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This publication is the Marketing Plan for Volkswagen, including analysis and
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Working Paper · March 2016

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This publication is the Marketing Plan for Volkswagen, which includes the analysis and
research of Volkswagen.
This publication is done by: Christopher Soh Xuan Yi, Johan Cho Yao Song, Luqman Al-Hakim,
Lam Kum Yuen Leon (All from UCD).
Our University College Dublin (UCD) lecturers overseeing this publication are: Professor
Markus Vanharanta & Dr. Ajit K. Prasad.
Christopher Soh Xuan Yi is currently an Undergraduate Business Student at the prestigious
University College Dublin. He can be contacted directly at: Christopher.xuanyi@ucdconnect.ie

Executive Summary
Volkswagen Group is a German multinational automotive manufacturing company
headquartered in Wolfsburg, Germany (Jurevicius, 2013). Founded in 1937 but only began
production in 1945 after being converted from an armament factory (Volkswagen, 2016).
Volkswagen’s perennial top sellers worldwide include the Jetta and Golf models (Forbes, 2016).

By May 2015, Volkswagen has 119 production facilities across 31 countries, and sells its
vehicles in 153 countries (Volkswagen, 2015). As of May 2015, it has 592,586 employees
producing 41,000 cars worldwide every weekday (Volkswagen, 2014). In the same year it
generated a net income of $268.55 billion US dollars and a market capitalization of $126 billion
US dollars (Forbes, 2015). Their immense growth has led to an industry ranking in both 2nd in the
world and in Singapore, in sales and market share (Volkswagen, 2016).

The purpose of this plan focuses towards generating greater brand awareness, gaining a larger
market presence to achieve higher sales-revenue. Through market research and data from interim
and investor reports, it aims to retain and increase customers, generate greater sales and profit
margins.

The following will be elaborated in the tables presented in this plan. Figures shown are based on
predictions of the next three years attainable by meeting the objective of being customer focused.
Procuring new customers and retaining existing customers would be essential in the process of
improving its positioning while reducing competition and increasing sales.
An analysis of the intrinsic and extrinsic conditions that impact the organization would first be
analyzed, followed by a marketing mix to spur growth and bran repositioning and finally
financial forecast will be projected with evaluative tools to evaluate the effectiveness of plans
and monitor them.

With the implementation of the proposed marketing strategies, Volkswagen can expect to see an
increase in local market share and brand equity. Therefore, leading to a greater success in its
revenue growth and enhanced positioning.
1.0 Introduction of Volkswagen Group
Volkswagen Group Singapore is an automobile retailer, and has two dealerships which offers
sales and service facilities (Volkswagen Singapore, 2016). This plan focuses on the Volkswagen
Golf model and the reason is because Singapore is more of a sedan car market, leaving the
hatchback Golf unable to match-up and compete with competitors sedans (Leow, 2016).

2.0 Situation Analysis

Volkswagen had been in the automobile manufacturing industry since 1937. Over the years it
rose to popularity with a consumer needs centric mindset. In 2009 it became the largest
automotive manufacturer worldwide (Autocar, 2015). However in 2015 it was overtaken by its
rival Toyota, as the top ranked automotive company in terms of sales (Morris, 2015).

In 2015, it was ranked 7th in terms of sales in Singapore, whilst managing to clinch 2nd spot in the
overall car group rankings (Focus2move, 2015). This analysis will analyze the internal and
external environment of the organization, the firm’s capabilities, customers, and business
environment in order to generate strategies to outdo their competition in Singapore. This retains
and increases customer base, resulting in increased profits and company equity in Singapore.

2.1 PESTLE Analysis

Using PESTLE analysis, we will examine the factors in the external environment that potentially
impacts Volkswagen.

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2.1.1 Economic
The different economic factors hold a significant impact onto the automobile industry. The lack
of control over these factors affects the way Volkswagen operates. Additionally, consumer
demand and behavior in managing income are affected by these factors. This affects the
organisation’s profitability:
 Prices of Commodities (E.g Oil, Steel)
 Changes in Interest Rates
 Economic Growth
 Changes in Disposable Income
 Fluctuations in Exchange Rate
 Level of Unemployment
 Inflation Rate

Today, Volkswagen has different subsidiaries within its portfolio (such as Ford, Lamborghini,
etc.) serving the different segments in Singapore. Thus it is imperative to position the Golf to
meet the needs and capture majority of the Singapore car market.

