Case 5 Volkswagens Marketing Strategy in India

8/10/2019 Case 5 Volkswagens Marketing Strategy in India

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Volkswagens Marketing Strategy in India

The case examines the marketing strategies of Volkswagen Group India, the Indian

subsidiary of German automobile manufacturer, Volkswagen AG (Volkswagen).Volkswagen entered the Indian passenger car market in 2001 by launching its car

brand Skoda. In 2007, two of its other brands Audi and Volkswagen, were also

launched in India. Volkswagen Group India emphasized on all aspects of marketing

mix including product, price, place and promotion. The company offered three brands

including Audi, Skoda and Volkswagen that together comprised of 15 different models

as of late 2009. Volkswagen Group India mainly catered to the luxury segment of the

Indian car market. The company had established presence in India through separate

distribution channels for each of its brands.

In its initial years, Volkswagen Group India primarily used the print media to

promote its products. However, considering the growth potential of India's

automobile market, the company started using electronic, digital and out of home

media along with print media. In November 2009, the company launched anintegrated marketing campaign to strengthen its brand image. The case describes the

marketing campaign and ends with a discussion on the growth prospects of the

company in future.


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We are fairly new in the Indian market. The brand awareness of Volkswagen is low.

We have to raise awareness, create and improve the brand.1

- Lutz Kothe, Chief General Manager, Marketing and Public Relations,

Volkswagen India, in November 2009.

Volkswagen is committed to the Indian market, the proof of which is the constant

investment and growth that we provide through the various projects initiated. India is

one of our key markets and we know that the future harbors a huge potential.2

- Jochem Heizmann, Member of the Management Board, Volkswagen

AG, in August 2009.

Introduction

On December 21, 2009, Volkswagen India Private Limited (Volkswagen India), the

group company of Volkswagen Group India, announced that it aimed to sell 300 units

ofBeetle, its iconic car, in India in the year 2010. TheBeetle was launched in India on

December 04, 2009. Raj Sawant, Business Head of Automark Motors, a Volkswagen

dealer in Ahmedabad, Gujarat, India, said, There are already over 170 advancebookings across India, and we have started delivering the cars as well. Going by the

initial euphoria, we expect to sell around 300 Beetles in 2010.3

Volkswagen Group India, the Indian subsidiary of leading automobile manufacturer,

Volkswagen AG (Volkswagen), based in Wolfsburg, Germany, had entered the Indian

passenger car market in 2001 by launching its car brandkoda. In 2007, two of itsother brands Audi and Volkswagen, were also launched in India.

Over the years, Volkswagen Group India not only launched several products, but also

ensured that its brands were well known among the Indian consumers. Although, the

company had had a presence in the Indian car market since 2001 and the kodaandAudi branded cars were well known among consumers, the Volkswagen brand was

not well recognized in the country. Therefore, in November 2009, the company

launched an integrated marketing campaign to build its brand image. It also launched

a marketing campaign for its iconic model, the Beetle. Volkswagen India expected

that with its brand building exercise, it would be able to increase its sales and capture

a significant market share in the Indian car market. According to Neeraj Garg (Garg),

Director (Passenger Cars), Volkswagen India, It is true the Volkswagen brand is not

well known in the country. This will be corrected with appropriate brandingstrategy.4

1 Volkswagen Launches First Brand Campaign in India, www.afaqs.com, November 10,2009.

2 Volkswagen Group India Holds A Positive Outlook, http://machinist.in, August 29, 2009.3 Volkswagen Aims to Sell over 300 Beetles in 2010, www.business -standard.com,

December 21, 2009.4 Volkswagen India Plans to Double Distribution Network,

http://economictimes.indiatimes.com, September 25, 2009.


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Volkswagen Group India had built a widespread distribution network for its threebrands across India. The company offered different car models ranging from luxurysedans to compact cars. According to Jochem Heizmann, Member of the Management

Board, Volkswagen, India is a huge market that we believe offers us potential. InIndia, the passenger vehicle segment has seen a growth despite the current marketsituation and Volkswagen plans to tap this. With the varied models across our brandsas well as the establishments that have been set up we hope to be able to cater to ourcustomers as well as dealers in the best possible manner.5

About Volkswagen

The history of Volkswagen (which means peoples car in German) can be tracedback to the 1930s when Ferdinand Porsche, a reputed automobile engineer anddesigner, started designing an affordable car for the common man. In 1936, the first

prototype of the car, called theKdF-Wagen, was designed in Stuttgart, Germany. Thisprototype was similar to what later came to be known as theBeetle.

