Company Profile:

Volkswagen group is an automotive conglomerate consisting of several brands of vehicle for a

range of cars for different customers demographic of age groups and price. Established in the
1930s, it has become one of the top automotive manufacturers in the world and is the top
automotive manufacturer in Europe. (Volkswagen, 2011a). Volkswagen began as a
manufacturer of heavy artillery and tanks during the 2nd World War for German’s Nazi and
the factories were then had to face the aftermath of being destroyed by the Allied Forces headed
by Great Britain but it was subsequently saved as it had shown great potential to become an
important automotive manufacturer. The automotive engineer to take on the project was Dr
Porsche who was well known in Europe for car manufacturing. (Bytewerk, 2007). From the
Beetle model to the Golf Model, Volkswagen’s vehicles were iconic and were the spear header
for car innovations that continue to do so until this day. Their risk taking effort was well
documented and their passion for building cars for people has made them a proactive
manufacturer that strives to protect the environment and sustainable community.

Methodology:

Volkswagen had a strong business model that has made them sustain businesses throughout
the turbulent years of automotive industries. The purpose of this module is to study the
Volkswagen’s current internal and external environment that affects the direction of the
company in marketing models and strategy. From Volkswagen’s annual report and
sustainability assessment, a secondary data was gathered and analysed .
Situational Analysis of Volkswagen:

Situational analysis is a method to investigate the current situation of Volkswagen. These

consist of internal marketing audit and external market situation of the company.

Segmentation Targeting & Positioning (STP):

Volkswagen’s strategy is to cater to all different age demographic, price and needs. Unlike
most vehicle manufacturer that comes with a single or two model that try to pleases the mass
market, Volkswagen has set a Product Market Matrix that divides accordingly to these groups:

• Young, Single and Professionals between the ages of 18-24 years old.
• Consumer who regards cars/vehicle as ‘status’ differentiator and has specific technical
details requirement like LED headlights, Bluetooth enable system.
• Consumers who have priority for speeds and better run engine for example the V6/V8
engine with higher horsepower capacities.
• Married Couples with children. Family centric focused on safety features, space and
basic family needs like Rear End monitoring system, Crash optimized rear end.
• Goods transporter for small scale home businesses that maximizes space like foldable
seats and Stow and Go storage system.
• Retired couple who has less emphasis on speed or sleek futuristic design.
• Consumers who haul equipment that has trailer tow package and Heavy Duty
suspension for more rugged and heavy-duty requirements

According to the product matrix from Volkswagen Annual Report, efforts and attempt to fill
in all the market segment for different needs and lifestyle of the society has been the strategy
of Volkswagen International.
POSITIONING:

Volkswagen is the group of company that owned and operated several other automotive arms
such as Audi (the luxury brand) including Lamborghini, with competitions like BMW and
Mercedes Benz Cars, Scania (heavy trucks and buses), Seat (Spanish Stylish compact cars),
Skoda (entry level vehicles such as sedan, hatchbacks), Volkswagen commercial vehicles for
transportation of goods and Volkswagen Passengers cars (entry-mid level vehicles). For the
purpose of this discussion, we will choose the Volkswagen Passenger Vehicles brand. The
main competitors for this range of vehicles are Toyota and Mazda. Toyota is one of the biggest
car brand with sales revenue of US$252.1 Billion (Toyota, 2010) while Mazda falls under
US$33.3 Billion annual sales (Mazda, 2010). One of the most enduring of Volkswagen effort
is to preserve and protects the environment. The main policy of the company is sustainability,
responsibility through their manufacturing, products and in the support in educating the
communities on the protection of environment. Apart from these initiatives, Volkswagen
differs from other vehicle manufacturer in the way the products are more energy efficient and
thus reducing the need for more fuel burning. BlueMotion is a technology created by
Volkswagen that reduces the sizes of the engine that runs on either petrol or diesel. Smaller
engines compared to the conventional engines buts runs better with increased performance and
reduced emission of carbon dioxide. Volkswagen is known for their high quality finishes that
ensures durability, comfort and ergonomic design with attractive and modern look. Quality in
the production also ensures safety and endurance.

Unique Selling Proposition:

Volkswagen is the group of company that owned and operated several other automotive arms
such as Audi (the luxury brand) including Lamborghini, with competitions like BMW and
Mercedes Benz Cars, Scandia (heavy trucks and buses), Seat (Spanish Stylish compact cars),
Skoda (entry level vehicles such as sedan, hatchbacks), Volkswagen commercial vehicles for
transportation of goods and Volkswagen Passengers cars (entry-mid level vehicles). For the
purpose of this discussion, we will choose the Volkswagen Passenger Vehicles brand. The
main competitors for this range of vehicles are Toyota and Mazda. Toyota is one of the biggest
car brand with sales revenue of US$252.1 Billion (Toyota, 2010) while Mazda falls under
US$33.3 Billion annual sales (Mazda, 2010).
Porter’s Generic Strategies:

Volkswagen has employed several strategies to remain competitive in the market with
segmentation of products to meet different needs and lifestyle of the consumers and ensuring
no compromise in the quality of the finishes, safety features and technology to remain ahead
of the competitors.

