Marketing Mix of Volkswagen and 4Ps (Updated 2023)

The Marketing mix of Volkswagen analyses the 4Ps of Volkswagen, including the Product, Price, Place, and Promotions. Volkswagen is a car manufacturing company named Volkswagen, a German name that means People’s Car. Ferdinand Porsche founded the company in the 1930s when he started designing affordable cars that could be purchased even by ordinary people. The prototype car, called KdF-Wagen, emerged in 1936. Ever since, the company has expanded its operations and is now a multinational car maker with fantastic products, one of the most famous being the Volkswagen beetle.

Volkswagen Group India traces its Indian Journey back to 2001, when it launched its first car brand, Skoda. Six years later, in 2007, it introduced two other brands in India, Volkswagen and Audi. As of 2009, Volkswagen Group India had 15 Volkswagen models, and the company was divided into two groups – Volkswagen Group India and its sub-division of manufacturing, Volkswagen India Private Limited. Volkswagen Group India emphasizes all aspects of its marketing mix to keep its brand in demand and profitable.

About Volkswagen

• Type: The automobile manufacturer
• Industry: Automotive
• Founded: May 28, 1937
• Founders: Ferdinand Porsche, Adolf Hitler, and the German Labour Front
• Headquarters: Wolfsburg, Germany
• Area served: Worldwide
• Current CEO: Thomas Schäfer (July 1, 2022–present)
• Number of employees: 174,269 (2021)
• Major Products: Passenger cars, commercial vehicles, and electric vehicles

Volkswagen Product Strategy

The sheer size of Volkswagen Group India contributes to the company’s growth. In terms of products, the company offers different cars to satisfy customers and meet their expectations depending on their varied needs. Volkswagen’s marketing strategy focuses on capturing the luxury car market’s target audience by offering innovative features and maintaining an affordable price range.

The new Product Mix of Volkswagen in 2023 is as follows (Source).

1. Passenger Cars: This is the core segment of Volkswagen’s offerings, including various models ranging from hatchbacks and sedans to SUVs. Popular models in this category include the Volkswagen Golf, Passat, Polo, Jetta, and the Beetle.
2. Luxury Vehicles: Under the Volkswagen Group, brands like Audi, Bentley, Porsche, and Lamborghini produce luxury and sports vehicles catering to the high-end market segment.
3. Commercial Vehicles: This includes a range of light commercial vehicles like vans, trucks, and buses. The Volkswagen Transporter, Caddy, and Crafter are examples of their commercial vehicle offerings.
4. Electric Vehicles (EVs): Volkswagen has been expanding its range of electric vehicles under its ID. Series, including models like ID.3 and ID.4, as part of their commitment to sustainable mobility.
5. Hybrid Vehicles: To cater to the growing demand for environmentally friendly cars, Volkswagen offers hybrid versions of some popular models, combining traditional combustion engines with electric powertrains.
6. Motorcycles: Through its subsidiary Ducati, Volkswagen Group produces high-performance motorcycles.
7. Financial Services: Volkswagen Financial Services AG offers dealer and customer financing, leasing, banking and insurance activities, and fleet management.
8. Autonomous and Connected Vehicle Technology: Volkswagen also invests in and develops technology for autonomous driving and vehicle connectivity, representing a future-oriented segment of its product mix.
9. Mobility Solutions: This includes car-sharing and other mobility services as part of their drive towards integrated mobility solutions.

Volkswagen Place Strategy

Each of the Volkswagen cars is manufactured and distributed in critical locations for strategic reasons so that the channel can easily access the cars and get the delivery on time. Various car distributors throughout the country distribute the vehicles manufactured by the company. The company aims to penetrate the automobile market in India because it views India as one of the largest markets in the world. The company’s target market and strategy is to sell 300 units of its iconic Beetle car. The company may be new in the Indian Market, but it has made many improvements.

For example, As Volkswagen targets urban areas, an urban customer will not have to travel more than 45 minutes to reach a Volkswagen outlet. Thus, the coverage in terms of sales is very high. Furthermore, Volkswagen has a fantastic CRM system that keeps a solid track of its customers and their service needs and also cross-sells other Volkswagen products like annual maintenance contracts. The company now needs to look at distributing in rural areas, where the demand is high, and the supply is less. If a company has to establish itself as an automotive manufacturer in India, it must also target rural areas.

Here’s the place strategy of Volkswagen.

