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Volkswagen’s Marketing Strategy in India

The case examines the marketing strategies of Volkswagen Group India, the Indian subsidiary of German automobile manufacturer, Volkswagen AG (Volkswagen). Volkswagen entered the Indian passenger car market in 2001 by launching its car brand Skoda. In 2007, two of its other brands Audi and Volkswagen, were also launched in India. Volkswagen Group India emphasized on all aspects of marketing mix including product, price, place and promotion. The company offered three brands including Audi, Skoda and Volkswagen that together comprised of 15 different models as of late 2009. Volkswagen Group India mainly catered to the luxury segment of the Indian car market. The company had established presence in India through separate distribution channels for each of its brands.

In its initial years, Volkswagen Group India primarily used the print media to promote its products. However, considering the growth potential of India's automobile market, the company started using electronic, digital and out of home media along with print media. In November 2009, the company launched an integrated marketing campaign to strengthen its brand image. The case describes the marketing campaign and ends with a discussion on the growth prospects of the company in future.

Volkswagen’s Marketing Strategy in India

“We are fairly new in the Indian market. The brand awareness of Volkswagen is low. We have to raise awareness, create and improve the brand.” 1

  • - Lutz Kothe, Chief General Manager, Marketing and Public Relations, Volkswagen India, in November 2009.

“Volkswagen is committed to the Indian market, the proof of which is the constant investment and growth that we provide through the various projects initiated. India is one of our key markets and we know that the future harbors a huge potential.” 2

  • - Jochem Heizmann, Member of the Management Board, Volkswagen AG, in August 2009.

Introduction

On December 21, 2009, Volkswagen India Private Limited (Volkswagen India), the group company of Volkswagen Group India, announced that it aimed to sell 300 units of Beetle, its iconic car, in India in the year 2010. The Beetle was launched in India on December 04, 2009. Raj Sawant, Business Head of Automark Motors, a Volkswagen dealer in Ahmedabad, Gujarat, India, said, There are already over 170 advance bookings across India, and we have started delivering the cars as well. Going by the initial euphoria, we expect to sell around 300 Beetles in 2010.‖ 3

Volkswagen Group India, the Indian subsidiary of leading automobile manufacturer, Volkswagen AG (Volkswagen), based in Wolfsburg, Germany, had entered the Indian passenger car market in 2001 by launching its car brand – Škoda. In 2007, two of its other brands Audi and Volkswagen, were also launched in India.

Over the years, Volkswagen Group India not only launched several products, but also ensured that its brands were well known among the Indian consumers. Although, the company had had a presence in the Indian car market since 2001 and the Škoda and Audi branded cars were well known among consumers, the Volkswagen brand was not well recognized in the country. Therefore, in November 2009, the company launched an integrated marketing campaign to build its brand image. It also launched a marketing campaign for its iconic model, the Beetle. Volkswagen India expected that with its brand building exercise, it would be able to increase its sales and capture a significant market share in the Indian car market. According to Neeraj Garg (Garg), Director (Passenger Cars), Volkswagen India, ―It is true the Volkswagen brand is not well known in the country. This will be corrected with appropriate branding strategy.4

  • 1 ―Volkswagen Launches First Brand Campaign in India,‖ www.afaqs.com, November 10,
    2009.

  • 2 ―Volkswagen Group India Holds A Positive Outlook,‖ http://machinist.in, August 29, 2009.

  • 3 ―Volkswagen Aims to Sell over 300 Beetles in 2010,‖ www.business-standard.com, December 21, 2009.

  • 4 ―Volkswagen India Plans to Double Distribution Network,‖ http://economictimes.indiatimes.com, September 25, 2009.

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International Business

Volkswagen Group India had built a widespread distribution network for its three brands across India. The company offered different car models ranging from luxury sedans to compact cars. According to Jochem Heizmann, Member of the Management Board, Volkswagen, ―India is a huge market that we believe offers us potential. In India, the passenger vehicle segment has seen a growth despite the current market situation and Volkswagen plans to tap this. With the varied models across our brands as well as the establishments that have been set up we hope to be able to cater to our customers as well as dealers in the best possible manner.5

About Volkswagen

The history of Volkswagen (which means ‗people‘s car‘ in German) can be traced back to the 1930s when Ferdinand Porsche, a reputed automobile engineer and designer, started designing an affordable car for the common man. In 1936, the first prototype of the car, called the KdF-Wagen, was designed in Stuttgart, Germany. This prototype was similar to what later came to be known as the Beetle.

On May 28, 1937, the Gesellschaft zur Vorbereitung des Deutschen Volkswagens mbH‖ company was founded, and on September 16, 1938, it was renamed as Volkswagenwerk GmbH.‖ In 1938, the construction work resumed on a production plant at Wolfsburg, Germany.

