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.
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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 ReviewUK 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.
Always on Time
Marked to Standard
(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 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:
- Direct marketing
- Public relations
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.
Chapter 3: Research Methodology
The research methodology for this report entails a careful blend of both primary and secondary sources available.Primary Sources of Data
Five customers of Skoda and Volkswagen were randomly interviewed for their views about the marketing strategies of both the companies, using open-ended questions to yield maximum response. This helped to assess their response towards the media and campaigns deployed by these brands and to evaluate the extent of impact and penetration of the marketing tools used into the target customers.
Attempts were made to interview at least one reliable personnel from the respective companies. However, due to lack of time and confidentiality issues of the company, this mode of research did not yield any reliable information for evaluation purposes.Secondary Sources of Data
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The secondary sources tapped include various books, published material, both from official as well as unofficial sources and both from electronic as well as print media. These include expert reviews on the marketing strategies of each company, company annual reports and other authentic related articles available on marketing strategies of Skoda and Volkswagen. Various advertisements, both from the print as well as electronic media, have also been carefully studied to conduct a comparative analysis for both the companies.
Chapter 4: Discussion & AnalysisSkoda - Turning Negative Perceptions into Positive
Rather than try to make it into a hero brand, which wasn't realistic, we made it the underdog, and everyone's on the side of the little guy. (James, 2002)
Under the marketing communications strategy deployed by Hawkens and the innovative 'It is a Skoda, honest' campaign, the market share of the company almost doubled. He confronted head-on the car's negative image using subtle, intelligent humor, targeting Skoda 'rejecters' precisely.
The rejuvenating marketing communications strategy of Skoda comprised of (James, 2002):
- Advertising: targetting the entire country, primarily through TV.
- Drect Marketing: targetted prospective buyers and existing customers, designed to encourage test-driving the new car.
- Public Relations: played a supplemental role by image-changing articles. Press was fed with information about motoring awards and VK backing. The success stories about Skoda now read 'History's biggest comeback since Bobby Ewing stpped out of the shower, the new Skoda is hip and sexy - yes, sexy.'
For a budget of about $7 million, Skoda witnessed increased sales, more than 23%, over the course of the 18-month campaign which marked the turn-around for the brand (James, 2002).Skoda's Marketing Communication Mix
The recent marketing communication strategy of Skoda constitutes the following key elements:
TV Advertising - Most Talked About Add of 2007
TV advertising has always been a win for Skoda. The 'baking of' add of 2007 is a remarkable example of the strategic advertising vision of the company. The award-winning add featured a group of master bakers creating a life-size car out of cake - icing, jelly headlights and "full of lovely stuff" strapline. The 'Favorite Things' soundtrack provided the background score for the extremely attractive recepie.
The cake add was indeed a radical move for Skoda. It was accompanied by columns in leading journals and magazines as the PR team took the initiative to send cake tins with ingredients to journalists. As a part of the direct marketing campaign, chocolate scented air fresheners were sent to potential and existing custoemrs of Skoda. Being an extremely bold positoning, Skoda adds communicated the message of how Skoda delivered exceptional customer service (Turner, 2007).Award winning website
Skoda UK's official website (www.skoda.co.uk) is yet another critical element of the marketing communications mix of the brand. The highly attractive, animated and engaging website played a crucial role in nurturing the marketing mix of Skoda. Its online marketing campaign won it laurels in 2008- the 'Best Motor Manufacturer Home Page' and 'Best Motor Manufacturer for Purpose Intent' (www.skoda.co.uk). The criteria for judgment included factors such as web design, use of animation, ease of navigation, and search tools available. The site's creative effectiveness has been demonstrated by a remarkable 400% increase in requests for test drives and brochures.MyClick Technology
Skoda has indulged in a mobile WAP site MMS MyClick advertising platform as a recent communication strategy. This is an endeavor to deliver a unique brand experience to consumers on their mobile devices.The image recognition technology of MyClick allows Skoda to reach end users with instant services wherever they are. Skoda is using this idea to provide an interactive platform where mobile users can access its 'Believe In Life' information by simply clicking their mobile phone camera (Roberts, 2008).Volkswagen's Marketing Communications Mix
Volkswagen, the brand, deploys two key elements in its marketing communications strategy:Online Marketing
The official website (www.volkswagen.co.uk) provides the most life-like experience of choosing a car on the internet. It allows the visitors to access the retailers' booking systems and book test drives in real time. Also they are able to see which models are available at any specific time and retailer and make online reservations. The dynamic feedback mechanism employed by the website allows the customer to search and modify their preferred car in real time - hence, as initially imagined by Volkswagen. The website is much responsive and provides a much richer customer experienceDouble Marketing - Volkswagen and the Blues
A multi-tiered, fully integrated marketing strategy was incorporated for the multiple-model launch in 2003, with the help of The Blues promotional team (Volkswagen and The Blues, n.d.). The marketing strategy adopted covered a diverse range of communications media including:
- TV and radio ads
- Online marketing on The Blues website
- Paid advertising: print ads in leading journals, in-flight marketing campaign with major national airlines
- Events marketing: Radio City concert, presence at key film and music festivals, etc.
