Contemporary Brand Management (Volkswagen)

CONTEMPORARY BRAND MANAGEMENT

Assignment 1 st semester 2014

NURULLAH FURKAN PEHLIVAN
ID: 77155459











CONTENTS

Page
1. The Brand Volkswagen

1.1. What is a Brand? ………………………………………………. 3
1.2. Brand, Commodity, Product, Service……………………………….
1.3. Background of Volkswagen……………………………………….
1.4.. Brand Archıtecture of Volswagen…………………………………..

2. BRAND POSITIONING

2.1. What is a Brand Positioning? …………………………………. 5
2.2. Brand Positioning – Volkswagen ......…………………………. 5
2.3 Brand Positioning – Major competitor: Toyota ………………… 6
2.4 Perceptional Map ………………………………………………….

3. Volkswagen BRAND ANALYSIS

3.1. Brand Identity………………………………………………………….. 6
3.2. Brand Image
.........................................................................
7
3.3. Brand Personality ………………………………………………. 8
3.4. Brand Equity
..........................................................................
9
3.5 Brand Pyramid …………….......……………………………….. 10


4. SPECIAL INTEREST

4.1. Global Branding ………………………………………………… 1

5. RECOMMENDATIONS …………………………………………….1

6. REFERENCES …………………………………………………… 1

7 APPENDİX ………………………………………………………1




















1.1What is a brand?
In present days, brands have an essential role in society. This is because
of the marketing of brand, which mean that customers are more willing to
buy specific brands and pay more money than competitors (Kapferer, 2008).
Keller (2013 p30),defines a brand as a "name, term, sign, symbol, or
design, or a combination of them, intended to identify the goods and
services of one seller or group of sellers and to differentiate them from
those of competition." So this means that when the marketers create a new
logo name or symbol for a product he/she creates new brand as well.(Keller
2013). İn addition Johansson and Carlson (2014) adds that brands may
decrease the risk, make decisions easier and gives other emotional
benefits. Brand is therefore essential for any sort of product.As the buyer
is more likely to trust the products and be convinced they made the
appropriate choice.

1.2 Brand, Commodity, Product /Service
De Chernatony and McDonald states differentiates between a brand and a
commodity (2003,p14) by saying: 'The difference between a brand and a
commodity can be summed up in the phrase 'added values'. Addtionally they
advocate that brands and added value are synonymous. This idea according to
(Wood 2000,p 665) is the 'product-plus' approach of thinking and she
states 'a brand is something additional to a commodity product.'
Keller (2013,p31) defines a product as 'anything we can offer to a market
for attention, acquisition, use, or consumption that might satisfy a need
or want',and he adds that branded products could be form of physical good
like automobiles. According to Keller (2013) a brand is more than a product
because it can have dimensions which differentiate it from any other
products produced in order to satisfy the same need.

1.3 Background of Volkswagen
First Volkswagen founded in 1937, under the control of the National
Socialist party as a state owned company. The aim for the establishment of
the Volkswagen was for the German nation to produce an affordable car for
people and increase the avaibility of cars. Volkswagen is German car
manufacturers and is the largest car maker in Europe. Volkswagen itself
includes twelve brands which includes Lamborghini, Audi, Seat, Porsche,
Bentley, Bugatti, Lamborghini, Ducati, Skoda, Volkswagen Commercial
Vehicles, MAN and Scania (Volkswagen 2013). Volkswagen targets most of the
market group from less consumption small cars to luxury car or motorcycles
for this reason it fulfills many segment in the market





VolkswagenAG(2013)


Today Volkswagen is the 31st most valuable brand in the world(interbrand
2014).Volkswagen's main competitors are Toyota Motor, General Motors, Ford,
Honda Motor, Nissan Motor, Chrysler Group LLC.




