Building a Strong Brand with Association – Red Bull Case Study

Bob Van den Bosch        

Professor Harrison

25 March 2017

Case Studies in Marketing Management

Skoda

What was the key weakness that Škoda was able to identify?
[pic 1]

Skoda was founded by 2 Czechoslovakian guys  in 1895, in the beginning this part of Europe (Eastern) had a very weak image among the people. The major part of the public were convinced that only low quality products were produced in this part of Europe, due to the lack of well trained and educated employees with sufficient technical knowledge.

This was always the major weakness of Skoda because its brand name was always related to this part of Europe, people had the idea that the cars weren't well assembled and that the materials used were of low quality, they had also the perception that the cars’ designs were outdated and that there were many things that would go wrong with the car.

As we all know, a car is a status symbol/product, people use a car to feel privileged or to differentiate themselves from others. So all the potential customers ask themselves what other people would think about them and what image they would have if they would drive a Skoda. A Skoda driver has the image of a boring, non-active, mid  to low range driver so people aren’t to keen to drive a car with such an image. I would identify this as a key weakness as well because this image will stop image-focused people from buying a Skoda.

From 1999 onwards, Skoda was able to enhance its brand image and tried to establish itself as competent car manufacturer with high quality products. They looked for a strong partner with a well and strong established brand image. So they came under the Volkswagen AG ownership, thanks to this change Škoda cars were no longer seen as low-budget or low quality. However, a brand ‘health check’ in 2006 showed that Škoda still had a weak and neutral image in the mid-market range it occupies, compared to other players in this area, for example, Ford, Peugeot and Renault.

What strength did Škoda use to turn its brand weakness into an opportunity?

One of Skoda’s major strengths was the fact that the customers of Skoda were very happy and satisfied about the cars they bought. Skoda realised this and saw this as an opportunity to get rid of the weak brand image. So they adapted a very unique  strategy which was new in the car manufacturing business, almost all car manufacturers are focused on output, sales and profit maximisation.

Skoda realised this and applied a strategy which is focused on customer satisfaction and happiness. The strategy worked and they were able to identify themselves as a reliable brand with happy and satisfied customer. So we can say that Škoda was able to overcome its major weaknesses and turned its previously defensive position/straetgy of the brand to a positive customer-focused experience. The various awards and prices that Škoda has won demonstrate how its communications are reaching customers. Improved sales is the ultimate prove that the new positioning and strategy is success.

How has Škoda strategically addressed external threats?

External threats come from outside the company, 3rd parties play a major role in these threats, not only direct from competitors but from governments and nature as well. If a government or a political party decide to change certain laws about pollution of cars for example, this can have a great impact  on the sales and success of Skoda. If the economic climate in a company changes, this can decrease the buying power of consumers, which will have a direct impact on the buying behaviour of car consumers. Skoda’s major external threat is the threat of new entrants and the competitions of the 50 different car makers on the markets which provide a wide range of 200 models, within these models there are more than 2000 derivates.

Skoda was aware of these threat and realised that they had to do something, they had to to ensure that its messages and products were powerful enough for customers to hear within such a crowded and competitive environment.  Because in the case they didn’t, potential customer would overlook Skoda. Which would lead to a decrease in the market share. So to prevent this, Skoda developed a strong product range which will respond the demand of each potential customer. They developed 7 major models with each one a design to appeal to different market segments. For example:[pic 2]

• The Škoda Fabia is sold as a basic but quality ‘city car’

• The Škoda Superb offers a more luxurious, ‘up-market’ appeal

• The Škoda Octavia Estate provides a family with a fun drive but also a great big boot.

Skoda’s combination of a clear range with competitive  pricing has overcome the threat of the strong competition, active on the car market.

As I mentioned already in a previous paragraph, external threats can come from governments as well, Skoda had to cope with a threat which was the outcome of a decision of the EU. The EU decided to make the legal and environmental regulations more strict, this made it for Skoda harder to respond to them. Skoda offered a solution and responded very effective to these changes, they designed products that are environmentally friendly at every stage of their life and production cycle.

They recycled as much as possible, parts were marked for quick and easy identification when the car  is taken apart. They also made use of the lasts and most environmental-friendly manufacturing techniques, facilities and technologies. For example, they painted areas to protect against corrosion use lead-free, water based colours. Their engineers and designers were told to cut consumption and emissions of their engines. They achieved this by making cars lighter and more aerodynamic.