Muhammad Huzaifa Shahid

L1f18bbam0093
SECTION: A
ASSIGNMENT NO 3
Changing Consumer Behavior

A Skoda case study

Introduction

A brand comprises a range of features which identifies its products in a way which differentiates
them from others. These features may be a name, logo, term, symbol or other creative element.
The motor industry is an area where branding is particularly strong. Global awareness of the
three pointed star of Mercedes-Benz is second only to the Coca-Cola brand. Recent research in
the motor industry claims that some of the best-known brands can probably attribute at least half
their worth to the brand. The worth attributed to a brand is known as brand equity. Brands with
power and value in the marketplace are often said to have high brand equity.

This case study focuses on the turn-around in the fortunes of a well-known motor manufacturer -
Skoda. It examines how Skoda has increased its brand equity through changing its image.

A period of change

For the first half of this century, Skoda was one of the world’s greatest marques - manufacturing
some of the most prestigious cars available, such as the luxury Hispano-Suiza limousines. It was
a leader in motor car design, technical innovation and a pioneer in the new realm of motorsport.

The economic situation during the communist years in the former Czechoslovakia forced Skoda
to become product rather than market orientated - with little regard for consumers and their
needs. In time, Skoda became unable to keep up with western motor manufacturers in terms of
style and innovation. The authorities made the rules - even insisting that the windscreens should
not be raked too far back in case the cars looked decadently sporty! Without any outside
influences in terms of creative and innovative ideas and manufacturing processes, the reputation
and image of Skoda suffered.

The rebuilding of the Czech economy after the “Velvet Revolution” in 1989 was significant for
Skoda. However, to benefit from the economic upturn, the company required a sound partner
with the ability to invest, not only money, but also management expertise, thereby
improving the efficiency of its factories, raising quality standards and planning for future
development. Skoda’s
partnership with Volkswagen was universally accepted as a way of guaranteeing the
independence of the existing factories and the Skoda marque.

On April 16th 1991, Skoda became a public company, joining Volkswagen, Audi and Seat, to
become the fourth brand in the Global Volkswagen Group. The strategic aim of the company was
to reposition the marque, by returning to the core brand values of high quality standards,
exceptional customer care and building a consistent marketing communications platform.

Brand values

The key to changing consumers’ perceptions involved emphasising that Skoda cars
represent exceptional value for money - the best Volkswagen technology at a very
competitive price. Skoda’s brand values (i.e. what the brand stands for) are:

• value for money

• reliability
• fitness for function
• quality
• integrity.

Skoda drivers tend to be people who are unpretentious, down to earth and honest.

Elements of a brand

Although it can be argued that a product is simply something you use, the real picture is more
complex. For example, you may buy a coat to keep you warm, or a newspaper to read – but what
coat do you choose or what newspaper do you buy? Products are not purchased to meet a single
need; a whole range of factors make up the product concept. In order to communicate these
factors to customers, organisations use branding to help consumers identify the products they
want. When consumers view a brand, it is important that they associate it with a range of
features, benefits and services that meet their requirements. These elements are at the heart of the
branding process.

When a customer buys a new Skoda, he or she will be concerned with its performance, looks,
modernity, colour choice, design, engine and specification. The sale will be influenced by the
brand's name and image, as well as the quality of the car and its various product features, such as
twin airbags, electric windows front and rear, electric sunroof etc. The potential buyer will expect
the option of a credit deal, a warranty, high levels of customer service and good after-sales
services. In a recent independent customer satisfaction survey, Skoda was the highest
placed European manufacturer, ahead of BMW and Jaguar.

Brands consist of three levels.

The core product is the tangible product which provides the benefits that customers seek when
they use the product. Skoda’s core benefits include how well the cars function and meet user
requirements. All modern Skodas have a high specification and compete with Western, Japanese
and South East Asian rivals. Skoda has invested heavily in research and development, resulting in
many key product improvements. In fact, since its launch in 1995, Skoda’s Felicia has shone in
both World and British Rally Championships and, in the 1996 RAC rally, was placed third
overall, driven by former world champion Stig Blomqvist, as well as winning numerous industry
awards from What Car?, Auto Express and Diesel Car.

The actual product consists of the features designed to support the core product. For a car, safety,
reliability and quality are all key elements of the actual product. Skoda vehicles are manufactured
to international industry standards and comply with current and future safety and emission
legislation. Components are supplied by top manufacturers such as Siemens, Bosch and Rockwell
and specifications have been improved. For example, research into the Felicia showed
that consumers see it as being an attractive, comfortable car with a spacious interior and high
quality upholstery.