2.1.2 Technological
Innovations from R&D have brought about advancements in the technological landscape. These
advancements have provided opportunities to redesign and improve the production process and
the operating infrastructure. This brings about improved product quality, greater efficiency and
lower associated costs. These technological trends includes:
 R&D Creates Alternative Sources of Fuel (Electricity, Hydrogen, Fuel Cells, Hybrid Power
Cars)
 Improved Technology Reduces CO2 Emissions
 Automation and Technology (E.g Web procumbent technologies, JIT Management, advanced
logistics software) Increases Production Efficiency and Lowers Cost
 Integration of Internet-Enabled Technologies in Automobiles e.g. GPS
 Shift towards Driverless Technology

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2.1.3 Political & Legal
The government has imposed strict regulations when it comes to trade, environment impact and
incentives to buy cars. These legal implications poses limitations that stifles the business
environment in Singapore (Agalawa, 2009), and affects consumer behavior. These include:
 Import Laws poses limitations on the import of certain automobiles and components
 Government Tax (e.g. ERP and COE) to limit number of cars on road
 Tax Rebates for environmentally-friendly vehicles
 Penalty for Carbon Surcharge
 Vehicle Emissions Standard

This applies to the recent Volkswagen emission scandal, which has a negative impact on
Volkswagen’s brand equity. Volkswagen sales in Singapore have dropped to 7th position from
the previous position of 2nd (Leow, 2016).

2.1.4 Social Cultural

The trends Singapore’s society and its culture also impact the usage and the choice of car or
automobile that they choose. The carbon footprint and brand image of automobiles are also a
concern in Singapore, where society is conscious about image portrayal (SBR, 2013). Other
examples include:
 Lifestyle and preferences of people that impact their needs in a car
 Social trends

2.2 Industry Analysis (Porter 5 Forces)

We will make use of Porter’s 5 Forces to examine Volkswagen’s relative position according to
competitors. This analysis will provide understanding of the competitive landscape in the
automobile industry in Singapore.

2.2.1 The Industry Structure

Competitive Rivalry between Existing Players: HIGH
Within Singapore, there exists numerous automobile organisations. Volkswagen and many of the
large competitors offers a wide product width and depth across different segments, with the top

3
five players (including Volkswagen) occupying 49% of the global automobile market (Adam,
2014). Whereas the large players occupy a large market share, the industry is highly fragmented.

Volkswagen and its competitors (Toyota, Honda, etc.) compete for local market share and resort
to competitive pricing (Volkswagen, 2015). Additionally, the Volkswagen Golf competes in the
hatchback market with competitor hatchback models from Toyota, Mazda and Honda (Navoda,
2012). Whereas brand loyalty produces a certain level of consistent sales and mitigates the threat
of competitor products to a certain extent, the low costs of switching to competitor brands
combined with number of competitors creates a high intensity of rivalry.

Competitors who also design similar hatchback models in the market (In Singapore):
 Toyota
 Honda
 Mercedes
 Mazda
 BMW

2.2.2 Industry's Ability to Retain Value

Bargaining Power of Buyers: MEDIUM
The majority of buyers are willing to wait for prices to lower, whilst expectations for services
and quality increases. Additionally, buyers have a wide variety of car models to decide from. The
presence of competitors have increased the factors that affects purchase decision, which includes
quality, price, after-sales service and design of the car. These are additionally affected by the
lifestyles of people which influences their choices (Navoda, 2012).

Due to the similarity in the designs and specifications of the Golf against other competitors,
buyers are not limited to a few choices of cars. The availability of competitor cars combined with
the low cost of switching brands, provides buyers with high bargaining power.

However, cars are not the only means of transportation; with public transportation an alternative.
Cars are considered ‘luxury’ transportation modes, and the influence of buyers is divided across

4
the fragmented market. As no single group of buyers hold significant influence on products sold
and pricing levels. As a result, this factor moderates the bargaining power of buyers.

Bargaining Power of Suppliers: LOW

Suppliers have moderately low power in the automobile industry. The primary reason is
attributed to the supplier’s reliance on the auto manufacturers. Each manufacturer has multiple
suppliers for different components; Volkswagen has more than 40 different suppliers for a
model. The main considerations for the suppliers are the quality, cost, and delivery of the
products. Whereas manufacturers are contracted to use suppliers, the cost of switching lowers
past the duration of such contracts. Inability to meet these considerations results in manufacturers
switching to other suppliers (Volkswagen, 2015). Lastly, as a result of the many suppliers in the
industry, suppliers have low bargaining power.

2.2.3 Long-Term Viability

Threat of New Entrants: LOW
The economic costs (for R&D and Manufacturing) associated and legal restrictions create
significant barriers of entry. High amounts of capital from physical manufacturing plants, cost of
raw materials and human capital are required, and the ability to achieve economies of scale is
required to achieve long-term sustainability (Kallstrom, 2015).

