Market Segmentation of Volkswagen

Volkswagen was founded in 1937 by the German Labour Front in Wolfsburg, Germany, and is the world’s largest vehicle manufacturer. It is the largest corporation in the Volkswagen group, including Audi, Lamborghini, Bentley, Scania, MAN, Skoda, and SEAT. Volkswagen, which literally translates as ‘People’s automobile,‘ began as a mass market supplier of inexpensive cars in Germany at a period when only one out of every fifty Germans could afford a car. Let’s go deeper to learn more about Volkswagen’s achievements.

Positioning strategy of Volkswagen

At first glance, the Taigo appears to be a T-Cross with a cut-down rear end, which is partially correct. However, the Tiago is more —  provides almost as much inside a room while maintaining a more aggressive stance.

Inside, the interior is substantial and well-engineered, albeit some of the materials seem a touch cheap. Nonetheless, the technology is clear and functional, especially the digital instrument display and the switchgear feels surprisingly substantial to the touch.

The Tiago, like other SUVs of its size, does not have all-wheel drive. Still, it offers various economical petrol engines and transmission options. Customers have many choices, including more efficient manual and handy automated models.

The Tiago is similar to the Volkswagen T-Cross; hence, the Volkswagen Polo lacks its own Euro NCAP safety rating. Instead, it has inherited the Polo’s score, giving it a perfect five stars. The adult occupant protection score is very good, reaching 94%.

Customers may also choose from various unusual shades, like deep red, blue, and bright green. It allows for personalization on the Taigo, and having a more colorful color pallet is good. Most colors are also available with a contrasting black roof and door mirrors, which ups the design factor.

Aside from the colors, consumers may select from various optional features, such as heated front seats, a panoramic sunroof, and a Beats Audio sound system. Other available features include a rear-view camera and keyless entry.

As a forerunner in the tiny coupe-SUV sector, the Taigo has few direct competitors. The sleek Renault Arkana is likely the closest competitor, but the Taigo isn’t only up against the French hybrid. It also competes against a slew of more traditional SUVs, like the T-Cross, with which it has many similarities. For some, the T-Cross’ more functional boot and already unique flair may be the deciding factor. In contrast, others will like Taigo’s more radical design.

Based on the abovementioned criteria, we may infer that Volkswagen belongs to the Everyman (Regular Guy) brand archetype.

What should we know about this archetype?

• The urge to actively communicate with people.
• The goal is to be a member of a group.
• Develop everyday solid values and the ability to fit in. ​

Level One: desolation.

Level Two: abandoned and lonely orphans looking for a place to belong.

Level Three: The beginner is learning how to connect, fit in, take help, and make new friends.

Level Four: the humanitarian who believes everyone has inherent dignity regardless of skill or circumstance.

The Everyman archetype gives a strong identity for businesses that adhere to the following characteristics: ​

• Whose application is relevant for individuals. 
• The main objective is usage in daily life. 
• A price between average and below average.
• Company with a family-friendly corporate culture that provides or supports.
• Those who wish to differentiate themselves from a more expensive or snobbish competitor.

Before we move on to the next section… 

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Positioning strategy of Volkswagen

Differentiation is about providing something distinctive to customers and making your brand memorable when they make purchase decisions. And Volkswagen is among the best when it comes to differentiation. Regardless of your age, if someone asks you to name an iconic European car, the first thing that comes to mind is a VW beetle, if not the beetle, then the camper, not only for the characteristics that those cars hold but also for the better engineering and cutting-edge technology that those two cars had at the time, in addition to their practicality. Some people continue to drive them all over the world. 

Understand the context: Analyze rivals’ messages, market conditions, and customer impressions of the Volkswagen brand compared to others. VW understood the situation and created new industry and market norms. Consider the VW Golf, one of the best-selling automobiles in the world, which sells 2000 units daily. Volkswagen debuted this model in the early 1970s, and is still very strong. 

Outcomes of Successful Positioning and Differentiation for Volkswagen

Volkswagen has grown its market share by delivering distinctive features such as economical engines and innovative safety systems. In 2016, it was the world’s largest carmaker by sales, a position it retained in 2017, 2018, and 2019, selling 10.9 million vehicles. It has had Europe’s most significant market share for more than two decades.

Enhanced Brand Image: The company’s emphasis on sustainability initiatives such as electric automobiles has strengthened its brand image and resonated with environmentally sensitive customers. Volkswagen Group was the best-performing brand by volume, with 349,200 EVs registered across Europe in 2022, making it Europe’s leading EV brand.

Customer Loyalty: Volkswagen’s dedication to quality and innovation has resulted in customer loyalty, which leads to repeat purchases and recommendations. Even outside of Europe, a study conducted in Australia found that 61.5% of VW owners would purchase the same brand if required a new vehicle.