Marketing Mix for Volkswagen:

Product:

Volkswagen and The Beetle car are known synonymously and has great histories and stories
making it one of the most iconic car in the world that sold over 23 Million units. But the biggest
selling model of Volkswagen in the market today is the Volkswagen Golf with 7th Generation
model since the 1st one in 1974 that has until now selling over 25 Million unit around the
world. It has been voted as the runner up European Car of the Year almost every year. But it’s
the personalized segmented product in the Volkswagen pipeline that made it successful. From
Convertible, Hatchback, Coupe, Sedan, Sports, SUV (Sports Utility Vehicle) and MPV (Multi-
purpose Vehicle), the company has the car that fits every lifestyle, needs, and budget of
consumers. In Malaysia, the Volkswagen Polo has remained as the most popular model with 5
versions that ranges from Trendline, Comfortline, CrossPolo, Highline and GTI and runs on
petrol, diesel to the diesel blue technology. Volkswagen Malaysia has reported strong growth
in deliveries, with the total number of units sold in 2012 crossing the 13,000 mark, recording
a 77% increase compared to corresponding period in 2011. This follows healthy growth
recorded in 2011 with 7,350 units sold. That translates to an estimated market share of 2.4% of
Total Industry Volume (TIV), making VW the sixth best-selling marque in Malaysia and the
top selling European brand. The brand also launched “Think Blue”, a global platform unifying
all activities and initiatives on environmental responsibility, fuel consumption and emissions.

Price:

Regardless of the ideal positioning of consumer’s needs, pricing is also one of the major
criterion is choosing a vehicle. Volkswagen has consistently priced their cars with premium
pricing with an average of 10 percent higher than competitors. The return is for more upscale
and rewarding ownership experience that translates to brand loyalty. However, with more
competitive automotive markets, Volkswagen has been losing market share as consumer
perceived the car value is overpriced compared to Asian automotive car manufacture that has
better features and equally good safety features like Mazda and Toyota. In fact many American
and European automotive factories have been losing out to these competitors and had never
recovered resulting in layoffs and eventual shut down. Through vigorous research, Volkswagen
has found that the previous models were not as popular because of two reasons; the retail price
and the perception of high maintenance costs (Evans, 2011). To counter this Volkswagen has
reduced their premium pricing to be only 5 percent above competitors’ products while
maintaining their quality and service. Having cars to be manufactured in United States has been
the strategy to reduce production cost and thus, reducing the price of their cars. The model Jetta
is an example. When the price is reduced, the not so popular model was swapped off the car
showroom and became very popular. They have managed to attract consumer who are more
price conscious who wants quality. Volkswagen has also decided to take on the approach of
more is less. They are going to make bigger cars and charge less for them. They are exploiting
this idea with the Jetta and the Passat. They are changing their pricing strategy in hopes of
reaching their goal to become the number one automaker company in the world.
Place:

Volkswagen has increased their dealership from 12 to 22 in the year 2012. The number of
showroom throughout the country has also jumped to 28 with the positive increased in sales.
With increased market awareness of Volkswagen product throughout Malaysia especially in
major towns and cities, road shows in popular shopping malls, and new showrooms. These
together with the increased of 3S Centre (Service, Sales and Spare Part) nationwide including
Sarawak and soon will be in Kota Kinabalu, Sabah will definitely create consumers’
confidence.

Promotion activities:

Volkswagen like the other car manufacturer has constantly organized events and road show in
malls with contest, promotion and product launch all year long. With the new official website,
customers can review prices, found out models , local dealers and service centers of the
company. They have also launched promotional activities through social networking sites such
as Facebook and Twitter that updates their customers and fans. Hill (1988) stated that
advertisement such as sales promotion, road show and other promotion activities will drive
awareness of consumer and will affect the purchase intention. Besides, this also supported by
Mortimer (2001), advertising campaign done by companies is one of the important tools to gain
the brand cognition from consumers. The Volkswagen Motor Club Malaysia is also an active
Motor Club that serves to organise activities for Volkswagen enthusiast.
 LEARNING OUTCOMES:

What we have learned

• The elements of the marketing mix ( 4PS ).
• The influences on and effects of the changes in the elements of the marketing
mix.
• Product decisions.
• Comparative analysis of Toyota brandwith its competitors.
• Describe the role of products in the marketing mix,including how product is
developed , classified and identified.
• Define price and discuss its importance in the marketing mix, including various
pricing strategies.
• Identify factors affecting distribution decisions, such as marketing channels and
intensity of market coverage.
• Specify the activities involved in promotion as well as promotional strategies
and promotional positioning.
WHAT IS PERCEPTUAL MAPPING ?

Perceptual mapping is a diagrammatic technique used by asset marketers that attempts to

visually display the perceptions of customers or potential customers. Typically the position of
a company's product, product line, or brand is displayed relative to their competition.[1]

Perceptual maps, also known as market maps, usually have two dimensions but can be multi-
dimensional; they can be used to identify gaps in the market and potential partners or merger
targets as well as to clarify perceptual problems with a company’s product

PERCEPTUAL MAPPING OF TOYOTA :

Cars that are positioned close to each other are seen as similar on the relevant dimensions by the
consumer. For example, consumers see Toyota, Volkswagen are competitors of each other.