Additionally, brand equity is an important point of differentiation given the high involvement
nature of automobiles. Many automobile brands with Volkswagen included, are generally well
established in Singapore, and possess a degree of brand loyalty. Thus, the high barriers of entry,
strong brand recognition, established market share across different segments provides
Volkswagen with competitive advantages over new entrants.

Threat of Substitutes: Moderate

The wide availability of substitute products that provide the similar transportation needs includes
other means of transportation such as taxis and public transportation. It is identified that means
of transportation are primarily based on the cost of operating, which is dependent on individual

5
financial ability. As a result, the threat of substitutes is dependent on economic stability, thus it is
identified to be relatively moderate.

2.3 SWOT Analysis

Using SWOT analysis (Figure 1.0), we will examine the various existing factors that can
potentially impact the success of Volkswagen in Singapore, in order to make more effective
strategic decisions in the marketing plan. A detailed explanation of individual factors is attached
for further reference (Refer to Appendices 1.0).

Figure 1.0: SWOT Analysis Table

Helpful Harmful
Strengths Weakness
Strong Global Presence Competitive Market Unable to Capture
Significant Market Share
Internal

Strong Brand Portfolio is Diversified Cars Lack Environmental-Friendly and

Fuel-Efficiency
Synergy Negative Brand Image from Emission
Scandal

Opportunities Threats
Consumer Preference Towards ‘Green’ Fluctuation of Fuel Prices
Vehicles
External

Increasing Popularity of Hatchback and Rising Prices of Raw Materials

Continental Cars
Growing Economy Without Market High ERP and COE Cost
Monopoly

2.4 Overall Analysis

The costliness of cars has cause tension and is a physical divide between the rich and poor. Only
a select few have enough disposable income to afford a vehicle, so everyone else must use taxis,
the Mass Rapid Transit, or buses. Whilst public transport is generally well-maintained and well-

6
run, there are plenty who resent using. Part of this resentment has to do with the prestige that a
car brings in Singaporean culture, where the socially prevalent goal is to attain the "5 Cs": car,
condo, cash, credit card, and country club (Kirk, 2013). With that in mind, cars are highly
desirable in Singapore. This makes pricing and value the most vital factors when it comes to
selecting a car (Woo, 2007).

3.0 Marketing Objectives:

 Build stronger brand awareness where the brand becomes a household name and favorite
 Increase sales of the Golf by 80% within 3 years
 Increase market share in Singapore to 25%
 Improve brand image

4.0 Target Market

The profile of a Volkswagen customer consists of the following factors:

Demographics
Age: 25-50 Years Old
Employment: 80.5% Employed
Marital Status: 22.2% Single/Divorced
Education: 32.3% Degree Holders
Mean Income: SGD $4,001 (<50th Percentile)
Geographic
Lives in Singapore
Total Car Market: 550, 000
Total Market: 56, 000 (10%)
Target Market: 10, 000 (1.8%)

Psychographic Behavioral
Values Familiar and Established Brands Vehicle is a Necessity (Need)
Conscious About Image High Usage of Vehicle on a Daily Basis
Long-Term Orientation Value-Conscious
Travel and Sports Enthusiasts, Familiar With Conducts Pre-Purchase Research Online
F1

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According to figures from LTA (2016), vehicle sales for 2016 are expected to reach 56, 000
vehicles. Based on hatchback sales data and increasing popularity of hatchback models over the
past two years, the target market is estimated to consist of 10, 000 (LTA, 2015).

As the Volkswagen Golf is not the lowest priced car in the market, the average buyer is between
25-50 years old, single/divorced, owns a degree, and earns a stable income of at least SGD
$4,001 to be able to afford this car (MOM, 2015).

The target consumer views a car as a necessity for daily transportation, and is most likely to be a
travel and sports enthusiast (Hawksford, 2016). The average buyer is also familiar with Formula
One, and is likely to be updated with sports news regularly. In addition, he/she is relatively
expressive and conscious about societal acceptance over his/her image portrayal. As a result,
he/she desires the familiarity of established brands.

Lastly, the buyer is careful when making decisions, with long-term value important to the
individual. As a result, these buyers are likely to conduct post purchase research online, prior to
the purchase decision.

4.1 Positioning
Based on the analysis conducted of Volkswagen and its competitors, we identified the following
key attributes the target market seeks: 1) Long-Term Value, and 2) Sporty Image.

Long-Term Value is derived from both the point of purchase, in addition to operating cost (from
fuel-efficiency). This provides greater emotional benefit in terms of post-purchase satisfaction.
We recommend that Volkswagen be positioned accordingly as compared to its competitors:
Toyota Yaris, BMW 1 Series, Hyundai Accent, Mazda 3, Honda Fit (Refer to Figure 1.0 & 2.0).