On May 28, 1937, the Gesellschaft zur Vorbereitung des Deutschen VolkswagensmbH company was founded, and on September 16, 1938, it was renamed asVolkswagenwerk GmbH. In 1938, the construction work resumed on a production

plant at Wolfsburg, Germany.

During World War II, Volkswagens core focus shifted to the production of militaryvehicles. After the War, as the area fell under the occupation zone of the UnitedKingdom (UK), in mid-June 1945, the company was revived by Major Ivan Hirst, aBritish army officer. Under his management, the company again started producing the

Beetle. By 1946, the production plant at Wolfsburg was producing 1,000 cars permonth.

In 1948, Heinrich Nordhoff (Nordhoff), a former senior manager at Adam OpelGmbH (Opel), was appointed to manage the company. Under Nordhoff, Volkswagenstarted producing a number of Type 2 commercial vehicles like vans and pickups. The

Volkswagen Bus called the VW Bully soon became very popular among consumers.In 1956, a separate manufacturing base was established in Hanover.

In 1973, the production of new generation of Volkswagen vehicles began with thePassat. In January 1974, production of the Golfwas started at the Wolfsburg plant. In1974, Volkswagen launched another car the Scirocco.

In 1976, the Golf GTIrolled off the production line. The car, with its110 bhp engine,became an instant hit among consumers. In June 1983, the company startedproduction of the second-generation Golf. The company used a highly automatedassembly process for the production of the car, and for the first time in vehiclemanufacturing, robots were used.

In July 1999, Volkswagen started the production of Lupo 3L TDI, which had a fuelconsumption of just three liters per 100 kilometers. In August 2002, the company

started mass production of the Touareg,a luxury-class Sports Utility Vehicle (SUV).In 2003, production of the fifth-generation Golf was started. On December 09, 2009,Volkswagen and Suzuki Motor Corporation (Suzuki)6 announced that they hadentered into a long-term strategic partnership in which Volkswagen purchased 19.9

percent of Suzukis issued shares.

5 Volkswagen Group India Holds A Positive Outlook, http://machinist.in, August 29, 2009.6 Suzuki Motor Corporation is a Japanese multinational corporation headquartered in

Hamamatsu, Japan. It specializes in manufacturing compact automobiles, a full range ofmotorcycles, all-terrain vehicles (ATVs), outboard marine engines, wheelchairs, and avariety of other small internal combustion engines. It was founded in 1909. As of 2008, itgenerated revenues of US$ 33.46 billion and net income of US$ 305.43 million (Source:http://en.wikipedia.org).


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As of 2009, Volkswagen was the largest car manufacturer in Europe. In the thirdquarter of 2009, the company generated revenues of 25, 956 million and reported a

profit after tax of 161 million (Refer to Exhibit I for Volkswagens Financial

Highlights). The company had eight brands Volkswagen, Audi, Bentley, Bugatti,Lamborghini, SEAT, koda, and Volkswagen Commercial Vehicles (Refer to TableI for Volkswagens Third Quarter Results in 2009 and 2008).

Exhibit I

Volkswagens Financial Highlights (2006-08)

(In millions)

2008 2007 2006

Sales Revenue 113,808 108,897 104,875

Operating Profit 6,333 6,151 2,009

Profit before Tax 6,608 6,543 1,793

Profit after Tax 4,688 4,122 1,955

Net Cash Flow -2,679 7,109 5,631

Net Liquidity on December 31 8,039 13,478 7,133

Source: www.volkswagenag.com.

Table I: Volkswagens Third Quarter Results

(In millions)

Q3 2009 Q3 2008 % Change

Sales Revenue 25956 28932 -10.3

Operating profit 278 1485 -81.3

Profit before tax 262 1481 -82.3

Profit after tax 161 1161 -86.1

Net Cash flow 791 -2408 -

Net Liquidity on September 30 13391 11767 +13.8

Source: www.volkswagenag.com.

Marketing Strategy in India

Volkswagen entered the Indian market in 2001 by setting up its Indian subsidiaryVolkswagen Group India. As of 2009, Volkswagen Group India had two groupcompaniesVolkswagen India Private Limited (Volkswagen India) and VolkswagenGroup Sales India Private Limited (VGSIPL). Volkswagen India focused on themanufacturing and sales of Volkswagen branded cars in India. Skoda Auto IndiaPrivate Limited (Skoda Auto India)

7and Audi India

8both were divisions of VGSIPL.

