1. Market definition
New beetle is competing in the small size car industry in the US market.
2. Market size
In US market, the total of small car sales in 2,217,813 units, which is equivalent to 32 million dollar.
Market size in dollar term = 2,217,813 * ($11,035 to $18,000) = $ 32 million
In 1998, New beetle sales is 137,885 units, which is 6 percent of the market.
Market share in 1998 = 137,885 = 6 percent.
3. Market growth
The industry is considered to be in the position between the growth and maturity stage. Considering the innovation and continuous car developments are still taking place, there are still good signs for the growing factors. Moreover, the industry is less attractive to enter at the moment because of the already established industry. The car manufacturer is approaching the maturity stage of the industrial life cycle. However, based on the small car sales in 1996 (2,322,021 units) and 1997 (2,217,812 units), the market is declining by 4 percent.
Market growth = 2,217,812 - 2,322,021 = - 4 percent
4. Key Trends
• Socio-cultural: American consumers have ever-changing demands attitude and there is a trend of aging population. The baby boomers customer has a change preferences as they are changing preferences to larger cars-sedans, SUVs and pick-ups.
• Economic: During the 1970s, the appreciation of the Deutsche Mark against the dollar threatened to price VW’s cars – most of which were low or mid range models – out of the market. The 1982 recession, drop in oil prices, and the declining popularity of hatchbacks contributed to the declining sales.
• Technology: In this industry, it is important to always keep up with technology in order to satisfy customer’s demands. Volkswagen offered the benefits of German engineered cars, which are perceived as high quality cars. For instance, with the New Beetle, VW is keeping themselves up to date with today’s car industry standards.
... middle of paper ...
...ncrease Revenue 5 4 3
Maintain the affordability concept 2 5 2
Increase number of customers 4 4 5
TOTAL 15 14 12
The strategy selected for New Beetle is to focus on the Baby Boomers market.
8. SELECTED STRATEGY AND JUSTIFICATION
New Beetle is a differentiated product that should target a focus segment that is the Baby Boomers. In terms of promotion, the advertisements would be mainly using the print media with high level of frequency to achieve the ads effectiveness. Since the main target market is Baby Boomers, Volkswagen can charge premium pricing in order to increase the revenue. The other competitors in the small car market may try to seduce the potential to buy their products instead, due to the lower price offered, dealers’ special deals and possibility of design duplication by the competitors.
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