Consumer Analysis Pt.3 — Consumer Segmentation

     Market segmentation allows the efficient distribution of products and services to the right consumers. It eliminates or mitigates threats, creates opportunities and consolidates a brand or company reputation vis-a-vis other brands in the minds of the targeted consumers. A competitive industry, such as the car manufacturing industry, uses this concept in order to eliminate product and service homogeneity. Two of the segmentation types generally utilised are Psychographic and Geographic segmentation.

Psychographic Segmentation

Utility/Family — This type of consumer focuses mostly on utility qualities of vehicles. They are pragmatic and are going to use a car as a tool. Would prefer large-volume trunks/pick-ups, 4x4s and family vans.

Comfort —  For this consumer type, convenience is above anything else. They will pay much more attention to interior quality, ergonomy and the smooth suspension.

Showing off — this kind of consumers values their status and will  do anything and will use every capable tool to prove it to his/her surrounding audience. Technical qualities and features does not bother them as long as they don’t represent added respectability value. They will pay attention to those models, that are considered as status milestones.

Enthusiasts — Love cars from a technical point of view. Regard vehicles like engineering products and have strong inclination for models that have some exceptional technological features (like rare Wankel engine or some state-of the art supportive features, like autopilot).

Sporter — Possesses good driving skills (or honestly believed). Really enjoy driving and tends to ‘squeeze’ all the power out of vehicle’s driving potential. Fancy a car, that is tweaked and/or adjusted for sport use or possesses some sportive features.

Trendy — Always aware of current trends! This kind of consumer tries to be on the ‘loop’ about the latest automobile fashion.

Responsible — They tend to have a strong feeling of social responsibility. They often feel burdened by the global impact of their decisions, hence; minimising negative outcomes is a high priority. While choosing a car he/she will pay careful attention to levels of CO2 emissions, rate of fuel consumption, kind of fuel and materials used for manufacturing. Their ideal car would be an electric version, as long as it meets his/her budget.

Geographic Segmentation

The fact that we cannot please everyone all the time is one of the reasons why car manufacturers employ geographical segmentations.  This marketing concept/component,helps then to identify and narrow down their intended target. By dividing the market into metropolitan,suburban or rural areas, the segmentation allows OEM to efficiently serve consumers needs, increase profit and gain market shares.

Volkswagen and Renault are not immune to this practise and as such , have strong worldwide presence. It allows them to get close to their current and future consumers effectively. Both companies have factories or assemblies lines in many parts of the world thus, target markets enjoy minimum delay in delivery , implementation and service.  In the case of VW, there are six key geographical regions working efficiently to maintain continuous growth and fulfill their particular goals requirement (North America, Western europe, Eastern Europe, China, India, South America ) These regions are subsequently divided accordingly into rural and metropolitan areas. In all, VW operates in 153 countries while Renault also has a very important world presence currently operating in 128 countries.

Fig. 1 and Fig 2  illustrate the geographical presence of this two companies around the world.

Fig 1

Source: [wiki]

Fig.2

Source: Renault Group

In the european geographical segment, VW clearly dominates the market starting from the mid 2005. On the other hand, Renault saw declining sales from the same time period on forward, although market share enjoyed a slight recovery by the third quarter of 2014. Nevertheless, it the company finds itself far behind the german car maker giant. The competition has been fierce and it seems that Renault is having a very difficult time to regain lost market shares.

Source: Left Lane

These two market segmentation, provide crucial information about the consumer and their taste

 

Demographic Segmentation

Is another crucial kind of segmentation. Overall statistics of European car market shows that the average age of new car buyers is relatively high. CETELEM survey shows that the average new car buyer is 49.5 years.  Further observation indicates that there’s not significant deviation from the average point. For example, in the UK, where the number reaches the extreme point is at 54.5 years old compared to the lowest point of 43.2 years old in Portugal.

Such high ages segments of new car buyers may be explained or attributed to the  relatively high unemployment levels found within European younger market segments. However, a paradoxical trend can be observed in Spain. The country has the highest youth unemployment rate amongst all others in the list (except Portugal), but yet,  is in the second position regarding youngest average age of new car buyers. So…correlation is yet to be found.

Further investigation shows, that only 11% of buyers are younger than 30 and 29% are older than 60; with most of young drivers in Portugal(20%) and most of elderly in UK(41%).

The next graph shows relative buying decisions regarding novelty of vehicles, divided in two age-groups.

