The New Beetle Advertising Campaign and Market Analysis

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The current advertising campaign for the New Beetle was successful for several reasons.

In 1993, Volkswagen experienced a significant downturn in sales. However, by the end of 1997, the VW brand achieved impressive growth, selling a total of 137,885 cars. This marked an unprecedented increase of 178% compared to its sales performance in 1993. It is evident that the relaunch of VW in 1994 within the American market was a triumph. The successful outcome can be attributed to the effective “Drivers Wanted” campaign, which was developed by Arnold Communications and guided by thorough market research and strategic positioning. Arnold Communications conducted extensive market research to gain a comprehensive understanding of the contemporary VW consumer and their standing within the industry.

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They collected primary data through conducting extensive interviews and visiting 95 of the top VW dealers, as well as driving VX over 50,000 miles to personally experience the cars. While it may have been time-consuming, collecting primary data was crucial because the modern car buyer and their affiliation to the VW brand may have changed since the last research commissioned by VW. This up-to-date research enabled VW to accurately define market segments and develop the most suitable segment for their products.

According to Hollensen 2007, effective international market segmentation (IMS) can be based on various characteristics. These characteristics consist of general factors like demography, education, and economy, as well as specific factors like culture, lifestyle, personality, and attitudes. Arnold Communications conducted an analysis and discovered that Volkswagen (VW) consumers, in general, were younger and slightly more affluent and educated compared to the average car buyer. However, what is particularly intriguing is that they all had very similar attitudes.

According to research, Volkswagen (VW) was perceived as appealing for its affordability and approachability compared to other European car brands, as well as for its unique and individualistic image compared to Japanese cars. The study also revealed that VW customers were seen as adventurous, experimenters, self-sufficient, creative, well informed, and eager to make the most of life. In response to these findings, VW repositioned their product and brand through the “Drivers Wanted” campaign. This campaign effectively connected with the young, fun, yet well informed and educated target audience on both rational and emotional levels.

Emphasizing its affordable German engineering, a campaign is showcasing a lifestyle that is more distinct, more interconnected, and different.

Question 2: What is the significance of the VW Brand? Why is the new Beetle so appealing?

The Drivers Wanted campaign effectively showcased the essence of the VW brand, demonstrating its appeal to younger consumers. It emphasized the inclusivity, affordability, unique style/lifestyle, and top-notch German engineering that set VW apart. The campaign conveyed a premium statement, without the premium price tag.

The appeal of the new Beetles was also very emotive, as it tapped into the nostalgia from its original heyday in 50’s and 60’s America, where the car achieved cult status. After receiving a tremendous public response to the display of a prototype new Beetle at the 1994 North American International Auto Show in Detroit, VW felt compelled to bring back this car. Once again, Arnold Communications conducted extensive primary research to truly understand what caused such an emotional reaction and attraction to the Beetle.

Primary research techniques, including nationwide interviews on the street with diverse individuals, as well as interviews with industrial designers and sociologists, were used to gather a range of perspectives on the appeal of the car. The interviews uncovered a wide variety of potential consumers. The older demographic, aged 40 and above or baby boomers, were attracted to the car due to its nostalgic charm. Meanwhile, the younger market maintained an emotional connection to the car thanks to its strong heritage. They viewed the car as a symbol of individuality, fun, and daring, representing someone who is not snobbish.

During interviews with industrial designers, it was found that people have a natural inclination towards and make certain assumptions about circular shapes. Round shapes evoke pleasant and friendly associations. They symbolize a sense of entirety and unity that many find appealing. Sociologists proposed that during the 1960s, the “Bug” phenomenon was regarded as countercultural and embraced the notion of “small is beautiful.” These values can still be utilized in present-day American society, which is currently undergoing a trend towards standardization. The Beetle could continue to be viewed as countercultural and be employed in the contemporary pursuit of individuality.

Question 3: How would you assess the various positioning possibilities?

Hollensen 2007 mentions that according to the IMS model, the third phase involves market screening. VW, based on research conducted by Arnold Communications, had evaluated and identified their potential markets. Now, it was time to carefully select and evaluate the segment opportunities that were most suitable. VW concluded that their primary target markets would be individuals aged 18 to 34 and baby boomers who were over 40 years old. Both of these markets exhibited similar personality traits, as indicated by VW’s research findings. However, due to budget constraints, VW could only focus on one market. Therefore, a decision had to be made regarding the positioning of the new Beetle.

For the younger market, the Beetle can be promoted under the VW umbrella, using the successful Drivers Wanted campaign. Alternatively, for the baby boomers, a separate campaign can be developed to make full use of the nostalgic leverage and position the Beetle as a Hero brand for VW. The drivers wanted campaign has proven successful with 18 to 34 year olds who relate to its fun, confident, and alternative lifestyle portrayal. The modern young America resonates with the Beetle’s heritage. However, the high price range of the new Beetle poses a disadvantage to this market.

The current price range for small cars in the industry is typically between $11,035 and $17,239. However, the Beetle, starting at $15,200, would exceed this range with a price tag between $17,000 and $18,000. This high price could potentially exclude a large portion of the target market. A benefit of targeting the baby boomers market is that it taps into the powerful nostalgic emotion that originally inspired the production of the Beetle. Additionally, this market tends to have higher wealth and can therefore afford the higher price point.

Despite its budget constraints, Beetle should have targeted the 18 to 34 age bracket for a more sustainable market. The changing preference for larger cars among the baby boomers, such as SUVs and Pick-ups, disadvantages Beetle’s decision to focus on them. I personally believe that Beetle made the wrong decision. Instead, they should have utilized the successful Drivers Wanted campaign, which had high levels of unaided awareness and loyalty.

Through their initial research on VW, it was found that the younger VW market was more affluent. This research also showed that the launch of the New Passat, a high priced car at $20,000, was successful and helped to enhance VW’s image, even though it went against the affordability value.

Question 4: What is the impact of the car’s positioning on pricing and media selection choices?

The positioning of the car in the 18 to 34 year old market or the baby boomer market impacts the pricing and media selection.

The pricing of the car mentioned in the case study was always a point of disagreement. The high base price of the beetle meant that its retail price would fall between $17 -18,000. The younger market might be unable to afford the higher price range, and there was also a possibility for consumers in both segments to upgrade to a medium-sized car in a similar price range. This would result in increased competition in the Beetle industry. If the price was set too low, dealers might not find the Beetle appealing. The media used for promoting the Beetle would also be impacted.

The budget for the Beetle launch was said to be 25% of an average car launch budget. There were two options: TV or Print. TV was preferred due to its ability to reach a larger customer base, while Print was more specific and cheaper. If TV had been chosen, the positioning of the Beetle’s ads would have influenced the selection of TV programs, channels, and potential air times. On the other hand, choosing Print would have been more cost-effective for the new Beetle’s budget and would have targeted a more specific audience.

The choice of publications depends on circulation figures and target market. Exhibit 14 in the case study provides tools like Simmons Descriptors and J.D. Powers Driver Profile to define target markets of magazines. This additional information simplifies the task of reaching either potential market for the Beetles. Reference: Hollensen, Svend (2007), Global Marketing: A Decision-Oriented Approach (4th ed.). London: Prentice Hall.

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