This report is a depiction of the brand strategy adopted by an automobile company Volkswagen. This primarily covers the brand management by the company including the critical evaluation of the brand strategy adopted with context to its brand value, brand image and brand positioning. The report provides the reader to have critical analysis of the brand management and at the end of the report a conclusion is drawn on the basis of analysis in the body of the report. In main part of the report there is VIP analysis followed Boston matrix and product life cycle for the detailed explanation of topic. Various brand strategies adopted by the company are also touched in this part of the report. The conclusion is followed by some suitable recommendation of the brand strategy management of the company.
Introduction
Branding
The concept of branding in market is related to the production of brand and in the views of Hankinson & Cowking (1993) that branding is tagline that used to differentiate product from other competitors in market.
Branding is defined as “identity of a specific product, service or business. A brand can take many forms, including a name, sign, symbol or slogan. The world brand began simply as a way to tell one person’s cattle from another by means of a hot iron stamp. The word brand began has continued to evolve to encompass identity- in effect the personality of o product, company or service.”
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In the views of Johnson and Scholes (2002, pp. 140) “branding is an important feature for saturated market and for the slow growing markets”.
The brand provides recognition and allows adding value, image and position to the company. An effective brand strategy is very useful for the survival and future growth of company. Branding is used to promote the products of the company in an easier and effective way. It builds up identity and for communicating the story of brand as in India the concept of storytelling is popular tool for advertising.
Importance of Branding
The branding is the face of the product that company offers to its customers hence every company has to toss their branding strategy effectively. Since this is beneficial in making the impression of product or services in the mind of customers. An effective and impressive brand name always attracts the customers and keeps the position and image of the company in their minds. This even gains to make the customers think and moved towards the use of another product of same company to which they are not familiar.
A good quality brand image in business matters a lot; the brand of the company is always seen as in differential part of the company which shows its value and quality. With an effective and strong brand the image of the company goes rise.
Strong brand of business facilitate other brands to link with each other different products of the company. The brand name of company used for the different products of the company for effective selling in market. (Source – Hankinson & Cowking, 1997 pp- 156)
Company Introduction
“VOLKSWAGEN DAS AUTOS”
The automobile company is well known for its services and higher satisfaction among their customers. Volkswagen group of India is subsidiary of worldwide famous Volkswagen AG. It switches to brand of Volkswagen in addition to two other existed brands of Skoda and Audi in Indian market. These brands possess its own character manoeuvres in an autonomous manner. The establishment of this subsidiary was in year 2007. In Indian autos market the brand image is featured by the size of vehicle, technologies of driving and different features like ABS, EPS and air bags and galvanized bodies of automobiles.
Multi branding v/s Corporate Branding
There are two main concepts taken corporate branding and multi branding that are explained as followed by the company:
Multi Branding: Concept of multi branding in the company mainly based on the objective to become most innovative manufactured volume complies with best quality product specifically considering medium to long term classless. With theme and slogan “Vorsprungdurch Technik” of Audi brand in considered as solid brand in automotive premium segment. In addition brand of Skoda is a combination of intelligent concepts in using space and technical innovation also covering the design and good money value (Kapfere, 2009, pp 276).
Corporate Branding: Volkswagen carries three main brands by having messages of “responsible” “innovation” and “providing Enduring Value”. The car under the corporate brand there is passenger cars convey reliability and quality and engineering of German skills at the global level. This facilitate in becoming the first choice in millions of the customers when buying a car.
Critical Evaluation of Brand Strategy of VGI
In the views of Porter (1993), for successful administration of a company there must be an identified strategy that itself serve as a position and must be able to handle competition through brand strategy of the company and is primarily differentiate into three parts as. Cost leadership strategy, differentiation strategy and focus strategy.
Brand strategy of Volkswagen is well maintained. As India is important market for the strategic marketing especially in automotive industry. There are good opportunities for future growth as a result of outstanding conditions of demands. But the noticeable condition is that there is very high competition full with challenges of conditions of market, different lifestyle, and behaviour of consumers.
Branding is key success factor for Volkswagen in order to gain good market position and competitive advantages therefore it become very successful in the Indian Automobiles of market. As branding plays a vital part for the Volkswagen and make it differentiate from other competitors in market. Kotler has viewed his comment on the leadership that “a cost leadership is not possible, differentiate is their competitive strategy” (Kotler, 2008, p.468). Also Varey considered brand as unique and for selling the proposition in the emerging markets.