These factors have added to the actual product, so that the Felicia is viewed positively
by customers, in terms of styling and looks. A number of associated issues are important
for customers. The augmented product involves the quality of after-sales service, extended
warranty conditions and credit. Skoda uses these elements to create new and repeat
purchases. In fact, Skoda’s customer loyalty, i.e. repeat purchases, is second only to Mercedes.
Skoda aims to become more successful through a process of continuous improvement. The
process began in 1991, with key events including:

April 1995 - UK Launch of the Felicia

June 1995 - UK Introduction of Exposure Marketing Programme

January 1996 - UK Introduction of Felicia Estate

February-June 1996 -UK TV advertising

May 1998 - UK Launch of the Octavia.

The launch of the Skoda Felicia helped to strengthen the Skoda image with existing customers
and challenged the entrenched perceptions of the public. Since then, the process has continued,
backed by advertising, awareness building and new product launches. The new Skoda Octavia
represents an even greater quantum leap forward for Skoda.

Brand strategy

Volkswagen faced some important decisions concerning the Skoda brand. Using the Skoda brand
name to launch a new product, through the strategy of brand extension, enabled Volkswagen to
enter new market segments. The development of the Octavia highlights Volkswagen’s confidence
in the Skoda brand. Skoda and Volkswagen decided that the brand needed a broader product base
and that Skoda’s movement into another product category would provide instant recognition and
market acceptance - simultaneously improving market share.

Positioning involves developing features of the marketing mix, such as ‘product’ and ‘pricing,’ in
a way which takes into account consumers’ thoughts and perceptions. At the same time,
the positioning process provides Skoda products with key advantages over other products in
each market segment.

Skoda’s product range is priced towards the lower end of the market. This creates a ‘fit’ with the
strategy of the Volkswagen Group which already has products ranging from prestige cars towards
the top end of the scale, to those which were competitively priced at the lower end. Audi, for
example, is pitched at the premium end of the market to compete with BMW, Seat is pitched to
compete with Alfa Romeo and Fiat, while Skoda is positioned as a competitively priced, quality
product, to compete directly with brands such as Rover.

The Octavia

The Octavia is available as a five door hatch and estate car, with a clean, aerodynamic, modern
design and an attractive, sleek appearance. The prominent front grill will be incorporated into the
design of future vehicles. With the Octavia, Skoda aims to:

satisfy the future market requirements

set the trend and the pace for further development

present and develop its own identity

communicate the metamorphosis of the Skoda brand.

With the launch of the Octavia, Skoda was able to maximise the synergy of the partnership with
Volkswagen and communicate the new, modern face of Skoda. Octavia represents everything
that the redeveloped brand stands for - i.e. an attractive price, modern European product, high
quality, style and safety. The Octavia has become the first Skoda product to be built on a
Volkswagen Group platform and has been constructed using the latest technology at an all new,
purpose-built, state-of-the-art, factory in the Czech Republic.

Brand image

People perceive a brand’s values and evaluate them either positively or negatively. A
well- positioned positive image helps to establish a strong position enabling the brand to
differentiate itself from competitors and improve its performance in the marketplace.
Skoda’s advertising campaign portrayed the positive changes which have taken place in the
company and in the cars. The partnership with Volkswagen was also emphasised. Over a short
period of time, research revealed that perceptions of the marque were changing. Skoda’s image
across a range of areas received rapidly improved ratings.
Previously, the stereotype of a Skoda owner was predominantly male and retired. This is no
longer the case. Changes in the brand image and positioning have attracted individuals
from other segments of the market including:

• affluent retired people

• independent working mothers
• non-working women/mothers
• married working women
• younger family men.

This has led to large increases in sales in the UK and world-wide.

Conclusion

In today's modern motor industry, a car’s brand is vitally important. It is more than just a marque
- it represents product features, image, customer service and servicing. Today’s customers want
authentic, individual products with integrity. Skoda has seized a unique opportunity -
emphasizing its values and creating a strong identity which has become the brand story of the
decade.

Question:

Please answer the following question based on the information given in the case study
All questions carry equal marks. 10 each. Total Marks = 30

1. Assume that you are the car owner of a SUZUKI Mehran car. You are planning to buy a
new SKODA car for your own personal use. Using a diagrammatic explanation where
appropriate, identify the stages of the buying process that you are likely to go through.

2. How can firms encourage positive post-purchase feelings? With reference to an example,
assess whether SKODA is doing enough in this respect. What improvements could
it make?

3. Recommend a strong positioning statement for a brand like SKODA. Do you think this
organization was able to change its Target Market? Why did they do it? Explain
your answer based on the class discussions on Consumer Behavior.

Good Luck!

1. Assume that you are the car owner of a SUZUKI Mehran car. You are planning
to buy a new SKODA car for your own personal use. Using a diagrammatic
explanation where appropriate, identify the stages of the buying process that you
are likely to go through.
 Ans : I' am the auto proprietor of a SUZUKI MEHRAN vehicle presently I'm
making my mind to purchase another SKODA vehicle for my own personal
private use. There are 5 levels of the looking for way that I'm probably going to
go through which are:

• Need of acknowledgment

• Information research,

• Evaluation of options

• buy

• Post buy conduct.