- Ancillary products
- Educational outreach: Letter from Volkswagen and logo presence in Teacher's Guides sent to 45,000 teachers nationwide.
Skoda has gone from trash to treasure with the overwhelmingly innovative marketing strategy of the Volkswagen group. This can be accredited to simply revamping the marketing communications mix, which even called for complete elimination of typical elements such as sponsorships. Instead it focuses primarily on four key aspects of marketing: advertising, direct mail, public relations and more recently online marketing. Ultimately transforming the company image from a 'joke' to a 'hero brand', the correct marketing strategy and timely deployment of that strategy have radically changed the perceptions of Skoda and it is today one of the fastest growing car brands in the UK.
Volkswagen Passenger Cars, on the other hand, is a brand of the same parent group, however with much lesser prominence as compared to that of Skoda. The most prominent feature of VW's marketing strategy is double marketing, vis-á-vis the three-pronged strategy of Skoda. Both brands have strong market presence and are working effectively with their individual marketing strategies. However, those deployed by Skoda are much more impact-full and far-reaching than VW's.Chapter 6: Recommendations
Skoda is suggested the following set of recommendations:
- Although the negative perceptions have withered off, the positive preconceptions are to be secured. Hence, Skoda needs to promote a 'we-are-not-as-bad-as-you-think' impression.
- Create a new communications theme that is able to sustain the brand's sense of individuality, without Skoda being perceived as 'just any other car brand'.
- Enhance the marketing communications mix with more emphasis on the advertising campaigns, such as those launched by Skoda.
Volkswagen Passenger Cars is suggested the following set of recommendations:
- Creativity Works (2003) HOW SKODA USED CREATIVITY TO INCREASE SALES BY 27% Available at: www.dandad.org/inspiration/creativityworks/pdf/skoda.pdf [Accessed 8th November 2009]
- Cunningham, Margaret; Doherty, Joanne; Douglas, Thomas; Garland, Philip; Guo Xiadi; Harmer, Chris (n.d.) The Death of the Skoda Joke and the Rebirth of the Brand. Available at: www.busmgt.ulst.ac.uk/modules/bmg900j3/Skoda%20Report.ppt [Accessed 8th November 2009]
- James, Dana (2002) Rebuilding Reputations - Skoda goes from trash to treasure Available at: www.amaphoenix.org/files/Rebuidling%20Reputation [Accessed 18th November 2009]
- Roberts, Benna (2008) Skoda users MyClick Mobile image recognition technology for Mobile Marketing Available at: http://www.gomonews.com/skoda-users-myclick-mobile-image-recognition-technology-for-mobile-marketing/ [Accessed 5th November 2009]
- Smith, P R & Taylor, Jonathan (2005) Marketing Communications
- Turner,Clark (2007) How Skoda created the most talked about ad of 2007 Available at: www.utalkmarketing.com/.../Article.aspx?...Skoda_created_the_most_talked_about_ad_of_2007 [Accessed 18th November 2009]
- Volkswagen and The Blues (n.d) Available at: www.sgptv.org/sponsor-casestudies/original/5.pdf [Accessed 5th November 2009]