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The New Beetle-case study

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Bernhard Persterer

on 21 May 2014

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Transcript of The New Beetle-case study

The New Beetle

Bernhard Persterer, Romy Lebert, Valentin Philibert, Valentine Trouilleux
The New Beetle
„On the road of life, there are passengers and there are drivers“

(Advertising campaign in 1995, Arnold Communications)
Market research results Arnold Communications (1995)
The "typical" VW customer ...
is younger, wealthier and better educated than a little of the average car buyer
enjoys it when driving to take an active part ("winding roads", "no speed limits")
looks in an automobile as a means to more of A to B.
has a particular attitude to life: well-informed, creative, adventurous, confident, keen to experiment

Perception of the brand:
"People's car"
unique and individualized driving experience

Positioning and Branding
not exclusive
not only the ability to bring someone from one point to another

The first beetle is delivered in the United States
Image problems
Imported cars are luxury

VW sold a total 8.913 cars in the U.S.

Volkswagen of America is officially registered.
Subsidiary of VW

Dr. Carl H. Hahn
Head of Volkswagen of America

Dr. H. Hahn decides that VW needs a unique corporate image.

The advertising aims that you buy not just a car but also receives quality service dealer.

VW dealers are organized nationally.
The result is a tight network of VW dealerships.

Opening of new headquarters
in Engelwood Cliffs

The Volkswagen numer 1,000,000
is delivered.

VW sold over 500,000 cars
In addition to beetles quiet cars like:

In the following years, sales stagnated

The exchange rate of DM to USD leads to a strong decrease in sales.
The cars were in the low to middle price segment.

1975 VW has done with almost every car sold losses.
In the course of the dealer network breaks almost.

VW buys an old Chrysler factory to produce in the U.S.

1976 - 1978
Due to the oil crisis and the decline in demand for hatchbacks fewer cars are sold.

Mid-80s to be sold less than 100,000 cars for the first time since 1968

At the beginning of the 90 are five times fewer cars sold than at peak times in the 70s.

When in 1993 only 49 533 cars are sold on rumors that VW completely withdraws from America.

VW plans to the New Beetle.
Designers want to pair the spirit of the beetle with a futuristic design.

VW thinks should look like the strategy to boost the sale.
The advertising agency "Arnold Communications" is employed.

Arnold Communications conducts market research.

Data collection:
95 of the Top 100 VW dealers are visited
There is performed a comprehensive customer survey
The team itself is 50,000 km driven

German engineering
More fun
Ultra-smooth ride

On the North American International Auto Show in Detroit, the New Beetle is presented.

It needs a marketing strategy to be developed with the target groups can be addressed and which the New Beetle can be positioned in the market.
The available budget for this is very low.
Mission Impossible

Market analysis
Market environment
In 1997 8.27 million cars were sold on the U.S. market
27% of them in the small car segment
Approx. 2.22 million purchases
Decreasing trend (5% decline)
Top Sellers Chevrolet Cavalier: Price of $ 12,110 (basic version) to $ 19,910 (Convertible)
Ford Escort: Price from $ 11,745 to $ 14,245
Car sales in 1997
VW's position in the U.S. car market
1997: 137 885 cars sold
1.66% market share of the total market
Top Sellers: VW Jetta (90,984 sales)
Target for 1998: sales of 200,000 cars
Of these, 55,000 New Beetles (> 25%)
Corresponds to a share of about 2.5% of the small car segment (sales of 1997)

SWOT-Analyse „The New Beetle“
German quality and technology at reasonable prices (compared to other German brands such as Mercedes, etc.)
Unique design ("smiling" front), round shapes
Success story of the old Beetle
Pleasant, enjoyable driving experience

Limited Marketing Budget

High purchase price
Memories of earlier, carefree times (first car, first kiss, Flowerpower ...) -> loyalty with the Beetle
Many young customers who want to express their individuality
Positive press reports, tense expectation of the public (long waiting list before launch)
Beetle is ridiculed as a "toy car" and seen as less "real, drivable" car
Design could be "soft" for male customers be
Competitors have far greater marketing budgets
Decline in the small car segment by 4.5% last year
Marketing Mix – 4P‘s
The "New Beetle"
Cult object of the 70s
Winding retro style, but equipped with the latest technology
German engineering stands for highest quality
Six bright colors, different design options
Four design principles
Base price: $ 15,200
With extras (CD player, skylights, etc.) $ 17,000 -$ 18,000
In the small car segment is thus one of the most expensive cars -> Premium Pricing Strategy
If price too high: More competition from the next higher segment
If price too low: less attractive for traders due to lower profit margin
Sales in the U.S. (Volkswagen of America)
VW Car Dealers / Car Dealers
1998: 600 VW dealers in the U.S., of which 10% exclusive

Less than a quarter of a usual advertising budget ($ 100 million and more) available for the New Beetle
TV campaign, print media
Various shows and magazines, to be where advertised
Arnold Communications

Recommendations to target audience, positioning and communications mix
Which target group to be addressed with the "New Beetle"?
Options for Targeting
Both target groups are addressed, focus is on the younger generation

How should the "New Beetle" be positioned?
Unique Selling Propositions & Benefits
The New Beetle embodies ...
the latest German technology to date,
an individual and unique driving experience that offers exceptional fun,
at an affordable price.
Perceptual Map
Perceptual Map
Communication mix
Decision factors
Beetle-launch under the "Drivers Wanted" campaign?
Competition -> 100M (80% TV, 15% print, 5% Radio)
Limited advertising budget
Only 25% of the typical budget (approximately $ 25 million)
TV campaign or print media?
TV to develop brand awareness within a broader customer base
Print media to (eg Baby Boomers) to reach a specific target audience cost-effectively
Communications mix:
85% of TV
12% print media
3% radio and posters
Evaluation and selection of TV shows and magazines with regard to the respective target groups

Print media:
Spin (Simmons Descriptor)
Glamour (High Edition)
Entertainment Weekly (low price, high Edition)

Recommendation communications mix
Advertising expenditures
Advertising expenditures VW America:
<25% compared to the competition

Budget Volkswagen America

Television: 21,25 mio $
Print-Media: 3 mio $
Radio/Billboards: 0,75 mio $

Exploitation, taking into account reserves (New Passat, etc.)
What proportion of the marketing budget for Volkswagen America should be used for the 1998 Beetle?
1. Background of VW and New Beetle in the U.S.
2. Relaunch of the New Beetle: Development of a marketing strategy
Market analysis
Market segmentation
Marketing mix

Market Segmantation
Potential New Beetle Buyers
Baby Boomers
Young Adults (18-34)
Slightly more educated
51M in the US population
Adults born between 1946 - 1964
Above average income and level of education
Approximately 79M in the US population
Baby Boomers
Trend towards novelty
and uniqueness
Consistent with current marketing strategy (Driveres wanted)
Retain brand loyality
Lower Purchasing
Easily swayed
Nostalgia, loyality
Higher Purchasing

Trend towards larger Cars
Questionable willingness to
Target Market Selection
Why Not Baby Boomers
Nostalgia is the only selling point
Insufficient data that correlates nostalgia and sales
At a different stage in life – may be looking for SUVs and Luxury cars
Not a long-term sustainable market demographic
Temporary Target Market with limited growth opportunities
Why Gen-X
Easily impressionable
Develop brand loyalty that will
translate to additional VW purchases at later stages in life
Compatible with current VW marketing strategy
Image profile better fits this demographic
Looking to be different, fun and unique
Would better appreciate counter culture styling
Affordable German engineering
Target Market Selection
Our Prmary Focus
engineering at
an affordable
An individual,
superior and
unique driving
Full transcript