Marketing Strategy of Volkswagen: Segmentation, 4 P's, and SWOT Analysis

This report discusses the marketing strategy of Volkswagen, including segmentation, 4 P's, and SWOT analysis. Volkswagen caters to different demographics and uses value-based marketing. Their strengths include a strong market share and reputation, while their weaknesses include operational inefficiency. Opportunities include alliances and the Chinese market, while threats include competition and environmental laws.

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Contents
Introduction...........................................................................................................................................3
Marketing Segmentation.......................................................................................................................3
Elements of marketing mix (4 p’s)........................................................................................................4
SWOT Analysis.....................................................................................................................................7
Conclusion.............................................................................................................................................9
References...........................................................................................................................................11

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Introduction
Volkswagen group is the largest Europe automaker group which handles Audi, Scania,
Porshe, Ducati, Lamborghini, Seat, Bentley, Man, Bugatti, and other Volkswagen
commercial vehicles. The company deals in automobile and financial services business. It
undertakes a major mass and low priced production of automobiles. Automobile business
deals in both commercial cars and passenger cars. Whereas, financial services deals with fleet
management, leasing and customer financing services. It is headquartered in Germany and is
generally operated by German Labor front (Volkswagen AG, 2018).
As far as marketing strategies are concerned, Volkswagen operate in these many independent
brands, therefore it has to consider demographic, geographic and psychographic segmentation
variables to render the needs of customers in existing economy. The report brings out
marketing strategies of Volkswagen, it tries to widen its scope of 4p`s (Martin, 2014).
Apart from the marketing mix, it is important to consider the SWOT analysis of marketing
strategies which the company have made. Moreover, it can identify the potential
opportunities and strengths to make sure whether the company is efficient to grab them
(Cremer, 2017).
Marketing Segmentation
Volkswagen strategizes to cater the different age demographics, needs and the prices. Most
vehicle manufacturer comes with one or two model to please mass market (Skinner, 2018).
Volkswagen has efficient set of product Market Matrix which is divided as per the specified
groups-
Young and professional people between 18 to 24 years. Consumer who regard vehicle and
car as status differentiator and are specified with technical features such as LED lights and

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Bluetooth enable system. To cater the wider range of factors, the four elements of marketing
mix has been extended to seven elements. The extended elements is process, people, physical
evidence. Some people prefer to ride their vehicles at high speed for fun and run their engine
such as V6/V8 engine with higher watt capacities. Retired and old people mostly look for less
speedy vehicles and sleek design (Fan, Shaokun, Lau, and Zhao, 2015).
Elements of marketing mix (4 p’s)
While considering the marketing incorporated in Volkswagen, the company chose Value-
based marketing. Initially, in 1930s, Volkswagen aims to maintain and empower every
person to drive their own car. This concept was not applied when company used radically
nonconformist in the age when company only produced luxury cars for elite. This assisted the
company to design the manufacturing and bringing product quality and brand image at par in
UK. Apart from this, the company strategies has inculcated relationship marketing approach
in Volkswagen. It is important for the company to stable its relationships with its customers.
To elaborate the marketing mix, brand strategy of Volkswagen considers 4P`s renowned as
product, price, place and promotion. The product in regards to Volkswagen is defined as a
combination of both services and goods to sell to the target market. Apart from this, it is
discovered that product is also a part of brand name. Design and quality are the major product
features that have variety in them (Cremer, 2017).

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(Source: Skinner, 2018)
Product
The product strategy is equipped with variety and design in the product which includes
warrant for them to result in good response from customers and make the customers satisfied
with the loyalty. The biggest selling product and model of Volkswagen is Volkswagen Golf
named with 7th generation. This 7th generation model is the first in 1974 (Poetsch, 2015).
Mainly, the company offers production facility for commercial vehicles. Majority of the
commercial vehicles are produced in Hanover, Pacheco, Wrzesnia, and Poznan. In 2017, the
company has delivered 498000 vehicles to various customers in all over the world. The
company holds a strong brand portfolio that can handle strong automotive brands. This brand
is responsible for developing, producing, and distributing the light commercial vehicles. The
company has built and created efficient ecosystem and other operational support system that
have helped Volkswagen to remain competitive in the sector (Poetsch, 2015).