7 Skoda Auto India Private Limited is a subsidiary of Skoda Auto part of Volkswagen Group,8 Audi India is a subsidiary of Audi AG, part of Volkswagen Group.


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The marketing strategy including product launch, product positioning, promotionalcampaigns, and establishing widespread dealer networks of each brand of VolkswagenGroup India which was handled by the group companies and their divisions

separately. Commenting on the rationale for following such a marketing strategy,Rupert Stadler, Chairman of the Board of Management of Audi AG, said, If youcompare Volkswagen to other big automobile groups in the world, you can see how ithas given independence to individual brands. Each of us has to do our job and not askmamas help all the time! This is what finally drives brands in the business.9

Products

Skoda Auto India entered the Indian car market in 2001 by setting up a plant atShendra, on the outskirts of Aurangabad, Maharashtra. In March 2007, when AudiIndia was set up as a division of VGSIPL, it also started using the same plant. InMarch 2009, Volkswagen India and Skoda Auto India started a joint manufacturing

plant at Chakan, near Pune, in Maharashtra. While Skoda Auto India invested 90million, Volkswagen India invested approximately 580 million to build the plant.

In mid-2009, Audi India assembled only two of its models the A4 and the A6 inIndia; the rest were imported as Completely Built Units (CBU). According to MartinBirkner, the Head of Audi India (Marketing), it would soon assemble more models inIndia so as to get a competitive advantage.

As of late 2009, Volkswagen Group India was marketing three different brandsincluding Audi, koda, and Volkswagen that comprised 15 different models (Refer toTable II for the cars offered by Volkswagen Group India).

Table II: Car Models Offered By the Volkswagen Group India

(December 2009)

Brand Car Models

Audi Audi A4, Audi A6, Audi A8, Audi Q5, Audi Q7, Audi TT, AudiR8.

koda New Superb, New Laura, Octavia, Fabia.

Volkswagen Passat, Jetta, Beetle, Touareg.

Source: www.volkswagenindia.co.in.

Volkswagen Group India received several awards in 2009. CNBC-Overdrive Awardrecognized the company as the most successful car manufacturer in 2009. koda

Fabiareceived the Car of the Yearas well as the Compact Car of the Year awards.The VolkswagenJettareceived the Premium Car of the Yearaward and the AudiA43.2thePerformance Car of the Year award.

Price

Volkswagen Group India mainly catered to the luxury segment of the Indian carmarket. Skoda Auto India had four models among which three the New Superb, the

New Laura, and the Octavia,were luxury cars and the Fabiawas a mid-segment car.TheFabiahad both petrol and diesel variants. koda branded cars had 20 variants intotal and were available in the price range of Rs. 490,043 and Rs. 2,576,383.

9 Audi Bullish on India; Sees Metropolitan Strategy as the Way Forward,www.blonnet.com, April 20, 2009.


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Audi India had seven models with prices ranging from Rs. 2,900,000 to Rs12,300,000. Volkswagen India had four models which were available in the pricerange of Rs. 1,240,379 to Rs. 5,185,000 (Refer to Table III forVolkswagen Group

Indias Car Prices).

Table III: Volkswagen Group Indias Car Prices(Ex-Showroom Delhi Price as of December 2009)

Brand Price Range

Audi A4 Rs. 29,00,000 to Rs. 36,00,000

Audi A6 Rs. 39,80,000 to Rs. 49,75,000

Audi A8 Rs. 61,21,717 to Rs. 1,23,00,000

Audi Q5 Rs. 38, 29, 000

Audi Q7 Rs. 52,00,000 to Rs. 73,01,771Audi TT Rs. 46,19,693 to Rs. 47,51,424

Audi R8 Rs. 1,17,00,000

kodaNew Superb Rs. 19,39,705 to Rs. 25,76,383

kodaLaura Rs. 13,05,207 to Rs. 17,68,528

kodaOctavia Rs. 10,19,845 to Rs. 12,10,023

kodaFabia Rs. 4,90,043 to Rs. 7,63,274

Volkswagen Passat Rs. 21,61,458 to Rs. 25,77,860

Volkswagen Jetta Rs. 12,40,379 to Rs. 16,38,251

Volkswagen Beetle Rs. 20,45,000

Volkswagen Touareg Rs. 51, 85,000

Compiled from various sources.

Promotion

Skoda Auto India and Audi India

In 2001, Skoda Auto India launched its first product, the Octavia, in India. Thecompany primarily used the print media whenever it launched a new product. To

promote the brand image of the company, it also used print ad campaigns (Refer toExhibit II for Skoda Auto Indias Print Ads). In June 2004, the company launcheda print ad campaign which read We fill our airbags with life. In the print adcampaign, the company emphasized the fact that koda cars had six airbags to ensure

proper safety.

