January 10th, 2018
Volkswagen Marketing mix
A well-structured marketing mix provides the entity with the needed competitive advantage in an increasingly competitive business environment occasioned by globalization. To do well in diverse markets the marketing strategy must combine the four elements of the marketing mix – price, product, place and promotion – effectively. This paper evaluates how Volkswagen – the European largest automobile manufacturer – has structured its marketing mix to better its market presence. The external environmental characteristics and the roles of ethics and social responsibility for the company are also discussed.
The Volkswagen group has employed the marketing mix elements to a varying extent to better its marketing strategy. On their automotive section the company has used its products to penetrate various markets such as China, India and Brazil (Volkswagen, 2010). Its brand diversification strategy has helped the company to make products such as the Polo that have achieved much success in non traditional markets (Webmaster, 2010). Similarly in response to criticism on lack of luxury cars, the Volkswagen group has acquired entities that produce luxury segment models – e.g. Audi A8 and Lamborghini (Proff, 2000; Mitra, 2010; Volkswagen 2010).
In respect to price, Volkswagen has used a premium pricing strategy in different markets but such seems to be changing. In the US the entity for instance dropped this strategy so as to compete effectively with other market players such as Toyota (Kurylko, 2010). In emerging markets the company has however avoided price competition hence its prices remain higher compared to players who have experience in the market with low cost vehicles (Webmaster, 2010). Similarly the entity has placed significant importance to place as marketing mix strategy. Apart from establishing production facilities in areas it considers to have the potential for growth, the firm has also established a wide dealership to bring its products closer to the customers (Volkswagen, 2010; Mitra, 2010). Finally in promotion, the entity has employed various promotional tactics to help achieve a competitive advantage over its competitors. For instance the US and Indian market the entity’s advertisement campaigns have helped it increase its market share (“Sex and the witty, 2007; Baggonkar, 2010) but the entity also offers other promotional services such as maintenance services for its customers (Volkswagen, 2010).
External environment characteristics and role of ethics and social responsibilities
The external environment also influences a company’s performance in the markets it conducts business. Volkswagen could for instance be affected by competition from other major market players such as Toyota, General motors and Chrysler. Similarly differences in culture between the parent company residence (Germany) and other markets such as China and India where the company has expanded to could adversely affect the entity’s foreign operations (Volkswagen, 2010). Differences in legal framework and technological knowledge in these foreign countries might also affect the level of operations that the entity can run successfully (Volkswagen, 2010).
To ensure it maintains a competitive advantage the entity also needs to periodically review its ethical practices. Volkswagen has set aside a code of business ethics and principles that delineate the principles it expects its employees and partners such as dealers to adhere to in conducting their duties and business (Volkswagen, 2010). Despite existence of such a code, Volkswagen – like most other auto manufacturers – faced a problem of vehicle recalls mainly in its Brazilian market (“Volkswagen recalls”, 2010). Such recalls could affect the entity’s reputation thus impact of their sales. Though entities are faced with increasing pressure to perform to the investor expectations; imprudent practices that lower products’ quality should be guarded against as these could bear long term adverse business outcomes.
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Kurylko, D. T. (2010, June 23). VW ends premium pricing strategy in U.S. Automotive News. Retrieved June, 24, 2010, from http://www.autonews.com/apps/pbcs.dll/article?AID=/20100623/COPY/306239994/1294
Mitra, K. (2010, January 11). The Challenger. Business Today. Retrieved June 21, 2010 from http://businesstoday.intoday.in/index.php?option=com_content&task=view&id=13668
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Sex and the witty: How advertising is helping Volkswagen fight back (2007). Strategic Direction, 23(3), 13-16. doi: 10.1108/02580540710730756.
Volkswagen (2010). Driving Ideas. Annual Report 2009, Retrieved June 21, 2010 from http://www.volkswagenag.com/vwag/vwcorp/content/en/investor_relations.-bin.acq/qual-MarginalParSys.Single.Component.0003.ContextBoxImageTeaser.0001.DownloadFile/GB_2009_e.pdf
Volkswagen Recalls 200,000 cars in Brazil (2010, Feb 11). Reuters. Retrieved June 23, 2010, from http://www.reuters.com/article/idUSTRE61A2YA20100211
Webmaster, C. (2010, April 15). Volkswagen polo booking crosses 5,000 units. OfficialWire. Retrieved June 21, 2010, from http://www.officialwire.com/main.php?action=posted_news&rid=129498&catid=1241