Case Study Bettle

8/7/2019 Case Study Bettle

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Beetle

The Birth, Growth, Death and Revival of a

Cult Brand

No other auto in history has changed so little and lasted so long

Thomas Karig, Volkswagen Spokesperson

Name: Nikhil Desai

Roll no. 33

Course: EX-MBA 2010-13

Semester: II

Subject: Marketing


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Q1. Examine the evolution of the Beetle brand and its growth over the years. How

did the strategies adopted by Volkswagen contribute to the brands success over

the years?

Ans: Evolution of the Beetle brand:

In 1930s, Adolf Hitler commissioned an automobile engineer, Ferdinard Porsche to

design a peoples car. Hitler wanted a durable, affordable car that could seat five

people. Since during that period German car manufacturers largely offered luxury cars

which were too expensive for a common man hence. By October 1935, he had built the

first prototype of the car. Its full steel body, space for five people, and impressive

performance made it quite different from the other models available at that time.The first

car was made in 1938. The first batch of 42 Beetles was rolled out only in 1941 that too

for testing and publicity.

Beetles growth over the years:

By 1943, production of the car picked up and the company produced 26000 Beetles

during the year. When the war ended in 1945, the Volkswagen factory was placed

under the custody of the British. The major positive development took place in 1945, the

factory received an order for 20000 Beetles from the British military. As a result, the

factory was rebuilt and 10000 Beetles were produced by October 1946. Things changed

drastically in 1947, when Volkswagen participated in the Hanover export fair and

introduced the Beetle in the market. In the same year the British appointed Heinrich

Nordhoff as managing director. Under Nordhoff leadership the company began to grow

quickly. Nordhoff commitment, farsightedness and management style worked wondersfor Volkswagen.

By the late 1940s, Volkswagen emerged as the largest car manufacturer in

Europe, exporting the Beetle to Denmark, Luxemberg, Swedan, Belgium and

Switzerland. In 1948, Volkswagen was the market leader in Germany, with a 63.5%

market share. In the same year, Beetle was exported to US, where it tasted a real

success.

The biggest factor in the cars favor was its affordability. According to a National

Automotive dealers association survey of import ownership in 1956-58, 88% of US

customer who bought Beetles in that period cited its cheaper to operate attribute as themajor reason for purchase. Beetles inexpensive, safe and reliable image began finding

its way in analysts review and consumer reports. Beetle strong construction and

flawless finish become popular as well. Beetles engine mechanism and operation was

so simple that they readily trusted their wives and children to drive a Beetle on their

own. The Beetle owners could repair their cars on their own whenever necessary.


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These attributes created a feeling of attachment, trust and belongingness in Beetle

owners towards car.

Volkswagen released a series of advertising and promotional campaigns in the late

1950s. Volkswagen adopted a strategy of self-deprecating advertising, making fun of

what many referred to as Beetles shortcomings (as compared to other cars).Advertisement slogan which became popular during 1960s included Nobody is Perfect,

Think small etc.

In addition Beetle advertisements highlighted the advantages of its small size, its price

and affordability, its simple mechanism and global reach. Some advertisements also

revealed the companys few drawbacks and highlighted the companys commitment to

offer customers the best possible quality.

Volkswagen promotional strategies also contributed to its success.

Q2. Critically analyze the reasons for the emergence of Beetle as a cult brand

especially in the US. How far do you think the emotional bonding of customers

with the product contributed to its success? Do you think suchan emotional

relationship witha product extends the products life span? Justify youranswer.

Ans: Beetle was not an instant success in the US since the market there was dominated

by technically superior luxury cars. In 1949, Volkswagen introduced the Beetle

Cabriolet, a four-seater convertible, for the export market. Beetle was launched in

different colors and with luxurious interiors as well. Because of its affordability, Beetlessales increased in US. US customers who bought Beetle cited its cheaper to operate

attribute as the major reason for the purchase. The Beetle engine was designed to

operate all day at about 60 mph, which is the cars top speed. The car had good traction

on ice as well. Beetle had a strong construction and it was easy to operate and

maintain. Customers could even repair their cars of their own whenever necessary.

Reportedly, even a mechanically challenged customer found it easy to fix problems in a

Beetle. All these attributes created a feeling of attachment, trust and belongingness in

Beetle owners towards their cars.