In 2005, Skoda Auto India launched several television commercials (TVCs) topromote its models. The company launched a TVC with the tagline, You need to bewell-built to carry your loved ones... In 2008, when the company launched theFabia,it launched a TVC with the tagline Because Youre Special. (Refer to Figure I foran Image of koda Fabias TVC). Commenting on the advertisement strategy,Shashank Vaid, Manager (Marketing), Skoda Auto India, said, We use televisioncommercials as part of the corporate branding strategy, while the print advertisementscommunicate the benefits.10

10Nirmal D. Menon, The Skoda Score, www.blonnet.com, January 13, 2005.


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Exhibit II

Skoda Auto Indias Print Ads

Source: www.skoda-auto.co.in.

Figure I: An Image of kodaFabiasTVC

Source: http://www.bigadda.com.


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As of 2009, Law & Kenneth11

handled the creative duties for Skoda Auto Indias fourbrandstheFabia, theOctavia, theLaura, and theSuperb.

Since its launch in India, Audi Indias focus had been on establishing itself as a luxurycar brand in India. According to Birkner, As a group, wehave presence in almostevery segment. We are in no hurry to launch Audis compact cars. Our focus iscurrently on establishing our luxury brand image.12

Volkswagen India

In September 2007, when Volkswagen India launched its first model, the Passat, inIndia, it appointed DDB Mudra Group (DDB Mudra) as its creative agency. In thefirst week of September 2007, the company launched an advertising campaign whichaggressively used the print media. Commenting on the rationale for launching thecampaign, Bobby Pawar (Pawar), Chief Creative Officer, DDB Mudra Group (DDBMudra)

13, said, Volkswagen has just launched the Passat and it has other big plansfor India. They are planning to launch cars here in India to suit every pocket. The brieffor us was to establish the spirit and philosophy of Volkswagen makes people believe

that theres a certain way of life at Volkswagen.14 In July 2008, the companylaunched its second model, theJetta,in India.

Initially, Volkswagen India did not market its products aggressively. However,considering the growth potential of Indias automobile market which was expected tosell two million vehicles in 2014 and three million vehicles by 2018 as compared to1.1 million vehicles in 2009, the company started laying special emphasis onmarketing its products.

Volkswagen Indias internal researchconducted in 2008 showed that the companysbrand was not well known among Indian consumers. According to the Society ofIndian Automobile Manufacturers (SIAM)

15, Volkswagen India had sold only 1,172

cars between April and October 2009, as compared to other European automobilemanufacturers like BMW India Private Limited

16which sold 2089 cars and Mercedes-

Benz India17that sold 1869 cars during the same period.18Therefore, the company felt

11 Law & Kenneth, the Indian subsidiary of UK based KennethWorldwide Group Company,was aleading ad agency in India. As of 2009, it handled creative duties of many leadingbrands including Johnson & Johnson Baby Products, ITC Personal Care, Cox & KingsTravel Agency, Haier Electronics, GoAir, Bajaj Scooters, ICICI Prudential Life Insurance,Oberoi and Trident group of Hotels etc.

12 Audi Weighing Options for Luxury Small Car Launch in India,www.thehindubusinessline.com, August 31, 2008.

13 DDB Mudra Group is an alliance between the India-based Mudra Group and DDBWorldwide Communications Group Inc (DDB), a part of Omnicom Group Inc. It is a leadingadvertising company in India. Some of its clients are Johnson and Johnson, HindustanUnilever Limited, Henkel, Volkswagen, Reliance ADAG, AIG Corporate and Tourism

Australia.14 Volkswagen Drives in with Mudra DDB, www.afaqs.com, September 11, 2007.15 The Society of Indian Automobile Manufacturers (SIAM) is the apex industry body

representing 44 leading vehicle and vehicular engine manufacturers in India. SIAM worksclosely with all the concerned stake holders and actively participates in the formulation ofrules, regulations, and policies related to the automobile industry (Source:www.siamindia.com).

16 BMW India Private Limited, the Indian subsidiary of the BMW Group, is headquartered inGurgaon, National Capital Region, India. The company offers a wide range of luxury carsincluding its BMW 3 Series, BMW 5 Series, BMW 6 Series, and BMW 7 Series. (Source:www.bmw.in).