During World War II, Volkswagen‘s core focus shifted to the production of military vehicles. After the War, as the area fell under the occupation zone of the United Kingdom (UK), in mid-June 1945, the company was revived by Major Ivan Hirst, a British army officer. Under his management, the company again started producing the Beetle. By 1946, the production plant at Wolfsburg was producing 1,000 cars per month.

In 1948, Heinrich Nordhoff (Nordhoff), a former senior manager at Adam Opel GmbH (Opel), was appointed to manage the company. Under Nordhoff, Volkswagen started producing a number of Type 2 commercial vehicles like vans and pickups. The Volkswagen Bus called the VW Bully‘ soon became very popular among consumers. In 1956, a separate manufacturing base was established in Hanover.

In 1973, the production of new generation of Volkswagen vehicles began with the Passat. In January 1974, production of the Golf was started at the Wolfsburg plant. In 1974, Volkswagen launched another car the Scirocco.

In 1976, the Golf GTI rolled off the production line. The car, with its110 bhp engine, became an instant hit among consumers. In June 1983, the company started production of the second-generation Golf. The company used a highly automated assembly process for the production of the car, and for the first time in vehicle manufacturing, robots were used.

In July 1999, Volkswagen started the production of Lupo 3L TDI, which had a fuel consumption of just three liters per 100 kilometers. In August 2002, the company started mass production of the Touareg, a luxury-class Sports Utility Vehicle (SUV). In 2003, production of the fifth-generation Golf was started. On December 09, 2009, Volkswagen and Suzuki Motor Corporation (Suzuki) 6 announced that they had entered into a long-term strategic partnership in which Volkswagen purchased 19.9 percent of Suzuki‘s issued shares.

  • 5 ―Volkswagen Group India Holds A Positive Outlook,‖ http://machinist.in, August 29, 2009.

  • 6 Suzuki Motor Corporation is a Japanese multinational corporation headquartered in Hamamatsu, Japan. It specializes in manufacturing compact automobiles, a full range of motorcycles, all-terrain vehicles (ATVs), outboard marine engines, wheelchairs, and a variety of other small internal combustion engines. It was founded in 1909. As of 2008, it generated revenues of US$ 33.46 billion and net income of US$ 305.43 million (Source: http://en.wikipedia.org).

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Volkswagen’s Marketing Strategy in India

As of 2009, Volkswagen was the largest car manufacturer in Europe. In the third quarter of 2009, the company generated revenues of € 25, 956 million and reported a profit after tax of €161 million (Refer to Exhibit I for Volkswagen’s Financial Highlights). The company had eight brands Volkswagen, Audi, Bentley, Bugatti, Lamborghini, SEAT, Škoda, and Volkswagen Commercial Vehicles (Refer to Table I for Volkswagen’s Third Quarter Results in 2009 and 2008).

Exhibit I

Volkswagen’s Financial Highlights (2006-08)

(In € millions)

 

2008

2007

2006

Sales Revenue

113,808

108,897

104,875

Operating Profit

6,333

6,151

2,009

Profit before Tax

6,608

6,543

1,793

Profit after Tax

4,688

4,122

1,955

Net Cash Flow

-2,679

7,109

5,631

Net Liquidity on December 31

8,039

13,478

7,133

Source: www.volkswagenag.com.

Table I: Volkswagen’s Third Quarter Results

(In € millions)

 

Q3 2009

Q3 2008

% Change

Sales Revenue

25956

28932

-10.3

Operating profit

278

 
  • 1485 -81.3

Profit before tax

262

 
  • 1481 -82.3

Profit after tax

161

 
  • 1161 -86.1

Net Cash flow

791

-2408

-

Net Liquidity on September 30

13391

11767

+13.8

Source: www.volkswagenag.com.

Marketing Strategy in India

Volkswagen entered the Indian market in 2001 by setting up its Indian subsidiary Volkswagen Group India. As of 2009, Volkswagen Group India had two group companies Volkswagen India Private Limited (Volkswagen India) and Volkswagen Group Sales India Private Limited (VGSIPL). Volkswagen India focused on the manufacturing and sales of Volkswagen branded cars in India. Skoda Auto India Private Limited (Skoda Auto India) 7 and Audi India 8 both were divisions of VGSIPL.

  • 7 Skoda Auto India Private Limited is a subsidiary of Skoda Auto part of Volkswagen Group,

  • 8 Audi India is a subsidiary of Audi AG, part of Volkswagen Group.

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International Business

The marketing strategy including product launch, product positioning, promotional campaigns, and establishing widespread dealer networks of each brand of Volkswagen Group India which was handled by the group companies and their divisions separately. Commenting on the rationale for following such a marketing strategy, Rupert Stadler, Chairman of the Board of Management of Audi AG, said, ―If you compare Volkswagen to other big automobile groups in the world, you can see how it has given independence to individual brands. Each of us has to do our job and not ask mama‘s help all the time! This is what finally drives brands in the business.9

Products

Skoda Auto India entered the Indian car market in 2001 by setting up a plant at Shendra, on the outskirts of Aurangabad, Maharashtra. In March 2007, when Audi India was set up as a division of VGSIPL, it also started using the same plant. In March 2009, Volkswagen India and Skoda Auto India started a joint manufacturing plant at Chakan, near Pune, in Maharashtra. While Skoda Auto India invested € 90 million, Volkswagen India invested approximately € 580 million to build the plant.

