I. Case Summary

Beetle is one of the products line up produced by VW or Volkswagen, a car manufacturer in Germany. The original Beetle was born in the mid 1930s, when Ferdinand Porsche began drawing up plans for "Volksauto," a people car (Roger, 1985). In the beginnings, VW had become the most successful car model ever, selling over 21 million cars (Roger, 1985). VW expanded their market to America and had to compete to other local, European, and Japanese producers. With its distinctive round shape, face-like front end, and low price, the car was becoming popular as a new generation of Americans.

On January 5, 1998, VW had exhibited its new line up of cars called the New Beetle at North American International Auto Show. This car had been an unexpected star at that show. By this experience, VW tried to conduct some studies to get the New Beetle contributing at least 25% of the 1998 sales target, which was 200,000 units, a 45% increase over the 1997 sales of 137,885 cars.

According to the former experiences, VW had seen sales in the United States decline from over half a million cars in 1970 to less than 50,000 cars by 1993. However, with support of a new advertising campaign targeted to a younger generation of car drivers and product instructions, VW of America had steadily rebounded with annual sales growth of 29% over 1993 to 1997 period.

The marketing team conducted research focusing on the segmentation, targeting, brand positioning, and competition. Besides, VW also improved the marketing communication strategies which were organized nationally rather than within smaller geographic regions. VW tried to use the good relationship with dealers and journalists to get some data supporting the research. The pricing strategy finally had been the crucial thing to study as the VW team realized that a premium-price strategy could be a potential issue.

In another side the design team conducted some research and refining the New Beetle base on the first concept. However, the design team identified four design principles, honest, simple, reliable, and original, for the new concept. One of the primary changes was that the new design would combine the Golf (one of the VW line up) platform and the previous Beetle. The new Beetle housed its engine in front and water-cooled while in the original Beetle, the engine was rear-mounted and air-cooled. The new Beetle offered front & side airbags and air-conditioning. It would be larger and more spacious than the first concept design. Finally, the brakes were up-graded from drum brakes to four-wheel disc brakes to improve its safety. Shortly, the new beetle puts the original things in a modern package.

II. Main Issue

VW management team realized that the Beetle had special things for automobile consumers even though it had some inconvenience matters in its initial design. However, Beetle owners were intensely loyal to their "bugs". These owners found the car's flaws to be endearing. The consumers really linked emotionally to the car. Thereby all those things forced the management team in bringing the car to the market. For sure, the declined sales after 1970 could be the important issue as a lesson.

Maryann Keller, an auto industry analyst, summarized VW's rise and fall as a failure to keep in step with American consumers ever-changing demands. VW had a generation of lovers and lost them. They allowed the Japanese to persuade this generation. The VW product line is tired and old (Automotive News, November 30, 1987). Therefore VW should come out with a new design of Beetle but still had the originality senses.
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Comparing to the other brands from Germany, VW is more approachable, more likeable, more value, and more human. While if we see the other brands from Japan, VW is more drivable, more substantial, more individual, and more spirited (Kelly, 1983). Thereby, the marketing team needed to make more efforts in extracting consumer expectation for the new Beetle.

One more thing had to be noted was in 1979, the company was forced to stop selling Beetle because of its inability to meet the requirements of two pieces of legislation, the National Highway Safety Act of 1966 and the ...

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