Case Study - The New Beetle

The New Beetle
Omiros Grigoreas
San Diego State University
MKTG-772 Strategic Brand Management
Dr. K. Ehrich
Case Study
Submission Date: September 17th, 2017
This case is about targeting and positioning and looks at the methods by which VW looked at the
consumer market and chose particular segments to whom the New Beetle might be appealing.
Use the following questions to focus your analysis:
What are the consumer groups that are appealing to VW, and what are some of the
advantages and disadvantages associated with marketing the New Beetle to these consumers?
How can VW be most effective in communicating their positioning strategy to a
potentially disparate set of consumers?
San Diego State University – Strategic Brand Management – Case Study – The New Beetle
Omiros Grigoreas ©
In 1970, Volkswagen’s sales were at their peak with 569,969 sold units. Especially the years 1960 to 1970
were full of success. But afterwards, sales started declining, which forced the company to be innovative and
try something new.
The Beetle was an important factor for Volkswagen, because it was their first successful car in the US
market until 1970. The reasons for the decline were the falling value of the US currency and later in 1978,
moreover, the governmental regulations which forced VW to stop selling their Beetle.
The occurred branding difficulties (perception of poor quality and reliability) led to a cooperation with a
new agency (Arnold Communications). A research revealed the most important characteristics of VW
drivers – they are more affluent, more educated and younger than the average car driver. Furthermore, they
are adventurous, creative, confident, self-sufficient, have an active role in driving and a unique attitude
towards life. For them, the car is more than just a car.
For the relaunch, VW used their equity from the past, especially the individualistic driving experience and
German engineering, combined with the design and technology from the future. Concerning the design, VW
used only round shapes and forms on purpose, because they look more human and represent completeness,
which is positively perceived by the customers.
Using the results and insights mentioned above, the target customers are the baby boomers and the younger
generation, which consists of people at the age of 18 to 34 years. The groups may be demographically
heterogenous, but they share characteristics such as confidence, individualism, desire to be the center of
action, driving passion and the seek for German engineering. This similarity implies, that the use of
emotionally based advertising can be used for both segments – which is an advantage. On the contrary, the
advertising has to be differently created and implemented, since the groups are of different age
(disadvantage). In order to address the segments individually and more efficiently, adjusted advertising is
necessary. The baby boomers focus more on their positive personal experiences such as going to honeymoon
with the Beetle, while the young generation wants the car to be more unique and non-conservative.
Also, a challenge is to train the sales force in a way, that they know how to appropriately approach the target
groups. Selling to baby boomers (people older in age) is different than selling to the younger generation.
The next issue is the pricing strategy. The baby boomers are more likely to afford the New Beetle for
approximately 17,000$, but this could be a problem for the younger generation. So, VW and Arnold
Communications face the challenge of conceptualizing a marketing strategy that can convince this target
group to spend this amount of money for the Beetle.
The next aspect is also related to the price. Since the Beetle was more expensive than the average car in the
small-car segment, potential customers may not even consider buying it, but prefer a larger car instead. An
important reason for this point could be the fact, that the buyers need larger cars because of having a family.
San Diego State University – Strategic Brand Management – Case Study – The New Beetle
Omiros Grigoreas ©
Finally, this high price lets VW appear inconsistent – formerly, the Beetle was supposed to be “people’s
car”, affordable for everyone. But on the other side, VW did a good step by following the trend of
individuality - the Beetle is not supposed to be people’s car anymore, but a personal car.
The following paragraphs focus more on the communication and positioning of VW. As said before, both
groups have to be addressed, and that has to happen on individual ways.
Investments in printed media, radio and TV are important for the baby boomers, since they are older and
probably stick to traditional channels. Cooperation with magazines and newspapers could help to reach
those potential customers, since their willingness to read is higher than for other age groups. Additionally,
it could be useful to cooperate with printed media which is being read by people with a higher income, since
only they are potential customers (due to the high price of the Beetle). Concerning TV commercials, they
should be shown in the early evening, when the baby boomers return home from work. For the radio, using
the time right before and after work would work best, so that you can reach the audience while being in the
car on the way home / to work. This idea is based on emotional advertisement, which reminds the group of
the previous positive experience they already had. The focus is on the emotions mentioned before
(honeymoon etc.).
The young generation (18 to 34 years) has to be convinced, that investing this high amount of money to
afford a Beetle is really worth it. Firstly, the unique design and the rational reasons of high quality (implied
by German engineering) have to be central. Also, the lifestyle and personal characteristics have to be
addressed in the advertisements (as mentioned before: confidence, individualism, driving passion, nonconservatism etc.), especially the individuality. It could also be useful to have special offers for students or
other people still in education, to make the car affordable and try to cultivate customer retention.
Particularly, they have to perceive that this car is useful for them – which can be a challenge, because the
car is small and people in the young generation are facing the phase of getting married and a family, which
implies the need of a bigger car. Concerning the channels, VW has to choose the right ones which are
frequently used by them, which are TV and radio (it was too early for the Internet).
To sum it up, both the channels as well as the content of the advertising have to be different and adjusted to
the target group. What has to be done the same way for everybody, is to transfer the basic idea to all groups
– VW offers high quality for an affordable price and German engineering, has to intensify the importance
of the Beetle and fulfill the quest of individuality. The potential customers should perceive that VW is
delivering unique value.
San Diego State University – Strategic Brand Management – Case Study – The New Beetle
Omiros Grigoreas ©