INTRODUCTION

ABOUT VOLKSWAGEN
Volkswagen Group, also called Volkswagen AG, major German automobile manufacturer,
founded by the German government in 1937 to mass-produce a low-priced “people’s car.”
Headquarters are in Wolfsburg, Germany.

The company was originally operated by the German Labour Front (Deutsche Arbeitsfront),
a Nazi organization. The Austrian automotive engineer Ferdinand Porsche, who was
responsible for the original design of the car, was hired by the German Labour Front in 1934,
and ground was broken for a new factory in the state of Lower Saxony in 1938. The outbreak
of World War II in 1939 occurred before mass production could begin, and the factory was
repurposed to produce military equipment and vehicles. Volkwagen’s military involvement
made its factory a target for Allied bombers, and by the end of the war the factory was in
ruins. It was rebuilt under British supervision, and mass production of the Volkswagen began
in 1946. Control of the company was transferred in 1949 to the West German government
and the state of Lower Saxony. By that time, more than half of the passenger cars produced in
the country were Volkswagens.

Volkswagen production expanded rapidly in the 1950s. The company introduced the

Transporter van in 1950 and the Karmann Ghia coupe in 1955. Sales abroad were generally
strong in most countries of export, but, because of the car’s small size, unusual rounded
appearance, and historical connection to Nazi Germany, sales in the United States were
initially sluggish. The car began to gain acceptance there as the 1950s progressed, however,
and Volkswagen of America was established in 1955. The American advertising
agency Doyle Dane Bernbach was hired to represent the brand in 1959, and the result was a
landmark advertising campaign that helped to popularize the car as the “Beetle” and
promoted its size and unconventional design as an advantage to the consumer. The campaign
was very successful, and the Beetle was for many years the most-popular imported
automobile in the United States. Although Volkswagen made many detail changes to the
Beetle, the basic rear-engine design and rounded shape remained the same. The company
developed other rear-engine models with more-modern styling and improved engineering, but
none were as successful as the Beetle.

Competition from small cars with more-modern designs and the company’s increasingly
troubled finances eventually dictated a change in corporate philosophy toward developing
more-contemporary and sportier car models. As a result, Volkswagen began phasing out its
rear-engine cars in the 1970s, replacing them with front-engine front-wheel-drive designs.
The first of those new cars was the short-lived K70 in 1970, followed by the Passat in 1973.
Most significant, however, was the Golf, initially called the Rabbit in the United States,
which was introduced in 1974. The Golf was an instant sales success, effectively replacing
the Beetle in the company’s lineup and ultimately becoming Volkswagen’s best-selling
model worldwide.

Joint ownership of Volkswagen by the West German government and the state of Lower
Saxony continued until 1960, when the company was mostly denationalized with the sale of
60 percent of its stock to the public. Since the 1950s Volkswagen has operated plants
throughout much of the world, including in Mexico, Brazil, China, and the United States. In
addition to passenger cars, the company also produces vans and commercial vehicles.
Volkswagen owns several other automotive companies, including Audi and Porsche in
Germany, SEAT (Sociedad Española de Automóviles de Turismo) in Spain, Škoda in
the Czech Republic, Bentley in the United Kingdom, Lamborghini in Italy, and Bugatti in
France.

In mid-2015 Volkswagen briefly held the distinction of being the world’s largest car
manufacturer by volume after surpassing Toyota Motor Corporation. However, shortly
thereafter Volkswagen faced a public relations crisis when the U.S. Environmental Protection
Agency (EPA) determined that the manufacturer’s diesel-powered cars contained software
that altered the vehicle’s performance in order to pass emissions tests. Volkswagen admitted
to installing the “defeat device,” and it recalled more than 10 million automobiles worldwide.
In the United States alone, the carmaker faced fines of more than $4 billion, and several
Volkswagen officials later were found guilty of various crimes. Despite the scandal,
Volkswagen sales worldwide continued to increase.

In 2019 Volkswagen ended production of the Beetle, which had undergone various redesigns
over some eight decades.

