Project Volkswagen Essay Example

SEAT, Skoda, Volkswagen Commercial Vehicles, Bentley, Bugatti, Lamborghini,and Scania (Volkswagen, 2011). With production plants in various locations across Europe as well as Americas , Asia ,and Africa they operate a total of 62 production plants.Approximately 400...The New Beetle, developed by the Volkswagen Company in 1998 to meet the demand for a retro-looking car in the US market, gained popularity quickly. With around 30 thousand vehicles being produced daily by thousands of employees worldwide, it became a hit. However, after more than 12 years on the market, it was announced that production would cease in 2011.

The original prototype for the New Beetle was designed by Ferdinand Porsche based on Hitler's orders in the early 1930s. The first model of the Beetle was manufactured in 1938 and became history's best-selling car design with a price tag of $1800. Today, you can find a Volkswagen New Beetle priced between $15000 and $22000.

According to Solomon et al., a product is everything good that a customer receives in an exchange (2011, p.183). Categorizing based on this definition, the New Beetle can be classified as a consumer durable specialty product (Solomon et al., 2011, p.185). It serves as both a core product and an actual product - providing transportation benefits as its core feature while having actual features like a two-door convertible body style and disc brakes.

Transmission options for the New Beetle range from five-speed manual to six-speed manual, four-speed automatic, six-speed automatic, and Tiptronic. This compact car is commonly used for household purposes and offers various support features such as warranties and after-sales services; however, these support features may vary between dealerships.When consumers make the decision to purchase a car

such as the New Beetle, they dedicate significant time and effort to the decision-making process. Recognizing the importance of guarantees, service quality, and customer support, Volkswagen dealers have created a dedicated website to facilitate information seeking. The development of the Volkswagen New Beetle progressed through various stages including idea generation, product concept development and testing, marketing strategy development, business analysis, technical development, test marketing, and commercialization. This analysis will specifically focus on the marketing strategy development, technical development,and commercialization of the New Beetle. The marketing strategy aims to introduce the product to the market by identifying target markets and planning pricing strategies. Volkswagen sellers have decided to maintain their successful advertising scheme in order to showcase the new product. As part of this campaign, they have launched a dedicated website called www.turbonium.com to display the new vehicle. This website launch is considered one of Volkswagen's effective mass media advertising campaigns. During the technical development phase, engineers and sellers from Volkswagen refined both design and production processes for this merchandise. Atthe North American International Auto Show in 1994,a prototype known as "Concept 1," was unveiled as a preview of what would become later known as tNew Beetle(2011, p. 191) noted, due to positive public response, Volkswagen developed a production version of this vehicle known as the New Beetle in 1998. The release of the New Beetle was considered a significant accomplishment for Volkswagen. Customers had high demand for the New Beetle and even ordered it without test-driving it, showcasing continuous innovation by modifying an existing product to differentiate it from competitors.

Volkswagen's effective marketing strategy played a crucial role in the successful adoption of the New Beetle.

They invested $560 million in an advertising campaign that revolutionized the industry. The campaign featured the vehicle on a dedicated website called turbonium.com, aiming to enhance their television experience and engage with consumers in today's marketing landscape. According to Eric (1999), "The Television experience is just the beginning." This successful promotion on turbonium.com made it one of history's greatest advertising campaigns.

The mass-media advertisement conducted by Volkswagen sellers for the New Beetle serves as a good example of product acceptance during the awareness phase (Solomon et al., 2011).According to (2011, p.202), every product goes through a life cycle and its marketing strategy must be adjusted accordingly to meet changing conditions. It is also crucial to adapt the marketing mix (product, promotion, price, and place) in order to sustain success in the market. During the introduction phase of a product's life cycle, which is characterized by early sales and profits but lack of competition, it becomes more important to inform the public about its existence rather than immediately convince them to purchase it. Currently, there is only one option for pioneers seeking exclusive features in this new car model - Volkswagen Beetle. The focus of marketing efforts in this initial stage is on informing the public about the benefits of a specific brand and its producing company. Persuading customers to buy is not necessary at this point since there are only a few buyers and widespread distribution is not needed. These early adopters are individuals who are willing to take risks and excited about purchasing innovative products like cars in the automobile industry. As we move into the growth stage, the new product starts being consumed in

larger quantities by early adopters and subsequently by the early majority. Increasing sales during this phase result in profits instead of losses. In this stage, Volkswagen Beetle can continue offering a single basic model initiallyHowever, in the face of growing competition and the introduction of similar cars by competitors (e.g., Mini Cooper), Volkswagen Beetle is aiming to expand its range by introducing more diverse models that can be extensively customized. This strategy will help attract new customers while still maintaining its dominant position. As the market leader, however, Volkswagen Beetle needs to adjust its advertising strategy and inform both the public and existing customers about advancements made to their new Beetle model. Additionally, given changes in the auto industry, Volkswagen Beetle must also enhance its product distribution channels to stay competitive within the industry.

