THE NEW BEETLE

GROUP NUMBER: 1 GROUP MEMBERS: Aarushi Jain (SMBA12001) Pallavi Ghai (SMBA12021) Shivam Goyal (SMBA12029) Vikas Miglani (SMBA12037) Zainab Asrani (SMBA12038) Elizabeth Lespinet

INTRODUCTION
Beetle, a very compact car is produced by VW or Volkswagen, a car manufacturer in Germany. The original Beetle was born in the mid 1930s, when Ferdinand Porsche began drawing up plans for "Volksauto," a people car. Initially, VW had become the most successful car model ever, selling over 21 million cars. VW expanded their market to America and had to compete to other local, European, and Japanese producers. With its distinctive round shape, face-like front end, and low price, the car was becoming prevalent as a new generation of Americans. On January 5, 1998, VW had exhibited its new line up of cars called the New Beetle at North American International Auto Show. This car had been an unexpected star at that show. Due to which VW experienced 25% of the 1998 sales target, which was 200,000 units, a 45% increase over the 1997 sales of 137,885 cars. According to the former experiences, VW had seen sales in the US decline from over half a million cars in 1970 to less than 50,000 cars by 1993. However, with support of a new advertising campaign targeted to a younger generation of car drivers and product guidelines, VW of America had steadily recovered with annual sales growth of 29% over 1993 to 1997 period. The marketing team conducted research focusing on the segmentation, targeting, brand positioning, and competition. Besides, VW also improved the marketing communication strategies which were organized nationally rather than within smaller geographic regions. The pricing strategy finally had been the crucial thing to study as the VW team realized that a superior-price strategy could be animpending issue. The qualitative research depicted that many consumers would perceive the new beetle as a toy car, and so they key element of the cars positioning would be to communicate it as a real driveable car. The design team conducted some research and unveiled the Concept One, a "retro"-themed concept car with a resemblance to the original Volkswagen Beetle. However, the design team identified four design principles, honest, simple, reliable, and original, for the new concept. Despite all the high expectations we have for the New Beetle, one thing is for sure, Volkswagen will never be again the one-car company.

ISSUES

ISSUE 1How much of the cars heritage should the new positioning use to leverage?
Play on the nostalgia Appeal to the new generation

ISSUE 2How to rebuild VWs image through the New Beetle?

Improve the reliability Make regular innovations Strengthen its brand equity

ISSUE 3How to price the New Beetle?

If the price is set too high, consumers might trade up into a higher-priced segment If the price is set too low the car might not be attractive enough to dealers due to low margins and thus fall short of VWs profitability goals

SWOT ANALYSIS

STRENGTHS
It stands apart from all other cars on the road The biggest-selling car design in history gets better The New Beetles safety beats the rest (tested by the Insurance Institute for Highway Safety) Distinctive shape with low price

WEAKNESSES
Its not an SUV The preference for American vehicles Too compact Costly repairs

OPPORTUNITIES
New Beetle has a worldwide appeal Capitalize on wistful desires

THREATS
Endure as long as its predecessor? Success of the a duplicate car, with similar attributes Many people will treat the VW Beetle with the prejudice anddistaste they feel for the actions of the Nazis.

CASE ANALYSIS
Old Beetle
Volkswagen Beetle was born in the mid 1930s, in Germany, designed by Ferdinand Porsche, originally called a peoples car .The German product entered U.S market in 1949 with its first model name-Type 1 VWs model name for the Beetle. Although firstly named the kraftdurchferideor strength through joy car, people quickly adopted the car more endearing designation, the beetle one of the prototypes was dubbed by the New York Times in 1938. It was popular with students who were budget-minded as well as drivers who pursued to express their individuality and personal style through the car. It was favoured for its resale value and very little upkeep which was emphasized by a humorous ad Buy low. Sell high. The Car was mainly directed for the small car segment and the target audience was Baby Boomers. Beginning from 1975 the sales of VW-Type 1 cars along with others VW cars had declined due to several reasons like -exchange rate instability caused because of appreciation of the German currency; Deutsche Mark, unable to comply with the requirements of new environmental legislation, stiff completion from the attack of Japanese brands, and recession of 1982.

Mission Impossible- The New Beetle

More than 10 years after the last Beetle was sold in US, Helmut Warkuss, Director of Design Centre for Excellence, VW, deigned a new beetle as a way to revive slumping sale of the VW franchise. The designers vision for the car mixed the equity of the past and the design geometry of the future. In order to reflect the Beetle philosophy, four principles were designed- Honest, Simple, Reliable & Original for the new concept. By 1993, their final designs convinced the company to move forward with what is known as The Concept 1. The manufacturer decided to display the car at the 1994 North America International Auto Show in Detroit. The first glimpse received by the journalists as a banana-yellow car rotated on the display stand. The public and the press gave a strong reaction saying: If this was a real driveable car and whether the retro look would totally go by the time, the car came into the market. The feedback makes some more significant changes to the original design. The new Beetle would be crucial to turn around the companys image in the worlds largest automotive market. Due to the concept 1, the new Beetle car had been thoroughly overhauled from its original older brother.

MARKETING, A CLASSIC
Target Audience and Positioning:
The new Beetle had its fair share of its fans, the research that the group conducted revealed polarizing opinion about the car. However, these fans were from a wide spectrum of consumer backgrounds- crossing the boundary of age, income and gender. Potential buyers did have some common characteristics, while consumers were demographically global. Moreover, they loved to drive and praised the German engineering. The new Beetles shape embodied many of these qualities and evoked many feelings associated with circular objects that represent completeness, a wholeness that many people were drawn to. In the 60s, it added a meaning that the bug was seen as the counter culture car. The thing that emerged from that time was small is beautiful, and the beetle was seen as a beautiful car. The Beetle is no longer a peoples car but is rather a personal car.

Competition and Pricing:

The VW team had to assess the new Beetles pricing and competitive place in the market, as a part of analysis for determining a target market and positioning. In 1997 a total of 8,272,043 cars were sold across four segments: Small, midsize, large & luxury. Domestic brands like Chevrolets Cavalier and Fords Escort & Saturn and Japanese car manufacturers like Toyota and Nissan would be the new Beetles immediate competitive set. With a basic price tag of $15,200 most New Beetles would list out in the $17,000-18,000 price range. Pricing had been a debate since it began its engineering overhaul and adopted more of the golf platform. The team realized that a premium price strategy could be of a potential issue.

Dealers:
In 1998, there were 600 VW dealers in the US. While several had dropped the VW line, most dealers had added other brands correspondingly reduced the time and effort they dedicated to the VW franchise. There was an encouragement to the dealers by the New Passats successful introduction. VW undertook two organizational efforts to improve relationships with the dealers. The 1997 trip to Germany, the dealers got to understand the German managements vision for VW and to see the line-up of VW cars to be introduced in the US. Also, it included the company wide training session for the dealers at the Disney Institute.

CONCLUSION
The recommendations according to our group for the above mentioned issues are Approaching the Consumer-More effort should be focused on campaign to attract Young Generation consumers and appeal to their mentality, behaviour and attitude.A campaign for Baby Boomers would be straightforward by using nostalgic images to bring back good memories from the past and rekindle their interest in the Beetle. Pricing Options- Basic and cheap model will appeal to younger generation of consumers who will be more budget conscious.Enhanced model with popular options will be catered to Baby Boomers who can afford to spend more on a new car (or any other wealthy person). Media Channels- Theres an opportunity to use the positive media coverage to Volkswagens advantage. Get the media involved to spread the word about the Beetle!Other suggested options to increase Beetles exposure: Print Advertising in magazines and showcasing car at big events