In mid-2009, Audi India assembled only two of its models the A4 and the A6 in India; the rest were imported as Completely Built Units (CBU). According to Martin Birkner, the Head of Audi India (Marketing), it would soon assemble more models in India so as to get a competitive advantage.

As of late 2009, Volkswagen Group India was marketing three different brands including Audi, Škoda, and Volkswagen that comprised 15 different models (Refer to Table II for the cars offered by Volkswagen Group India).

Table II: Car Models Offered By the Volkswagen Group India (December 2009)

Brand

Car Models

Audi

Audi A4, Audi A6, Audi A8, Audi Q5, Audi Q7, Audi TT, Audi

R8.

Škoda

New Superb, New Laura, Octavia, Fabia.

Volkswagen

Passat, Jetta, Beetle, Touareg.

Source: www.volkswagenindia.co.in.

Volkswagen Group India received several awards in 2009. CNBC-Overdrive Award recognized the company as the most successful car manufacturer in 2009. Škoda Fabia received the Car of the Year as well as the Compact Car of the Year awards. The Volkswagen Jetta received the Premium Car of the Year award and the Audi A4 3.2 the Performance Car of the Year award.

Price

Volkswagen Group India mainly catered to the luxury segment of the Indian car market. Skoda Auto India had four models among which three the New Superb, the New Laura, and the Octavia, were luxury cars and the Fabia was a mid-segment car. The Fabia had both petrol and diesel variants. Škoda branded cars had 20 variants in total and were available in the price range of Rs. 490,043 and Rs. 2,576,383.

9

―Audi

Bullish

on

India;

Sees

‗Metropolitan‘

www.blonnet.com, April 20, 2009.

Strategy

as

the

Way

Forward,‖

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Volkswagen’s Marketing Strategy in India

Audi India had seven models with prices ranging from Rs. 2,900,000 to Rs 12,300,000. Volkswagen India had four models which were available in the price range of Rs. 1,240,379 to Rs. 5,185,000 (Refer to Table III for Volkswagen Group India’s Car Prices).

Table III: Volkswagen Group India’s Car Prices

(Ex-Showroom Delhi Price as of December 2009)

Brand

Price Range

Audi A4

Rs. 29,00,000 to Rs. 36,00,000

Audi A6

Rs. 39,80,000 to Rs. 49,75,000

Audi A8

Rs. 61,21,717 to Rs. 1,23,00,000

Audi Q5

Rs. 38, 29, 000

Audi Q7

Rs. 52,00,000 to Rs. 73,01,771

Audi TT

Rs. 46,19,693 to Rs. 47,51,424

Audi R8

Rs. 1,17,00,000

Škoda New Superb

Rs. 19,39,705 to Rs. 25,76,383

Škoda Laura

Rs. 13,05,207 to Rs. 17,68,528

Škoda Octavia

Rs. 10,19,845 to Rs. 12,10,023

Škoda Fabia

Rs. 4,90,043 to Rs. 7,63,274

Volkswagen Passat

Rs. 21,61,458 to Rs. 25,77,860

Volkswagen Jetta

Rs. 12,40,379 to Rs. 16,38,251

Volkswagen Beetle

Rs. 20,45,000

Volkswagen Touareg

Rs. 51, 85,000

Compiled from various sources.

Promotion

Skoda Auto India and Audi India

In 2001, Skoda Auto India launched its first product, the Octavia, in India. The company primarily used the print media whenever it launched a new product. To promote the brand image of the company, it also used print ad campaigns (Refer to Exhibit II for Skoda Auto India’s Print Ads). In June 2004, the company launched a print ad campaign which read ‗We fill our airbags with life‘. In the print ad campaign, the company emphasized the fact that Škoda cars had six airbags to ensure proper safety.

In 2005, Skoda Auto India launched several television commercials (TVCs) to promote its models. The company launched a TVC with the tagline, ―You need to be ‘

well-built to carry your loved ones

...

In 2008, when the company launched the Fabia,

it launched a TVC with the tagline ―Because You‘re Special.(Refer to Figure I for

an Image of Škoda Fabia’s TVC). Commenting on the advertisement strategy, Shashank Vaid, Manager (Marketing), Skoda Auto India, said, ―We use television commercials as part of the corporate branding strategy, while the print advertisements communicate the benefits.10

  • 10 Nirmal D. Menon, ―The Skoda Score,‖ www.blonnet.com, January 13, 2005.