Branding Value of Volkswagen
The brand value is an important aspect of a brand. This can be illustrate as the customers are usually willing to spent or pay more for that product that is related to any known brand, they preferred brand that the product. The brand value is hence defined as “that extra money made by a company or can be made from the selling of its products in solely way only due to the name of its brand”. For example For Volkswagen group India there is late entry of the Volkswagen group of India in the market as compared to other competitor rivals. Due to this company has lack to gain the first mover advantage in market and hence less gain in the brand value. For further development the company in order to strengthen its brand value it follow the strategy by making corporate statement “innovation for everyone”.
While marketing any product, importantly in India, the most crucial factor is quality and price of product as India is at a halt a poor country.
Brand Image for Volkswagen
Brand image is specified as those qualities which are related to the association to customers with the particular brand. It is expressed as the human behaviour and their wants and desires, but not enough it also associates with the situational use, price and quality of the brand. Here example can be taken as the Mercedes Benz which possesses a string brand image due to its product quality and features and their price, this came to make an image of brand in the minds of customers about that particular product. The brand image is not an inherent character for a company brand though this can be achieved through the advertising and campaigns.
Brand image is identity of the product in market and is a symbol of the company that make its impression and image in the minds of customers. The Volkswagen with its new brand name “Das Auto” along with its vision, the company is going to create new image by surrounding proximity and convenience via affordable innovations. The Volkswagens brands of Skoda and Audi managed in such a way that curved their position in stiff ad competitive automobile market and creating their baton of brand image in consciously sensitive markets like India.
Brand Positioning
In the view of Armstrong (2002), “brand positioning zeroes in on customers and gives them a reason to buy a product in preference to others; it differentiates a product from other products based on attributes. Walter (1997) also states that position of brand is perception among target customers. The Volkswagen group of India as came back into market after the period of ten years it has going to position its brand again in the minds of their customers and in market. The company has positioned its brand bracketed to set of above middle classed customers whose income is above average and have the thrill to show off as and where compared to brand Audi which is expensive and very showing type is designed for those types of consumers that are sporty and want to show off more with expensive expenditure. On contrary the Volkswagen brand is suitable for the average persons and also full the desire to show off. The company has managed them with a separate position in market. According to a statement given by the director of VW passengers cars Mr. Neeraj Garg that the company will take some time for making its position and there is a slow process to gain position into the minds of customers of India.
Segmentation
In India most driving factor is recognised affordability, due to this the market of domestic cars is segmented on to accordance with their prices. There is price based competition in Indian market therefore the car is segmented as below:
Multi Segmentation
Geographical segmentation
Demographical segmentation
Social Class
Marketing Strategy
Marketing Strategy adopted by Volkswagen brand after its launch in India in 2007 in relation to marketing Mix
Marketing Mix
Marketing mix of Volkswagen Brand
Source: Kotler, P & Armstrong, G (2004)
For brand strategy of Volkswagen there is involvement of first P according to marketing mix is Product as described in model. The product in this model is defined as that combination of services and goods sell to the customers by the company or organisation in target market (Armstrong & Kotler, 2005). From analysis it is found that product is also a part of Brand name. Design and quality are the main product features that possess variety in them. Here an example can be quoted for a brand of Volkswagen Touareg that has been sold in India comprises of a package of seating, engine, breaks and engine etc. (Volkswagen India, 2009). Hence for product strategy the company is equipped with variety and design in their products including warrant for them which in turn results in good response from the customers and make them satisfied and bring loyalty in them.
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The second P in this model if marketing mix is price. Price is of a product or service is defined as that amount which is paid by customer to the organisation or company for buying their products or services offered to them (Armstrong & Kotler, 2005). While discussing the price strategy it has been found that there are 61 dealership offers high prices for the products to sell in India as compared to their rivals like Honda city and Ford, but there is variation that the company charge interest rate by 4.5 – 5.0 % instead of other rivals make with 8% or more as a loans given by banks or building societies of other rival car makers. This facility is attributed by the Volkswagen financial Services that aided to support the sales of the company to their customers.
There is next P for the marketing mix is Place that is also very crucial in Brand management. The place usually referred to that place where there is availability of products of company to their customers. As in concerned to Volkswagen the company involved in using dealers and distributors for the purpose of the sales of their products. There are two modes for the dealers to get authorised either through franchised or direct ownership of company. For the company their network related to their dealers is very important and is maintained in a proper way because the product of the company are introduced through them to the customers, hence it is very important. In the views of Kotler 2005 the company usually share their losses and profits both with their dealers for purpose to maintain the quality of cost leadership. At present the Volkswagen has fine relationship with their dealers in India and also involve in the dealing of their products with Skoda with 61 leaders (Top News, 2010).