NEED RECOGNITION

The main genuine advance that I will take is need prevalence I will found out the intention to
purchase a shiny new Skoda car. I'am a college going researcher and need to buy a vehicle because
of the reality I should be free and with a vehicle I do not, at this point should get up right on time
inside the morning to anticipate the overall population delivering. This vehicle additionally doesn't
have me to fear around the sitting tight an ideal opportunity for public transportation I'm
purchasing another car since I decided a few issues in Mehran vehicle and I need solace and safey.
Thusly, I begin to choose to purchase a new vehicle.
INFORMATION RESEARCH

The subsequent stage I will go through is the records look for. I will do investigate
and choose which kind of auto is suitable for me. I'm a fair-minded school going
understudy who circumstance about the assurance of me and my family. I have
apparent skoda's exhibition, rankings, assessments and abilities on web and in ad.
Thusly, I found that Skoda is the auto that generally perceived in assurance ,
dependability, convinience in the wake of seeing the promotion. In business I have
apparent Skoda is gaining practical experience in insurance. I considered the to be of
Skoda as a family vehicle is advancing security and dependability. This meets the
prerequisite of mine.

EVALUATION OF ALTERNATIVES
The third stage is assessment of options. Presently in this progression I will contrast SKODA and
different brands and discover more insights regarding this vehicle. To purchase another skoda
vehicle I will worried about its exhibition, looks, innovation, shading decision, plan, motor and
detail. I will choose to buy this vehicle because of the great positioning in wellbeing and security
and it additionally gives the alternative of a credit bargain, a guarantee, undeniable degrees of
client support and great after-deals administrations. Thusly, this shows that the item addresses my
issue.

PURCHASE

The fourth stage is buying choice. Subsequent to making examination by different items, I'm
affirms to purchase Skoda in light of the fact that Skoda affordable cost and the positioning of
wellbeing is high. In a new free consumer loyalty overview, Skoda was the most elevated put
European producer, in front of BMW and Jaguar granted in security. This shows the high
dependability of the vehicle in the piece of security. Therefore, this vehicle will totally meet my
fulfillment.

POST PURCHASE BEHAVIOUR

The last phase of dynamic interaction is the main part, which is post buy conduct. In this
progression I will tell about my sentiments my demeanor towards the item by utilizing the item. I'll
inform or audit concerning the fulfillment or disappointment of this vehicle when I use it and
educate others regarding my experience. Shopper fulfillment will harvest the huge benefit for the
organization since purchaser will purchase the items on sometime later if the item meets the buyer
fulfillment. In the wake of selling the items, organization regularly will get some information about
how is the fulfillment of purchaser, will buyer purchase the items again and will shopper
recommend the items to others. Shopper fulfillment will expand the deals of the organization.

2. How can firms encourage positive post-purchase feelings? With reference to an

example, assess whether SKODA is doing enough in this respect.
What improvements could it make?

Ans. I figure firms ought to comprehend the brain research behind client conduct since it
uncovers significant freedoms inside the client excursion and it will help in good post-buy
sentiments. Firms can utilize this data to give their image reason past the deal and to
construct trust and steadfastness with their client
.

LOYALTY PROGRAM

Firms should utilize devotion programs as a methods for empowering post buy sentiments.
Marking your devotion program to fit the 'voice' of your organization. You have a chance to make
your dependability program as one of a kind as your image and champion in the personalities of
your clients.
Go past the thank you and exhibit that you esteem their custom by welcoming clients to be
important for your dedication programe.
Email them with a challenge to join and spread out the advantages, be they a select offer, VIP
admittance to deals, or extra focuses on buys.
REFUND AND RETURN

This will help diminish post-buy uneasiness by guaranteeing your client is completely mindful of
your discount strategy and brings measure back. Being straightforward about this will fabricate
trust with your client as it shows your image isn't about deals, and that you comprehend your
clients' requirements.

PRODUCT SATISFACTION FEEDBACK

 Firms should take product satisfaction feedback to improve customer experience
and positive post purchase feelings on the products they’ve purchased. Let the customer
know that you value their opinion and that it will help improve your product line.

SKODA POSITIVE POST-PURCHASE FEELING

In modern day modern-day motor industry, a vehicle’s brand is vitally essential. it's far greater than
just a marque - it represents product features, photo, customer service and servicing. these days’s
clients need genuine, person products with integrity..human beings perceive a logo’s values and
compare them both definitely or negatively. A properly-located fantastic image allows to establish
a robust effective post purchase feeling allowing the logo to differentiate itself from competitors
and improve its overall performance within the market.

in my view A employer like Skoda is doing enough in inspire fantastic submit buy feeling due to
the fact SKODA has seized a precise possibility - emphasizing its values and creating a
strong identification which ends up in effective post purchase feeling..
SKODA has modified customer perception that Skoda automobiles constitute awesome cost for
money - the nice Volkswagen generation at a very aggressive charge. Skoda emblem values
include price for cash , reliability, health for characteristic, excellent and integrity.