Every owner of the car started to act like a salesman and because of the emotionalrelationship with the product they started to recommend this brand to potential

customers.

I think emotional relationship with a product extends the products life span because

customers start thinking the product as the one of the family member and even if they


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have some other car they still like to have one Beetle in their garage. Also, since they

love their car they start handling the car carefully and try to maintain regularly.

Q3. Ex

ami

ne th

e rea

sons for th

e di

sconti

nua

ti

on of th

e Beetle bra

nd byVolkswagen and critically comment on the rationale forits relaunch. Do you think

the nostalgia factoris strong enough to change the fortune ofa company in any

industry? Support your stand.

Ans: The declining sales of Beetles in its largest market US was attributed largely to the

increased competition in the small passenger car segment with the entry of foreign

brands, mainly Japanese compact car brands, which were technically more advanced in

this segment. Volkswagen changed its strategy and decided to focus less on the Beetle

and more on developing and launching new brands. In 1974, the Volkswagen launched

Golf and it became an instant success in Germany due its advanced technologicalfeatures. This resulted in a further decline in demand for the Beetle in Germany.

During the 1970s, US government regulations on safety and emission controls with

regard to the automobile industry became stringent. And Beetle could not be modified to

meet those standards, began loosing ground. Gradually a host of new car models with

advance technology and safety levels began eating into its market share.

During 90s, the automobile industry in Europe faced a recession which severely

affected the companys financial condition. Due its many problems, Volkswagen posted

a loss of $1.1 billion in 1993. To overcome these problems, the management, led by

CEO Ferdinard Piech, began considering the possibility of reviving Beetle. It seemedthat Volkswagen wanted to improve its performance in the US by cashing in on the

nostalgia of customers for the Beetle brand.

I think the nostalgia factor is strong enough to change the fortune of a company in any

industry because the Beetle car in the past is tested one and successful over a

considerable period of time. Since its a people car, its a value for money. Every

customer will definitely think of value he is getting for his money. Even if customer does

not go with the New Beetle, he will surely consider other cars of same manufacturer

which will help the growth of the company.

Q4. Critically analyze the strategies adopted by Volkswagen to promote the New

Beetle. Do you think the New Beetle will be able to achieve the cult status ofits

predecessor? Why / Why not?

Ans: Volkswagen adopted a cautious approach to the relaunch of Beetle as many

company executives opposed this idea. They felt that the company just couldnt afford


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to invest in an outdated model at this point. Most of them felt that Volkswagen needed

new, state-of-the-art models to revive its sales in the US and improve its financial

condition. The first prototype of the new Beetle (with many modifications in shape and

features that differentiated it from the old Beetle) was unveiled at the International Auto

Show in Detroit in 1994). After this, Volkswagen received thousands of emails from

across the world, requesting the company to relaunch Beetle. Volkswagen decided to

go ahead with the relaunch and announced that the New Beetle would be launched in

1998. The new Beetle featured technologically advanced features in line with other

Volkswagen vehicles. Its engine was in the front. Other changed features in the new

Beetle were front-wheel drive, liquid cooled engine, standard air-conditioning and four

times the horsepower of the original Beetle.

The New Beetle body design was based structurally on the Golf and was more spacious

than the old Beetle. The car contained state-of -the-art safety featuresand clearly

reflected European design and engineering. However, the New beetle retained some of

the old features of the original Beetlr such as bulbous fenders, gauge pod, big round

speedometer, front passenger dashboard grab handles and a flower vase in the dash

board.

I think the New Beetle will be able to achieve the cult status of its predecessor because,

y The Beetle has shown its success in the past and it is in the peoples mind

y The New Beetle is a complete modern design and futuristic. It is designedto appeal to people who fondly recall the past as well as young peoplewho have no connection to the original car.

y The New Beetle is an up-market, lifestyle vehicle. Its highly emotional, acar that makes the experience of driving a fun.

y People have got Beetle as a peoples car image

y The new Beetle is technologically upgraded in comparison with other carsin the same segment.

There were large waiting lists for the New Beetle and the customers were reportedly

even ready to wait for months to get the delivery of their New Beetle.

The company seems to have succeeded in its attempts to achieve the cult status to the

New Beetle as of its predecessor;

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Case Study Bettle