1.4 Brand Architecture of Volkswagen

There are two diffirent ways we can describe brand architechture of
Volkswagen, including: endorsing brand strategy and source brand stategy.
Kapferer(2008 p 353) states that, 'automobile brands attempt to capitalise
on their name (Volkswagen, Toyota) but boost the attractiveness of the
models themselves by means of a name'.So Volkswagen here is a masterbrand
as it consists on various product ranges (Golf, Polo, Passat) and each one
of them known as a brand.(Kapferer 2008). But the purchasing decision could
be affected by values which came from Volkswagen as an endorsing brand.
That is also supported from Kapferer (2008 p 363) who indicates that
'endorsing brand is placed lower down because it acts as a base guarantor'

Figure 1 – Endorsing Brand strategy

(Kapferer 2008, p.363)


Skoda, Audi, Seat, Bugatti and many others all own individual brand names
and the source brand, Volkswagen, operates as a parent brand. The purpose
of a source brand for Volkswagen is to attract a particular customer
segment offering character and value enhanced by daughter brands (Kapferer
2008p368).

Figure 2 –Source Brand strategy
(Kapferer,2008, p.367)




2.BRAND POSITIONING

Keller (2013) describes brand positioning as the model that a company uses
to build a competitive advantage in the mind of consumers in the
marketplace. Further, Kapferer (2008, p.43) defines brand positioning as
'ensuring customers instantly associate a brand with a particular
functional benefit' so that brand positioning is what the brand actuall
stands for, what it represents and what its values are. De Chernatony
(2010) uses the example of Volvo, which generates the idea of safety in the
minds of consumers, so that Volvo has positioned it's brand as a safe car
manufacturer, suitable for families with young children for example.

Aaker (1996, p176) explains brand positioning as a part of brand identity
and the brand's value proposition and says that it therefore should be
'actively communicated to the target audience and that demonstrates an
advantage over competing brands'According to Aaker (1996) there are four
most noticable aspects of Brand positioning which are 'Part','Target
Audience','Actively Communicated' and finally 'Demostrates Advantage'.

Additionally, Kapferer (2008, p75) uses the diagram below to illustrate
brand positioning. The first questions he uses are what the brand promise
is and what the consumer benefit is. In the case of Volkswagan, its promise
and consumer benefit is that it is a reliable car, which hardly ever breaks
down and that it is a safe car, suitable for families with young children.
The next question concerns for whom the brand is for. For this aspect,
Volkswagan has a very wide target group as it could potentially be for
anyone as most people drive, but as they have frequently shown off the
increased safety and reliablity of their cars, I would say that Volkswagan
is more family-oriented. Asking against whom defination of competitive
context major competitors, as ı have written in first section main
competitors are like Toyota, Ford or GM.
And lastly, Kapferer asks when the brand will be used. As Volkswagan is a
car brand, the brand could be potentially used at any time, as anyone who
drives could be using it at any time of the day.
Figure 3: Positioning a Brand
Kapfererer(2008, p.176)


Rosenbaum-Elliot et al. (2011) uses this statement to summarise what brand
positioning is: 'a positioning statement addresses the benefits a brand
offers and the specific target audience in order to satisfy a particular
need'. They add that in order to have an effective positioning, the brand
must demonstrate that it understands the motives that consumers have when
they purchase the particular products that it is branding e.g. if the
target audience is families, then Volkswagan has to identify the motives
families have when they buy cars and usually they want a car suitable for
younger children, so space for car seats and a safety aspect, which is how
Volkswagan has positioned its cars.


2.2. POSITIONING STATEMENT OF VOLKSWAGEN

I have devised a brand positioning statement for Volkswagan:

'Volkswagen targets most of society (as their cars can be potentially used
by anyone at any time) and provides people with reliable, safe and good
quality cars. Volkswagen offers a very wide range of products from family
cars to luxury cars or motorbikes and trucks.'

In addition, Volkswagen is well known as a reliable and high class quality
car producer, and is also popular in the market, known for long-term
durability, a fair price (Kapferer, 2008).

