The rebirth of Skoda

The Skoda company began back in 1895 when Czech entrepreneurs, Vaclav Laurin and Vaclav Klement began making bicycles in the Czech town of Mlada Boleslav. They very soon expanded into motorcycle manufacture and by 1905 had made their first motor cars. In the early days the vehicles were quite grand and were as stylish and innovative as many of the famous names of Western Europe and America. The Skoda reputation for quality was such that during the twenties it was the only manufacturer granted a licence by the famous Hispano-Suiza company marque to build its luxury limousines. After the second world war Czechoslovakia became more and more isolated from outside influences and new vehicle production at the Skoda factory became increasingly basic and functional reflecting the values of the now established Communist government. Raw materials were poor and with little outside intervention Skoda was unable to keep up with western motor manufacturers in terms of style and innovation. The authorities made the rules and even insisted on such things as windscreens not being raked too far back in case the cars looked decadently sporty. The factory concentrated on mass production of standardised products and all resources were ploughed into this. The first millionth Skoda car of a single type was produced in Mlada Boleslav during this period on 29 August 1973. However, even in the unfavourable environment of a poorly managed economy where innovation was not encouraged the Skoda factory managed to preserve the skills of craftsmanship, invention and design for which it had once been famous. This strength was to prove invaluable when the time came for the rejuvenation of the Czech economy and the company. After the Velvet Revolution in 1989, the newly formed Czech Republic began rebuilding its economy in the free market and Skoda quickly realised that things had to change if it was to successfully compete in this market. Skoda began the search for an economically sound partner with financial, technical and managerial resources to help improve the efficiency of its factories and assist in the companys future development. A number of leading automotive manufacturers demonstrated a keen interest, but the Czech government decided to accept the Volkswagen Group proposal, with the full approval of Skodas management, engineers and Union members. A key element in accepting Volkswagen for this partnership was the guarantee of the independence and selfreliance of the existing factories and Skoda marque. Skoda was to retain its own identity and responsibility for product development, production and sales operation. On April 16th 1991, Skoda became a public company and the fourth brand in the International Volkswagen Group, the others being Volkswagen, Audi and SEAT. The Czech company contributed its assets in the former state firm to this new business,

thus becoming co-owner of Skoda. The Volkswagen Group contributed capital, advanced technology and managerial assistance and expertise. The Skoda model in production at that time was the Favorit, which had almost no competition on the home market until after the Velvet Revolution. Under the new Volkswagen management the Favorit model underwent a thorough upgrading, which resulted in 800 technical improvements, including reducing noise levels, single point fuel injection and new safety features. Build quality was improved to meet the rigorous standards upheld by all Volkswagen manufacturing plants and the aesthetic appeal of the Skoda cars was improved with the introduction of new colours and trims, ensuring it was able to hold its place against new competitors in the Czech Republic and improve its appeal in Skodas export markets. Changing the image People who know about the motor industry, know about Skodas illustrious past. For the first half of this century Skoda was one of the worlds greate st marques. It was the manufacturer of some of the most prestigious cars available, such as the luxury Hispano-Suiza, it was a leader in motor car design and technical innovation and a pioneer in the new realm of motorsport. However, the economic situation surrounding the communist years in Czechoslovakia dictated that the Skoda factory became product oriented rather than market oriented, mass producing a basic product rather than matching its products to the needs of customers and market demands. Inevitably, in such a highly competitive area as the motor industry, this caused the reputation and image of Skoda and its products to suffer. Some common jokes about Skoda in the 1990s were... Why does a Skoda have a heated rear windscreen? - To keep your hands warm while you push it; or How do you double the value of a Skoda? - Fill it with petrol Transformation started in October 1994 with the international launch of the new Skoda Felicia. The Felicia was a economical, spacious hatchback that made its UK debut in May 1995 with a 1.3 litre engine and was followed in 1996 by an estate car, plus a new 1.6 litre version with the engine from the Volkswagen Golf. The Felicia range pricing started at 6299 on the road. How then has the public responded to the transformation at Skoda? Skoda clearly had a major task to change the publics perceptions, which for many are still rooted in the past. The key to alt ering the publics perception was making people aware of what was happening at Skoda with the company and the cars and to convey the companys personality and strengths. Skodas advertising campaign has revolved around showing consumers what changes have taken place in the company and cars and these advertisements have been led with the strapline: Weve changed the car. Can you change your mind? The emphasis has been on the partnership with Volkswagen and the value for money pricing.

The first Skoda to be built on the Volkswagen platform was Octavia launched in 1998. Octavia was launched in the UK with Skodas highest promotional budget ever (approx. 10 million). But the launch was a massive failure. Only 6,154 cars were sold over the year after launch despite very good reviews in leading car magazines. It was at that stage that the people in charge realised just how seriously negative perceptions people had of Skoda as a car brand. Research also suggested that over 60% of Brits promised that they would never buy a Skoda due to its unfashionable, poor quality image. An image that was no longer in sync with the very good cars that Skoda now offered to the public. VW understood that they needed to close the gap between Skoda's poor image and the reality i.e. the good value, high quality cars that Skoda now offered. The new model Skoda Fabia was going to be the platform for the Skoda repositioning. The ad agency brief was something like: Relaunch the Skoda brand and do it by using the launch of the new supermini, the Fabia. The agency delivered a SIMPLE and BRAVE solution ATTACK THE NEGATIVE PERCEPTIONS OF THE SKODA BRAND. EXPLOIT THE POTENTIAL OF: GREAT CAR MEETS DISBELIEVING PEOPLE. The Skoda brand repositioning was supported by a number of ads. The overall objective with the campaign was to turn the Skoda brand from cheap and nasty to value for money and cheerful. And the idea was to create a message that made gentle fun at Skodas poor customer perception. Theme: The Fabia is so good that you wont believe its a Skoda. The campaign ran in both print and TV supported by three different television ads showed situations where people failed to realize that the car in question is a Skoda. The poster ads featured lines such as Its a Skoda, honest! and No, really . The campaign was also supported by a major PR push aimed at consumer press with the attempts to influence journalists to discuss Skoda in a positive light. So, what were the campaign results one wonders? Well, Skoda sales grew by 34% in the year of the campaign. By the end of 2000 more than 11,000 Fabia had been sold in the UK and even Octavia saw an increase in sales of 29%. Moreover, customer perceptions of Skoda improved dramatically! Instead of seeing the old Skoda they now saw a cut-price, high quality VW.

http://businesscasestudies.co.uk/skoda/the-rebirth-of-skoda/conclusion.html#axzz2kFemslwB http://insightforinnovation.blogspot.pt/2009/10/brand-repositioning-case-1.html