The marketing mix which is also referred to as the 4Ps is defined as a set of marketing tools utilized by a business to achieve its marketing objectives. Marketing business is all about positioning to ensure the satisfaction of the market needs. There exist four fundamental elements in the marketing mix, and they include product, price, place, and promotion. Volkswagen's marketing mix cannot be considered to be different from other organizations. However, its size is all the difference.
In terms of product, the corporation offers a wide range of products. Some of the most popular models the company sells include Polo, Passat, Jetta, Sirocco, Tiguan, Beetle, and Touran among others. Volkswagen also owns exotics brands such as Porsche, Bentley, Audi, Ducati, Bugatti and Lamborghini ("Volkswagen Marketing Mix" 2018). The company offers different trims and variants depending on parameters such as level of localization, comfort, size, features, engine configurations and power among others. This indicates that the company operates both economy and luxury brands.
In terms of prices, Volkswagen is considered an international automobile manufacturer. The company boosts sales of approximately 34,500 vehicles every day. It sets prices differently for various regions. For instance, the prices are competitive for various developing countries while it offers premium price in countries where it is established as a brand. Volkswagen uses the quality of products for expensive brands. In pricing activities, the company uses the strategy of psychological pricing ("Volkswagen Marketing Mix" 2018). There are various factors that the company uses in its pricing strategy, and they include completion, demand, segment, geography, and features of the product.
Volkswagen has made available its products in most parts of the world. The location of the products is dependent on the availability of workforce and strategic factors. The company has developed assembly lines and production facilities in various parts of the world. Some of the locations include Germany, USA, China, South Africa, Mexico, Poland, Indonesia, and Russia among others ("Volkswagen Marketing Mix" 2018). Volkswagen has developed an international presence, and it has an efficient supply chain. The products are availed to the consumers through its multi-brand showrooms in addition to company-owned dealerships.
In terms of promotion, Volkswagen has used different strategies. For instance, the company uses 360 brandings in the promotion of the parent company and the different car brands it offers. Some of the promotion points include its high quality inform of comfort, durability, and speed of the car ("Volkswagen Marketing Mix" 2018). The company has extensively used social media platforms such as Facebook and Twitter to market its products. The two critical factors used by Volkswagen in promotional activities are product safety and quality.
Porter's 5 Forces
Porter's 5 Forces is used to evaluate the relative position of Volkswagen while considering its competitors. The analysis sheds light on Volkswagen's competitive landscape in the global automobile industry.
Competition in the industry: The automotive industry is growing at a high rate and automobiles are now considered more a commodity than a luxury. There are increasing opportunities for car manufacturers due to high demand. Several competitors in this industry are large which means their actions are very noticeable (Soh et al., 2016). Competitors in this industry tend to offer products with comparable quality and efficiency because the level of product differentiation is low. In the automobile industry, the fixed costs high and companies have to make substantial sales to make profits which intensify rivalry (Pratap, 2018). Some of Volkswagen's main competitors include Toyota, General Motors, Ford, Nissan, Renault and Hyundai among others.
New entrants: In the automotive industry, there are high economic costs from research and development and manufacturing. Additionally, there are legal restrictions that result in an increased barrier to entry. Companies in this industry require high capital cost, increased the cost of raw materials in addition to high human capital (Soh et al., 2016). Also, there is a need for economies of scale to ensure long-term sustainability. Volkswagen faces low to negligible threats from new entrants.
Power of suppliers: In the automobile industry, suppliers have low bargaining power since they heavily rely on auto manufacturers. A manufacturer has different suppliers for different parts. Manufacturers usually consider quality, cost and time delivery of components can switch to other suppliers if these considerations are not met (Soh et al., 2016). Since there are many suppliers in the market; supplier tends to possess low bargaining power.
Power of customers: The automotive industry has witnessed changes in the 21st century. The bargaining power of consumers has increased due to the availability of information which means they can examine products' quality, safety, fuel efficiency and environment friendliness among others (Pratap, 2018). Also, companies have invested a lot in marketing to attract customers. The increase in the bargaining power of consumers is attributable to these factors. The bargaining power of consumers can be considered medium to high.
Threats of substitute products: In the automobile industry, there are substitute products such as taxis and public transportation. The means of transportation are affected by the cost of operation and based on customer financial power (Soh et al., 2016). This means that threat of substitute is impacted on by economic stability of the customer. It can, therefore, be concluded that the threat of substitute products is relatively moderate.
Pratap, A. (2018). Volkswagen Five Forces Analysis. Retrieved from https://notesmatic.com/five-forces-analysis-of-volkswagen/
Soh, C., Song, J., Radzaly, L., & Lam, L. (2016). This publication is the Marketing Plan for Volkswagen, including analysis and research of Volkswagen. doi: 10.13140/RG.2.2.21300.65928
Volkswagen Marketing Mix (4Ps) Strategy | MBA Skool-Study. Learn. Share. (2018). Retrieved from https://www.mbaskool.com/marketing-mix/products/17004-volkswagen.html
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