Beetle

The Birth, Growth, Death and Revival of a

Cult Brand

“No other auto in history has changed so little and lasted so long”

Thomas Karig, Volkswagen Spokesperson

Name: Nikhil Desai

Roll no. 33
Course: EX-MBA 2010-13
Semester: II
Subject: Marketing

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Q1. Examine the evolution of the Beetle brand and its growth over the years. How
did the strategies adopted by Volkswagen contribute to the brand’s success over
the years?

Ans: Evolution of the Beetle brand:

In 1930s, Adolf Hitler commissioned an automobile engineer, Ferdinard Porsche to

design a people’s car. Hitler wanted a durable, affordable car that could seat five
people. Since during that period German car manufacturers largely offered luxury cars
which were too expensive for a common man hence. By October 1935, he had built the
first prototype of the car. Its full steel body, space for five people, and impressive
performance made it quite different from the other models available at that time.The first
car was made in 1938. The first batch of 42 Beetles was rolled out only in 1941 that too
for testing and publicity.

Beetle’s growth over the years:

By 1943, production of the car picked up and the company produced 26000 Beetles
during the year. When the war ended in 1945, the Volkswagen factory was placed
under the custody of the British. The major positive development took place in 1945, the
factory received an order for 20000 Beetles from the British military. As a result, the
factory was rebuilt and 10000 Beetles were produced by October 1946. Things changed
drastically in 1947, when Volkswagen participated in the Hanover export fair and
introduced the Beetle in the market. In the same year the British appointed Heinrich
Nordhoff as managing director. Under Nordhoff leadership the company began to grow
quickly. Nordhoff commitment, farsightedness and management style worked wonders
for Volkswagen.

By the late 1940s, Volkswagen emerged as the largest car manufacturer in

Europe, exporting the Beetle to Denmark, Luxemberg, Swedan, Belgium and
Switzerland. In 1948, Volkswagen was the market leader in Germany, with a 63.5%
market share. In the same year, Beetle was exported to US, where it tasted a real
success.

The biggest factor in the cars favor was its affordability. According to a National
Automotive dealers association survey of import ownership in 1956-58, 88% of US
customer who bought Beetles in that period cited its cheaper to operate attribute as the
major reason for purchase. Beetles inexpensive, safe and reliable image began finding
its way in analyst’s review and consumer reports. Beetle strong construction and
flawless finish become popular as well. Beetles engine mechanism and operation was
so simple that they readily trusted their wives and children to drive a Beetle on their
own. The Beetle owners could repair their cars on their own whenever necessary.

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These attributes created a feeling of attachment, trust and belongingness in Beetle
owners towards car.

Volkswagen released a series of advertising and promotional campaigns in the late

1950s. Volkswagen adopted a strategy of ‘self-deprecating advertising’, making fun of
what many referred to as Beetle’s shortcomings (as compared to other cars).
Advertisement slogan which became popular during 1960s included ‘Nobody is Perfect’,
‘Think small’ etc.

In addition Beetle advertisements highlighted the advantages of its small size, its price
and affordability, its simple mechanism and global reach. Some advertisements also
revealed the company’s few drawbacks and highlighted the companys commitment to
offer customers the best possible quality.

Volkswagen promotional strategies also contributed to its success.

Q2. Critically analyze the reasons for the emergence of Beetle as a cult brand
especially in the US. How far do you think the emotional bonding of customers
with the product contributed to its success? Do you think such an emotional
relationship with a product extends the product’s life span? Justify your answer.

Ans: Beetle was not an instant success in the US since the market there was dominated
by technically superior luxury cars. In 1949, Volkswagen introduced the Beetle
Cabriolet, a four-seater convertible, for the export market. Beetle was launched in
different colors and with luxurious interiors as well. Because of its affordability, Beetle’s
sales increased in US. US customers who bought Beetle cited its ‘cheaper to operate’
attribute as the major reason for the purchase. The Beetle engine was designed to
operate all day at about 60 mph, which is the car’s top speed. The car had good traction
on ice as well. Beetle had a strong construction and it was easy to operate and
maintain. Customers could even repair their cars of their own whenever necessary.
Reportedly, even a mechanically challenged customer found it easy to fix problems in a
Beetle. All these attributes created a feeling of attachment, trust and belongingness in
Beetle owners towards their cars.