1. Global Manufacturing Footprint: Volkswagen has established a significant global presence with manufacturing plants in key regions worldwide, including Europe, America, Asia, and Africa. This strategy ensures local production for significant markets, reducing logistics costs and adapting to regional demands.
2. Extensive Dealership Network: The company maintains a widespread dealership network worldwide, offering sales, services, and customer support. This network is crucial for maintaining a solid customer relationship and brand presence in various markets.
3. Strategic Local Partnerships: Volkswagen often partners with local companies in specific markets to facilitate market entry and expansion. These partnerships can be essential for navigating local regulations, customs, and consumer preferences.
4. Online and Digital Sales Platforms: Embracing digital transformation, Volkswagen has been integrating online sales channels and digital platforms into its strategy. This approach caters to the evolving consumer behavior that favors online research and purchases.
5. Focus on Emerging Markets: Volkswagen actively targets emerging markets, adapting its product offerings to meet these regions’ specific needs and price points. This includes introducing models specifically designed for markets like China, India, and Brazil, recognizing the growth potential in these areas.

Volkswagen Pricing Strategy

Depending on the size, level of exclusivity, options, and engine power, Volkswagen car prices range from affordable to very expensive cars, and that is what happens with many other cars. However, Volkswagen prides itself on being a car manufacturer that manufactures vehicles the average person can afford. However, Volkswagen is a German company, and being an exporter to India, there are naturally several cost considerations, which makes Volkswagen less of a value-for-money product and more of a bit costlier product.

When you compare the Volkswagen Polo with a Hyundai I10 or Maruti Swift, you will find that the Polo is costlier. Thus, although Volkswagen wants to manufacture affordable cars at the lower end, the competition is high. Hence, you will find that Volkswagen has better sales figures in the Sedan section. The best-selling Volkswagen products are the Volkswagen Vento and Volkswagen Jetta. Thus, in some areas, Volkswagen’s pricing is higher, whereas in others, it is competitive. Volkswagen is an in-between brand in terms of product range and pricing. It is neither as costly as the BMW and Audi’s nor as cheap as Maruti or Hyundai.

Volkswagen’s pricing strategy is a well-crafted blend of market competitiveness, brand value, and customer segmentation, designed to cater to diverse consumers while maintaining its reputation for quality and reliability. Here’s a breakdown of key elements of their pricing strategy:

1. Value-Based Pricing: Value-based pricing is at the core of Volkswagen’s pricing strategy. They set prices based not just on the cost of production but also on consumers’ perceived value of their vehicles. This approach allows them to balance affordability with the premium quality associated with the brand.
2. Market Penetration and Competitive Pricing: In highly competitive segments, like hatchbacks and compact sedans, Volkswagen often employs a market penetration strategy. They price their vehicles competitively against key rivals to gain market share, especially in emerging markets with higher price sensitivity.
3. Premium Pricing for Luxury Segments: For their high-end models and vehicles under luxury brands like Audi, Porsche, and Bentley (part of the Volkswagen Group), they follow a premium pricing strategy. This reflects the superior quality, technology, and status associated with these vehicles, catering to a more affluent consumer base.
4. Dynamic Pricing Based on Features and Customization: Volkswagen’s pricing varies significantly with added features, customizations, and model variants. This flexible pricing allows customers to choose a vehicle that fits their budget while paying extra for additional features or luxuries they value.
5. Geographical Pricing Strategy: Recognizing the differing economic conditions and consumer purchasing power across regions, Volkswagen adopts a geographical pricing strategy. This means the exact model may have different prices in different countries, factoring in local taxes, import duties, transportation costs, and market-specific demands.
6. Adaptive Pricing for Electric Vehicles (EVs): Volkswagen is adopting an adaptive pricing strategy in the rapidly evolving EV segment. They are strategically pricing their EVs, like the ID series, to be competitive against traditional gasoline and other EVs while also considering government incentives for electric vehicles.

Volkswagen Promotion Strategy

The company used a lot of ATL media, like TVCs and print media, in its initial year in India to promote its brand and products. However, considering India started experiencing a surge in automobile market competition, the company had no option but to adopt other marketing strategies like digital, BTL, and out-of-home media in addition to ATL media. The company also uses social media and online platforms to market its products. The company launched an integrated marketing plan in 2009 to strengthen its brand image. The company also sponsors numerous car events as well as other corporate events.

The company also allows customers to buy their cars through leasing to reach a broader customer base. This means customers don’t have to pay the total amount to buy the car.  Although this strategy is intensely used in the USA and the UK, the same promotional strategy is not so effective in India. Volkswagen utilizes company-owned dealerships as crucial touchpoints to enhance brand visibility, ensuring a consistent and premium customer experience.

Some Recent Video ads and Print ads for Volkswagen are:

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