 

Here again Spain surprises with relatively high ratio of new cars in younger population. In France, on the other hand, the younger consumer, prefers second-hand vehicles.

In all, older European consumer populations shows a shifts in their behavioral patterns and buying decisions. Age groups that are responsible for most of the demands observed on the car market are essentially comprise by, those who either have started families or retired.

 

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Consumer Analysis:

Part 1 — Needs

Part 2 — Decision Making

Part 3 — Segmentation

Part 4 — Trends

The anatomy of brand positioning model

In order to compare the communication plan of the two companies, we are going to examine the anatomy of brand positioning of both companies. The brand positioning is composed of six elements:

• Brand heritage
• Brand domain
• Brand values
• Brand assets
• Brand personality
• Brand reflection

Source : http://www.staffs.ac.uk/sgc1/faculty/market-for-mans/week5.html

	Renault	Volkswagen
Brand domain	Popular car	Popular car
Brand heritage	“4 chevaux”MotorsportFusion with Nissan	« Type 1 »DesignBeetle
Brand values	Closeness with the clientSecuritySustainable mobility	Customer focusTop performance Responsibility and sustainability
Brand assets	DiamondRelation with motorsportsSloganAdvertising	Design“Das auto”
Brand personality	MotorsportsPartnerships	Iconic brand imageThe Beetle
Brand reflection	Good and secure French car	Secure – Cool – Fun – Hype

RENAULT

Brand domain

Renault  in one of the main players in the automobile world market.  Recently Renault-Nissan bought Samsung Motors and Dacia to develop its internationalisation strategy and certainly to expand its market. The acquisition of Samsung motors is strategic. In fact, Renault has set their sight on building  a vast and modern state of the art manufacturing facility in Indonesia. This future facility will be producing about 240 000 cars per year. By this strategic plan, Renault and Nissan will have the opportunity to produce close to targeted Asian Market. Moreover, by acquiring Dacia, Renault was able to target a new market segment : base range and budget cars. It proved to be a successful step taken by the manufacturer due to the fact that Dacia reached a new sales record in 2013 (404 000 units).

Brand heritage

In 1898, Louis Renault and his brothers founded the Renault society. But at the beginning, Renault was just focusing on sports car. In fact, the society became famous thanks to the impressive results obtained in car racing competition. By 1905, Renault began to expand their market and started to produce vehicles targeting the general population. During the WWI, Renault created trucks, stretchers, ambulances, shells or tanks. Some of their models became world famous like the 4cv, la Dauphine, Renault 25 and nowadays with the Renault Espace, Megane, and Laguna. A very important part of Renault history was  the merging event that occurred in 1999 with the Japanese car manufacturing Nissan Motors. The merger proved to be a very successful endeavor, unlike the failed merger attempt with the Swedish car giant, Volvo back in 1993. Nevertheless, these events indicated the shifting strategy that Renault was pursuing in order to gain internationalization of the brand and expansion into the emerging markets. Further reading can be found in dedicated post.

Brand values

Closeness with the client: One of Renault main differentiation strategy consisted in revolutionizing client relationships in a more efficient manner. According to Mr Plantegenest, commercial director of Renault, the objective for 2016 is to be the leader regarding customer relations. As he mentioned, Renault is among the top 5 car manufacturers and in some countries, is already the leader. By trying to meet and exceed customers expectations, the company is regaining lost terrain and it is constantly seeking new ways to do it more efficiently. Security: Renault relied greatly in innovation and development of  advanced technologies for accident prevention. For example, Renault created ‘driver assistance’, a concept to anticipate inherited risks. The four objectives are: Prevent, correct, protect the occupants and protect children. These objectives are essential for Renault and it weights considerably in every decision that the company takes regarding the new technologies developed by the company. Sustainable mobility: Renault also was behind the whole concept known as ”Eco-conduite” Here, fuel efficiency became primordial due to the changing behaviors of the drivers. The main goal was to consume less fuel from previous years.