The last and fourth one P is Promotion. The promotion has variance in their objectives that has to be achieved in market. The promotion is usually handled with the tool of advertisement. The promotions for customers are added through the advertisement that results in the excitement among them. The aim of promotion is to pull in target consumers. These promotions are based on the scheme of non profit but in turn results in the profit for the company (Bradley, 1993). For example the Volkswagen Company in year 2009 has launched a promotion named “Pre Monsoon campaign” published by Motor beam, 2009. This promotion is for the purpose to establish the brand of company India. In India the company offered a variety of range of services to their customers and fro this company is getting profit from the promotions of the company brand.
Pricing strategy
Pricing strategy of Volkswagen: In the vies of Lowe and Doole (et al 2006), for any company at the initial stage of launch in market introduced with two adopted strategies for pricing, one is marketing skimming price strategy and other one is market penetration pricing. The company Volkswagen has choose the strategy of market penetration pricing. In this strategy previously the prices were set high so that there can be coverage of initial investment this is so because the company had invested a lot of money in the business to set up the unit in Pune, Maharastra.
Ansoff Growth Matrix Model for Strategy
Source: Kotler, P & Armstrong, G (2004)
For further analysis there is discussion in accordance with the given model of Ansoff Growth Matrix for Volkswagen. This model usually depicts the different areas of market development of the product of the company. This development is in relation with company and that aspect that are very important for the diversification of market. The thing is that this company has been diversified as it enters into new market.
Market development
According to Reiziger (et al, 2003) “when a company took entrance into a new market and launch themselves by introducing existing products this is came to know as the development of market, and the main aim of the company is to lure the customers from the their existing competitors in that exiting market i.e. new market”. The company Volkswagen has got the entry into Indian market in 2007 by launching their product Jetta, then after two years in 2009 the company has launched two new cars in market with their existing brand using the brand value in market these cars are ionic beetle and the Touarge sedans (Volkswagen India, 2010).
Diversification
Again in the views of Reizger (2003) this is the entrance of any new company with having the launch of their new product under its own brand is termed to be diversification. This strategy is commonly recognised as most risky one as there is introduction of two new entities one is market and other one is product. For the Volkswagen diversification is not so risky, as it has already successfully launched a variety of cars in the market with its own brand and in accordance with its brand image and with every brand it has inched higher and created sense of the demand in the market on every launch of new products. Most currently the company has as innovation there are four new car that has gone to be launched in 2012 and these new coming products are SUVW, Couple, Up and Blue Sport (Volkswagen, 2010).
Conclusion & Recommendation:
As from above discussion it is concluded that Volkswagen has got an effective branding strategy but there are some factors that has to be taken into consideration for the company to make its brand VIP. In India this company is represented by three brands i.e. Audi, Skoda and Volkswagen and posses their own identity and features and an independent manner in market. The brand of Volkswagen along with Audi and Skoda provide good level of consistency and excellence in the market within the existing value, image and position of its brand in target market of automobiles. It has also been concluded that the company adopted brand leveraging strategy. The product launched by the company are good from all aspects and given for strengthen the brand image and identity in market. Having discussion over the marketing mix all the aspects of the marketing mix by the Volkswagen are handled in an effective way, company cover all areas of price, promotion, place and product well but there is some need to pay emphasis over the promotion and price aspect of the brand strategy to get the good response in market. It is also concluded that there is lack of loyalty factor in Indian market of Auto brands as compared to the other markets. The company Volkswagen is new in the market and hence there is low brand awareness of the company in market. There must be raise of awareness among all the required fields of market. There must bring up some improvements and creation of the brands. As in Indian market which is basically driven by the price and prerequisites, company Volkswagen carry on its brand with the quality factor only. This is criticised here because this strategy will create hindrance in the brand development and prosperity of the company. The factor of Cannibalization can be seen as it can pay an important role for the Volkswagen approach for the branding i.e. multi branding approach and hence resulting in the brand that are new take the business away from that which are already established in market.
There are some suggestions that the company can adopt for the effective brand management are to drive the response of the customers as they are the key link for the success of the company and there must be online and offline programmes of marketing.
The company has to be involved in the Build Brand Engagement process to learn how the consumer wants to link up with the brand of product. They must continue to attempt at increasing the customer loyalty.
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