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International Business

Exhibit II Skoda Auto India’s Print Ads

International Business Exhibit II Skoda Au to India’s Print Ads Source: www.skoda-auto.co.in. Figure I: An Image
International Business Exhibit II Skoda Au to India’s Print Ads Source: www.skoda-auto.co.in. Figure I: An Image

Source: www.skoda-auto.co.in.

Figure I: An Image of Škoda Fabia’s TVC

International Business Exhibit II Skoda Au to India’s Print Ads Source: www.skoda-auto.co.in. Figure I: An Image

Source: http://www.bigadda.com.

416

Volkswagen’s Marketing Strategy in India

As of 2009, Law & Kenneth 11 handled the creative duties for Skoda Auto India‘s four brands the Fabia, the Octavia, the Laura, and the Superb.

Since its launch in India, Audi India‘s focus had been on establishing itself as a luxury car brand in India. According to Birkner, ―As a group, we have presence in almost every segment. We are in no hurry to launch Audi‘s compact cars. Our focus is currently on establishing our luxury brand image.12

Volkswagen India

In September 2007, when Volkswagen India launched its first model, the Passat, in India, it appointed DDB Mudra Group (DDB Mudra) as its creative agency. In the first week of September 2007, the company launched an advertising campaign which aggressively used the print media. Commenting on the rationale for launching the campaign, Bobby Pawar (Pawar), Chief Creative Officer, DDB Mudra Group (DDB Mudra) 13 , said, ―Volkswagen has just launched the Passat and it has other big plans for India. They are planning to launch cars here in India to suit every pocket. The brief for us was to establish the spirit and philosophy of Volkswagen makes people believe that there‘s a certain way of life at Volkswagen.‖ 14 In July 2008, the company launched its second model, the Jetta, in India.

Initially, Volkswagen India did not market its products aggressively. However, considering the growth potential of India‘s automobile market which was expected to sell two million vehicles in 2014 and three million vehicles by 2018 as compared to 1.1 million vehicles in 2009, the company started laying special emphasis on marketing its products.

Volkswagen India‘s internal research conducted in 2008 showed that the company‘s brand was not well known among Indian consumers. According to the Society of Indian Automobile Manufacturers (SIAM) 15 , Volkswagen India had sold only 1,172 cars between April and October 2009, as compared to other European automobile manufacturers like BMW India Private Limited 16 which sold 2089 cars and Mercedes- Benz India 17 that sold 1869 cars during the same period. 18 Therefore, the company felt

  • 11 Law & Kenneth, the Indian subsidiary of UK based Kenneth Worldwide Group Company, was aleading ad agency in India. As of 2009, it handled creative duties of many leading brands including Johnson & Johnson Baby Products, ITC Personal Care, Cox & Kings Travel Agency, Haier Electronics, GoAir, Bajaj Scooters, ICICI Prudential Life Insurance, Oberoi and Trident group of Hotels etc.

  • 12 ―Audi

Weighing

Options

for

Luxury

Small

www.thehindubusinessline.com, August 31, 2008.

Car

Launch

in

India,‖

  • 13 DDB Mudra Group is an alliance between the India-based Mudra Group and DDB Worldwide Communications Group Inc (DDB), a part of Omnicom Group Inc. It is a leading advertising company in India. Some of its clients are Johnson and Johnson, Hindustan Unilever Limited, Henkel, Volkswagen, Reliance ADAG, AIG Corporate and Tourism Australia.

  • 14 ―Volkswagen Drives in with Mudra DDB,‖ www.afaqs.com, September 11, 2007.

  • 15 The Society of Indian Automobile Manufacturers (SIAM) is the apex industry body representing 44 leading vehicle and vehicular engine manufacturers in India. SIAM works closely with all the concerned stake holders and actively participates in the formulation of rules, regulations, and policies related to the automobile industry (Source: www.siamindia.com).

  • 16 BMW India Private Limited, the Indian subsidiary of the BMW Group, is headquartered in Gurgaon, National Capital Region, India. The company offers a wide range of luxury cars including its BMW 3 Series, BMW 5 Series, BMW 6 Series, and BMW 7 Series. (Source: www.bmw.in).