8
Value-Repositioning
Figure 2.0: Recommended Position within Hatchback Market (VW)
High Quality
BMW
VW
Toyota Honda
Low High
Price Mazda Price
Hyundai

Low Quality

Under the recommended positioning strategy, Volkswagen will be positioned as the premier
hatchback in terms of perceived value (Figure 2.0). Greater value positioning is created from
improving quality whilst at a constant price level. The Golf will be differentiated over
competitors by being positioned closely with competitors (e.g Mazda, Honda), to invite direct
value comparison.

9
Image-Repositioning
Figure 3.0: Recommended Position within Hatchback Market (VW)
Sporty
BMW
Mazda VW

Fuel Honda Toyota Fuel

Inefficient Hyundai Efficient

Conservative

We recommend an image repositioning strategy towards a sportier and greater fuel-efficient

image (Figure 3.0). A sporty-image is aligned with the image-consciousness of the target market,
whilst fuel-efficiency delivers greater long-term cost benefits. These brand values appeal to the
inner-selves of the target market, and will be effective points-of-differentiation over competitor
models.

For today’s value-conscious, octane-loving drivers, Volkswagen can position its Golf to offer a
more sporty and fuel-efficient as compared to competitors, so as to offer the best long term value
to consumers in the market.

10
5.0 Marketing Mix:
In line with the marketing objectives, the focus of the marketing mix will be towards providing
greater value, and creating a stronger brand image.

5.1. Product:
Product Class: Transport Vehicles

Product Life-Cycle Stage:

Volkswagen Golf Car - Product Extension
Volkswagen has been offering its Volkswagen Golf cars like the Golf GT MK6 model in the
Singapore market as early as 2003 (SGCarMart, 2016).

After releasing the first Volkswagen Golf car in Singapore, Volkswagen has been adding new
technology and refreshing the exterior and interior designs of the car. In 2015, Volkswagen
launched the Volkswagen Golf 1.4 TSI (DRG) range that is lighter and more fuel efficient. The
latest range also includes the most advanced engine, safety features and a cool exterior outlook.
In 2015, there's the new Golf Variant, Golf R-Line that has family friendly, with new features
like the panoramic sunroof (Volkswagen Singapore, 2016).

By adding new innovations to the existing golf car on a regular basis, like the technological
features, advanced engine, exterior and interior designs, Volkswagen is able to extend the Golf
car product life cycle (Lorette, 2016).

As seen in figure 4.0, product extension (red upward curve) phase brings sales growth, and
occurs after the maturity stage (orange neutral curve).

Another benefit of product extension is it enhances customer loyalty to Volkswagen, and

also attracts new customers. As by having satisfied customers, they will spread positive word-of-
mouth of Volkswagen Golf cars (Linton, 2016).

11
Figure 4.0: Product Life Cycle

Product Features and Qualities (Volkswagen Singapore, 2016)

Features:

1. 5-Speed Manual Transmission

2. 6-Speed Automatic Transmission
3. Leather Sports Seats
4. 5-Seater
5. 18L in-line Four Cylinder Gas Engine

Qualities:

1. Cruise Control
2. Rear-View Camera
3. Automatic Post-Collision Braking
4. Cruise Control
5.

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Warranty:

1. 2 year manufacturer & 1 year retailer

2. 12-year body protection
3. 3-year paintwork
4. 6-month or 10,000km wear and tear

Customer Service:

24-hour, 7 days a week Roadside Assistance and tow service through Volkswagen Centre
Singapore at +65 6305 7299.

Product Levels

CORE BASIC ACTUAL AUGMENTED POTENTIAL

 Transport  Quality  Inflated  High fuel  Automatic
convenience  Brand tires efficiency collision brake
 Speed to get  3-Door, 5-  Leather  Insurance  Run smoothly
from point Door design seats policy with minimal
to point  7 Different  Working  Extended wear and tear
 Status colors engine warranty  Automatic rain-
Symbol  Engine  Decent  Easy sensing wipers
mileage financing  Parking Assist
 Steering plan  Keyless Access
wheel
 Audio
System
 Airbags
 Seatbelts
 Cooling
system

13
5.2. Place:
The Golf will be manufactured and distributed from China to Singapore (Volkswagen, 2016). To
effectively distribute the Golf to the Singapore market, we have examined the following key
areas to recommend an appropriate Place strategy:
 Degree of Market Exposure
 Distribution Strategy
 Distribution Channel

5.2.1 Market Exposure - Limited

The degree of market exposure is interconnected to the choice of distribution strategy. The Golf
is a speciality good that require high involvement in the purchase decision. In addition, the
relatively small size of Singapore combined with the niche target market requires limited
distribution coverage.

