Facing the “mission Impossible” - Volkswagen Beetle

Facing the “Mission: Impossible”

Background

During the 1960s and early 1970s, Volkswagen Beetle was extremely loved by the American people. It also helped VW create its best-selling record in the U.S. market – more than half a million cars per year, of which nearly three quarters were Beetles. Even the unique shape and design of the Beetle became one of the symbols of 1960s’ counterculture.

However, since 1974, VW had experienced a sales declining due to several reasons such as the appreciation of the Deutsche mark against the dollar, Japanese cars’ invasion, the 1982 recession and etc. It even stopped selling the Beetle in 1979 because of the incapability to keep with the new environmental legislation. The sales continued to decline until the early 1990s.

In 1995, in order to revive the Volkswagen brand, the VW marketing team, together with its newly-hired advertising agency, Arnold Communications, launched the Driver Wanted campaign. After that, several successful advertising came out and VW got back huge amount of customers who were willing to buy Jettas and Golfs. Finally, sales rebounded and both 1995 and 1996 respectively witnessed an annual 16% increase.

By the spring of 1998, Volkswagen had successfully relaunched its brand in the U.S. market. It even achieved the goal to establish a new relationship with the younger generation through the Driver Wanted campaign.

“Mission: Impossible”

In November 1997, VW launched its new product, the New Passat. More importantly, in January 1998, six New Beetles came out under the spotlights in a leading auto show. The New Beetles, doubtlessly, caused great excitement and nostalgia among the press and the American people.

Liz Vanzura, marketing director for Volkswagen, together with Charlie Waterhouse, director of product development, and Steven Keyes, director of public relations, formed the marketing team of the New Beetle. They were going to identify a specific target market and develop a brand proposition within a limited advertising budget. Although a recent Nesweek article called it a “Mission: Impossible”, the success of the New Beetle would be essential to VW’s recovery in the U.S. market in the long run.

Target Market & Brand Positioning

It was certain that the baby boomers were the target market of the New Beetle because they cherished numerous memories of the original Beetle. But based on the research of the marketing team, VW’s new core customers of 18-to-34-years-olds were also attracted by the New Beetle. They shared some common characteristics such as confidence, unconventionality, individualism, uniqueness, and a desire to be the center of attention. Of course, they all enjoyed VW’s unique driving experience – more connected to the road, and recognized the benefits of German engineering.

Baby Boomers as the Main Target Market

If the marketing team targeted baby boomers, then “indulging in the nostalgia” would be the main value proposition. It seemed quite reasonable to do so because this group could also afford the $15,000-plus price tag for the New Beetle. Definitely, there would be several advantages for this strategy:

1. There was a strong emotional connection to the original Beetle.

Baby boomers shared precious memories and strong emotional connection to the original Beetle. Not only the Concept 1’s (the New Beetle model) debut in 1994 and the shining auto show in 1998, but also the journalists’ firsthand experience of the New Beetle revealed that there were outpouring emotion and enthusiastic reception for the New Beetle among the American people, especially baby boomers. They would extremely welcome the New Beetle and spontaneously become the buyers.

1. Baby boomers could afford a higher price.

The New Beetle’s size automatically placed itself into the small-car segment. There were many contenders in this segment such as Chevrolet’s Cavalier, Ford’s Escort and Saturn, Toyota Corolla and Nissan Sentra. The price varied from $11,035 to $17,239. The base price tag of the New Beetle was $15,200, and most of them would list out in the $17,000 - $18,000 price range with extras, making it one of the more expensive cars in the small-car segment.

The younger generation would not necessarily accept the high price. But baby boomers as the middle-aged people, they could definitely afford such price. And it would also bring a high profit that attracted more dealers.

1. A more focused market would save the advertising budget.

Considering the budget was limited and the remaining dollars should be used to support the New Passat, a more focused market – baby boomers – would be appropriate for the New Beetle. While advertising through television could reach a broader audience, it was far expensive. In contrast, print advertising was economic and it would be enough to reach the baby boomers.

Of course, there were disadvantages of such marketing strategy that could not be neglected, such as:

1. Too narrow market and too monotonous proposition.

Targeting baby boomers as the main market was focused enough, but too narrow. What’s more, nostalgia proposition was so evident that it would easily become monotonous in the long run. It would affect the sales amount in the future inevitably.

1. The Drivers Wanted Campaign had won a younger generation customers.

Since the Drivers Wanted campaign had already won a new generation of customers of VW’s cars, it wouldn’t do any good to ignore this market group for the long-term benefit.

And besides, young people also valued the New Beetle’s unique spirit delivered by its rich history and shape and design. The superb driving experience which was elaborately created by the German engineering and the top-of-the-line Golf platform was also welcomed among the young people.

VW wouldn’t give up the achievement of the new campaign, and as a result, the New Beetle marketing strategy could not put the younger generation customers in a secondary position. In my opinion, the New Beetle should follow the existing Drivers Wanted campaign to reach the younger market. That would not only bring all of the separate VW cars under one umbrella, but also save a part of the advertising budget.