Volkswagen’s International Marketing Strategy

Company’s snapshot:
Volkswagen is a German automobile company. It operates as a manufacturer and distributor of automobile parts in the Global automotive industry. One of its subsidiaries is the Volkswagen of America that is based in United States. The Group’s principal activities are to design, manufacture and distribution of cars and other vehicles worldwide. These activities are carried out through two divisions: Namely Automobile and Financial services. The Automobile division involves development of vehicles and engines, as well as the production and sale of passenger cars, commercial vehicles, trucks and buses. The Financial division involves dealer and customer financing, leasing, Banking and insurance services, rentals and fleet management.

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Overview of Volkswagen Group of Companies:
It leads the continent as the Europe’s number one car maker. The Company’s major production line include Volkswagen Passenger car, Audi, SEAT, Skoda, Lamborghini, Bugatti and Bentley ranges of vehicles. The Company’s major emphasis is on increasing its focus on core business, profitability and reducing the production cost. In order to achieve this it is considering divesture of non core business segments and adapting many Modular strategies in the process of production and introduction of new models.
Company at a Glance:
Major Industry:

Automotive Industry.

Sub Industry:

Diversified Automotive Mfrs.

2008 Sales:

113,808,000,000 (Year Ending Jan 2009).

Employees:

357,207.

Market Cap:

30,656,317,749.

Share Type:

Stammaktie.

Stock Data:

Current Price (12/30/2009): 76.58 In Euro.

Revenue generated in the year 2008:
113.808 BLN EUR.
History:
It was setup in 1930 by Ferdinand Porshe in Germany and was known as Porshe Buro. In early 1930’s German Automotive industry was mainly involved in making Luxury cars. And so an average German could only afford nothing more than a motorcycle.
In 1934 Ferdinand Porshe was commissioned by Adolph Hitler to build a small inexpensive car. He required a basic vehicle that could transport two adults and three children. And this vehicle would be available to all at the price of a motorcycle. On 22 June 1934 Ferdinand Porshe agreed to create a ‘People’s Car’ for Hitler. There were many changes including better fuel efficiency, reliability, ease of use, and economically efficient repairs and parts. The prototypes of the car in the form of ‘KDF-Wagen’ started appearing from 1936. this car had its peculiar round shape and air-cooled, flat-four, rear-mounted engine.
Only a handful of cars were made before the second world war started, that is in 1936. The post war existence of the Company owed to a British major Ivan Hirst. He indented to dismantle the Company and ship it to Britain as no car manufacturer was interested in the Company as it lacked the fundamental requirements. The Company survived by producing the cars for British Army. Volkswagens were first sold in America in 1949. And even though these models were universally known as Beetle, the Company never officially named it, instead it was referred as Type 1.
During 1960’s and 1970’s the car was becoming outdated the Company introduced several Type 3 and Type 4 models. It differed from the previous models notably with the introduction of monocoque/unibody construction, the option of a fully automatic transmission, electronic fuel injection, and a sturdier power plant. In 1964, Volkswagen succeeded in purchasing Auto Union, and in 1969, Motorenwerke AG (NSU). VW ultimately merged Auto Union and NSU to create the modern day Audi company.
Company’s mission statement:

Provide a quality product.
Create a safe environment.
Enhance productivity.
Eco Friendliness.

Volkswagen projects:

The engineers at Volkswagen are constantly trying to develop new fuel efficient Models which have very less fuel emission and offer great performance.
It is involved in developing many fuel efficient vehicles such as BlueMotion Models, alternate powertrain technology and supporting many other projects for environmentally sound driving.
Golf BlueMotion is the example of the most fuel efficient vehicle created by them with CO2 emissions less than 107g/kg.
Volkswagen is one of the company to become the member of “Business and Biodiversity Initiative”.
Where ever possible they use recycled and recyclable materials and most eco friendly methods of construction.
They are constantly working on developing vehicles which are fuel efficient and which have minimum impact on the environment.
The company is engaged in many research projects relating to biotopes, the environment and protection of the species and supports research programs.