5.2.2 Distribution Strategy – Exclusive Distribution

Based on the degree of market exposure, the focus will be towards maintaining the quality of
distribution, compared to creating widespread coverage. An exclusive distribution strategy using
a limited number of intermediaries and middlemen is most appropriate.

The strategy allows for the highest degree of control over other distribution strategies. This
provides opportunities to focus on committed and specialised personal selling, combined with
extensive after-sales service to maintain the exclusive quality of the Golf.

5.2.3 Distribution Channel – One-Level

The distribution strategy will consist of a one-level channel; with the retailer (Volkswagen
Singapore) managing sales operations exclusively for the Singapore market (Figure 5.0).

14
Figure 5.0: One-Level Distribution Channel

Manufacturer Volkswagen SG Singapore Market

Volkswagen Singapore is a Volkswagen-owned subsidiary, and will manage the distribution of

the Golf through its existing retail operations. The retailer carries Volkswagen-only product
lines, and offers relative coverage with two show rooms situated in the Southern and Eastern
parts of Singapore (Volkswagen, 2016).

Under the recommended strategy, Volkswagen will hold legitimate power and direct control over
the distribution network. This provides various competitive advantages; with greater control over
the quality of personal selling; allocation of resources towards Volkswagen products; and
collection of consumer feedback. The low number of intermediaries reduces the points of
transactions, which creates a more efficient logistical flow.

5.3. Promotion:
The objective of the promotional mix is planned accordingly to the product life cycle. These
consists of: 1) Raise Product Awareness, 2) Create ‘Sporty’ Image, 3) Create ‘Fuel-Efficient’
Perception.

The integrated communication plan will be effective to communicate brand values, increase
association towards the Golf, and meet the desires of the target market. The association of
attributes to the product/brand is effective in developing product image. We believe that these
abovementioned promotional mediums will meet the marketing objectives and drive greater
sales.

The aim of the promotional strategy is to market the Golf based on the core values of the
company. Each of the tools will help consumers identify with the organization’s core values, as a

15
result influencing attitudes and behavior. This is contrary from the current promotional strategy
in focusing on product offerings. In doing so, this is more effective in appealing to consumers
inner self, thus influencing outer selves – purchase decision (Zinkhan and Hong, 1991).

The tools used are customized to maximize an effective reach towards the target market, and will
make use of the following:

5.3.1 Advertising:
Advertising is an effective medium in raising product awareness throughout a geographically
dispersed area.

Television and Printed Media

Traditional advertising strategies (Television, Magazine and Newspaper) will be used to reach a
large target audience. The use of multiple strategies leverages the risk of individual media
fragmentation. In addition, all three mediums complement the demographic profiles of the target
market. Consistent advertising across multiple mediums reinforces greater product awareness
and trust. This creates greater appeal towards the Golf accordingly to the psychographic profile
of the target market who values trusted and familiar brands.

Online Advertising
Singaporeans are highly connected to the internet (80% internet penetration) and this provides
opportunity to reach more people cost-effectively (DIL, 2015). Based on the behavior of the
target market, SEO will be used to direct online traffic towards the Volkswagen website. The
website will be essential to communicate information and comparison with competitor models.
Additionally, websites with travel-related or sports-related content (especially relating to
Formula One) will be targeted, to maximize the cost-effectiveness of advertising coverage. These
advertisements will be used to direct further traffic towards the Volkswagen website.

Public Transport
Advertisements on public transport (MRTs and Public Buses) are able to reach towards the target
market of first-time buyers (using public transport), and existing drivers (on the roads). Static

16
advertisements in high commuter traffic areas (MRT Stations and Bus Stops) are effective in
concentrating advertising efforts at a concentrated mass; especially when located in visible
contact areas. Additionally, ‘moving’ advertisements on public buses extends the number of
advertisements contact points across individual routes. As a result, advertisements cover a larger
market.

5.3.2 Interactive Marketing:

Interactive marketing through social media platforms (such as Facebook, Twitter and Instagram)
serve as engagement tools and create two-way communication. Social media is highly used in
Singapore (DIL, 2015), and is able to reach a large target audience. Interactive marketing
encourages certain levels of participation, and is effective in stimulating interest, driving product
awareness. These are effective to build emotional connection which helps consumers identify
with the Golf (Pavlou and Stewart, 2000).

