Volkswagen's Marketing Strategies: Segmentation, Marketing Mix, SWOT Analysis - An Essay.

Critically evaluate concepts, theories and models of marketing.

Marketing Segmentation

Volkswagen group is the largest Europe automaker group which handles Audi, Scania, Porshe, Ducati, Lamborghini, Seat, Bentley, Man, Bugatti, and other Volkswagen commercial vehicles. The company deals in automobile and financial services business. It undertakes a major mass and low priced production of automobiles. Automobile business deals in both commercial cars and passenger cars. Whereas, financial services deals with fleet management, leasing and customer financing services. It is headquartered in Germany and is generally operated by German Labor front (Volkswagen AG, 2018).

As far as marketing strategies are concerned, Volkswagen operate in these many independent brands, therefore it has to consider demographic, geographic and psychographic segmentation variables to render the needs of customers in existing economy. The report brings out marketing strategies of Volkswagen, it tries to widen its scope of 4p`s (Martin, 2014).  

Apart from the marketing mix, it is important to consider the SWOT analysis of marketing strategies which the company have made. Moreover, it can identify the potential opportunities and strengths to make sure whether the company is efficient to grab them (Cremer, 2017).

Volkswagen strategizes to cater the different age demographics, needs and the prices. Most vehicle manufacturer comes with one or two model to please mass market (Skinner, 2018). Volkswagen has efficient set of product Market Matrix which is divided as per the specified groups-

Young and professional people between 18 to 24 years. Consumer who regard vehicle and car as status differentiator and are specified with technical features such as LED lights and Bluetooth enable system. To cater the wider range of factors, the four elements of marketing mix has been extended to seven elements. The extended elements is process, people, physical evidence. Some people prefer to ride their vehicles at high speed for fun and run their engine such as V6/V8 engine with higher watt capacities. Retired and old people mostly look for less speedy vehicles and sleek design (Fan, Shaokun, Lau, and Zhao, 2015).  

While considering the marketing incorporated in Volkswagen, the company chose Value-based marketing. Initially, in 1930s, Volkswagen aims to maintain and empower every person to drive their own car. This concept was not applied when company used radically nonconformist in the age when company only produced luxury cars for elite. This assisted the company to design the manufacturing and bringing product quality and brand image at par in UK. Apart from this, the company strategies has inculcated relationship marketing approach in Volkswagen. It is important for the company to stable its relationships with its customers.

To elaborate the marketing mix, brand strategy of Volkswagen considers 4P`s renowned as product, price, place and promotion. The product in regards to Volkswagen is defined as a combination of both services and goods to sell to the target market. Apart from this, it is discovered that product is also a part of brand name. Design and quality are the major product features that have variety in them (Cremer, 2017).

(Source: Skinner, 2018)

The product strategy is equipped with variety and design in the product which includes warrant for them to result in good response from customers and make the customers satisfied with the loyalty. The biggest selling product and model of Volkswagen is Volkswagen Golf named with 7^th generation. This 7^th generation model is the first in 1974 (Poetsch, 2015).

Elements of marketing mix (4 p’s)

Mainly, the company offers production facility for commercial vehicles. Majority of the commercial vehicles are produced in Hanover, Pacheco, Wrzesnia, and Poznan. In 2017, the company has delivered 498000 vehicles to various customers in all over the world. The company holds a strong brand portfolio that can handle strong automotive brands. This brand is responsible for developing, producing, and distributing the light commercial vehicles. The company has built and created efficient ecosystem and other operational support system that have helped Volkswagen to remain competitive in the sector (Poetsch, 2015).

The model includes delivery vans, multipurpose vehicles, transporters, camper vans. The models are caddy Kombi, Caddy Kombi TGI, Caddy delivery van, Caddy Maxi kombi, Amarok single Cab, and Caddy Maxi Delivery Van TGI. The company has broad product portfolio of every brand under the umbrella of brand architecture and also the financial management of the company cannot be doubted. While studying the BCG matrix, the marketing strategy of Volkswagen can be marked as question marks because business of Volkswagen commercial vehicles are still struggling. Therefore, while finding stars in the same matrix, its financial services is the supporting services that assists financial assistance to the groups (Das auto, 2018).    

The important element in the model of marketing mix is price. Price is the consideration paid by the customers to the company when acquiring or buying the product or services offered to customers. The company involves distributions and dealers to target sales. There are commonly two ways to expand one`s business, one is direct ownership of the establishment or another through franchising. Company relate to dealers and maintain proper way to introduce the products to customers and convincing them to buy to purchase (Martin, 2014).

The company generally shares the profit and losses with its dealers to maintain the quality of cost leadership. While dealing with the price strategy, it was discovered that there are more than 61 dealership offers whose price is compared to the rivals such as Honda city and Ford. In regards to price, the company has vision to provide customers with car and its components by discussing with innovative team with the favorable environment-friendly ecosystem. Moreover, the product should be of high quality and competitive pricing and viability and sustainability in long term (Dagevos, 2016).

The pricing system of this automobile company is not only limited to purchasing it from the store. Therefore, the price variable includes cost of diagnosis which comprises of safety inspection, A/C performance inspection, and scan of engine malfunction. Other cost incurred is related to oil and lubrication that has DSG transmission service, application of synthetic oil change, brake fluid flush and coolant flush. Tire services such as tire rotation, tire balancing, mount and balancing, and aligning the four wheels, tire storage that depend on season (Martin, 2014).

