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The New Beetle

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by

Salman Hussain

on 26 May 2011

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Transcript of The New Beetle

MGCR 352
Case Study Analysis THE NEW BEETLE Agenda - Define the marketing problem
- Review the decision factors (marketing mix)
- SWOT Analysis
- Quantitative Analysis
- Alternatives
- Reccommendations & Implementation Problem Recognition -How to promote the new beetle
-Uncertain target market
-Trying to target 2
generations

-Brand was falling The Marketing Mix roduct
lace
romotion
rice P
P
P
P How to promote the product in the US, and who the target market should be Product -The New Beetle 1998
-Designed to resemble the older beetle but
with modern technology
-4 design principles:


-"Higher quality" than Japanese cars on the market.
Automotive icon because of its history (WW2) Place -Marketing in the United States

Problem: Dealersips not confident with the brand itself A little hesitant in having the product in their dealerships -old generation + younger generation -Try to make Volkwagen relevant in the US once again
-Difficulty with marketing in the United States -Honesty
-Simplicity
-Reliablability
-Originality Promotion -To the Baby boomer generation
-Magazines and printing option available
-TV ads, billboards and car shows to promote
-A lot of press and attention attached to the product
-Arnold Communications -Arnold Communications developed advertising that would appeal to the hip Gen-X drivers Price -Problem

-On the market for smaller cars:

-The base price for the new beetle is $15,200 and adding the extras (CD players, sunroof goes up to $17,000-18,000) -A little too expensive to be called the "people's car" -small car $11,035 (2 door Saturn coupe)
-expensive small car $17,239 (Sentra SE 4 door sedan) SWOT analysis S -Cheaper than the traditional German cars
-Unique individualistic driving experience
-The product history – the ‘Beetle’
-The design of the product

-Dealers informational session in Germany -circles v. sharp edges -Manufactured in Mexico, rather than Germany

-VW “Drivers Wanted” marketing strategy contributed to the revival of the VW brand and increased sales

-Innovative promotions and attractive lease financing schemes represent a favorable proposition

-Successful co-branding strategy between VW and Trek/K2. SW -Stigmatism of the brand

-Limited advertisement budget for the beetle -low ad recall SWO -Cherished memories - emotional connection to the beetle

-Enthusiastic reception from the press, dealers, and the general public SWOT -Perceived as a “toy car” vs. an "every day car"

-3 brands contribute to 1/3 of the market share

-Downfall of the beetle in the past can potentially impact people’s current perspectives

-Competitors spend more money on promotional activities and advertising

-5% decline in the small car sales segment from 1996 to 1997 Quantitative Analysis Market Share - Total Market -In 1997, a total of 8,272,043 cars were sold in total

-Market Consists of 4 Segments -VW sold 137,885 units
-VW Total Market Share 1997 = 1.67% -Small, Midsized, Large, and Luxury Market Share - Small Car Segment -In 1997 2,217,812 cars were sold in the Small Car Segment



-1998 VW New Beetle Goal – Sell 55,000 cars -VW Golf and Jetta currently part of the small car segment
-VW Golf sales for 1997 = 20,702 units
-VW Jetta Sales for 1997 = 90,984 units
-VW Market share = 5% -Small Car Market Share = 55,000/ 2,217,812 = 2.5%

......IS THIS FEASIBLE? other
36.40% Volkswagen
5.00% Ford
12.80% Chevrolet
13.60% Saturn
11.30% Nissan
5.50% Dodge
5.50% Toyota
9.90% Small Car Segment Market Share:
Top 5 Brands 1. Chevrolet 13.6%
2. Ford 12.8%
3. Saturn 11.3%
4. Toyota 9.9%
5. Dodge & Nissan 5.5% Alternatives -Target Market: Young Generation + Baby Boomers -Geographic – United Stated of America
-Behavioral - Risky, Daring, Well informed (Educated), Adventurous, Self-Sufficient, Experimenters
-Psychological – Center of Attention, Confident, Creative, “Make the Most out of Life”
-Demographic – Single, Retired, Small Family, Average Income Perceptual Map 1. Print Media





2. Television Campaigns

3. Banners/ Billboards



4. Radio Two Different Marketing Strategies Aimed at: -The younger generation


-The baby boomer generation -More efforts for campaigns that appeal to their mentality, current behaviors and attitudes (individualism, unique)


-Campaigns that are more straightforward that use “memories” “past events” and “images” to bring back the memories from the past and rekindle their interest in the beetle THANK YOU FOR YOUR TIME! trengths WOT eaknesses OT pportunities T hreats Dealerships Contribution Margin for VW New Beetle: Manufacturers' Price: $15,200

Retail Price: Between $17,000 and $18,000

Average Contribution Margin: $17,500-15,200= $2,300

Average Contribution Margin (%): 13% -Competitors use: 80% television, 15% print, 5% radio
-Go with more visual route to increase appeal of product (TV, billboards, print media = huge part of beetle is its shape)
-VW should spend 70% on TV ads, 27% on printing medium and 3% on banners - Advertise in various magazines and print media
-Entertainment Weekly: High amount of correlation (Simon’s
descriptor), inexpensive, high number of circulation (to target
consumers of all ages).
-Spin: Extremely high number of correlation (to target young
generation).
Glamour: Inexpensive, Extremely high number of circulation (to target the female population). -To reach a larger segment of the population (commercials + product
featured in shows to react to the increase in TiVos). -Specifically aimed at public transportation modes – Buses, Metro
Station, Taxis
-Rental Car
-Not on highways



-Not an ideal media channel – Beetle’s appearance is key in attracting customers.
-Radio’s usually built in cars - people listening most likely already own a car. -Develop stronger relationship with dealerships by increasing their knowledge and interest in the product in order for greater buy by the owners themselves. This will increase loyalty to the brand and product.

-Increase the hype about the new product to get people more excited and increase demand – promotions (offers valid only for the first few months after the car is launched), car shows, etc













-Get the product out on the market as quickly as possible to prevent consumers from decreasing their anticipation and sell it to them while they are already hyped up! %
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