5.3.3 Personal Selling:

The high involvement nature in the purchase decision requires an extensive consumer thought
process; and creates high post-purchase dissonance. Personal selling will be conducted by the
sales force in the retail operations; to provide information; address buyer concerns; and build
interpersonal relationship. This personalized experience addresses uncertainty of buyers to
stimulate purchase decision.

Additionally, expert channels are a desirable medium that effectively appeals to customers’
‘values’ (SmartInsights, 2012). Brand advocates such as Lewis Hamilton are likely to be
recognized by the target market, and hold a high degree of referent power. To maximize cost-
effectiveness, we recommend selecting sportsmen who exemplify Volkswagen’s brand values
and are closely associated towards the demographics of the target market. This will be effective
in creating the desired brand image, and influence purchase decision.

5.3.4 Events and Experience (Sales Promotion):

Events are experiential are mediums which immerses individuals in personalized experiences
and creates special brand-related interactions. This is effective in creating emotional connection

17
and stimulating interest. The Golf will be sponsored for specific events/activities that possess the
relevant attributes that creates an orientation towards a sporty-image. Such events identified
include F1 and Singapore Motor show.

Experiential engagements are identified to be more effective than direct marketing, in terms of
developing consumer identification with the brand and creating brand image (Bigham, 2010).

5.3.5 Publicity:
Public relations (PR) would be used to generate publicity and communicate brand values. These
will develop the Golf towards the desired market positioning, whilst building good relationships
with the market. Singaporeans regard PR as a highly trusted source of information (DIL, 2015),
and this provides opportunities to create a positive and fuel-efficient brand image from articles
written by journalists whom the PR has liaised with. This is important in lessening the impact of
the existing negative image associated with Volkswagen.

5.3.6 Product Placement:

Product placement will be used to develop association towards the brand image and positioning.
Placement within the media is effective to reach and influence association with the relevant
attributes. This creates perceived endorsement that links the individuals (in the media), such as
portraying the product on movie films or local television shows, to the Golf. However, it is
important to select the right media channels to effectively create the desired image. Successful
execution is effective in creating the association of the sporty-image, and fuel-efficient attribute
to the minds of consumers.

5.4. Price:
Demand for the Golf is price sensitive, as a continental car faces competition. Many competitor
brands sell hatchback models that possess similar functions with lower prices; in the current
market. Volkswagen will differentiate the Golf in terms of product offering and value as part of
this strategy.

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Price Objectives
 Value-Add
 Maximize Current Profits
 Maximize Market Share
 Be a Quality Leader

Pricing Method
Value-Added Pricing- Volkswagen will charge a competitive price for a high-quality offering.
This is done through reengineering the company’s operations so as to produce at a low cost while
keeping the high-quality of the car maintained.

We propose the addition of extra augmented services to create differentiation value:

 Extended warrantee, from the current 3 year to add another year of warrantee
 Additional post-sales service
 Free replacement of parts within a time period
 Complimentary vehicle accessories
 Add in new technologies and features

We refrain from lowering the price level; which erodes brand value over the long-term; to attract
customers. By offering greater post-sales coverage over the Golf, it offers greater peace of mind
over purchase decision; which is identified to be valued as it meets value-conscious needs. This
delivers greater value over a longer-term horizon, and will win loyal customers over by offering
extra services not offered by competitors.

6.0 Financial Forecast:

Expected Revenue
Based on average monthly sales data of Volkswagen collected from LTA (2016), the projected
sales volume for 2016 hatchback sales is projected at 1,116 units (Figure 6.0). Based on the
recommendations in the market plan, we are projecting an increase in average sales volume by
15% annually for the next 5 years; which will increase sales volume by 75% of 2016.

19
Figure 6.0: 5-Year Financial Forecast
Financial Year 2016 2017 2018 2019 2020
% Change from base year 15 30 45 60 75
Vehicles(Units) 1,116 1,283 1,476 1,698 1,951

Marketing Budget:
The recommended marketing budget for the Golf will be SGD $8.0 million. This figure is based
on 12% of projected revenue for 2016 (Figure 6.0).

Laurel Mintz (2015) CEO of marketing firm, Elevate, recommends allocating 6-12% of
projected revenue for the marketing of an established brand like Volkswagen.

The majority of the budget will be allocated for the marketing plan, with SGD $1.3 million (2%)
to provide a degree of allowance to capture short-term opportunities in the mass market and
develop brand recognition.