From the research I have carried out on Volkswagan, there are other
descriptive words which we could add in to the brand positioning statement
such as 'caring', for the young generation of today, innovative and devoted
to making more environmentally friendly cars using cleaner energy.









2.3 Perceptional map
Using the brand positioning statement, I have devised a perceptional map
for Volkswagan. We can see that Volkswagan is near the most reliable end of
the scale, this is because Volkwagan have concentrated on and have always
advertised the reliability of their cars. Further, in recent years, they
have tried to invest more in environmentally friendly cars, but there is
still some way to go until they are viewed as being environmentally
friendly.

Figure 4 Perceptional map of Volkswagen



2.4 COMPARISON WITH MAIN COMPETITOR TOYOTA
I will now compare and contrast Volkswagan's positioning strategy with a
major competitor, which is Toyota.
Japanese automotive producer Toyota is the one of most valuable automobile
brands and ranked 8th best global brand (interbrand 2014).

The positioning statement and core philosophy of Toyota is stateed as
'continuous improvement'. For example they used company slogan 'Moving
Forward' which states it is a progressive and dynamic car producer that
always aims for innovations to make their cars better than their
competitors. Toyota is the producer of Lexus, Hino and Daihatsu car brands.
Kapferer (2008, p40) states 'As all tests and garage repair records
demonstrate, Volkswagen quality has now been matched and even by passed by
Toyota, but for buyers, perception is reality.' This shows that in terms of
quality, Volkswagan is still perceived to be better than Toyota in the
minds of consumers, even though this may not be true in reality.

The brand positioning statement of Toyota could also include that the brand
is aware of current environmental issues and trys to mitigate these, and
that they will try to fufill the requirements of consumers from around the
world by creating a reliable, safe, innovative cars, using premiuim quality
with comparatively low prices.

Toyota emphasises its strategy of being a known enviromentally friendly car
company, producing hybrid technology cars and at the same time relatively
low cost cars against competitors.

Volkswagen invests on the diesel type of engine and developing idea of blue
motion technology but whereas Toyota stands for investing on hybrid
technology, and this is the one of major contrasts of these two big
automobile company.


3 BRAND ANALYSIS
In this section, will discuss four theoretical concepts in relation to
Volkswagan and these will include Brand Identity, Brand Image, Brand
Personalty and Brand Equity. I will implement each of these concepts to the
Volkswagan brand and will use secondary research to analyse each of them.

3-1 BRAND IDENTITY

Johansson and Carlson (2014) say that brand identity is what the brand
actually stands for and that the main elements of brand identity include
its origin, the kind of customer that the brand targets and what it's core
product compnents are. They add that if the brand has a clear and
identifiable identity, then consumers can easily know in their minds what
the brand stands for and what it sells and this will make it more
successful. To add to this, Kapferer (2012, pg172) defines brand identity
as a 'common element sending a single message amid the wide variety of its
products, actions and communications'.

According to De Chernatony (2010), brand identity is original and
distinctive and is the key idea of the brand and how the brand connects to
their stakeholders. Additionally, Nandan (2004) states brand identity comes
from the company and highlights how the differentiated the product is and
its particular features.

According to Keller (2013,p143) there are six criteria for brand elements
to be successful, these are as follows

1. Memorable
2. Meaningful
3. Likable
4. Transferable
5. Adaptable
6. Protectable

The brand name of Volkswagen shows how they comminicate their identity to
consumers. Volkswagen as a name of the company has a meaning if we
translate from German into English, and it means 'people's car', that also
supports the idea of targeting every consumer segment and is consistent
with mission of the company. And their recent company slogan is 'Das Auto'
('The Car'), this highlights their large consumer target base as anyone can
drive 'the car'. The name of Volkswagan will have a positive impact on
consumers as consumers will instantly recognise this brand name and will
associate it with a car that has a long history of being reliable and
indicates high quality, and Germany itself has an association with high
quality and engineering skills.

