Volkswagen Crisis: New Marketing Strategy
Volkswagen, a German car manufacturer, is going through an eventful year.The brand surpassed Toyota as the world’s largest automaker in the first half of 2015 by selling 5.04 million vehicle. The good news of Volkswagen being the number one car company came in mid-July and the bad news followed immediately thereafter, within a month. Volkswagen is said to have been caught cheating on American air pollution. Volkswagen installed sophisticated software in diesel vehicles issued between 2008 and 2015. Such news has come at a time where, Volkswagen has struggled in the U.S. and the sales fell 10% in 2014, despite a 5.9% gain in overall industry sales. Surprisingly the brand had an increase of 4.4% in sales globally but the sales fell by 2.6% in the U.S. Experts believe that Volkswagen brand lacks enough selection and has lagged on quality in the world’s most lucrative car market, U.S.
The German brand have to arrange for finances for the repair and fines. Volkswagen has to fix the problem in 482,000 diesel vehicles costing $3,000 per car. Over and above that, U.S. fines could be of $37,500 per vehicle and this would mean a penalty of $18 billion. The money involved with impact the profits and it will take years to recover the same. The impact Volkswagen brand will have globally will be difficult to repair. It is estimated that 11 million vehicles worldwide are equipped with the defective device software. Volkswagen CEO quit within a week after the emissions-cheating scandal erupted in the U.S. Just two days after the CEO resigned, Volkswagen named the new CEO, who also heads its luxury sports car brand, Porsche. Under the new CEO, Volkswagen has withdrawn its application for emissions certifications for its diesel models. Though the brand sells diesel cars which are around a quarter of its sales in the country, this scandal will tarnish the brand’s image. Volkswagen stopped selling new diesel cars but is selling models powered by gas. The brand needs a big push to sell gas-powered vehicles with new marketing strategies. Recently the brand is offering a $2,000 customer loyalty incentive, towards the purchase or lease of any new model and the offer ends on 2nd November.
The advantage of these promotions will benefit the customers as they can get a good discount on the cars. The question remains whether these kind of promotional offers are sustainable in the long run or not.
Below are few Marketing suggestions for Volkswagen:
1) Trust is the major factor for the consumers and it will be difficult for the brand to win back the customers trust. To increase sales in the longer run, the brand has to present good offers on the maintenance of the newly sold cars. It will help gain consumers attention and confidence in the brand.
2) Volkswagen has to gain consumer confidence by taking responsibility of the scandal. A good PR strategy will convey the message to the world that Volkswagen is taking action against the guilty.
3) As discussed earlier, about a quarter of Volkswagen sales in the U.S. are diesel. Volkswagen should look at other fuel-efficient options like a hybrid car and start building reputation towards the new options.
4) Volkswagen has sold many cars over the years and has established loyal customer’s base. The brand should use social media extensively to reconnect to the loyal customers and over a period of time, convert more consumers to a loyal customer. Build the reputation that is lost and it will benefit in the longer run.
5) New marketing campaigns that emphasize more on new products, safety, customer service, and excellent quality product. It is likely that the Volkswagen brand will face a backlash on social media whenever they launch new product. The brand has to take the challenge and work double hard to change the perception of the consumers.
Volkswagen faces charges for the wrongdoing and the rage of its American customers who feel let down. The brand needs anew start and that can be possible with new campaigns and new strategies under the new management.