7.0 Implementation Activities:

Table of Implementations
Task Description Personal Start Date -
Responsibilities Completion Date
Online Advertisement Banners, Search Johan 20th April 2016 – 27th
Advertising Engine Optimization April 2016
Television Liaising with MediaCorp and Christopher 20th April 2016 – 27th
Advertising television cable service providers. April 2016
Printed Media Liaising with Straits Times and Luqman 20th April 2016 – 27th
local automobile magazines to April 2016
introduce printed advertisements.
Bus Collaborating with SBS, SMRT Leon 20th April 2016 – 27th
Advertisement and LTA to place advertisements April 2016

20
 on buses and in trains, as well as
at bus stops where there high
volume of commuters.
Interactive Collaborate with LTA to place Johan 29th April 2016 – 5th
Marketing interactive advertisements at bus May 2016
stops.
Personal Selling Training and Development of Christopher 29th April 2016 – 5th
Product Knowledge, deployment May 2016
at showroom and roadshows.

Employ/Solicit the services of

sports representatives.
Events Organizing events at popular Luqman 29th April 2016 – 5th
(Roadshow) hotspots such as outside May 2016
Takashimaya and Singapore
Expo.
Public Relations Providing information to local Leon 29th April 2016 – 5th
journalists so as to be featured in May 2016
news articles and magazines
highlighting Volkswagen’s
product offerings and upgraded
features.
Product Liaising with local directors and Johan 8th May 2016 – 16th
Placement MediaCorp to feature the May 2016
Volkswagen Golf in their movies
and television shows.

21
8.0 Evaluation of Plan
This section highlights the criteria for success and lists the process to monitor the strategies
implemented. Evaluation of the strategies is important to manage the unpredictability of the
external environment. This allow for changes to be applied when needed, to achieve the desired
marketing objectives.

Criteria for success:

 Achieve 80% or more listed goals

The 8-Step Evaluation Process is as follows:

Step 1- Identify the objectives of this marketing plan

 Build stronger brand awareness where the brand becomes a household name and
favourite
 Increase annual sales of the Golf by 75% within 5 years
 Increase market share in Singapore to 25%
 Improve brand image
Step 2- Quantify the objectives
Step 3- Execute plan
Step 4- Monitor quarterly and collate data yearly
Step 5- Identity deviating points of results
Step 6- Remove those with negative or no improvements
Step 7- Improve current strategies and add new ones
Step 8- Repeat step 1-7

It is proposed that by implementing these strategies and evaluating the outcomes of the
implementations, Volkswagen will be able to achieve the targeted marketing goals and
objectives. This will develop stronger brand equity and larger market share in the Singapore
market within the next 5 years.

22
Appendices

Figure 1.0
Internal
Strength 2.1.1 Strong global presence
Having its operations in 153 countries worldwide, Volkswagen
became the second largest automaker by output in the world in
2014 with 10.23 million units sold and 202.2 billion euros in
revenue (Statista, 2014). With such immense reach to the mass
market, Volkswagen has been successful in capturing the
majority of the market with only Toyota able to compete in
terms of global presence (Murphy, 2015). Furthermore, the
financial report of Volkswagen in 2015 highlighted the
company’s positive growth in car market where its sales
revenue rose by 10.3% from the previous year to $52,735
million (Potsch, 2015).

2.1.2 Strong brand portfolio

Volkswagen has a strong brand portfolio of 13 car brands
ranging from passenger cars like its own Volkswagen cars to
the more premium Porsche and Bentley (Volkswagens, 2014).
With their acquisition of renowned brands, it has strengthened
its positioning and reputation which sets the stage for
cooperation with other brands. Additionally, Volkswagen’s
key achievement was in its acquisition of Scania and MAN
which became leading truck business in 2015 (Potch, 2015).
2.1.3 Synergy
Volkswagen Group benefits from the synergy created between
all 13 brands. Each contributes to a portion of research &
development and costs, shares best practices and distribution
channels (Jurevicius, 2013). Extra synergies are being added
where the company leverages on cross-brand integration to
develop its capabilities and technologies as a brand on its own
would face difficulties in financing its R&D (Volkswagen,
2013). With strong synergies across brands, Volkswagen is
able to unite and capitalize on the capabilities of each of the
individual brands which provided greater development.

23
 Internal
Weakness 2.2.1 Competitive market make them unable to capture
significant market share locally
Singapore, although a small city, has a booming economy
which allows for increase expenditure on luxury goods. Also,
due to the image conscious society, Singaporeans go for image
boosting products to increase their self-image. Thus, brand can
be an important factor other than serviceability, design,
functions and safety of a car. Volkswagen has many
competitors from continental to asian car brands who are able
to offer the same product at an equal or even lower cost, such
as Toyota for example (Chin, 2010). Furthermore, the taxi,
bussing and MRT infrastructure improvements and entrants of
new operators have also offered more convenience to
consumers in a small country like Singapore and increased the
comparison with public transport as a convenient mode of
transport (Lee, 2015). With the differing modes of transports
and brands offering comparative products, it has hindered the
growth of sales locally.

