One of the largest issues that a company faces is when their brand grows stagnant. This has happened to many well established brands all over the world and it is up to the marketing team in order to ascertain what would prospectively be the best option to consider when looking into how to redevelop the brand. Some factors that can cause the brand to grow stagnant are: lack of attention to the global sustainability initiative, branding that is old and dated, and competition that is using a fresh strategy that highlights that corresponding brand in a negative light. A perfect example of this is the luxury brand Volvo from Sweden. The reason that Volvo is such a quintessential example of a product that whose branding has gone stagnant is that Volvo actually has sensational vehicles, yet they have been tagged as the “safe and boring” choice in the luxury automobile industry. Perhaps it is because of their exterior design that leaves something to be desired for the luxury consumer who is shopping for a BMW or Mercedes or perhaps it is the clients who are typically seen driving Volvos. These clients are older, tied down with families, and essentially, do that have that spirit of adventure and intrigue that the BMW or Mercedes customer has. These factors are precisely why Volvo had a critical marketing problem to solve because they really do have excellent and safe vehicles that drive for longer than most BMW or Mercedes. That being said, they needed to freshen up their strategy to remain competitive in the luxury market. This paper will analyze the dilemmas that Volvo’s team was faced with and how they went about solving those corresponding those dilemmas to stabilize their brand and prosper as a result.
Macro and Micro Environmental Factors Influencing Volvo’s Strategy:
The Macro Environmental factor that is primarily affecting Volvo’s strategy negatively is the stereotypes pertaining to their brand and their stagnant branding policy, (“Volvo,” 2016). This issue has a ripple effect in their overall business model because it limits the consumer that they are attracting around the globe. The reason that this is crippling their brand is that even though those consumers are buying cars, they are less of risk takers and they are predictable, (“Volvo,” 2016). In order to increase sales, Volvo had to consider a way to attract a more fast-paced and unpredictable consumer.
Branding is surely Volvo’s issue for prospective company growth. Due to the way that they have let their branding idle to attract that same “settled down” consumer who keeps every expense on their spreadsheet, has really caused a decline in their sales because they are losing an entire block of prospective consumers that would want to drive and could afford their reliable and luxurious vehicles. One way that this could be reestablished is to launch a new line of vehicles to grow their consumer base. Additionally, redesigning the boring exterior of their cars to be more competitive with BMW and Mercedes could also be a viable option to make their brand more chic and desirable to a wider base of consumers.
Pertaining to Microeconomic Factors, Volvo is not negatively influenced by the quality of their products, (“Volvo,” 2016). It is undisputed that Volvo is reliable. There is no question there. That predictable consumer that they have attracted time and time again is surely able to attest to their quality; however, they are almost too safe, if that were ever considered possible for a car. The Microeconomic Factor that greatly hinders Volvo is surely related to how they do not capitalize on the possibility of promoting their reliable products in an outrageous marketing campaign that draws them attention, “Volvo,” 2016). Something such as this will highlight their brand’s strength and also will highlight how their cars last many years, have low maintenance issues, and overall, are a good investment to both the safe and daring consumer.
Another Microeconomic Factor that is greatly affecting their business model is their lack of attention to sustainability pushes in the automotive industry for many years, “Volvo,” 2016). This is surprising given the culture in Scandinavia as a whole pertaining to Green initiatives. Volvo needs to market this in their new branding strategy as well in order to remain competitive with other auto manufacturers. Another neat way to do this would be to produce more hybrid or sustainable vehicles in order to attract that wealthy consumer who is hunting for a risky yet safe and environmentally sound car. This is a great avenue for Volvo to potentially to build on their “too safe” image, yet boost their credibility pertaining to sustainability initiatives.
Volvo SWOT Analysis:
In order to paint an accurate picture of how a business is operating and where they have potential threats or room for improvement, it is wise to conduct a SWOT analysis, (“SWOT Analysis,” 2016). A SWOT Analysis consists of aligning a prospective companies Strengths, Weaknesses, Opportunities, and Threats, (“SWOT Analysis,” 2016).
