Case: The New Beetle

1. Relaunch of A Classic Case: The New Beetle Group 1 Manali Bhole, Carole Gleeson, Melissa Turetz, John Varghese

2. Should VW use “Drivers Wanted”, to launch the New Beetle in the US? • Auto Industry mid-late 1990s • Rebranding of VW in America in 1990s • Was VW successful? • Beetle vs. New Beetle • Similarities and Differences • Marketing Strategy • Product Attributes • Targeting Auto Industry Volkswagen New Beetle

3. Auto IndustryTotal units of cars sold in the US in 1997 was 8.3 million • Auto Industry Declining • 3% decrease in units sold between 1996 and 1997 • Shift toward Luxury Cars • Experienced an increase of 6.5% units sold 8.5M 8.3M 13% 15% 10% 9% 49% 49% 27% 27% Source: Exhibit 11 in HBS Case: The New Beetle

4. Auto IndustryThe Small Car segment represents 27% of US total automobile market • Segment Leaders • Chevrolet Cavalier • Ford Escort • Saturn • Up & Comers • Toyota Corolla • Honda Civic 2.3M 2.2M ~38% 6% 5% 86% 84% • 7%, • ~ 10% of small car market 10% 9%  300% Source: Exhibit 11 in HBS Case: The New Beetle

5. Auto IndustryVW represents 5% of the Small Car segment • VW on an upward trend • 4.7% in 2006 -> 5% in 2007 market share of small cars • Jetta capturing share but is it at the expense of Golf? 110K 111K 19% 22% 81% 78% Source: Exhibit 11 in HBS Case: The New Beetle

6. The start of the decline for VW in the 1970s:“Failure to keep in step with American consumers’ ever-changing demands” • ↑of Deutsche mark v. USD • 1982 recession • ↓ preference for hatchbacks • ↓ oil prices • New environmental laws • New competitors VW Sales History in the United States Pressures on American consumers Single-product successes • Beetle • Rabbit • Microbus Source: Exhibit 2 in HBS Case: The New Beetle

7. Relaunch of Volkwagen in the US in the 1990s:Making the VW brand important again Arnold Communications was hired in 1994. Their research revealed the following strengths and weaknesses of the VW brand. • Weaknesses • Eroding Brand image • Poor perceived quality • Poor perceived reliability • Lack of confidence within dealer organization • Japanese driving experience was becoming the standard • Strengths • German engineering • Fun to drive • More driveable than Japanese competition • Perceived as unique, different and cool • Appealing to successful young buyers Strengths Weaknesses Source: Arnold Presentation provided by Prof. Kopp; HBS Case: The New Beetle

8. Know Your Customers:VW consumers were more active (younger), more affluent, more educated than the average car buyer Industry Enjoy taking risks 170 100 Exercise regularly 169 101 Intelligent, Smart, Bright 132 100 Amicable, Affable, Benevolent 126 102 Refined, Gracious, Sophisticated 121 97 Very happy with life 121 96 Prefer to spend a quiet evening at home 78 101 Economy driven 80 101 They love to drive! Source: Arnold Presentation provided by Prof. Kopp (1999 Simmons Fall NCS, weighted by population); HBS Case: The New Beetle

9. Drivers Wanted was introduced in June 1995 to market Golfs and Jettas

10. How successful was the ad? Unaided Brand Awareness Source: Exhibit 10 HBS Case: The New Beetle

11. How successful was the ad? Ad Recall Source: Exhibit 10 HBS Case: The New Beetle

12. Why reincarnate the Beetle? • To revive slumping sales of Volkswagen, in the early 1990s the design center in Simi Valley CA began the process of re-designing the Beetle Despite all the high expectations we have for the New Beetle, one thing is for sure, Volkwagen will never be again the one-car company.” - Ferdinand Piech, chairman, Volkwagen AG Board of Management