FOR EXAMPLE

The core product is the tangible product which provides the benefits that customers seek
when they use the product. In the given case study it tells us Skoda’s core benefits
include how well the cars function and meet user requirements. All modern Skodas have a
high specification and compete with Western, Japanese and South East Asian rivals.
Skoda has invested heavily in research and development, resulting in many
key product improvements. In fact, since its launch in 1995, Skoda’s Felicia has shone in
both World and British Rally Championships and, in the 1996 RAC rally, was placed
third overall, driven by former world champion Stig Blomqvist, as well as winning
numerous industry awards from What Car?, Auto Express and Diesel Car. Research into
the Felicia showed
 that consumers see it as being an attractive, comfortable car with a spacious interior and
high quality upholstery.

The factors like safety, reliability and quality are added in Felcia as it is the key element
of the actual product, so that the Felicia is viewed positively by customers, in terms of
styling and looks.

So, After reading the case study and by giving example I have come to know that Skoda
company is doing enough in encouraging positive post purchase feeling. Because
The product of SKODA provide the quality of after-sales service, extended warranty
conditions and credit. Skoda uses these elements to create new and repeat purchases
.These qualities will increase positive post purchase feelings and cusomers will rebuy
the product after positive post purchase feeling. In fact, Skoda’s customer loyalty, i.e.
repeat purchases, is second only to Mercedes.

IMPROVEMENTS

Skoda have to attention on advertising compaigns, great of merchandise, launch new products by
way of improving efficiency of its factories, raising first-rate requirements and making plans for
future development, Skoda have to searched for gasoline green and eco pleasant automobiles
.furthermore, the opposite things Skoda could do for improvements are as follows:

• For low costing Skoda must try and open manufacturing and assembling flora nearby to
its new focused markets to lessen its transportation value.

• provide extensive range of servicing, a good duration of guarantee or warrantee with an

enlarged community of service facilities to hold present customer’s faith and smile.

• begin thinking about new technology, improvements to upload with the products to
attract market interest closer to the brand.

After the all enhancements enterprise ought to initiate its new large stage campaigning to
draw clients having contrast with other manufacturers available in marketplace inside the identical
price range.
 3. Recommend a strong positioning statement for a brand like SKODA. Do you
think this organization was able to change its Target Market? Why did they do
it? Explain your answer based on the class discussions on Consumer Behavior.

Ans:

POSITIONING STATEMENT

BMW is a German car, motorbike and engine production agency. made for the
affluent retired human beings, impartial operating mothers, non-working
ladies/mothers, married operating ladies, more youthful own family men. It’s a
value- for - cash logo which have an appealing charge, cutting-edge product,
excessive high-quality, sylish merchandise and provide safety as nicely and it’s
merchandise are designed in line with purchaser pleasure and desire.

TARGET MARKET

yes, I suppose that this business enterprise named as BMW changed into capable
of exchange it’s target marketplace because BMW initially entered the business
with the strategy of reasonable rate of car for the clients but whilst making it lower
priced and coffee rate the business enterprise forgot to look on its layout in step
with new technological advancements and the today's marketplace trend however
due to it business enterprise had confronted lot of problems.

due to the release of differents products. BMW turned into to move from to
transport faraway from being a reasonably-priced emblem to being a cost-for-cash
brand. BMW’s biggest challenge become the pleasure of its clients. It indicated that
the emblem belongs with a quality merchandise and happy customers.

Now the BMW charges went up excessive due to many enhancements and
customers needed to agree that progressed car was well worth paying. there was a
paradigm shift of
organization’s recognition now it's far searched for luxurious section motors which
are reliable and
extra dependable.
previously, BMW business enterprise targeted the mens who're retired but this
wasn’t growth their sales. this is no longer the case. Now, changes inside the logo
picture and positioning have attracted individuals from other segments of the
market including:

• prosperous retired people

• unbiased working moms
• non-running women/moms
• married operating ladies
• more youthful family guys.

BMW business enterprise trade it’s goal marketplace to growth their income and
earnings margin and to make logo picture .and converting the goal market has
caused large will increase
in sales to international-huge.

After rebranding of the organisation and change the target marketplace there was a
drastic change within the sales n earnings margins of the car. the brand new
strategy turned into consumer delight in conjunction with new innovative
technologies for the automobile making it lovelier and nice turned into excellent
and the new automobile turned into engineered with practicality and price for
money. the brand new logo fee of BMW looked for gas green and eco pleasant
cars.