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The model includes delivery vans, multipurpose vehicles, transporters, camper vans. The
models are caddy Kombi, Caddy Kombi TGI, Caddy delivery van, Caddy Maxi kombi,
Amarok single Cab, and Caddy Maxi Delivery Van TGI. The company has broad product
portfolio of every brand under the umbrella of brand architecture and also the financial
management of the company cannot be doubted. While studying the BCG matrix, the
marketing strategy of Volkswagen can be marked as question marks because business of
Volkswagen commercial vehicles are still struggling. Therefore, while finding stars in the
same matrix, its financial services is the supporting services that assists financial assistance to
the groups (Das auto, 2018).
Price
The important element in the model of marketing mix is price. Price is the consideration paid
by the customers to the company when acquiring or buying the product or services offered to
customers. The company involves distributions and dealers to target sales. There are
commonly two ways to expand one`s business, one is direct ownership of the establishment
or another through franchising. Company relate to dealers and maintain proper way to
introduce the products to customers and convincing them to buy to purchase (Martin, 2014).
The company generally shares the profit and losses with its dealers to maintain the quality of
cost leadership. While dealing with the price strategy, it was discovered that there are more
than 61 dealership offers whose price is compared to the rivals such as Honda city and Ford.
In regards to price, the company has vision to provide customers with car and its components
by discussing with innovative team with the favorable environment-friendly ecosystem.
Moreover, the product should be of high quality and competitive pricing and viability and
sustainability in long term (Dagevos, 2016).

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The pricing system of this automobile company is not only limited to purchasing it from the
store. Therefore, the price variable includes cost of diagnosis which comprises of safety
inspection, A/C performance inspection, and scan of engine malfunction. Other cost incurred
is related to oil and lubrication that has DSG transmission service, application of synthetic oil
change, brake fluid flush and coolant flush. Tire services such as tire rotation, tire balancing,
mount and balancing, and aligning the four wheels, tire storage that depend on season
(Martin, 2014).
Place
The company has increased and extended its dealership with more new, young and growing
entrepreneurs. The number of showroom in the whole country has been increasing with either
self-owned business or by providing franchise. The number of showroom and stores
increased with a positive in sales (Akdeniz, and Calantone, 2017). With the market awareness
of Volkswagen product in whole Malaysia especially in popular cities, road shows have
become popular in various shopping malls. The place referred to place where the company
avails its products to its potential customers. Company is able to cover more diversified
network that is related to dealers. Further, even with dealers, it is important to maintain the
purpose and quality of cost of leadership. Volkswagen cars are available almost in each art of
the country (Argon Associates, 2014b).
The company also uses assembling lines and manufacturing facilities. The several parts of the
world includes such as Mexico, Germany, USA, India, China, Russia and many more.
Indonesia is recognized as one of the top destination of cars and van sales. The company has
undertaken a construction of new plant with $140 million for manufacturing the large
transport of various vehicles and vans. As far as the other countries such as India is
concerned, Volkswagen started assembling of specific export modules of certain engines and

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other local engines to increase the localization level of recent 70 percent to 90 percent that
help to make cars with reasonable resources without wasting them. Volkswagen have boosted
its international presence and its distribution channels that are laid in countries in which it
operates (Isensee, 2018).
Promotion
The promotion element of the marketing mix deals with inducing the customer to buy the
product. The promotion is usually maintained by the tool of advertisement. The excitement
among the customers and their family is recorded and unveiled on television. The main aim
of promotion is to attract the target customers (Khan, 2014).
Volkswagen continuously organize events and sponsor programs with the contest in malls to
promote. They also launch promotional activities by social networking sites such as
instagram, twitter, and Facebook that keep updating the customers of new models that are
being manufactured. The company launch advertisement such as sales promotion, mall and
road shows, and other promotional activities that can drive awareness among the customers
and influence the purchase intention (Liu, Li, Chen, and Balachander, 2017).
Advertising campaign executed by companies is an important tool to get a brand cognition
among the customers. Volkswagen uses Double marketing to position its brand. Double
marketing means that the company operates multiple campaigns on different places that carry
different information simultaneously. Earlier, Coke was the only company which tried double
marketing because it has huge budget which would employ different advertisement agencies
(Argon Associates, 2014a).
The company has launched an media program called “Blues” that can complement and
communicate the main essence of Volkswagen brand. This promotion resulted into huge

