VW Beetle - HBR Article

Essay by dawnc1228University, Master'sA+, March 2004

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The marketing team has asked how VW could back the excitement it once had in the marketplace, while updating the brand's image to appeal to anew generation of consumers. The answer is the new VW Beetle. Our marketing team collaborated with Arnold Communications and are poised to position the VW Beetle with one foot in the past and the other on the accelerator heading for the future. Newsweek recently indicated that the new Beetle is a marketer's version of "Mission Impossible". This is due, in large part, to the fact that the positioning of the new Beetle could either be defined as a niche product or could simple be a part of a single-product successes VW experienced during the late 1950's.

Beginning in the late 1950s, VW experienced a number of single product successes in the US market. These successes included the Beetle, the Rabbit, the Microbus, and the Karmann Gia sports couple.

In fact, by the end of 1954, a total of 8,913 Volkswagens were purchased and were being driven by American consumers. Despite being seen as the automotive icon of the 1960s, US VW sales declined from over a half a million cars in the 1970s to less than 50,000 cars by 1993. (exhibit 1) A number of factors contributed to this:

ćThe appreciation of the Deutsche Mark against the dollar threatened to price VW cars out of the market

ćNew competitive threats from Japanese brands

ćThe 1982 recession; drop in oil prices

ćDeclining popularity of hatchbacks

ćRequirements of new environmental legislation, ceasing production of the Beetle

ćFailure to keep in step with the American consumers changing demands

ćSupply constraints at a Mexican plant

Despite the fact that sales were expected to pick up once supply constraints were lifted at the Mexican plant, it would not be...