Marketing Strategy of Volkswagen – Volkswagen Marketing Strategy

Founded in 1937 the Volkswagen Group is the Europe largest automaker handling 12 brands
such as Audi, Seat, Skoda, Bentley, Porshe, Lamborghini, Scania, Ducati, Man, Bugatti,
Volkswagen and Volkswagen commercial vehicles.  It primarily is in two businesses: the
automotive business and the Financial Services business.

The Automotive business deals in Passenger Cars as well as Commercial Vehicles/Power

Engineering Business while the financial service vertical deals in customer financing
services, fleet management and leasing.

Segmentation, targeting, positioning in the Marketing strategy of Volkswagen –

Since Volkswagen operate in 12 independent brands, the group mix

of demographic, psychographic, geographic segmentation variables to cater to the needs of
the customers in existing as well as emerging economies.

It uses differentiated targeting strategy for offering the specific products to the specified

segments of customers of different group brands.

Positioning helps in understanding where the products stand in the mind of the potential
customer and the image built in their mind. The majority of its brands are in the premium
segment and therefore the group use value-based positioning strategy to create emotional and
inspirational connect with the customers.

Marketing mix – Here is the Marketing mix of Volkswagen.

SWOT analysis – Here is the SWOT analysis of Volkswagen.  

Mission- “Mobility for everyone”

Vision-  “To Provide customers Cars & components which are manufactured by the
motivated and innovative team in the environment-friendly ecosystem and should be of
highest quality, competitively priced & viable in long run.  ”

Tagline-“Das Auto”

Competitive advantage in the Marketing strategy of Volkswagen –

Strong brand portfolio: Handling world’s strong automotive brands and co-creating their

efficient ecosystem and operational support system have helped the company in being
competitively ahead of its peer companies in the industry.

Financially Strong Group: With such broad product portfolio of each brand under the

umbrella brand architecture of the group the financial management cannot be doubted.

Low operational Cost:  Economies of scale in its various operational, manufacturing &

production processes has helped the brand in keeping its operational cost low thereby
spending more on branding and advertising activities.

BCG Matrix in the Marketing strategy of Volkswagen –

BCG matrix helps the company in understanding its competitive position in the industry and
work upon the loopholes accordingly.

In the automotive business, Audi, Bentley, Porshe, Lamborghini, Bugatti, Volkswagen, and

Ducati are stars in the BCG matrix whereas Scania, Seat, Skoda, Man, and Volkswagen
commercial vehicles businesses are still struggling and therefore are a question mark in the
BCG matrix.

It financial services business is the supporting division which assists and provide financial
assistance to the group companies and is, therefore, Stars in the BCG matrix.

Distribution strategy in the Marketing strategy of Volkswagen –

The group is extensively using its dealership networks and expanding it to the developing
nations to make their brands available to the existing as well as new markets. In the year
2015, the distribution expenses rose from 16% to 23515 Million Euro. By closely working
with dealership networks and optimising its operational efficiency for increasing
the profitability is a win-win situation for both company and dealers.

Brand equity in the Marketing strategy of Volkswagen –

Handling these brands and their visibility campaigns is the challenging task for the group.
Cross-branding activities have helped the group by increasing its visibility in the market by
minimising the operational /branding cost.
Competitive analysis in the Marketing strategy of Volkswagen –

The automotive market is very competitive with companies eating up each other’s market
share. There is an increase in deliveries to the customers which is the indication of the
increase in sales and better customer service, acceptance of the brand and high customer
satisfaction.

Volkswagen group competes on the basis of experience in handling the large & giant
automotive brands.

Market analysis in the Marketing strategy of Volkswagen –

The growth of automobile market has been affected by several bottlenecks such as the
government regulations increase in labour cost, infrastructure cost, volatility in the fuel
prices, currency fluctuations, or the competition in the market.  The automotive industry is
already crowded with a large number of MNC’s players.

Customer analysis in the Marketing strategy of Volkswagen –

Since the group handles a large number of brands in different customer segment so it has

offerings for middle-upper or upper-income class customer groups. Its financial services
business supports its automotive business across the globe.