What do you do when everyone knows your brand, but they aren’t convinced it’s right for them? This was the challenge facing Volkswagen, which, despite its ever-expanding range of products and glowing international reputation, was a brand that mainstream New Zealanders saw as being too stuffy, too expensive and too European.
To change that, Volkswagen appointed Denise Goodwin, who worked with Subaru and Turners Car Auctions, in the new position of national marketing manager in an effort to take some of the load off the general manager. To find out why Kiwis weren’t enamoured with the brand, she commissioned two in-depth research studies—one qualitative study by Uber Research and one quantitative study by The Research Agency. Before these studies were conducted, Volkswagen was essentially flying blind in New Zealand and the marketing team didn’t really understand why some people bought a Volkswagen (or, perhaps more importantly, why a larger number didn’t). But the research finally offered some answers as to what was holding VW back and showed that if it was to reach its potential it needed to start fishing in the bigger, non-European pond and that while New Zealand drivers believed Volkswagen cars were well-designed and well-built, they perceived the brand to be “cold and bland” and “not in tune with the Kiwi lifestyle and with how we use our cars”.
One of the major reasons for this perception was because of the prolonged use of international advertising material, which underlined for New Zealanders how European the brand was. So if Volkswagen hoped to go from “Niche Street to Main Street”, it needed to put a greater focus on the brand itself and connect with New Zealanders in a way that had not occurred before by showing that it understood them, how they used their cars and what they used them for. Or, in Goodwin’s words, the brand had to become “150 percent Kiwi” if it was to reach its major financial objective, set in 2009, of doubling the New Zealand business in five years.
Achieving this wasn’t going to be easy, of course. The new brand strategy, which was based around the idea that “Volkswagen had a car for every Kiwi”, was implemented against a backdrop of financial turmoil in the automotive sector, with big brands like Ford, GM and SAAB teetering on the edge of the precipice and total new vehicle sales in New Zealand dropping by 17 percent since 2007. Added to that, its competitors were seducing customers with attractive pricing, generous finance terms and promise after promise around resale values and trade-in prices.
Volkswagen didn’t want to enter that dog-eat-dog battle. It was convinced it could rise above the rabble and attract new customers, primarily by tapping into their emotions, making the brand more attractive and challenging some barriers to purchase. Add in some seriously good new vehicles and they were certain the sales would follow.
As such, the comms strategy was based around creating locally-made advertising for the first time and painting a picture of a brand with a wide range of vehicles, so a broad variety of media was discarded and the focus was placed on television and online. And leading the charge was a 60 second brand commercial called ‘Milk Run’ that was made by DDB and Robber’s Dog, followed five ordinary New Zealanders driving a different Volkswagen and featured the tagline ‘we’re all the same, but different’.
http://www.youtube.com/watch?v=ZaaJKvUBHw8Futher research by The Research Agency found the marketing strategy was working and tracking confirmed the “car for every Kiwi” message was the exact out-take of the communication plan. But it also showed that New Zealanders thought a new Volkswagen would be expensive to buy and service. At every stage of the plan, the strategy was based around testing and then responding appropriately, so individual 30-second commercials imbued with VW’s now well-renowned sense of humour—one set at a wedding, the other in a hairdresser—were produced to directly address these perceived disadvantages.
The next phase was launched when Volkswagen’s new Amarok arrived on the scene. In New Zealand, the ute market is a large segment dominated by Toyota’s Hilux but this new vehicle was seen as a major opportunity for growth, so DDB was again enlisted to produce another TVC.
http://www.youtube.com/watch?v=uNs1BXzKWaIAll the TV activity was supported by Volkswagen’s website, some tactical work with the likes of Drive Days and service plans, and a series of big sponsorships, including New Zealand Football and, more recently, the New Zealand Olympic Committee. There were also localised communications from Volkswagen dealers around the country.
Globally, Volkswagen’s business strategy is to be the world’s most innovative mass market vehicle manufacturer and it has overtly stated it wants to be the world’s largest manufacturer of motor vehicles by 2018 (according to Forbes, it is already at number one in terms of sales, profits, assets and market value and its position ahead of Toyota and GM looks set to be cemented after the completion of its full Porsche takeover). The support of Volkswagen in Germany was vital to the success of this new strategy, as the global bods had to be convinced that a significant lift in local marketing investment in the form of research and indigenous television production would pay dividends.
This approach flew in the face of modern international marketing thinking, where a one-size-fits-all strategy is commonplace, and bland, homogenous, supposedly cost-effective advertising is trotted out around the world in the hope it will appeal to everyone. But trying to appeal to everyone often means you don’t appeal to anyone, and, even though it had some of the world’s best and most consistent advertising to call on, local nuances are crucial when it comes to communications, so HQ agreed to put the money where the local team’s mouth was, which proved that you could change the habits of a multi-national if there’s a thorough and well-considered case to back it up.
Volkswagen distributor European Motor Distributors also needed to put its money on the line. And the Volkswagen dealer network needed to be sold on the vision for the brand and invest significantly in new showroom vehicles and more salespeople in anticipation of an increase in enquiries.
They were certainly were right to be confident. In 2009, Volkswagen registered total sales of 1913 vehicles. But the localised strategy produced immediate dividends, with sales increasing by 17 percent in 2010 to 2233 vehicles and by 49 percent to 3329 vehicles in 2011.
431 of those sales in 2011 were Amarok utes, and at an average RRP of $52,500, that equated to an additional $22.6 million in revenue in 2011. And all from a brand with no credentials or history in the ute category, just pure brand reputation, clever positioning (‘The Thinking Man’s Ute’) and good advertising.
The 49 percent year on year growth for Volkswagen is further put in context when you consider the total market only grew by five percent between 2010 and 2011. And even without the Amarok, the year on year increase for Volkswagen was still 30 percent.
2012 is shaping up to be another record year for the brand, with sales up until April pointing towards total sales for the year of 3780, a further 13 percent increase on 2011. This puts it on target to reach its goal of selling 4000 cars by 2014.
Given the success of this new strategy, it’s no surprise the transition from “the people’s car” to the “car for every Kiwi” is expected to continue for some time in this market. And the plan is to keep offering more cars for more Kiwis, year in, year out.
Even though New Zealand is just a tiny drop in the ocean for the automotive behemoth, it seems the bosses have been paying attention to the success: ‘Milk Run’ was used at the beginning of a board meeting in VW HQ in Germany as an example of “a great piece of Volkswagen humanity in its advertising”.
Overall, brand momentum is up, sales are up, market share is up and revenue is skyrocketing. It’s a story of ambition, investigation, insight, action and success; a story where all the elements of the marketing mix came together at the same time to radically improve the business.
As they say in Germany: yah, das ist gut. Or now, perhaps more appropriately: yeah, sweet as.
Awards: Fairfax Media Supreme and Automotive
Winner: Volkswagen New Zealand
The partners: DDB New Zealand, Uber Research, The Research Agency
Judge’s comment: “What Volkswagen has shown is that you can change a business proposition into a brand proposition. A lot of people would look at that journey and put it into the too hard basket. They didn’t. They were prepared to learn from it and through it, and they genuinely believed in the insight that they were going to create and build their brand around. It is also testament to their achievements over the past three years that Volkswagen globally has seen this as a best practice for in-territory.”