Strengths
Regarding Volvo’s Strengths, Volvo has the Strength of quality and reliability, (“Volvo SWOT Analysis, USP & Competitors,” 2016). In fact, Volvo has carefully paid attention to world class safety standards that are truly efficient, (“Volvo SWOT Analysis, USP & Competitors,” 2016). This is great for Volvo’s business because it allows them to successfully maintain the quality of the driving experience and overall quality of their vehicles worldwide.
Volvo additional has the Strength of attracting an elite class of consumers with their classic style, (“Volvo SWOT Analysis, USP & Competitors,” 2016). This is important to note because in spite of the fact that their brand has grown boring to some, they do have a classic sense of tasteful elegance in their design that few brands can truly ever compete with in their entire corporate history. The Swedish influence in Volvo’s branding has surely left a long-lasting sense of classical European elegance that should never go unnoticed.
Volvo also has the Strength of having over 100,000 employees worldwide, (“Volvo SWOT Analysis, USP & Competitors,” 2016). This is important to note as an asset of Volvo because having that much talent at their grasp is crucial to the future of their brand. Many brands forget the importance of utilizing the brain power that they already have within their walls and Volvo absolutely has this in their business as a potential resource to tap into.
Volvo’s final strength is their plethora of subsidiaries that greatly diversity their business model, (“Volvo SWOT Analysis, USP & Competitors,” 2016). Some examples of Volvo’s other subsidiaries are: Renault Trucks, Mack Trucks, Volvo Trucks, Volvo Construction Equipment and Volvo Busses, (“Volvo SWOT Analysis, USP & Competitors,” 2016). This is an important asset of Volvo because they have the potential to serve a very diverse consumer in the industrial sector as well as be a polished luxury car brand. Furthermore, this trucking business has the potential to boost their sustainability presence if they navigate their technology and resources carefully.
Weaknesses
Volvo has several weaknesses and the majority of them pertain to branding and potential market share acquisition, (“Volvo SWOT Analysis, USP & Competitors,” 2016). The first weakness that Volvo possesses is that they have a very limited penetration of a “middle class consumer” given that their price point is so high and have no option for the middle class consumer to consider. This is relevant to Volvo’s weaknesses because Mercedes, for example, has their C Class automobiles that allow the middle class who wants the prestige of Mercedes’s name to enter their brand loyalty and to increase sales. Volvo has to seriously consider this because it is limiting a crucial market potential for sales and updated fresh branding. Another example of a company that has done a great job with this is Lexus. Lexus has several different tiers of vehicles available to attract the middle class to luxury high end consumer and this has done volumes for their sales and branding prestige around the world. Furthermore, BMW has also done something similar with their 3, 5, and 7 class offerings. This diversifies their consumer yet still keeps their brand elite. What ends up happening as a result of all three of these car companies that have done this is that their brand has prospered, yet still remained exclusive because the luxury consumers can still afford those high status S500 or 7 Series cars, yet the middle class can still have a bite of the prestige as well.
Volvo’s second weakness is tied to this because they are very cornered in the market because they are truly unable to compete with other automobile brand giants such as: Lexus, Mercedes Benz, BMW, Audi, and the like, (“Volvo SWOT Analysis, USP & Competitors,” 2016). What is going to make Volvo overcome this is to put their efforts into designing a fresh line of cars both for the middle class and the prospective environmentally conscious consumer that have their standard of reliability. If they do this, they can gain some of this market share.