The company has increased and extended its dealership with more new, young and growing entrepreneurs. The number of showroom in the whole country has been increasing with either self-owned business or by providing franchise. The number of showroom and stores increased with a positive in sales (Akdeniz, and Calantone, 2017). With the market awareness of Volkswagen product in whole Malaysia especially in popular cities, road shows have become popular in various shopping malls. The place referred to place where the company avails its products to its potential customers. Company is able to cover more diversified network that is related to dealers. Further, even with dealers, it is important to maintain the purpose and quality of cost of leadership. Volkswagen cars are available almost in each art of the country (Argon Associates, 2014b).

Product

The company also uses assembling lines and manufacturing facilities. The several parts of the world includes such as Mexico, Germany, USA, India, China, Russia and many more. Indonesia is recognized as one of the top destination of cars and van sales. The company has undertaken a construction of new plant with $140 million for manufacturing the large transport of various vehicles and vans. As far as the other countries such as India is concerned, Volkswagen started assembling of specific export modules of certain engines and other local engines to increase the localization level of recent 70 percent to 90 percent that help to make cars with reasonable resources without wasting them. Volkswagen have boosted its international presence and its distribution channels that are laid in countries in which it operates (Isensee, 2018).

Promotion

The promotion element of the marketing mix deals with inducing the customer to buy the product. The promotion is usually maintained by the tool of advertisement. The excitement among the customers and their family is recorded and unveiled on television. The main aim of promotion is to attract the target customers (Khan, 2014).

Volkswagen continuously organize events and sponsor programs with the contest in malls to promote. They also launch promotional activities by social networking sites such as instagram, twitter, and Facebook that keep updating the customers of new models that are being manufactured. The company launch advertisement such as sales promotion, mall and road shows, and other promotional activities that can drive awareness among the customers and influence the purchase intention (Liu, Li, Chen, and Balachander, 2017).

Advertising campaign executed by companies is an important tool to get a brand cognition among the customers. Volkswagen uses Double marketing to position its brand. Double marketing means that the company operates multiple campaigns on different places that carry different information simultaneously. Earlier, Coke was the only company which tried double marketing because it has huge budget which would employ different advertisement agencies (Argon Associates, 2014a).

The company has launched an media program called “Blues” that can complement and communicate the main essence of Volkswagen brand. This promotion resulted into huge success among 2 million people who attended different concerts sponsored by the company. The company also uses web promotion that includes podcasting to promote the brnad through internet. To get the promotion through other modes, the company joined hands with universal studio (Zoellner, and Schaefers, 2015).

Volkswagen enjoys an strong market share in automobile industry as it is drived as one of the continent`s number one care manufacturer. It enjoys a strong reputation in market due to which the value of stock cannot be brought down to null anyhow. The company has 44 sites to produce the cars in the world and it can meet the demand of customers (Jurevicius, 2016). The company also enjoys a advantage of strong R&D Activities through which it finds out the potential customers and make proper marketing strategies to attract them. The company is always inquisitive of discovering new technology that can make the vehicles more efficient so that it do not consume unnecessary fuel and also decrease the emission of nitrogen oxide, carbon di oxide and lead to ensure that their operations are not affecting better environment. The company holds a strong brand value as people are aware of other brands that are owned. Undoubtedly, Volkswagen is among the top brands of vehicles in this sector (Varshney, & Sharma, 2018).   

Price

Volkswagen do not perform very well in Africa and North America that remained a concern for Volkswagen. The company also faces operational inefficiency and weaker productivity are the reasons due to which company could not focus on marketing strategies in this area and the company also turn to very less employee productivity to the competitors (Jurevicius, 2016). The company has less and limited liquidity position as the company has already invested in Research department that restrict to engage in promotion of other projects (Cremer, 2017).

The company enjoys several opportunities due to greater market share such as from the very beginning it started entering alliances and merged with different companies such as Audi, Porshe, Skoda and many more. The company knows that customer has demanded for fuel efficient and hybrid vehicles (Isensee, 2018). Therefore, if Volkswagen continue to meet the needs of customers by research and development so that they can survive in the current market. By using knowledge in finding how new technology are used in engines to reduce the harmful emission. The Chinese market provides an encouraging rate of growth in the car market. The market in china has reached nearly to $98 million in 2008. On the same side, the consumption has reached to 7.4 million units which is an increase of around 17.8 percent as compared to previous year (Jurevicius, 2016). The company strive to cater all the elements of marketing mix, the company strive to enjoy additional resources from government, when they better their product to compete with the other automobile companies. The price strategy plays an important role in competing within the industry (Zoellner, and Schaefers, 2015).

The excessive competition in the automobile industry led companies to make strong marketing campaigns. Volkswagen have claimed that Toyota is the biggest competitor. Due to recession and economic slowdown, there always remained a stiff competition among the companies and how a company with innovation grab the market in the automobile sector (Cremer, 2017). Every country has laws to protect the environment such as strict emission standard to focus on advancement in technology. The company has to follow environmental laws and ethics and manufacture such cars that could meet the demand and do not lead to pollution and emission. The production cost has increased due to increase in prices of raw material and increased imposition of government rules which restrict the labor. There is extensive potential in automobile industry and various factors lead to increase in demand (Varshney, & Sharma, 2018).     

Conclusion

From the above discussion, it can be summarized that Volkswagen is recognized as a successful company and it is well known brand name. Successful company like Volkswagen aims bigger goals and has the chance to dominate the automobile industry. Marketing plays an important role when it comes to cater and maintain the huge operations of the company. To maintain the success of the company, the company cannot limit itself to cater the existing customers. It maintains a marketing department to use the winning strategy.

References 

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