17 Mercedes-Benz India, the Indian subsidiary of Mercedes-Benz, a division of Daimler AG,was established in 1995. It offers a wide range of luxury cars including the S-Class, the E-


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it was necessary to build brand awareness in India. According to Joerg Mueller, ChiefRepresentative of Volkswagen Group India and President and Managing Director,Volkswagen India, In India, it is very important because people (have been)

associated with the brand since the time of the Beetle. Then we were not in the marketfor many years, and now we are here again. It means that people in India and potentialcustomers dont know exactly what Volkswagen stands for. Therefore, it is importantnow to build up the brand, to make it famous again, and to show what Volkswagenstands for in terms of our values.19

In November 2009, Volkswagen India for the first time launched an integrated 360degree communication campaign using the print, electronic, digital, and out of homemedia. Till then, the company had been using mainly the print media to promote its

brands the Passatand the Jetta. Commenting on the campaign, Lutz Kothe (Kothe),Chief General Manager, Marketing and Public Relations, Volkswagen India, said,Based on a clear brand strategy, Volkswagen is known for its cutting-edgeadvertising across the world. Our powerful and creative campaigns continue to have a

special place in the consumers mind through decades. With our first brand campaignin India, we have strived to achieve the same for our consumers here and are confidentthat they will take to it. Our aim has been to break away from the communicationclutter by being innovative and refreshing with the way we narrate our brand story tothe customer.20

MediaCom India Private Limited (MediaCom)21 was the media agency of

Volkswagen India for the campaign. The company planned to spend Rs. 400 million

on the marketing campaign to build its brand image in India. The campaign included

18,000 TV spots, 150 print advertisements in daily newspapers, about 300 OOHinstallations, and a digital campaign that would last till February 2010.

The integrated marketing campaign started on November 11, 2009, when the Times of

India (TOI)22created a roadblock23for Volkswagen India across its 16 editions and

nine pages.24

As part of the roadblock, Volkswagensbrands including the Jetta, thePassat,and the Touaregwere advertised on all the editions of TOI (Refer to Exhibit

III for Volkswagen Indias Print Roadblock). According to Divya Gururaj, MD,MediaCom, Currently, theres very little awareness for brand VW and the companyhas been selling select premium car brands in India so far. But now they are getting

aggressive and print allows them to disseminate a lot of information about the brand.

Class, the C-Class, the M-Class, the CLS-Class, the SLK-Class, the CL-Class, and theMaybach (Source: www.mercedes-benz.co.in).

18 India, China Key for Honda, Says CEO Ito, www.livemint.com, November 12, 2009.19 Ammar Master, We are of the Opinion We Are Right On Time for The India Party,

www.livemint.com, January 17, 2008.20 Volkswagen Connects with Indian Hearts in New TVC, www.exchange4media.com,November 10, 2009.

21 MediaCom India Private Limited, in which Madison Communications Private Limited had a51 percent stake, is one of the leading media agencies in India.

22 The Times of India (TOI) is a popular English-language broadsheet daily newspaper inIndia. It is owned and managed by Bennett, Coleman & Co. Ltd. In 2008, the newspaperreported that (with a circulation of over 3.14 million) it had been certified by the AuditBureau of Circulations as the worlds largest selling English -language daily newspaper.(Source: http://en.wikipedia.org).

23 A Roadblock is defined as exclusivity in any number of advertisement slots for a singleclient over a given period of time (Source: http://ads.economist.com)

24 Byravee Iyer, Hit the Road, www.business-standard.com, November 24, 2009.


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Exhibit III

Volkswagen Indias Print Roadblock

Source: Volkswagen India Road Block: Blitzkreig! www.lbhat.com, November 11,

2009.


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Print gives a far bigger spread to disseminate information and talk about the technical

specifications.25

On November 11, 2009, Volkswagen India also aired its first TVC to promote thebrand instead of a specific car. The TVC was developed by DDB Mudra. The TVC

focused on the Volkswagen brand as a whole and showcased different Volkswagen

car models. The TVC showed a young boy in a Volkswagen showroom deciding on

the cars that he wanted to book in advanceat various stages of his life. The boy wenton to select the Beetlefor his 18thbirthday, theJettafor when he became the Vice-

president of a company, and the Passat for when he became the Chief ExecutiveOfficer. The TVC ended with Volkswagens baseline Das Autowhich, in German,means The Car, and the tagline, German engineering. Made for India (ReferFigure II for an Image of Volkswagen Indias TVC to Promote the Brand).Commenting on the rationale for the TVC, Pawar said, It is about giving peopledifferent cars at different stages of their lives. There is a Volkswagen for every