Opportunities
As mentioned above, Volvo surely has Opportunities. In fact, Volvo’s primary opportunities are related to diversifying their brand. This is how they are going to get out of their rut and join the rest of the luxury car world while appealing to the middle class. If they do this and make their brand hip, they can absolutely prosper. An example of this that comes to mind is what Mini Cooper did in recent years. Previously, the Mini Cooper was dated and not relevant; however, with some brand revamping with the right CEO, the Mini Cooper is now back and better than ever. This opportunity absolutely does exist for Volvo, they just have to have some serious collaborative meetings and set their plans for brand diversification in motion. This will take a substantial investment in capital; however, the pay off in the end will absolutely be wroth their efforts because their brand will truly catapult as a result.
Volvo has what a lot of these giants didn’t and that is high quality and safety standards, (“Volvo: Putting the Vroom Back Into Sales,” 2016). This is their card to play in their Opportunities. If they are able to put that Swedish sustainable engineering into the proper place, they absolutely can and will succeed in their efforts to revamp their brand and increase sales overall.
Threats
Volvo’s primary threats actually come from the prospect of doing nothing to save their brand, (“Volvo: Putting the Vroom Back Into Sales,” 2016). The reason that this is their glaring threat is that they risk just keeping that same predicable consumer; however, if they invest the capital now, they can prevent their brand from growing further stagnant, which is precisely what they need to do in the long run. If Volvo acts now, they will have to do less damage control later.
That being said, Volvo’s additional threats come from the plethora of luxury car giants in the market that are attracting middle class consumers, exotic consumers, and sustainable consumers, (“Shaping the Future of Transport,” 2016). If Volvo wants to go up against this competition, then they are going to have to make a drastic change to their brand and get going! The brilliant part is that they have all of the fuel power they need to do this, they merely need to act, which gives them a great advantage over the other brands in the industry.
Best Strategic Factors for Volvos Strategy:
In Volvo’s case, I propose a strategy that is consisting of rebranding, redesigning, and sustainability. I feel that these are the key ways to get their brand more competitive with their luxury counterparts. This is not impossible given that brands such as Mini Cooper and Burberry have absolutely achieved this. Burberry is also an excellent example of this because their fashion plaid was outdated and old and now look at it! Volvo, I feel is the Burberry Plaid of the luxury car industry. If they make their plaid into a new and fresh look, their brand can absolutely come back.
Sustainability is going to be a key strategy for Volvo because it naturally plays off of their world class European design that can attract both their European and American wealthy customer. This model will drive sales and will also potentially be implemented into their new car line for the middle class. They also may receive tax credits for this that could also finance their marketing campaign for their new line as well. By thinking in this way, Volvo will be able to create a comprehensive branding strategy that will across the board attract their new, old, and more exotic consumer. If Volvo, collectively changes their luxury to include affordable, sustainable, and maintain their existing client base, they will absolutely develop as a global luxury brand superpower that will have the potential to surpass their luxury automobile brand counterparts.
Conclusion:
All in all, Volvo is in a more stable place than most. The changes that they have to implement in their brand will be expensive, but they are not impossible. This is an important point to remember is that Volvo’s main danger is to remain stagnant. By remaining stagnant, Volvo will continue to lose out to vast competitors such as: BMW, Audi, Lexus, and Mercedes Benz. That being said, if they really revamp their brand through designing an affordable car line for the middle class, add in a sustainable model, and also, attract a hip new customer, they absolutely have a place in the market’s future of luxury automobiles. The key for Volvo is going to be to get out of their branding comfort zone and to do something exotic while still keeping their world class safety and quality standards. This is absolutely possible for them and I have every faith that they will be able to achieve this and revamp their world class luxury brand.
Works Cited
“Shaping the Future of Transport.” Volvo Group Global. 2016. Web. 15 April 2016.
“SWOT Analysis.” MindTools. 2016. Web. 15 April 2016.
“Volvo.” ISID Business and Sustainable Development. 2016. Web. 15 April 2016.
“Volvo: Putting the Vroom Back Into Sales.” A Case Study. 2016. Web. 15 April 2016.
“Volvo SWOT Analysis, USP & Competitors.” BrandGuide. 2016. Web. 15 April 2016.