  • 17 Mercedes-Benz India, the Indian subsidiary of Mercedes-Benz, a division of Daimler AG, was established in 1995. It offers a wide range of luxury cars including the S-Class, the E-

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International Business

it was necessary to build brand awareness in India. According to Joerg Mueller, Chief

Representative of Volkswagen Group India and President and Managing Director, Volkswagen India, ―In India, it is very important because people (have been) associated with the brand since the time of the Beetle. Then we were not in the market for many years, and now we are here again. It means that people in India and potential

customers don‘t know exactly what Volkswagen stands for. Therefore, it is important now to build up the brand, to make it famous again, and to show what Volkswagen stands for in terms of our values.19

In November 2009, Volkswagen India for the first time launched an integrated 360 degree communication campaign using the print, electronic, digital, and out of home media. Till then, the company had been using mainly the print media to promote its brands the Passat and the Jetta. Commenting on the campaign, Lutz Kothe (Kothe), Chief General Manager, Marketing and Public Relations, Volkswagen India, said, ―Based on a clear brand strategy, Volkswagen is known for its cutting-edge advertising across the world. Our powerful and creative campaigns continue to have a special place in the consumer‘s mind through decades. With our first brand campaign in India, we have strived to achieve the same for our consumers here and are confident that they will take to it. Our aim has been to break away from the communication clutter by being innovative and refreshing with the way we narrate our brand story to the customer.‖ 20

MediaCom India Private Limited (MediaCom) 21 was the media agency of Volkswagen India for the campaign. The company planned to spend Rs. 400 million on the marketing campaign to build its brand image in India. The campaign included 18,000 TV spots, 150 print advertisements in daily newspapers, about 300 OOH installations, and a digital campaignthat would last till February 2010.

The integrated marketing campaign started on November 11, 2009, when the Times of India (TOI) 22 created a roadblock23 for Volkswagen India across its 16 editions and nine pages. 24 As part of the roadblock, Volkswagen‘s brands including the Jetta, the Passat, and the Touareg were advertised on all the editions of TOI (Refer to Exhibit III for Volkswagen India’s Print Roadblock). According to Divya Gururaj, MD, MediaCom, ―Currently, there‘s very little awareness for brand VW and the company has been selling select premium car brands in India so far. But now they are getting aggressive and print allows them to disseminate a lot of information about the brand.

Class, the C-Class, the M-Class, the CLS-Class, the SLK-Class, the CL-Class, and the Maybach (Source: www.mercedes-benz.co.in).

  • 18 ―India, China Key for Honda, Says CEO Ito,‖ www.livemint.com, November 12, 2009.

  • 19 Ammar Master, ‗We are of the Opinion We Are Right On Time for The India Party,‘‖ www.livemint.com, January 17, 2008.

  • 20 ―Volkswagen Connects with Indian Hearts in New TVC,‖ www.exchange4media.com, November 10, 2009.

  • 21 MediaCom India Private Limited, in which Madison Communications Private Limited had a 51 percent stake, is one of the leading media agencies in India.

  • 22 The Times of India (TOI) is a popular English-language broadsheet daily newspaper in India. It is owned and managed by Bennett, Coleman & Co. Ltd. In 2008, the newspaper reported that (with a circulation of over 3.14 million) it had been certified by the Audit Bureau of Circulations as the world‘s largest selling English-language daily newspaper. (Source: http://en.wikipedia.org).

  • 23 A Roadblock is defined as exclusivity in any number of advertisement slots for a single client over a given period of time (Source: http://ads.economist.com)

  • 24 Byravee Iyer, ―Hit the Road,‖ www.business-standard.com, November 24, 2009.

418

Volkswagen’s Marketing Strategy in India

Exhibit III

Volkswagen India’s Print Roadblock

Volkswagen’s Marketing Strategy in India Exhibit III Volkswagen India’s Print Roadblock Source: “Volkswagen India Road Block:

Source: “Volkswagen India Road Block: Blitzkreig!” www.lbhat.com, November 11,

2009.

419

International Business

Print gives a far bigger spread to disseminate information and talk about the technical specifications.25

On November 11, 2009, Volkswagen India also aired its first TVC to promote the brand instead of a specific car. The TVC was developed by DDB Mudra. The TVC focused on the Volkswagen brand as a whole and showcased different Volkswagen car models. The TVC showed a young boy in a Volkswagen showroom deciding on the cars that he wanted to book in advanceat various stages of his life. The boy went on to select the Beetle for his 18 th birthday, the Jetta for when he became the ‗Vice- presidentof a company, and the Passat for when he became the Chief Executive Officer. The TVC ended with Volkswagen‘s baseline ‗Das Auto‘ which, in German, means ‗The Car‘, and the tagline, ‗German engineering. Made for India‘ (Refer Figure II for an Image of Volkswagen India’s TVC to Promote the Brand). Commenting on the rationale for the TVC, Pawar said, It is about giving people different cars at different stages of their lives. There is a Volkswagen for every stage.26 He added, Volkswagen has been known globally for its iconic brand campaigns. The challenge for us was to transfer that greatness in India as well. The car is not only the soul of German engineering, but also about the democratization of innovation.‖ 27

Volkswagen India appointed Portland Outdoor Limited (Portland) 28 for the OOH campaign. The outdoor campaign was launched in 23 cities across India. Portland announced that the OOH campaign would be implemented in three phases, each over a period of one month. Commenting on the campaign, Madhuri Sapru, Managing Partner – South Asia, Kinetic & Dialect, said, ―The brief for the campaign was to increase the awareness for brand Volkswagen, and to reinforce the perception of Volkswagen as an innovative company.‖ 29 (Refer to Exhibit IV for Volkswagen India’s OOH Campaign).