stage.26 He added, Volkswagen has been known globally for its iconic brand

campaigns. The challenge for us was to transfer that greatness in India as well. Thecar is not only the soul of German engineering, but also about the democratization of

innovation.27

Volkswagen India appointed Portland Outdoor Limited (Portland)28

for the OOHcampaign. The outdoor campaign was launched in 23 cities across India. Portlandannounced that theOOH campaign would be implemented in three phases, each overa period of one month. Commenting on the campaign, Madhuri Sapru, ManagingPartner South Asia, Kinetic & Dialect, said, The brief for the campaign was toincrease the awareness for brand Volkswagen, and to reinforce the perception ofVolkswagen as an innovative company.29 (Refer to Exhibit IV for VolkswagenIndias OOH Campaign).

Figure II: An Image of Volkswagen Indias TVCto Promote the Brand

Source: Volkswagen Launches First Brand Campaign in India, www.afaqs.com,

November 10, 2009.

25 When It Comes to India, Volkswagen Isnt Thinking Small,http://economictimes.indiatimes.com, November 25, 2009.


27 Arcopol Chaudhuri, Volkswagen Set to Roll out Brand Campaign for India,www.campaignindia.in, November 10, 2009.

28 Portland Outdoor Limited was promoted by the WPP Group, a leading communicationsservices group in the world (Source: www.wpp.com).

29 Anushree Bhattacharyya, Portland Drives German Auto Brand Volkswagen to 23 Cities inIndia,www.network.media.com,December 01, 2009.
http://www.network.media.com/http://www.network.media.com/http://www.network.media.com/


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Exhibit IV

Volkswagen Indias OOH Campaign

Source:Anushree Bhattacharyya, Portland Drives German Auto Brand Volkswagen

to 23 Cities in India, www.network.media.com, December 01, 2009.

On December 04, 2009, Volkswagen India launched theBeetle. The company plannedto import the car, priced at Rs. 2.045 million, for sale in India. It launched a marketingcampaign to support the launch of the Beetle. Before the launch of the car, thecompany started a teaser outdoor campaign including hoardings with the tagline,Curves are back. Commenting about the campaign, Kothe said, Recreate a legend

that was the brief that we gave to the agency. It addresses a non-existent segmentbecause no other car in the world can compare with the Beetle. We are very confidentthat the Beetle will make its way in India.30

On December 05, 2009, the first TVC to promote the Beetlewas launched by DDBMudra. In the TVC, a couple was shown riding a Beetle. The TVC continued as thecouple reached their destination and the man asked how much he had to pay the valet.

Instead of taking money from the man, the valet paid him Rs. 200, put on a pair ofsunglasses, and took away the car in style to park it. The TVC ended with the taglineGerman Engineering. Recreating Legends. Commenting on the rationale forlaunching the campaign, Pawar said, The launch campaign was in keeping with thecontinuation of the Beetles brand values. It remains among the worlds most belovedcars; the old Beetle was the original love bug. The newly designed Beetle is the love

bug with aphrodisiac added. The idea was to showcase the reaction to a Beetle as onewhere the brain is disconnected; those who buy the Beetle are buying into anemotional promise, that of a fantastic design innovation. So the reaction when one

30 Bindu Nair Maitra, DDB Mudra Creates Launch Pad for Volkswagens Beetle,www.campaignindia.in, December 07, 2009.


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sees the car is one where your heart talks to you. The commercial talks about thepleasure of riding the new Beetle. At a time when most car designs tend to be allabout hard edges, the new Beetle celebrates curves and voluptuousness.31

Volkswagen India also launched a print and an outdoor campaign to promote theBeetle. The campaign had the tagline Its official. Curves are back. As part of itsOOH campaign, Volkswagen India took up the entire OOH space at the busy BandraJunction in Mumbai. According to Rajiv Sabnis, President, DDB Mudra,Volkswagen has an innovating spirit when it comes to marketing, just like the carsthey make. They also believe in dominating the media, not just the roads. After thehugely innovative and impactful TOI roadblock, we conceived the launch of the newBeetle with an innovative outdoor campaign. The six-part Beetle outdoor cametogether part-by-part in the first week of December, heightening peoples anticipationand excitement about an imminent launch.32

Distribution

As of 2009, koda, Audi, and Volkswagen each had a presence in India through theirseparate distribution channels. koda Auto had a strong presence in the Indian luxurycar market through its 62 dealerships covering over 50 cities across India.

