Marketing Strategy of New Beetle

Table of Contents

Table of figures and tables

1.0 Introduction
1.1 Company profile
1.2 Identification of competing products

2.0 Marketing Strategy
2.1 Description of the strategy
2.2 Target market
2.3 Marketing Mix

3.0 Product Development Process

4.0 Assessment of Performance

5.0 Conclusion

References

Table of figures and tables

Figure 1: Production facilities worldwide

Figure 2: Volkswagen Group

Figure 3: Components of the Marketing Mix

Figure 4: Ad spending 1993 – 1998 (million $)

Figure 5: New Product Development model

Figure 6: Key facts

Figure 7: Sales NB (units)

Figure 8: Product Life Cycle

1.0 Introduction

New ideas and the development of new products are essential for every business. Companies should invest in research and development, not just for its survival (Trott 1998) but also to guarantee a successful and profitable future. Companies with a high number of new products and successful new development programmes are considered as innovative companies and achieve a high reputation in the business and from customers. This coursework will take a closer look at the development process of the Volkswagen New Beetle (NB), including its marketing strategy, the development process and its assessment of performance on the market. First of all there is going to be a short introduction to the Volkswagen company itself. Afterwards I am going to describe the marketing strategy of the NB and I will take a look at the marketing mix used. The third step will point out the product development process with all relevant stages. The coursework will end with an explanation of the factors which account for the success/failure of the NB, followed by a conclusion.

1.1 Company profile

Volkswagen is one of the world's most successful and biggest car manufacturer with over 335,000 employees (Annual Report 2003), the head office is located in Wolfsburg/Germany and the company runs eighteen production facilities worldwide. With a production unit of 5,021,000 cars in 2003 Volkswagen confirms its status as the biggest car manufacturer in Europe. The sales of Volkswagen increased in 2003 to 87.2 billion € (2002: 86.9 billion €) and the profit in 2003 amounted to 1.1 billion € (2002: 2.6 billion €) (Group Overview 2004).

illustration not visible in this excerpt

Figure 1: Production facilities worldwide

Source: Group Overview 2004

The Volkswagen company is divided into two main divisions. There is the Automotive Division on the one hand and the Financial Services Division on the other hand. Passenger cars (including the NB), is the leading product line within the Automotive Division.

Figure 2: Volkswagen Group

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Source: Annual Report 2003, p.82

The New Beetle can be described as a mixture of an addition to the existing line of passenger cars and improvement to the existing original Beetle. For the younger generation who did not experience the spirit of the Beetle before, the NB can also be described as a new-to-the-world-product.

1.2 Identification of competing products

Because of the niche position of the NB there are no true competitive products on the car market. A closer look at the price range of the NB (from $ 15,200) shows products like the Saturn, Chevrolet Cavallier and Ford Escort which are also in the same price range (FIU 2004). Considering the unique design and retro-image of the NB, the MINI from the BMW Group seems to be the most competitive car at the moment.

2.0 Marketing Strategy

2.1 Description of the strategy

The marketing strategy of the NB was based on the design reminiscent of the legendary old Beetle: One of the most successful cars in the world, the last old Beetle left the production line in July 2003 with a total production of 21.6 million Beetles (Hatton 2003). The new car should be marketed as an emotional and not a rational car, which is design driven with an outstanding personality.

2.2 Target market

1. The “Baby Boomers”: People who are connected to memories of the old Beetle, who yearn for the “good old days” of the ’60s and ’70s and for whom the car will bring back nostalgia about their first car and their personal experiences.
2. The younger generation: People who see the NB as a fun car, to express their own personality and are considered to be cool and trendy.

Volkswagen and its agency Arnold Communications created a profile of the ideal NB customer: He should be a confident, creative, independent driver who is an active participant in life (Effie Awards 1999). The customers should be aged between 18 to 45, equally divided between women and men with average household income of $ 50,000 (Effie Awards 1999). This profile results in two main target groups:

2.3 Marketing Mix

The Marketing Mix is a combination of four marketing tools product, price, promotion and place used by companies to practise their marketing objectives in the target market (Kotler 2000).

Figure 3: Components of the Marketing Mix

illustration not visible in this excerpt

Source: Kotler 2000, p.15

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