Background Information
VW introduced the Beetle to the US market in 1949. The Americans had serious reservations concerning imported cars (Lal 1).
The company began its first advertising campaign in New York Times
In the 1960s the company created and expanded the dealerships, it also focused on popularizing both the Beetle and the VW brand. Brand recognition rose to an all-time high in the same period (Lal 3).
In 1970, the appreciation of the dollar against other currencies affected the profits margins of the company. Car dealers in the US started looking into other car markets. They started importing the Japanese brands hence creating unbearable competition for the Beetle.
In the 1980s, the sales of the Beetle dipped due to increases in the importation of Japanese cars and new environmental regulations affecting the car markets. VW stopped the production of the Beetle.
VW sales hit rock bottom in 1993.
The company developed a new marketing strategy, fired DDB Nedham Advertising Agency, and hired Arnold Communications to revamp the ad campaign.
Sales started rising again, and the company's sales experienced a rebound in 1997. It was considered a good time to introduce the New Beetle to the market and in 1998, the company launched the new Beetle. It required a new marketing strategy which the company's marketing team considered to be the ‘Mission Impossible (Lal 14).’
Causes of the Demise of VW in America
Fluctuations in exchange rates. It made the Beetle a little bit expensive.
An increase in the Japanese imports. It ate into the market for the new Beetle.
Changing market preferences in line with the introduction of new and differently designed cars.
Poor marketing strategies. The marketing strategies failed to develop customer loyalty, grow sales, and most importantly attend to the changing market conditions especially concerning customer preferences (Lal 14)
Generalization of marketing campaigns with no focus on any particular market segment hence the advertisements did not achieve that which they were intended to achieve.
Key Elements in the Re-launch
The New Beetle 1998 offered resembled older beetle only that I was sleeker (Lal 4).
It came with more colors
The car also came with new technology
The company wanted to sell the idea of a car with higher quality than the imported Japanese cars (Lal)
The four design principles for the New Beetle 1998 include
Honesty
Reliability
Originality
Simplicity (Lal 8)
On marketing, the company focused on targeting two market segments. These included the baby boomers and the younger population in the US (Generation X).
There were challenges with marketing to the two populations. On the baby boomers, the company sought to bank on the nostalgia associated with buying the imported Japanese cars based on their experience with the Beetle at the end of WWI (Lal 8).
The baby boomers were also likely to purchase the car for their family members but not for themselves since at their age they would require larger cars/SUVs.
For the younger generation, the worry is that the population can easily be swayed by new information-no brand loyalty.
The New Beetle 1998 was retailing at $17,000 hence making it expensive for a car of its properties (Lal).
Dealers were also apprehensive of having the New Beetle in their car yards.
Based on the analysis, the company must steer its marketing strategy towards selling to the younger generation and not the baby boomers. They should design a campaign that focuses on brand loyalty and should also focus on attracting markets with lower incomes.
Works Cited
Lal, Rajiv. The New Beetle. Harvard Business Review. 2003. Print