As of 2009, Audi India had 14 dealerships across India including cities like Delhi,Gurgaon, Chandigarh, Ludhiana, Mumbai, Mumbai West, Pune, Ahmedabad,Bangalore, Hyderabad, Chennai, Jaipur, Kolkata, and Kochi. The company aimed tohave 15 dealers by 2010 and 18 dealers by 2011.

33Volkswagen India said it would

increase its dealerships from 25 to 40 by the end of 2009. The expansion wouldinvolve opening of new outlets in Indore, Jalandhar, Bhopal, Vijayawada, andKozhikode. The company already had outlets in several major places in Indiaincluding Delhi, Chennai, Bangalore, Hyderabad, Ahmedabad, and Kolkata.

The Road Ahead

In November 2009, Audi India announced that it had achieved 59 percent year to datesales growth. In the period between January and November 2009, it sold 1,550 cars ascompared to 974 cars in the same period in 2008. The company aimed to achieve a 50

percent sales growth in 2010.34 It announced that it aimed to capture a 30 percentshare in the Indian luxury car market by 2011 from 20 percent in June 2009.

35Skoda

Auto India was set to launch its sports utility vehicle (SUV), the Yeti, in January 2010.

On December 04, 2009, Volkswagen India also showcased its next launch in India,the Touareg, an SUV. The vehicle was priced at Rs. 5.185 million. According toGarg, The launch of the Touareg is our marketing debut in the SUV segment. Indiahas a great demand for SUV. The Touareg has been successful across countries andthe entry will further enhance our presence in the market.36

31 Bindu Nair Maitra, DDB Mudra Creates Launch Pad for Volkswagens Beetle,www.campaignindia.in, December 7, 2009.

32 Volkswagen & DDB Mudra Execute a Unique OOH Roadblock in Mumbai,www.exchange4media.com, December 17, 2009.

33 India to Be Fifth-Largest Auto Mkt by 2015: Audi India MD,http://economictimes.indiatimes.com, October 5, 2009.

34 Audi India to Assemble More Models Locally, Targets 50 percent Growth In Sales,www.driveinside.com, October 28, 2009.

35 Audi to Expand More Dealerships in India, http://burnyourfuel.com, June 15, 2009.36 The Volkswagen Beetle Finally Comes to India, www.moneycontrol.com, December 14,

2009.
http://www.gaadi.com/Volkswagen-Touareghttp://www.gaadi.com/Volkswagen-Touareghttp://www.gaadi.com/Volkswagen-Touareg


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Volkswagen India planned to launch its small car, the Polo,in the first half of 2010.The company wanted to build its brand image before launching its new car in India.According to Kothe, By the time Polo is launched, we would want to be ready and

make sure there is enough brand awareness. While our target group is essentiallypremium and upper premium, we want to be warm and appealing and a part of themasses.37

On December 12, 2009, the production of Volkswagens Polo started at its Chakanplant near Pune, Maharashtra. According to analysts, Volkswagen Indias marketshare in India would largely depend on the success of the Polo. According to UmeshKarne, a Mumbai-based analyst at BRICS Securities Limited

38, The Polo is a keymodel for Volkswagen as they have created a big capacity in India. India will continueto be a small-car market for at least the next five or six years and every companyneeds a compact car to get market share.39

However, some analysts were of the opinion that Volkswagen Group India wouldhave two compact cars once the Polo was launched in 2010, as it already had the

koda Fabia. They were of the view that, the two cars would compete with eachother.

To further improve its presence in the Indian car market, Volkswagen India alsoplanned to roll out a low-priced car named UP! in India by the fiscal 2010-11. The carwas expected to be priced at about Rs 0.3 million. The company also planned tolaunch a sub-B segment car with a price tag of between Rs. 0.35 million and Rs. 0.45million in India. According to Jochem Heizmann, Member of the Board ofManagement of Volkswagen, It is clear we need a car below the Polo and are lookingat different options and working on it. That maybe the Up, or another car. However,no decision has been made yet.40

With the new launches from all its three brands, Volkswagen Group India aimed tocapture an eight percent market share of Indias car market by 2013 to 2014.According to Mueller, We are looking to have 8 per cent market share of the Indiancar market in the next 4-5 years by the Volkswagen Group which includesVolkswagen, Audi, and koda. The market has recovered and we are firmly on agrowth track. Our plan is to increase our sales every month.41


38 BRICS Securities Limited is an India based financial services company. It was founded in2004.

39 Vipin Nair, Volkswagen Aims to Capture 10% of Indias Car Market (Update 1),www.businessweek.com, December 13, 2009.

40 VW India Could Enter Sub-B Segment with Up Rollout, www.wheelsunplugged.com,December 14, 2009.

41 Volkswagen Connects with Indian Hearts in New TVC, www.exchange4media.com,November 10, 2009.


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References and Suggested Readings:

1. Volkswagen Aims to Sell over 300 Beetles in 2010, www.business-standard.com,

December 21, 2009.