Every owner of the car started to act like a salesman and because of the emotional
relationship with the product they started to recommend this brand to potential
customers.

I think emotional relationship with a product extends the product’s life span because
customers start thinking the product as the one of the family member and even if they

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have some other car they still like to have one Beetle in their garage. Also, since they
love their car they start handling the car carefully and try to maintain regularly.

Q3. Examine the reasons for the discontinuation of the Beetle brand by
Volkswagen and critically comment on the rationale for its relaunch. Do you think
the nostalgia factor is strong enough to change the fortune of a company in any
industry? Support your stand.

Ans: The declining sales of Beetles in its largest market US was attributed largely to the
increased competition in the small passenger car segment with the entry of foreign
brands, mainly Japanese compact car brands, which were technically more advanced in
this segment. Volkswagen changed its strategy and decided to focus less on the Beetle
and more on developing and launching new brands. In 1974, the Volkswagen launched
Golf and it became an instant success in Germany due its advanced technological
features. This resulted in a further decline in demand for the Beetle in Germany.

During the 1970s, US government regulations on safety and emission controls with
regard to the automobile industry became stringent. And Beetle could not be modified to
meet those standards, began loosing ground. Gradually a host of new car models with
advance technology and safety levels began eating into its market share.

During 90s, the automobile industry in Europe faced a recession which severely
affected the company’s financial condition. Due its many problems, Volkswagen posted
a loss of $1.1 billion in 1993. To overcome these problems, the management, led by
CEO Ferdinard Piech, began considering the possibility of reviving Beetle. It seemed
that Volkswagen wanted to improve its performance in the US by cashing in on the
nostalgia of customers for the Beetle brand.

I think the nostalgia factor is strong enough to change the fortune of a company in any
industry because the Beetle car in the past is tested one and successful over a
considerable period of time. Since it’s a people car, it’s a value for money. Every
customer will definitely think of value he is getting for his money. Even if customer does
not go with the New Beetle, he will surely consider other cars of same manufacturer
which will help the growth of the company.

Q4. Critically analyze the strategies adopted by Volkswagen to promote the New
Beetle. Do you think the New Beetle will be able to achieve the cult status of its
predecessor? Why / Why not?

Ans: Volkswagen adopted a cautious approach to the relaunch of Beetle as many

company executives opposed this idea. They felt that the company just couldn’t afford

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to invest in an outdated model at this point. Most of them felt that Volkswagen needed
new, state-of-the-art models to revive its sales in the US and improve its financial
condition. The first prototype of the new Beetle (with many modifications in shape and
features that differentiated it from the old Beetle) was unveiled at the International Auto
Show in Detroit in 1994). After this, Volkswagen received thousands of emails from
across the world, requesting the company to relaunch Beetle. Volkswagen decided to
go ahead with the relaunch and announced that the New Beetle would be launched in
1998. The new Beetle featured technologically advanced features in line with other
Volkswagen vehicles. Its engine was in the front. Other changed features in the new
Beetle were front-wheel drive, liquid cooled engine, standard air-conditioning and four
times the horsepower of the original Beetle.

The New Beetle body design was based structurally on the Golf and was more spacious
than the old Beetle. The car contained state-of -the-art safety featuresand clearly
reflected European design and engineering. However, the New beetle retained some of
the old features of the original Beetlr such as bulbous fenders, gauge pod, big round
speedometer, front passenger dashboard grab handles and a flower vase in the dash
board.

I think the New Beetle will be able to achieve the cult status of its predecessor because,

 The Beetle has shown its success in the past and it is in the people’s mind

 The New Beetle is a complete modern design and futuristic. It is designed

to appeal to people who fondly recall the past as well as young people
who have no connection to the original car.

 The New Beetle is an up-market, lifestyle vehicle. Its highly emotional, a

car that makes the experience of driving a fun.

 People have got Beetle as a people’s car image

 The new Beetle is technologically upgraded in comparison with other cars

in the same segment.

There were large waiting lists for the New Beetle and the customers were reportedly
even ready to wait for months to get the delivery of their New Beetle.

The company seems to have succeeded in its attempts to achieve the cult status to the
New Beetle as of its predecessor;