Volkswagen known to be a deisgner of iconic car models including the
'Beetle' Redesiging this iconic car, giving modern apperance has brough a
lot of success and profit to Volkswagen and the model has become extremely
popular amng consumers. The Beetle is still timeless and has cult status
(Beetle,2014). Volkswagen is also popular for producing very stylish, long
lasting as well as aesthetically pleasing cars as well as considering
environmental aspects.
The picture below shows how the beetle used to look like and the new
current one. Beetle always has fashionable, authentic style and the new
beetle has a progressive look and is an innovative contemporary
reinterpretation of the traditional Beetle.




Beetle (2014)




The Volkswagen logo represents the letter of the company's initials with V
over a W on the background colour as blue and sorounded by a circle. Words
for "Volks" is in German means people, and "Wagen" is German for car. The
logo is one of the most recognizable and strongest in the world.
The figure below shows the evolution of the Volkswagen logo throughout the
company's history.






DesignWorld(2013)







I have used Kapferer's identity prism (2008) and adapted it to suit
Volkswagan:

Figure 5 Brand İdentity Prism















3.2 BRAND IMAGE

De Chernatony and Mc Donald (2003) state brand image is the 'consumers'
perceptions of who the brand is for and what it stands for, that is, it
reflects the extent to which it satisfies consumers' functional and
representational needs'.Keller (2013) adds that if the question was 'what
came to your mind when you thought about particular brand, what would you
say about that brand'. For Volkwagan, it is highly likely that if this
question was asked of consumers, they would probably associate it with
being reliable, safe, enviromentally friendly, luxury and so on. These
associations with what the brand is all about when consumers think of the
brand is what makes the brand image.
These all different associations with a brand by consumers are caused by
the past experiences with brand, brand logo, brand name or advertisement of
the brand (De Chernatony2010). This shows that brand image is consumer
based.
Brand image is also the way a specific brand positioned themself in the
market for example how the customers perceives the product (Nandan,2004).
Whereas identity is sent out by the company themselves as what they want
the consumer to think about the brand(Tony,1995)


Volkswagen has a good brand image in consumersminds in terms of
enviromental factors as well as qualilty aspects.
Volkswagen as a brand gives image of being enviromentally friendly and that
they are committed to the environment via the launch of BlueMotion
technology. This technology includes all products, technologies and
innovations that extremely improve fuel economy and reduce emissions. Blue
motions technology is both energy efficient and fun to drive.




Volkswagen.(2012)


Volkswagan also has the overall aim toby 2018 for all production plants
throughout the world to reduce consumption of energy and water, the amount
of waste, emissions of CO2 and solvent emissions by 25 % compared to 2010.
The aim applies all group production plants and corporate functions, and
they are all working together towards acheiving this goal.
At the end of 2013 they were already half way to their goal by reducing
12,5% enviromental impacts on production (Volkswagen sustainable 2013).


(Volkswagen sustainable 2013)

3.3 BRAND PERSONALITY

Aaker (1997, p.347) states brand personality is a 'set of human
characteristics associated with a brand'. Moreover, when customers
experience the brand, customers will develop their own views of brand that
will help them to personify brands. Brand personality focuses on what the
brand says about the customer and how they feel being associated with brand
(De Chernatony, 2010).

Kapferer (2008) says that brand personality is the way that the brand's
products and services speak to their consumers and what sort of personality
it represents is it were human.

Aaker (1997) states that there are five main dimensions for a brand
personality and these are Sincerity, Excitement, Competence,
Sophistication, and Ruggedness.

