Volkswagen (VW) brand takes a semi-premium position in India. At the same time, it is more premium than the main brand’s competitors: Toyota and Honda. By positioning the brand in this way, the management aimed to emphasize the value of quality, innovation, and high technology which are historically associated with VW. Additionally, it helped to add value for those customers who have needs for self-realization and the creation of positive social identity.
In this way, VW cars may not be available for low-income Indian residents, but the brand positioning helps to identify clearly the targeted audience and address it through advertising campaigns and consideration of the potential customers’ interests and preferences. Thus, the VW position in India is an effective strategic decision.
To increase the availability of VW Group’s products to the diverse groups of consumers, the enterprise provides both less and more premium cars in the region: Skoda and Audi. Three brands target distinct customer groups with different income levels, social statuses, and interests. The positioning of the brands helps the organization to make a distinction between cars and avoid cannibalization. Each of VW’s brands is endowed with the features complementing other brands in the portfolio. Product diversification supports the attraction of customers with different needs and preferences. In this way, Audi, VW, and Skoda each are characterized by a sustainable presence in the Indian market.
VW’s segmentation in the Indian market is highly effective because it targets the largest consumer groups in the country. The five segments: new middle class, business builders, young progressives, modern urban elite, and metropolitan smarts, – constitute 46% of the overall market comparing to the lower-end segments which together comprise only 44%. Moreover, the selected segments are characterized by a rapid and intense growth rate, and, in this way, supported by the effective advertising campaigns, VW’s profit margins significantly increased.
The development of culturally relevant advertising was one of the most efficient strategic decisions of the company. The global advertising of VW focuses on universal trust, German quality in engineering, and strong heritage. However, the mentioned values did not appeal to the Indian public, and the brand awareness at the initial stages of the VW brand’s entry into the Indian market remained low.
Since 2009, VW evaluated the cultural environment in the country and generated an innovative approach towards the targeted audience. VW’s advertising campaigns demonstrate the organization’s cultural sensitivity, consideration of customer needs, values, and national peculiarities. The advertising also helped VW to develop the brand’s personality and raise brand awareness among the Indian public.
The analysis of the case study helped to reveal that VW currently has a strong position in the Indian market, and the further successful growth of the brand is indubitable. The efficient VW’s internalization strategy increases the opportunity for the company to be among the top three brands by 2018. The premises of VW’s success are enclosed in its innovative approach to overcoming existing challenges and consideration of targeted customer groups.
Although initially the brand was strongly associated with the German heritage and values, the cultural localization of the marketing strategy through the evaluation of external environment, risk analysis, and collaboration with the most prominent specialists and professional networks, such as Doyle Dane Bernbach, helped VW to increase customer attraction and attain significant improvement in sales rates and profitability. Moreover, it is possible to say that by addressing its potential customers’ needs, VW managed to achieve the product’s cultural integration which contributes to VW’s sustainable growth.