The Rebranding Of Skoda By Volkswagen

Rebranding is the creation of a new name, term, symbol, design, or a combination of them for an established brand with the intention of developing a differentiated (new) position in the mind of stakeholders and competitors.

The re-branding of Skoda provides a useful case study of the challenges faced by brands wishing to reposition themselves. Critics of the Skoda would be surprised to hear the Skoda is now one of the fastest-growing car brands in the UK motor industry. The Czech car company boosted its sales in the UK in 2001 by 24%.

Most companies in need of rebranding suffer from generalized positioning. Usually a company doesn’t want to narrow its message too much for fear of missing opportunities. Therefore, the company doesn’t strongly position itself as an expert in its sweet spot. As a result, people searching for what the company does best don’t recognize the company as an expert, and the company needs to fight harder to win the business it is really good at, business it should win easily every time.

There is no cookie-cutter approach to B2B corporate rebranding. Each situation is different. Corporate rebranding, however, almost certainly includes changes to our marketing messages, i.e., the words used to persuasively position our company. In addition, rebranding may include changes in the design and delivery of key communications vehicles.

Introduction

The re-branding of Skoda provides a useful case study of the challenges faced by brands wishing to reposition themselves. There are some cases in which corporate rebranding is the primary initiative needed to successfully reposition a company or brand. Rebranding strategies and rebranding initiatives are appropriate and needed when the company or brand already has strong, relevant underlying differentiation, is currently doing everything right, and the sole purpose of rebranding is to reflect what the company is already doing in a much more compelling, persuasive manner. In short, corporate rebranding is about strategically polishing the apple with sharper, more differentiating positioning.

Critics of the Skoda would be surprised to hear the Skoda is now one of the fastest-growing car brands in the UK motor industry. The Czech car company boosted its sales in the world in 2010 by 11.5%. This built on growth of 34% in 2000.

How has this been achieved?

Background

SKODA – background & news

Skoda Auto is an automobile manufacturer in the Czech Republic. The origins of Skoda go back to the early 1890s where, like many long-established car manufacturers, the company started out with the manufacture of bicycles. The first model, Voiturette A, was a success and the company was established both within Austria-Hungary and internationally. By 1905, cars were being produced by the firm. During the First World War Skoda was engaged in war production. After WWI it began producing trucks, but in 1924, after running into problems and being hit by a fire, the company sought a partner. As a result, it merged with Skoda Works, the biggest industrial enterprise in Czechoslovakia. Later production was under the Skoda name. After a decline during the economic depression, Skoda was again successful in the late 1930s.

The Velvet Revolution brought great changes to Czechoslovakia, and most industries were subject to privatisation. Skoda had a monopoly in car manufacturing in Czechoslovakia until the 1989 ‘Velvet Revolution’. After this the Czech government started looking for a commercial partner to revitalise its Skoda factories.

In April, 1991, Skoda became the fourth brand of the Volkswagen Group. Volkswagen took a 31% stake in Skoda and started work in training and educating the workforce to Western quality standards. It invested in the plant, research, development and new models. Which would increase to a 70 percent shareholding by 1995, at a total cost to Volkswagen of DM 1.4 billion Ten years later, in 2001, VW took total control of the business. The perception of Skoda in Western Europe has undergone complete change. As technical development progressed and attractive new models were brought to market, Skoda’s image was initially slow to improve.

The first two launches from the new Skoda camp were well-received by the automotive press. The Felicia – launched in 1994 – was built as an old-style Skoda, but enjoyed the benefit of VW features. The 1998 Octavia was built on the VW group platform.

The costs of the improved VW car structure pushed up Skoda prices. The cars carried a higher price tag and Skoda needed to convince consumers that this price was worth paying.

A VW Group’s marketing manager working for Skoda explained:

“We needed to move away from being a cheap brand to being a value-for-money brand. At the same time, we badly needed to find our own positioning within the group, rather than just trading on being part of the VW Group. Otherwise, we might just as well have re-branded ourselves as VW, with very little reason for existence.”

Launch of the Octavia

Skoda’s first VW-backed model was the Octavia. Skoda’s highest-ever spend on a marketing campaign about £11 million in 1993 and 1994 to persuade potential U.K. customers to give the brand a chance. In the year 1995 sales of Skoda wasn’t that good but after that worldwide sale grew about 25 percent in 1996. Increases were most remarkable in central Europe. In neighbouring Slovakia, sales gone up by 90 percent to 23,035 units; they leapt 102 percent to 15,840 in Poland. The Czech Republic itself remained a vibrant market, with 87,400 cars sold in 1996, up 21 percent.

VW’s Strategy

VW resisted the temptation to scrap the Skoda brand altogether. Despite its poor image in the UK, Skoda still commanded respect in Eastern Europe and held its own in other Western European countries.

The Skoda brand also had high “brand awareness” in the UK -even if it was for the wrong reasons – and a reliable distribution channel through a network of independent car retailers.

The next product launch was the Skoda Fabia in 2000. It was launched with a much smaller marketing campaign.

Key elements of the promotional mix were as follows:

• The Fabia was launched with a number of television, print and poster ads

• The initial TV campaign ran for four-and-a-half weeks and the print and poster campaign ran for two weeks.

• Expensive TV and print campaigns were supported by both PR and direct mail campaigns

• The PR push targeted the consumer press and attempted to get journalists to discuss Skoda in a positive light

• The direct mailings tried to build on loyalty levels among Skoda drivers and get across the brand’s new image.

• AutoExpress magazine carried a competition to win a Skoda car that generated 27,000 responses.

Impressive results

For the first time, total sales are above three quarters of a million units. 762,600 vehicles were sold; Octavia is the top-selling model. Market shares in important markets increased.

Skoda Auto has sold more cars than ever and achieved new records with regard to market shares and deliveries in important sales markets. With 762,600 sold vehicles worldwide (2009: 684,200), the Czech car manufacturer cracked the threshold of three quarters of a million sold vehicles for the first time. This corresponds to a growth rate of 11.5 percent compared to the previous year. The top-selling model was once again the Octavia. The Yeti and the Superb Combi also experienced an excellent development in their first full sales year. Skoda’s sales in the growth markets of China, Russia, and India continued dynamically.

On the Czech home market, Skoda was able to further expand its leading position too. The market share rose to 34.5 percent in 2010 (2009: 33.4 percent). Overall, the company sold 58,000 vehicles in the Czech Republic in the past year (2009: 56,500). This corresponds to a growth rate of 2.7 percent compared to the previous year.

Deliveries to customers in the business year 2010 (Skoda models compared with total business years of 2009): Octavia (318,900 vehicles / +16.6 percent), Fabia (229,000 vehicles / -13.3 percent), Superb (98,900 vehicles / +121.9 percent), Yeti (52,600 vehicles), Roomster (32,300 vehicles / -31.4 percent), Octavia Tour (30.900 vehicles / -29.5 percent)

There was also a less obvious, but equally important shift in the public’s perception of Skoda. Only 42% of those polled after the campaign said they would not consider buying a Skoda.

Many UK customers now don’t see a Skoda in front of them – they see a cut-price VW.