Marketing Strategy:
Volkswagen mainly uses Double Marketing in order to position its brand. Double marketing mainly means running multiple campaigns at different places carrying different messages simultaneously.
Initially coke was the only company that tried this because of their huge Budget by engaging different ad agencies and pitting them against each other.At times there were different campaigns that were put up at the same time. But they didn’t really work together.
In the time period of last few months they have launched campaigns such as “Unpimp my ride” to prevent the modifications done by people and for design control, the”obeying your fast” for the GTI – as well as the “safe happens” jarring TV ad spots for the Jetta.
The Company’s major emphasis is on easier availability of its products. And to make that possible it has around 44 sites all over the world. That gives them the Geographical advantage. As they can reach the demands of their customers and even provide a good after sales service through their service centres.
Its major marketing strategy is branding its products into different segments of production lines.
Its brands go from Skoda (economically priced family vehicles) to Rolls Royce.
Use of Latest Technology:
Blueprinting is the latest technology used by them. Blueprinting is the science of engine rebuilding. At times the engine becomes rigid and there is often disturbance during the start of the engine.
This is due to incorrect shimming, vibration from poorly balanced cranks, rough low speed running from valve clearances being too large, so generally speaking there is a lot of room for improvement.
Careful measuring, fitting and balancing are the main steps involved in Blueprinting. This enhances the performance of the engine providing fuel economy and dependability. In simple words the engine becomes brand new. After Blueprinting the Gear shifting feels very positive and the vibrations will be nullified aiding Longitivity.
Volkswagen’s Closest Competitors:
Ford, Toyota, Mercedes and General Motors are the major competitors. Out of which Volkswagen claims that Toyota is its major competitors.

Company

Sales Revenue(Year 2008)

Loss (%)

General Motors

$148,979Billion

8%

Ford

$146277Billion   

11%

Mercedes

$23.8Billion

7%

Toyota

$204352Billion

8%

Volkswagen made a profit of about 1.2 Billion in the year 2008. Their sales revenue was 113.808 BLN
SWOT Analysis:
Volkswagen AG – Strengths

Strong Market Share: As it leads the continent as the number one car maker, it holds a strong reputation in the market. Due to this its stock value cannot be brought down easily.
Strong R&D Activities: This is a major advantage over its competitors. They are always inquisitive of finding some alternate technology which make vehicles more fuel efficient and decrease the emissions ensuring a better environment.
Strong Brand Equity: It holds a strong brand value as people are aware of each and every Brand owned by them. And those stand among the top brands amongst others in the industry.
Geographic Diversification: As it has 44 sites all over the world, it can meet up the demand of the consumers over every product.
Strong Growth Prospects: They should continue to live up to the reputation created by them in the Automotive industry.

Volkswagen AG – Weakness

Limited Liquidity Position: As they have a huge capital invested in Research and development and promoting other projects they have limited liquidity position.
Declining Market Share in Sector

Volkswagen AG – Opportunities

Strategic Alliances: Volkswagen from the very beginning started forming alliances with other companies. The Brand such as Audi was formed by merging of Volkswagen with Auto Union and Nsu.
Demand for Fuel Efficient and Hybrid Vehicles: There has always been an increase in demand of better fuel efficient vehicles with very low emissions. So if they continue to meet the demands through their Research and development they can survive in the emerging market.
Growth Opportunities in Emerging Markets: Using their knowledge and efficiency in finding new technology which can be used in the engines, for example Blueprinting technology, they can always have a strong position in the market.

Volkswagen AG – Threats

Intense Competition: There are many companies which are providing a good competition in terms of market share. Last year Volkswagen claimed that Toyota is its biggest competitor.
Global Economic Slow Down: Due to recession there has been a very stiff competition among the companies as there has been very limited demand in the automobile sector.
Stricter Emission Standards: Due to the advancement of technology there has been a demand of very low emissions and to some extent the companies have been able to meet up the demand, so the emission standards get stricter and stricter each time a new technology comes up.

Conclusion:

Volkswagen is successful mainly because of manufacturing automobile parts, rather than waiting for the manufacture of a new car and launching it.
Most of the major brands that they own were purchased by them.
People were to some extent aware of those brands. But they did not hold much bigger market value.

References:
Volkswagen Chronicle
Volkswagen Beetle History 1938 to 2003
Jpost.com
www.rememusem.com
Volkswagen’s American assembly plant
Rumors.automobilemag.com
Companiesandmarkets.com
Corporate information snapshots
IBISWorld
Institute for Sustainability and Technology Polic
Articlesbase/Volkswagen Gti, Automobile Magazine’s Car of the Year
CJS Racing South West
http://autos.yahoo.com/articles/autos_content_landing_pages/1161/volkswagen-steals-toyotas-crown-as-worlds-largest-automaker/
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