The New Beetle

Critical Issues / Background Data: Volkswagen's challenge is to launch the "New Beetle" with a smaller than typical budget and a goal of selling the entire 55,000 car inventory in the initial year. In order to determine the most effective strategy for the market launch, the team must identify target market segments and determine the unique value proposition and positioning of the "New Beetle" in the small car category.

VW & Beetle Brand Perceptions: The VW brand has had issues, including customer perception of poor quality and reliability, low brand awareness, and eroding dealer confidence due to poor sales. The strength of the brand appears to be the combination of German engineering and a fun driving experience. Newer research shows that folks that purchase VWs cut across demographic lines. The common theme amongst VW drivers is confidence, a quest for individuality, a love of driving, and an appreciation for German engineering. The Beetle is viewed with nostalgia and positive memories by the Baby Boomer generation. It is therefore up to Volkswagen to take this research and apply it to their marketing campaign to attract their desired target market.

Target Market: Volkswagen wants to optimize their market penetration by targeting specific demographics. The younger generation of 18 – 34 year olds represents the core target market Volkswagen needs to usher in a new era of VW drivers. Various venues appeal to different age groups and another attractive demographic is the Baby Boomers generation, with their fond memories of the original Beetle. For the Baby Boomers the price tag is not likely to be a deterrent as most are in their peak earning years. Volkswagen's responsibility is to recreate this nostalgia towards the Beetle while adding a new edge that makes the Baby Boomers feel young again, by focusing on its superior handling ability and advanced engineering.

Recommendations: Volkswagen should limit their advertising costs targeted at the Baby Boomers as the nostalgia for the car should allow it to sell itself. Volkswagen should invest their advertising dollars on the younger generation as the face of the New Beetle. This is consistent with the image Volkswagen is looking to evoke as one of energy and vigor. Volkswagen needs to portray