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success among 2 million people who attended different concerts sponsored by the company.
The company also uses web promotion that includes podcasting to promote the brnad through
internet. To get the promotion through other modes, the company joined hands with universal
studio (Zoellner, and Schaefers, 2015).
SWOT Analysis
Volkswagen strengths in regards to marketing are described below-
Strengths
Volkswagen enjoys an strong market share in automobile industry as it is drived as one of the
continent`s number one care manufacturer. It enjoys a strong reputation in market due to
which the value of stock cannot be brought down to null anyhow. The company has 44 sites
to produce the cars in the world and it can meet the demand of customers (Jurevicius, 2016).
The company also enjoys a advantage of strong R&D Activities through which it finds out
the potential customers and make proper marketing strategies to attract them. The company is
always inquisitive of discovering new technology that can make the vehicles more efficient
so that it do not consume unnecessary fuel and also decrease the emission of nitrogen oxide,
carbon di oxide and lead to ensure that their operations are not affecting better environment.
The company holds a strong brand value as people are aware of other brands that are owned.
Undoubtedly, Volkswagen is among the top brands of vehicles in this sector (Varshney, &
Sharma, 2018).
Weaknesses
Volkswagen do not perform very well in Africa and North America that remained a concern
for Volkswagen. The company also faces operational inefficiency and weaker productivity
are the reasons due to which company could not focus on marketing strategies in this area and

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the company also turn to very less employee productivity to the competitors (Jurevicius,
2016). The company has less and limited liquidity position as the company has already
invested in Research department that restrict to engage in promotion of other projects
(Cremer, 2017).
Opportunities
The company enjoys several opportunities due to greater market share such as from the very
beginning it started entering alliances and merged with different companies such as Audi,
Porshe, Skoda and many more. The company knows that customer has demanded for fuel
efficient and hybrid vehicles (Isensee, 2018). Therefore, if Volkswagen continue to meet the
needs of customers by research and development so that they can survive in the current
market. By using knowledge in finding how new technology are used in engines to reduce the
harmful emission. The Chinese market provides an encouraging rate of growth in the car
market. The market in china has reached nearly to $98 million in 2008. On the same side, the
consumption has reached to 7.4 million units which is an increase of around 17.8 percent as
compared to previous year (Jurevicius, 2016). The company strive to cater all the elements of
marketing mix, the company strive to enjoy additional resources from government, when they
better their product to compete with the other automobile companies. The price strategy plays
an important role in competing within the industry (Zoellner, and Schaefers, 2015).
Threats
The excessive competition in the automobile industry led companies to make strong
marketing campaigns. Volkswagen have claimed that Toyota is the biggest competitor. Due
to recession and economic slowdown, there always remained a stiff competition among the
companies and how a company with innovation grab the market in the automobile sector
(Cremer, 2017). Every country has laws to protect the environment such as strict emission

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standard to focus on advancement in technology. The company has to follow environmental
laws and ethics and manufacture such cars that could meet the demand and do not lead to
pollution and emission. The production cost has increased due to increase in prices of raw
material and increased imposition of government rules which restrict the labor. There is
extensive potential in automobile industry and various factors lead to increase in demand
(Varshney, & Sharma, 2018).
Conclusion
From the above discussion, it can be summarized that Volkswagen is recognized as a
successful company and it is well known brand name. Successful company like Volkswagen
aims bigger goals and has the chance to dominate the automobile industry. Marketing plays
an important role when it comes to cater and maintain the huge operations of the company.
To maintain the success of the company, the company cannot limit itself to cater the existing
customers. It maintains a marketing department to use the winning strategy.

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