In order to understand brand personality, Aaker's (1997) scale identifies
five dimensions of human characteristics associated with a brand:
Sincerity, Excitement, Competence, Sophistication and Ruggedness.
As ı applied Brand Personality of dimension to Volkswagen
" "Dimesions " "
"Sincerity "Family oriented " "
"Excitement "Innovative,Trendy " "
"Competence "Reliable anb High " "
" "Quality " "
"Sophistication " " "
"Ruggedness "Masculine " "


3.4.BRAND EQUITY
Aaker (1991, p. 15) gives a definition of brand equity as:
'a set of brand assets and liabilities linked to a brand, its name and
symbol, that add to or subtract from the value provided by a product or
service to a
firm and/or to that firm's customers'.

Brand equity depends on some psychological indicators, which are percieved
from the customers percpective and their point of view (Kapferer, 2008).

Keller (1993) defines a consumer based brand equity by saying 'differential
effect of brand knowledge on consumer response to the marketing of the
brand'
He adds also that it happens when customers familiar with the brand and
have strong and unique brand associations in his/her thoughts

The feature of this pyramid is it match with levels in the pyramid on the
stages of brand development.


Figure 6 Brand Resonance Pyramid
Keller (2013,p108)
The pyramid itself is divided into four levels: Salience, Performance and
Imagery, Judgment and Feeling, and Resonance










Implying Kellers brand resonance pyramid to Volkswagen brand would be like
As follows



"Resonance: "Attachment "
"Judgments "Credibility and Consideration "
"Feelings: "Fun, Securty, Social Approval "
"Performance "Good engine, Durability, "
" "Enviromental, Affordable "
"Imagery "Strong History and Heritage, Family"
" "man user "
" "Working class, family man, High "
"Salience "Performance Product "


Volkswagen has highest brand awareness of car producer and high level of
repeat purchase rate and as well as customer loyalty.

3.5.BRAND PYRAMID

De Chernatony(2010,p259) definition of the brand pyramid is:
'the key functional benefits that allow the brand to make a rational claim
that has been superbly linked with emotional rewards through welcomed
values, all of which are understood through personality traits.' The
definition helps to understand thebrand essence. Kapferer(2008,p197) says
that brand essence is the summary of positioning and/or the identity.


Below the figures shows de Chernatony s (2010) way of approach how brand
pyramid illustrate the essence of a brand.


De Chernatony (2010,p259)


3.6 Brand Pyramid for Volkswagen

From my secondary research if we establish key attributes for Volkswagen is

İts a car producer company which attracts the all target groups in the
society providing them different type of cars.
Later from my understanding I developed the brand pyramid and it below the
shows figure.



















4. SPECIAL INTEREST

Global Branding
Özsomer and Altaras(2008,p1) gives a definition of global brands as thos
which:
'have regional/ global awareness, availability, acceptance, and demand and
are often found under the same name with consistent positioning,
personality, look, and feel in major markets
enabled by centrally coordinated marketing strategies and programs.'
In most of the markets global brands has competition with local brands. Key
characteristics of global brand is large availability and recognition,
social responsibility, standardization, and a good level of quality.
(Özsomer2012)

Only avaibility and recognition itself deoesnt make global brand, the
brands also needs to have certain presence in some important part of the
world.(Johansson and Carlson,2014)

Johansson and Carlson (2014) opinion of right global brand should have to
take important amount of market share in various diffirent major markets.
So Volkswagen should consider this application of glabal branding theory.


It is very common for people globally to assoicate Germany with high
quality, reliable cars and high engineering skills. The Volkswagan brand
uses the company slogan 'Das Auto' ('The Car') to give the message to
consumers that the brand is German and therefore uses this language to
support and make the connection in the mind of consumers worldwide that the
brand is German and that the brand is therefore innovative, provides value,
is responsible and high quality.

Volkswagen performs in all key market segments with more than 70 different
models. It supplies most of its cars to customers in major developing
countries like India, China, and Brazil or its origin country, Germany.
The Volkswagen Group operates 107 production plants in 19 European
countries and a further eight different countries in continental America,
Asia and Africa. The Volkswagen Group sells their vehicles in 153 diffirent
countries around the world (VolkswagenAG2014).
Volkswagen global brand management managers mainly aim to focus on wishes
and choice of customers today and in the future. Starting from developing
innovations which meet with customer desires and still being affordable.
(Volkswagen2013).
In criteria used by Interbrand top 100 global brand selected Volkswagen
31th place in 2014.