2.2.2 Most cars are not environment friendly and fuel

efficient
Volkswagen owns four sport car brands Porsche, Audi,
Lamborghini and Bugatti have high emissions and are fuel
inefficient (Cuellar, 2014). High emissions damage the
environment, causing global warming (United States
Environmental Protection Agency, 2013). Fuel inefficient cars
burn fuel faster and lead to higher cost. Furthermore,
Volkswagen cars are not as fuel-efficient and environmentally
friendly as the competition (DeMuro, 2014).
2.2.3 Controversy and fraud about the emissions of the cars
In 2015, Volkswagen admitted to manipulating emission
results (Cremer, 2015). They sold diesel cars in the US by
faking their cars’ low emission. This scandal had a negative
impact on public and consumer trust worldwide and hurt the
company’s finances, tarnishing its reputation and brand equity
(Hotten, 2015).

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 External
Opportunities 2.3.1 Consumer inclination towards “green” vehicles
Ford Motors did a study in its annual sustainability report in
2011 that highlighted the changing needs of consumers in
terms of owning vehicles. It reflected an increasing demand for
more fuel-efficient vehicles and consumer inclination for
products that are ethical in consumption and environmentally
friendly (Ford, 2011). Thus, Volkswagen could capitalize on
this trend and introduce more fuel-efficient models that also
emit much less CO2 across all its automotive brands.
2.3.2 Growing trend for hatchback and continental cars
Growing trend globally for hatchback cars. As it is a cheaper
alternative to owning a premium brand. For example, the
Mercedes came up with A-series hatchback at a relatively
comparable price to a Japanese car. Consumers choose this
option as it give a greater status and prestigious image and this
is very applicable to Singapore’s image conscious culture. At
the same time continental cars have the perception of greater
engineering technology and quality as compared to Japanese
cars. Smaller cars also are more fuel-efficient and suit the
urbanized environment like Singapore (MacLean, 2014).

2.3.3 Growing economy and no Monopoly

With a growing population and improvement in transportation
infrastructures, aggregate demand for cars is expected to grow
(Land Transport Authority, 2013). Despite the economic, the
GDP growth has slowed but still rising (Trading Economics,
2015). Majority of the consumers are seeking cars with low
operating cost while still showing some form of status on one
hand while the wealthier are inclined to spend more on cars
that bring efficiency and luxury, mainly continental cars that
has the perceived better performance, quality and status. With
its brand image and being a continental car, Volkswagen can
meet and satisfy these needs (Vorano, 2015). Thus, growing
their market share and attract more customers. The market
share that the big players like Honda, Toyota, Mercedes only
hold less than a fifth of the share which makes the market
fairly competitive and free for Volkswagen to reposition itself
to capture and increase their share (Focus2move, 2015).

25
 External
Threats 2.4.1 Fluctuating fuel prices
The price of oil has fluctuated from $60 per barrel $146 in
2009 and subsequently descended again to below $50 in 2015
(GNP, 2015). When fuel prices drop, it could make hybrid cars
less desirable compared to current models and Volkswagen’s
investments on hybrid and electric cars would become losses.
On the other hand, increasing fuel prices would make non-
hybrid models less attractive to cost conscious consumers, as
they would demand smaller-sized cars that are more fuel
efficient (Adam, 2014).
2.4.2 Rising raw material prices
Raw material prices have been on the rise due to increased
demand and it is expected to continue to increase for as much
as 10% from a survey done by IRN Inc. in 2014 (Sedgwick,
2014). As raw materials like, metal, plastic and glass which
makes up 47% of components of a car the swelling of prices
will lift the costs for auto manufacturers and result in lesser
profits for Volkswagen (Kallstrom, 2015).
2.3.3 High ERP and COE Cost
Economist Intelligence Unit (2016) reported Singapore to be
the most expensive country to live in in terms of transportation,
household supplies, utilities to name a few. This is not helpful
with the imposition of regulatory measures such as the
Certificate of Entitlement (COE) and road usage charges like
the Electronic Road Pricing (ERP). The country also has one of
the most regulated automotive markets in the world due to its
geographic constraints and the need to regulate traffic density
(Frost, 2007). In order to regulate the flow of traffic in a small
city, the government has used such systems to reduce the
number of cars on the road and subtly discourage use of it.
Although the price of COE has dropped of late, the cost today
is an estimated $45,000 (OneShift, 2016). Such regulations
impede and discourage many buyers by making cars less
affordable.

26
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