2.

Volkswagen & DDB Mudra Execute a Unique OOH Roadblock in Mumbai,www.exchange4media.com, December 17, 2009.

3.

VW India Could Enter Sub-B Segment with Up Rollout,www.wheelsunplugged.com, December 14, 2009.

4. The Volkswagen Beetle Finally Comes to India, www.moneycontrol.com, December

14, 2009.

5.

Vipin Nair,Volkswagen Aims to Capture 10% of Indias Car Market (Update 1) ,www.businessweek.com, December 13, 2009.

6.

Bindu Nair Maitra, DDB Mudra Creates Launch Pad for Volkswagen's Beetle,www.campaignindia.in, December 07, 2009.

7.

Anushree Bhattacharyya, Portland Drives German Auto Brand Volkswagen to 23Cities in India, www.network.media.com, December 01, 2009.

8. When It Comes to India, Volkswagen Isnt Thinking Small,http://economictimes.indiatimes.com, November 25, 2009.

9. Byravee Iyer, Hit the Road, www.business-standard.com, November 24, 2009.

10.

India, China Key for Honda, Says CEO Ito, www.livemint.com, November 12,2009.

11. Times of India Creates Roadblock for Volkswagen Brands,www.indiantelevision.com, November 11, 2009.

12. Volkswagen India Road Block: Blitzkreig! www.lbhat.com, November 11, 2009.

13.

India Eco Summit: VW Group eyes 8% shares in India , www.business-standard.com, November 10, 2009.

14.

Volkswagen Connects with Indian Hearts in New TVC, www.exchange4media.com,November 10, 2009.

15. Volkswagen Launches First Brand Campaign in India, www.afaqs.com, November10, 2009.

16. Arcopol Chaudhuri, Volkswagen Set to Roll out Brand Campaign for India,

www.campaignindia.in, November 10, 2009.

17.

VW India Eyeing to Clock 3,000 Units Sale during CY 2009 ,www.wheelsunplugged.com, October 31, 2009.

18.

Audi India to Assemble More Models Locally, Targets 50 percent Growth InSales, www.driveinside.com, October 28, 2009.

19.

India to Be Fifth-Largest Auto Mkt by 2015: Audi India MD,http://economictimes.indiatimes.com, October 05, 2009.

20. Volkswagen India Plans to Double Distribution Network,

http://economictimes.indiatimes.com, September 25, 2009.

21.

Volkswagen Group India Holds A Positive Outlook, http://machinist.in, August 29,2009.

22.

IFC to Invest 135 Million Euros in Volkswagens Pune Plant , www.business-standard.com, August 06, 2009.

23. Audi to Expand More Dealerships in India, http://burnyourfuel.com, June 15, 2009.


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24. Volkswagen Group Preparing the Ground for Sustainable Growth in India,http://machinist.in, June 09, 2009.

25. Volkswagen Mulls Beetle Launch in India This Year, www.dnaindia.com, June 09,

2009.

26.

VW India Appoints Maik Stephan as Managing Director, Lutz Kothe as CGMMarketing and PR, www.wheelsunplugged.com, June 08, 2009.

27.

Audi Bullish on India; Sees Metropolitan Strategy as the Way Forward,www.blonnet.com, April 20, 2009.

28. Volkswagen Group Most Successful Car Manufacturer at the CNBC-Overdrive

Awards, www.indiaprwire.com, January 13, 2009.

29.

Audi Weighing Options for Luxury Small Car Launch in India,www.thehindubusinessline.com, August 31, 2008.

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Ammar Master, We Are Of The Opinion We Are Right On Time For The IndiaParty, www.livemint.com, January 17, 2008.

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Volkswagen Drives in with Mudra DDB, www.afaqs.com, September 11, 2007.

32. Nirmal D. Menon, The Skoda Score, www.blonnet.com, January 13, 2005.

33.

www.bmw.in.

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35.

www.mercedes-benz.co.in.

36.

www.siamindia.com.

37.

www.wpp.com.

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39. http://ads.economist.com.

40.

http://www.bigadda.com.

Case 5 Volkswagens Marketing Strategy in India

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