According to figure 1.1., overall sales are projected to steadily increase until they reach their peak. The third and longest stage of a product's life cycle is known as the maturity stage. During this phase, intense competition among companies producing similar products leads to fierce competition for customers, resulting in declining profits and peak sales (Solomon et al., p.203-204). Survival becomes a priority during this phase as many competitors exit the market. To remain competitive, management keeps product prices at their lowest possible level. For example, in today's automotive market, competition revolves around offering the lowest prices which forces other companies to carefully manage costs.During the maturity period of a product's life cycle, widespread distribution becomes crucial because not having the product available in a specific location can result in lost sales while competitors' products may be present instead. The decline phase

is the final stage where sales and profits continue to decrease and there are fewer competitors remaining. This phase persists until customer preferences change enough that the company can no longer make a profit, ultimately leading to the demise of the product category. Maintaining low prices is important during this phase, but it should be noted that a decline in sales does not necessarily indicate that a product has reached its decline phase in its life cycle. If a company believes their product is experiencing declining sales (Figure 1.1), it may not be wise to immediately implement strategies for the decline phase as this could potentially lead to premature failure. Instead, the company needs to first confirm if the product is truly declining before attempting to improve sales. Rather than focusing on cost-cutting measures during this phase, priority should be given to implementing strategies aimed at increasing sales. The concept of the product life cycle suggests that products and industries go through different stages like introduction, growth, maturity, and decline. By evaluating where a product stands within this life cycle, management can make informed decisions about how to proceed.
Loyal customers of Volkswagen Beetle are willing to search for limited availability locations and wait for their cars due to their continued purchase of them. According to the Carsales web (2010), it can be argued that the decline phase for the New Beetle began several years ago in certain markets like Australia. Solomon et al. (2011, p.205) define a brand as unique elements of a product, such as its name, term symbol or identifier, which sets it apart from competitors' products.

Volkswagen (VW) is an internationally recognized brand

known primarily for compact cars and particularly famous for its Beetle model. In 1998, Volkswagen surprised its customers by reintroducing the Beetle brand name. The Beetle brand has a rich history dating back to 1938 and enjoys strong customer loyalty.

Recognizing the importance of brand loyalty when introducing their cars, Volkswagen discovered that approximately 80% of Americans preferred American automobiles over foreign ones. The Beetle brand holds significant value for customers and evokes nostalgic feelings.

In 1998, the New Beetle retained the charm of its predecessor with its compact size, vibrant colors, and curved shapes while also offering new features such as a powerful engine, air conditioning, stereo system, and airbags. This combination of old aesthetics and modern technology created a sense of nostalgia, fun, and freedom. This brand equity provided Volkswagen with a competitive edge.The acquisition of the Beetle brand allowed them to introduce a new car in 1998 with the same name, reinforcing its brand equity. According to Solomon et al.(2011), the existing brand equity of the Beetle instantly attracted customers, leading to high demand upon its release. The Volkswagen Group struggled to meet this demand, forcing some customers to settle for different colors. This demonstrates the loyalty and appreciation of customers towards the Beetle Brand's quality and recognition.

Examining the Beetle as a consumer product reveals that the launch of the New Beetle in 1994 was part of the technical development phase, where potential customers' attitudes were assessed by engineers and marketers. The introduction of the New Beetle in 1998 involved changes made to an existing product, representing continuous innovation.

The mass-media advertising campaign for the New Beetle is a prime example of creating awareness during

the adoption process for new products. Overall, it can be concluded that the successful Beetle brand has earned customer loyalty.Volkswagen's decision to develop the New Beetle was influenced by their perception of quality and brand consciousness, showcasing their position as a leading automobile manufacturer worldwide and the largest in Europe. The introduction of the New Beetle in 1998 aimed to cater to the demand for retro-style cars in the US market. From a marketing perspective, this car was a successful product development that stood out as a distinct vehicle within Volkswagen Group. However, after more than twelve years on the market, declining sales and profits led to its final stage in the product life cycle, resulting in production ending in 2011 according to Volkswagen's announcement. Despite this announcement, Volkswagen has plans to launch another car under the same brand name soon, capitalizing on strong customer loyalty. This new addition will join Volkswagen Group's line of successful vehicles, which includes both variations of Beetle models - original and New Beetle. In 1999, Volkswagen introduced the new Beetle 1.8 Turbo through an advertising campaign featured on a website mentioned in Eric.W's report viewed on June 30th of that year. Heimer.S discusses the impact of the New Beetle on Volkswagen's sales in an article titled "New Beetle: My History for Much of 59 Percent Gross Sales Increase at Volkswagen" from urlwire.com published in 1999.Various sources explore the nostalgic appeal of the New Beetle. An article by Meredith.Roentgen in the Philadelphia Daily News (March 11th, 1999) references this phenomenon. Naughton.K and Vlasic.B's article titled "The Nostalgia Boom" from Business Week magazine (March 1998) provides further insights. Rohan's article in

The New York Times (January 4, 1998) also discusses the nostalgic feelings evoked by the New Beetle. Ogden.Thousand's article titled "Top as run of century? VW Beetle.Of course." in the Portland Business Journal (November 12, 1999) offers additional information about the success of the New Beetle model. The textbook "Marketing 2: Real People.Real Choices," written by Solomon.Michael R., Marshall.Greg W., and Stuart.Elnora W., published in Australia in 2011 is referenced for further information. There is a mention of Volkswagen itself, but no specific details are given about this source.