it into becoming a full line that ramps up various electrification efforts. Moreover, the beetle sales have dropped by 2.2% in the market as there is an increased shift from small cars to different light trucks (Jones & Richardson, 2017). Also, in an attempt to streamline the bloated product lineup, the Volkswagen group has been placing significant energy on removing the Beetle from the selected global market. Also, the demand for other Volkswagen hatchbacks and Beetle have endured pressure as most American consumers migrate to SUVs and crossovers. Therefore, as a result of slumped sales, the company is forced to end production of the Volkswagen Beetle.
Predicting the future
Therefore, in conclusion, there are low chances of the Volkswagen Beetle to increase in value because millions of them were manufactured. Even those with vintage air coolers may be rendered collectable classic vehicles as they have nominal values. However, it is possible that the Beetle will be revived sometime later into an electric car hence influencing the current Beetle’s perceptions of the future. Therefore, despite putting an end to Beetle’s production, individuals should continue enjoying them and putting them in good shape for as long as they render them useful.
References
Flach, L. (2016). Quality upgrading and price heterogeneity: Evidence from Brazilian exporters. Journal of International Economics, 102, 282-290.
Jones, D. B., & Richardson, A. J. (2017). Origins of sports car marketing: early 20th Century British cycle-cars. Journal of Historical Research in Marketing.
Vega, G. (2017). Volkswagen: Business as Usual. Business and Professional Ethics Journal.
Welskopp, T. (2020). Behemoth: A History of the Factory and the Making of the Modern World by Joshua B. Freeman.