Figure II: An Image of Volkswagen India’s TVC to Promote the Brand

International Business Print gives a far bigger spread to disseminate information and talk about the technicalwww.network.media.com, December 01, 2009. 420 " id="pdf-obj-11-64" src="pdf-obj-11-64.jpg">

Source: “Volkswagen Launches First Brand Campaign in India,” www.afaqs.com, November 10, 2009.

25 ―When

It

Comes

to

India,

Volkswagen

Isn‘t

Thinking Small,‖

http://economictimes.indiatimes.com, November 25, 2009.

 

26 ―Volkswagen Launches First Brand Campaign in India,‖ www.afaqs.com, November 10,

2009.

27 Arcopol

Chaudhuri,

―Volkswagen

Set

to

Roll

out

Brand

Campaign

for India,‖

www.campaignindia.in, November 10, 2009.

28 Portland Outdoor Limited was promoted by the WPP Group, a leading communications services group in the world (Source: www.wpp.com).

29 Anushree Bhattacharyya, ―Portland Drives German Auto Brand Volkswagen to 23 Cities in India,‖ www.network.media.com, December 01, 2009.

420

Volkswagen’s Marketing Strategy in India

Exhibit IV

Volkswagen India’s OOH Campaign

Volkswagen’s Marketing Strategy in India Exhibit IV Volkswagen India’s OOH Campaign Source: Anushree Bhattacharyya, “Portland Drives
Volkswagen’s Marketing Strategy in India Exhibit IV Volkswagen India’s OOH Campaign Source: Anushree Bhattacharyya, “Portland Drives

Source: Anushree Bhattacharyya, “Portland Drives German Auto Brand Volkswagen to 23 Cities in India,” www.network.media.com, December 01, 2009.

On December 04, 2009, Volkswagen India launched the Beetle. The company planned to import the car, priced at Rs. 2.045 million, for sale in India. It launched a marketing campaign to support the launch of the Beetle. Before the launch of the car, the company started a teaser outdoor campaign including hoardings with the tagline,

‗Curves are back.‘ Commenting about the campaign, Kothe said, ―Recreate a legend — that was the brief that we gave to the agency. It addresses a non-existent segment because no other car in the world can compare with the Beetle. We are very confident that the Beetle will make its way in India.‖ 30

On December 05, 2009, the first TVC to promote the Beetle was launched by DDB Mudra. In the TVC, a couple was shown riding a Beetle. The TVC continued as the couple reached their destination and the man asked how much he had to pay the valet. Instead of taking money from the man, the valet paid him Rs. 200, put on a pair of sunglasses, and took away the car in style to park it. The TVC ended with the tagline ‗German Engineering. Recreating Legends.‘ Commenting on the rationale for launching the campaign, Pawar said, ―The launch campaign was in keeping with the continuation of the Beetle‘s brand values. It remains among the world‘s most beloved cars; the old Beetle was the original love bug. The newly designed Beetle is the love bug with aphrodisiac added. The idea was to showcase the reaction to a Beetle as one where the brain is disconnected; those who buy the Beetle are buying into an emotional promise, that of a fantastic design innovation. So the reaction when one

30 Bindu

Nair

Maitra,

―DDB

Mudra

Creates

www.campaignindia.in, December 07, 2009.

Launch

Pad

for

Volkswagen‘s

Beetle,‖

421

International Business

sees the car is one where your heart talks to you. The commercial talks about the pleasure of riding the new Beetle. At a time when most car designs tend to be all about hard edges, the new Beetle celebrates curves and voluptuousness.31

Volkswagen India also launched a print and an outdoor campaign to promote the Beetle. The campaign had the tagline ―It‘s official. Curves are back.As part of its OOH campaign, Volkswagen India took up the entire OOH space at the busy Bandra Junction in Mumbai. According to Rajiv Sabnis, President, DDB Mudra, ―Volkswagen has an innovating spirit when it comes to marketing, just like the cars they make. They also believe in dominating the media, not just the roads. After the hugely innovative and impactful TOI roadblock, we conceived the launch of the new Beetle with an innovative outdoor campaign. The six-part Beetle outdoor came together part-by-part in the first week of December, heightening people‘s anticipation and excitement about an imminent launch.32

Distribution

As of 2009, Škoda, Audi, and Volkswagen each had a presence in India through their separate distribution channels. Škoda Auto had a strong presence in the Indian luxury car market through its 62 dealerships covering over 50 cities across India.