Below map shows Volkswagen group production maps, it shows that very wide
existence production plants around the world.



Volkswagen Sustainable report (2013)




The Volkswagen is doing well in the China experienced good growth rate in
the Chinese market in year 2014 but they are doing badly with small
proportion of existence markets like the U.S. Brazil, and Russia in
2013,and 2014.

Volkswagen launced in 2011 The Peoples Car Project İn China. It aimed
dialogue with Chinese people their perception of future of Auto innovation.
The project had great success, they had over 14 million online visitor and
250 tousand diffirent car idea. So Volkswagen made very good engagement
with Chinese market with this Project.(VW China)

VW China


Volkswagen start environmental action in China by having a largest
invesment program, and huge proportion of budget invested by 2015 in low-
consumption models and sustainable production. They are aiming to grow 4
times in terms of number of employee by 2018 and set new production plan
with enviromental standarts.
I think from Management team Volkswagen Martin Winterkorn summarize the
all actions of Volkswagen what happening in China.
He stated: "We will be launching the largest investment program in China's
automotive history.(Volkswagenag news 2013)
China will have a essential role in achieving the goals of the Volkswagen.



Volkswagen had campaign in US ''Why VW''? Campaing promoted fun stories,
brand values having a Volkswagen.











http://www.brandchannel.com/home/post/Why-VW-US-Campaign-091712.aspx


5.RECOMMENDATIONS

In recent years, people's lifestyle has been changing as people are keen to
become more environmentally and eco-friendly, use of low CO2 emission cars
is getting more popular and people are more keen to purchase these sort of
car. Therefore, I suggest that Volkswagan should consider this
environmental change and turn it into an advantage for them. Even though
recently, Volkswagan has invested more than ever in eco-friendly vehicales
and green technologoes, I suggest that they should strengthen this and
focus more on Blue Motion strategy agents. The main aim for Volkswagan
should be to become a leader in the world's automobile industry, producing
environmentally friendly cars. For that reason Volkswagen should spend more
money on the research and development of enviromental fuel, reduce energy
consumption and low C02 emissions and cooperate with universities improving
of this technology. They should also focus on electric cars which is
becoming more trendy in the present day.

Volkswagen should focus on their sales North America Continent market
specially US and Mexico. As ı showed figure below first half of 2014 the
passanger car market share of Volkswagen in this continent is just about
%4,5.North America is second largest automobile market after Asia weak
company positioning there shows importance of the problem, therefore they
should produce a cars models meet with American requirements and suit with
American characteristic, implement more affordable car price stategy, using
competitive price against main rivals Toyota or Fords. Producing of new
model with new looking or updating models. Hire new managers and sales
executives with good understanding American market could be new solution
for Volkswagen.
Volswagen Key figure (2014)
Volkswagen should realize that proportion young generation increasing they
are new customer who enters the market they might target this new group. In
the future Volkswagen will definetly benefit from this new target group.
Volkswagen should improve customer satisfaction by doing after sales
service and high quality cars these will improve customer loyality and they
will keep buy from Volkswagen and moreover there will be new customer group
who wants to purchase Volkswagen brands.

They should focus on and it will also bring making great deal of
opportunities in emerging markets such us Russia, India, and the Asia
Pacific region these areeas are where the biggest
growth potential in the global automotive market happening. These countries
are getting developing and got purchasing power that makes tham new
business market. In order to do that they might open new factories and
invest there, specificly produce for those countries new affordable models.
Volkswagen should manage to solve problem in these areas high interest
rates and currency fluctiations if they do that finally sales will
gradually increase.





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http://www.vw.com.cn/en/VwCulture/zaoche.html