Marketing - The Process
Precisely defined, marketing is the process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services to satisfy customers (Google). It is a dynamic process of ensuring a close fit between the core competencies of an organization and the external demands placed upon it.
The fundamental role of marketing is often associated with the promotional aspect of a product or service. It consists of making the consumer aware of what you're offering, and convincing them to buy it.
Marketing Communications & Marketing Communications Mix
Marketing Communications takes a leap further to streamline the actions a firm takes to communicate with end-users, consumers and external parties. It identifies the best media available for any particular product or service to communicate with the market (Smith & Taylor, 2005). It is primarily concerned with demand generation and product and service positioning.
The marketing communications mix is essentially a conceptual framework that helps to structure the approach to marketing. It covers all the communication tools available to a marketer, such as advertising, sales promotion, direct marketing, sponsorship, e-marketing, corporate identity, etc.
This report is an attempt to study the marketing communications strategies and mix for consumer vehicle brands in the UK, namely Skoda and Volkswagen Passenger Cars (now-on referred to as Volkswagen or VW). These are two sister companies and hence an interesting comparison.
Automotive Industry & Marketing
The competitive nature of the automobile industry in the UK has prompted the automobile manufacturers to explore new and innovative marketing strategies to thwart the deadly competition. Almost all companies offer diverse range of vehicles in almost all segments as a part of their marketing strategy. This is in the endeavor to make sure that the customer is driving one of their vehicles only.
The automobile industry relies not just on one medium of advertising and promotion; rather they aim to develop a combination of almost all options to leave the most impact-ful trail of marketing. The audio-visual medium is a rage since it gives the vehicle manufacturers an opportunity to flaunt their cars. The print medium, on the other hand, provides an opportunity to explain the functions of a car in detail and highlight their unique selling proposition (USP) to the customers. More recently, the automobile industry has shifted focus to the online medium, exploring the internet, which offers greater flexibility in terms of utilizing its interactive features such as demonstrating the interiors of the car with its salient features, etc.
Aims & Objectives:
The aims and objectives of the report shall remain the following:
Study the automobile industry dynamics in the UK, with specific focus on history and evolution of Skoda and Volkswagen as significantly important brands.
Study the marketing communications strategies and tactics used by Skoda and Volkswagen to fight competition.
Study the campaigns, media used and the brand image projected by Skoda and Volkswagen and how successful have they been in reaching out to their target.
Chapter 2: Literature Review
UK Automotive industry - Market Overview
The UK automotive sector is a highly flexible, dynamic and a global enterprise. The UK is the 12th largest automobile producer in the world and UK car industry has always been export-oriented and is known for exclusive brands, such as the Rolls-Royce, Bentley, Land Rover, Aston Martin and Jaguar. Amongst the key multinational players are: Ford, Toyota, Diamler-Chrysler, GM and Volkswagen. The top five UK car producers include Nissan, Toyota, Honda, MINI and Land Rover (Cunningham et al., n.d.).
The automotive sector in the UK is in a state of constant change which is imperative for adapting to challenging commercial, regulatory and technological trends worldwide. However,at present, the UK car industry is in major turmoil. With credit crunch, spiraling oil prices and fragile consumer confidence, the industry is witnessing its worst since 1966. The buyers are shunning dealerships in droves and the manufacturers are in deep thoughts of how to revive the declining sales.
The slowdown in the UK mirrors the difficult conditions being experienced across the main European markets.
(Paul Everitt, SMMT).
The major trends in the UK automotive industry over the last five years, as identified by the Society of Motor Manufacturers & Traders Ltd (SMMT), depict the following:
UK new car market has eased in recent years, after witnessing a peak of 2.579mn in the fiscal year 2003. The market is now contested by many marques.
Fuel-efficiency is a big issue in the UK automotive industry.
UK vehicle output has declined, but will recover over the next 18 months (figures as of 2007).
In the year 2006 there were 1.65 million cars and commercial vehicles (CVs) produced in the UK alone.
In the year 2006 the UK new car market eased to 2.345 million units, its lowest level since 2001.
Estimates show that over 2 million vehicles are currently scrapped each year.
Global automotive market is very positive and is largely driven by Asian demand, in particular in China and India.
Skoda- The Brand and the Re-Branding
Skoda Auto is an automobile manufacturer based in the Czech Republic. It was once one of Europe's leading producers of quality, highly engineered cars but its fortunes plummeted under the post-Second World War communism phenomenon. It was until 1989 when Volkswagen took a 30% stake in the beleaguered car firm, that there were any signs of hope for the uplift of the company. In 21991, Volkswagen bought Skoda outright and this was when the 'journey of improvement' triggered off for Skoda. Backed by VW's expertise and investments, the design of Skoda, both in terms of style and engineering, improved greatly.
Although Skoda cars were quite at par with those of the rivals, in terms of function, style and value for money, the entire brand image of Skoda lagged far behind. As Chris Hawkens (Marketing Director Skoda, 1999) stated: All the research showed quite substantial levels of rejection of the Skoda brand by consumers. (Creativity Works, 2003)
Trying to Sell Skoda's is Like Trying to Sell Nuclear Waste.
Hawken took up the initiative to challenge the negative perceptions about Skoda and to create a new brand platform to ensure future growth. The action plan called for innovation and a carefuly integrated marketing communications strategy which comprised of three core strands:
As a result, the entire image of the Skoda brand improved and eventually changed altogether.
Volkswagen - The Brand
Volkswagen commercial vehicles is another brand of the Volkswagen group, like Skoda, and is a separate marque to Volkswagen Passenger Cars since 1995. VW's relationship with the UK automobile industry dates back to 1952 when the first two models of Beetles were introduced into the market. In 1953 Volkswagen Motors Ltd officially became the UK importer, and the brand thereon went from strength to strength and became to be knows as the 'people's car'. The Volkswagen Passenger Cars brand runs a combination of three core values: 'innovative', 'providing enduring value' and 'responsible'.
Technology, people and the environment dominate the philosophy and actions of Europe's largest automaker.
Double marketing has been the key for Volkswagen. It is not about stuffing multiple messages into one campaign, ratherrunning multiple campaigns on different messages concurrently. Volkswagen has more often indulged in launching many models collectively and hence has exploited this marketing strategy. The campaigns of 2006 provide a classic example of this phenomenon at Volkswagen: the 'Unpimp my ride' campaign about design and control, the 'obeying your fast' campaign for the GTI and the 'safe happens' bold TV ads for the Jetta.