As of 2009, Audi India had 14 dealerships across India including cities like Delhi, Gurgaon, Chandigarh, Ludhiana, Mumbai, Mumbai West, Pune, Ahmedabad, Bangalore, Hyderabad, Chennai, Jaipur, Kolkata, and Kochi. The company aimed to have 15 dealers by 2010 and 18 dealers by 2011. 33 Volkswagen India said it would increase its dealerships from 25 to 40 by the end of 2009. The expansion would involve opening of new outlets in Indore, Jalandhar, Bhopal, Vijayawada, and Kozhikode. The company already had outlets in several major places in India including Delhi, Chennai, Bangalore, Hyderabad, Ahmedabad, and Kolkata.

The Road Ahead

In November 2009, Audi India announced that it had achieved 59 percent year to date sales growth. In the period between January and November 2009, it sold 1,550 cars as compared to 974 cars in the same period in 2008. The company aimed to achieve a 50 percent sales growth in 2010. 34 It announced that it aimed to capture a 30 percent share in the Indian luxury car market by 2011 from 20 percent in June 2009. 35 Skoda Auto India was set to launch its sports utility vehicle (SUV), the Yeti, in January 2010.

On December 04, 2009, Volkswagen India also showcased its next launch in India, the Touareg, an SUV. The vehicle was priced at Rs. 5.185 million. According to Garg, The launch of the Touareg is our marketing debut in the SUV segment. India has a great demand for SUV. The Touareg has been successful across countries and the entry will further enhance our presence in the market.36

  • 31 Bindu Nair Maitra, ―DDB Mudra Creates Launch Pad for Volkswagen‘s Beetle,‖ www.campaignindia.in, December 7, 2009.

  • 32 ―Volkswagen & DDB Mudra Execute a Unique OOH Roadblock in Mumbai,‖ www.exchange4media.com, December 17, 2009.

  • 33 ―India to

Be

Fifth-Largest

Auto

Mkt

by

2015:

Audi

India

MD,‖

http://economictimes.indiatimes.com, October 5, 2009.

  • 34 ―Audi India to Assemble More Models Locally, Targets 50 percent Growth In Sales,‖ www.driveinside.com, October 28, 2009.

  • 35 ―Audi to Expand More Dealerships in India,‖ http://burnyourfuel.com, June 15, 2009.

  • 36 ―The Volkswagen Beetle Finally Comes to India,‖ www.moneycontrol.com, December 14,
    2009.

422

Volkswagen’s Marketing Strategy in India

Volkswagen India planned to launch its small car, the Polo, in the first half of 2010. The company wanted to build its brand image before launching its new car in India. According to Kothe, ―By the time Polo is launched, we would want to be ready and make sure there is enough brand awareness. While our target group is essentially premium and upper premium, we want to be warm and appealing and a part of the masses.37

On December 12, 2009, the production of Volkswagen‘s Polo started at its Chakan plant near Pune, Maharashtra. According to analysts, Volkswagen India‘s market share in India would largely depend on the success of the Polo. According to Umesh Karne, a Mumbai-based analyst at BRICS Securities Limited 38 , ―The Polo is a key model for Volkswagen as they have created a big capacity in India. India will continue to be a small-car market for at least the next five or six years and every company needs a compact car to get market share.‖ 39

However, some analysts were of the opinion that Volkswagen Group India would have two compact cars once the Polo was launched in 2010, as it already had the Škoda Fabia. They were of the view that, the two cars would compete with each other.

To further improve its presence in the Indian car market, Volkswagen India also planned to roll out a low-priced car named UP! in India by the fiscal 2010-11. The car was expected to be priced at about Rs 0.3 million. The company also planned to launch a sub-B segment car with a price tag of between Rs. 0.35 million and Rs. 0.45 million in India. According to Jochem Heizmann, Member of the Board of Management of Volkswagen, ―It is clear we need a car below the Polo and are looking at different options and working on it. That maybe the Up, or another car. However, no decision has been made yet.‖ 40

With the new launches from all its three brands, Volkswagen Group India aimed to capture an eight percent market share of India‘s car market by 2013 to 2014. According to Mueller, ―We are looking to have 8 per cent market share of the Indian car market in the next 4-5 years by the Volkswagen Group which includes Volkswagen, Audi, and Škoda. The market has recovered and we are firmly on a growth track. Our plan is to increase our sales every month.41

  • 37 ―Volkswagen Launches First Brand Campaign in India,‖ www.afaqs.com, November 10,
    2009.

  • 38 BRICS Securities Limited is an India based financial services company. It was founded in
    2004.

  • 39 Vipin Nair, ―Volkswagen Aims to Capture 10% of India‘s Car Market (Update 1),‖ www.businessweek.com, December 13, 2009.

  • 40 ―VW India Could Enter Sub-B Segment with Up Rollout,‖ www.wheelsunplugged.com, December 14, 2009.

  • 41 ―Volkswagen Connects with Indian Hearts in New TVC,‖ www.exchange4media.com, November 10, 2009.