Marketing Mix of Volkswagen

Product 

Volkswagen sells multiple automobiles in several nations. Volkswagen’s top-selling and most popular models include the Polo, Passat, Jetta, Sirocco, Tiguan, Touran, Phaeton, Eos, and Beetle. Volkswagen’s marketing mix comprises all these models as part of its product strategy. Numerous trims and versions are available according to the amount of localization, amenities, comfort, size, seating capacity, choices, engine combinations, and power.

Volkswagen provides a variety of body styles, including hatchback, estate, sedan, coupe, convertible, SUV, crossover, coupe, and MPV. It also produces and sells hybrid, dual-fuel, and electric automobiles. Volkswagen’s Polo and Gold models also earned the coveted European Car of the Year award, which is 50 years old. The firm has invested more than $80 billion in developing electric vehicles.

Price 

Volkswagen is the world’s leading automotive manufacturer. With 34500 vehicles delivered daily, Volkswagen sells its goods cheaply in particular developing countries and somewhat more expensively in economies where people perceive it as a brand that can charge a more significant premium.

Volkswagen uses superior quality to justify its somewhat higher costs. Volkswagen employs psychological pricing as one of its price-setting strategies. Reduced buyers’ regret due to perceived and real good quality helps consumers rationalize the higher price for Volkswagen vehicles. Spares are also rather pricey. As a result, Volkswagen’s price approach in the marketing mix is heavily influenced by competition, category, demand, vehicle characteristics, and the location served.

Place 

Volkswagen vehicles are accessible practically everywhere in the globe. Having assembly lines and production facilities in different locations throughout the world. These include Germany, Mexico, the United States, China, India, Indonesia, Russia, the Czech Republic, Portugal, Spain, South Africa, Poland, and Slovakia.

After identifying Indonesia as a top sales destination for cars and vans, Volkswagen invested $140 million in a new factory to manufacture heavy transport vehicles and multi-vans. In India, Volkswagen plans to begin assembly of particular export engine modules and local engines, increasing localization levels to 90% from 70%. Volkswagen’s recent push into Algeria included establishing a new production unit to improve localization and lower car prices.

Promotion 

Volkswagen’s advertising strategies have always been aggressive. Volkswagen has employed 360 branding as part of its marketing mix promotion strategy to promote the parent firm and each of its vehicles. With more tensile strength in its steel, deeper depth and shine in its paint, higher interiors, and better equipment levels, Volkswagen has helped push ‘higher quality’ as a hallmark of all its cars.

Most of its marketing in developing nations has touted the same. The abuse-friendly design, robust construction, and lifespan were touted in India, resulting in significant sales. Aggressive promotional actions on social media networks and online platforms such as Twitter, Facebook, YouTube, and Instagram help Volkswagen stay on top of the promotional game as competitors move into the online sector. Product distinction is one marketing approach employed in Volkswagen’s creatives for promotional activities. At the same time, safety and German build quality are two characteristics that appear most frequently in automobile advertisements.

How does Volkswagen segment its market?

Volkswagen employs a range of segmentation characteristics to identify various client groups. The firm uses a variety of segmentation factors, including:

Geographic segmentation: Volkswagen divides its markets into regions and nations. For example, the corporation sells and provides different models and features in North America than Europe or Asia.

Volkswagen segmented their market based on age, income, and educational level. For example, the business markets its cheaper and sporty cars, such as the Golf GTI, to younger clients, while its luxury models, like the Phaeton, target older and more affluent consumers.

Volkswagen segmented its market based on lifestyle and personality traits. The organization caters to customers who appreciate innovation, quality, and performance. For example, the company’s marketing communications frequently highlight its track record of innovation and success and its dedication to sustainability.

Behavioral segmentation: Volkswagen divides its market according to consumer attitudes regarding the brand and its goods. For example, the corporation targets clients who are brand loyalists, ecologically conscientious, or concerned with fuel efficiency.

What are the largest markets for Volkswagen?

Volkswagen raised sales of its completely electric vehicles by 21.1% to around 394,000 units 2023. China, Germany, the United States, the United Kingdom, Sweden, France, Norway, and Belgium were the top markets for Volkswagen’s all-electric vehicles in absolute volume.

Volkswagen’s first entirely electric ‘world vehicle’ was also highly accepted in the United States, with around 38,000 instances of the ID.4 supplied to consumers, representing an 84.2 percent increase from 2022. The ID.3 all-electric small car was trendy in China, with more than 75,000 shipped in 2023, a more than 200 percent increase over the previous year.

This concludes the Volkswagen blog, which covered the company’s segmentation, positioning, and marketing mix. Please see our home page for more postings about other well-known companies.