423

International Business

References and Suggested Readings:

  • 1. Volkswagen Aims to Sell over 300 Beetles in 2010,‖ www.business-standard.com, December 21, 2009.

  • 2. Volkswagen & DDB Mudra Execute a Unique OOH Roadblock in Mumbai,‖ www.exchange4media.com, December 17, 2009.

3.

VW

India

Could

Enter

Sub-B

Segment with Up Rollout,‖

www.wheelsunplugged.com, December 14, 2009.

  • 4. The Volkswagen Beetle Finally Comes to India,‖ www.moneycontrol.com, December 14, 2009.

  • 5. Vipin Nair, Volkswagen Aims to Capture 10% of India’s Car Market (Update 1),‖ www.businessweek.com, December 13, 2009.

  • 6. Bindu Nair Maitra, DDB Mudra Creates Launch Pad for Volkswagen's Beetle,‖ www.campaignindia.in, December 07, 2009.

  • 7. Anushree Bhattacharyya, ―Portland Drives German Auto Brand Volkswagen to 23 Cities in India,‖ www.network.media.com, December 01, 2009.

  • 8. When It Comes to India, Volkswagen Isn’t Thinking Small,‖ http://economictimes.indiatimes.com, November 25, 2009.

  • 9. Byravee Iyer, ―Hit the Road,‖ www.business-standard.com, November 24, 2009.

  • 10. India, China Key for Honda, Says CEO Ito,‖ www.livemint.com, November 12,

2009.

  • 11. Times

of

India

Creates

Roadblock

for

Volkswagen Brands,‖

www.indiantelevision.com, November 11, 2009.

 
  • 12. Volkswagen India Road Block: Blitzkreig!‖ www.lbhat.com, November 11, 2009.

  • 13. India Eco Summit: VW Group eyes 8% shares in India,‖ www.business- standard.com, November 10, 2009.

  • 14. Volkswagen Connects with Indian Hearts in New TVC,‖ www.exchange4media.com, November 10, 2009.

  • 15. Volkswagen Launches First Brand Campaign in India,‖ www.afaqs.com, November 10, 2009.

  • 16. Arcopol Chaudhuri, ―Volkswagen Set to Roll out Brand Campaign for India,‖ www.campaignindia.in, November 10, 2009.

  • 17. VW India Eyeing to Clock 3,000 Units Sale during CY 2009,‖ www.wheelsunplugged.com, October 31, 2009.

 
  • 18. Audi India to Assemble More Models Locally, Targets 50 percent Growth In Sales,‖ www.driveinside.com, October 28, 2009.

  • 19. India to Be Fifth-Largest Auto Mkt by 2015: Audi India MD,‖ http://economictimes.indiatimes.com, October 05, 2009.

 
  • 20. Volkswagen India Plans to Double Distribution Network,‖ http://economictimes.indiatimes.com, September 25, 2009.

  • 21. Volkswagen Group India Holds A Positive Outlook,‖ http://machinist.in, August 29,

2009.

  • 22. IFC to Invest 135 Million Euros in Volkswagen’s Pune Plant,‖ www.business- standard.com, August 06, 2009.

  • 23. Audi to Expand More Dealerships in India,‖ http://burnyourfuel.com, June 15, 2009.

424

Volkswagen’s Marketing Strategy in India

  • 24. Volkswagen Group Preparing the Ground for Sustainable Growth in India,‖ http://machinist.in, June 09, 2009.

  • 25. Volkswagen Mulls Beetle Launch in India This Year,‖ www.dnaindia.com, June 09,
    2009.

  • 26. VW India Appoints Maik Stephan as Managing Director, Lutz Kothe as CGM Marketing and PR,‖ www.wheelsunplugged.com, June 08, 2009.

  • 27. Audi Bullish on India; Sees ‘Metropolitan’ Strategy as the Way Forward,‖ www.blonnet.com, April 20, 2009.

  • 28. Volkswagen Group Most Successful Car Manufacturer at the CNBC-Overdrive Awards,‖ www.indiaprwire.com, January 13, 2009.

  • 29. Audi Weighing Options for Luxury Small Car Launch in India,‖ www.thehindubusinessline.com, August 31, 2008.

  • 30. Ammar Master, ―We Are Of The Opinion We Are Right On Time For The India Party,‖ www.livemint.com, January 17, 2008.

  • 31. Volkswagen Drives in with Mudra DDB,‖ www.afaqs.com, September 11, 2007.

  • 32. Nirmal D. Menon, ―The Skoda Score,‖ www.blonnet.com, January 13, 2005.

  • 33. www.bmw.in.

  • 34. www.ifc.org.

  • 35. www.mercedes-benz.co.in.

  • 36. www.siamindia.com.

  • 37. www.wpp.com.

  • 38. http://en.wikipedia.org.

  • 39. http://ads.economist.com.

  • 40. http://www.bigadda.com.

425