Brand assets

Diamond: the logo is very important in the car market. The story of Renault logo “the Diamond” is very specific. In fact, for the creation of the “40 chevaux” the installation of the alarm (the circular horn) was a huge problem for the manufacturers. This installation required a gap in car body. For the manufacturer this gap was not a good idea. And they find the solution. They were wearing a huge diamond of 25 cm high to hide the hole in the car body. And this diamond becomes the symbol of Renault. The diamond stay since 1925. Nowadays, the diamond is implemented in 3D. Motorsports: The motor sport racing is closely associated with Renault history. A strong legacy and tradition were spearheaded by the company, thanks to their success in the world of car races. And nowadays, Renault have their own formula 1 racing team  (Lotus-Renault). They also supply engines(power units) to 3 more teams. Slogan: “Drive the Change”. Over the years and with the continuous improvement of the brand, slogan also changed to keep up with the latest models innovation. But now this new slogan shows the importance of the new values of the manufacturer.

• Sustainable mobility
• Innovation

In fact, Renault wants to be part of the new edge of Electric car. (Renault project Z.E.)

Advertising: The car manufacturer uses the same character on all TV commercial for the last 3 years( Nicolas Carpentier). He is not a world famous celebrity or a world leader, but it’s perfectly what Renault targets. Nicolas Carpentier is the perfect “normal guy”, he can be a father or a young worker. With this idea in mind o use only this character we know exactly that if we see this actor on a TV commercial it’s a Renaut add.

Brand personality

Motorsports: As previously mentioned, Renault history is closely associated with the motorsport world. Events like Renault 8 Gordini, the Alpine, and the creation of the Renault sport series, it becomes one of the most wealthy and influential car manufacturers, currently ranking number 4 worldwide. All these successful events drove the brand into the world stage where it showcase their expertise and efficiency due to the nature of these challenges where competition is very intense.  Partnership: Renault was a part of huge and famous events. For 27 years, Renault was the official partner of the “Festival de Cannes”. This event is very famous and has a good impact on the image of Renault. (Luxury, Beauty, Charm…)

Brand reflection

Renault have the image of a “Good and secure French car”. No one will describe the car as a luxurious car. It’s a car not expensive that can be convenient for all the family. For instance, the Renault CLIO is one of the most esteemed cars by French people according to a recent survey did by the CCFA (comité des constructeur français d’automobile).

VOLKSWAGEN

Brand domain

Volskwagen is implemented since 1930’s in the automotive market for middle class. Over time, the Volkswagen Group acquired other brands such as Audi, Seat and Skoda in order to position itself in every segment. In addition, they also diversify on the markets of trucks and motorcycles.

Brand heritage

Quality and authenticity are becoming key selling points in communication. In hard times, people are looking for comfort from the past. That is why in 2008, in an effort to get back to their German roots, Volkswagen created a talking Beetle, named “Max”, to interview German celebrities (Heidi Klum, David Hasseloff..) and deliver bad jokes with a fake German accent. The campaign’s weak attempt to link back to the birthplace of their brand via stereotypes attracted lots of negative comments and one of the biggest sales drops in recent years. VW’s Beetle is the best example of embracing their brand heritage. They took the original car concept and modernized the design to include conveniences and amenities that the buying public would demand. The brand heritage instilled in the Beetle is more than just names or symbols; they represent a legend or storyline that consumers can follow. Further reading in dedicated post.

Brand values

Customer focus: The brand wants to satisfy every segment of the population Top performance: Innovation for everyone is their trademark. In 2013, Volkswagen has become the most innovative company in the world according to the latest ranking of Booz & Company. The brand spent $ 11.4 billion in 2013 to research and development. Responsibility and sustainability: The Group pays real attention to the environment in the area of ​​recycling and eco-consumption

Brand assets

Logo: Volkswagen or VW was founded in 1938 by order of Adolf Hitler in Stuttgart. In 1938, the first car to emerge was “Ladybug” by Ferdinand Porsche’s Volkswagen logo represents the V Volks (the people) and W Wagen (car) in a circle. Originally a cogwheel surrounded the circle. It disappeared after the second World War. Slogan: Volkswagen currently distributes advertising with two different slogans:

• “Das auto”: a reminder of the German origins of the brand. Indeed, everything that comes across the Rhine has de facto a positive connotation of quality and know-how.
• “Le plus dur, c’est de choisir”: which perfectly corresponds with the brand positioning. Indeed, with this slogan, the brand claims all choices for every consumer.

Brand personality

Volkswagen is a globally recognised brand that is known by everybody thanks to its truly iconic brand image. In recent years, Volkswagen tops its rankings as one of the 20 best brands in the world. This shows that the Volkswagen brand is not only branded, but also highly wanted by the global market as well! Through effective brand differentiation, Volkswagen has created a positive brand image and likeability for its brand because people just love its brand’s distinctive personality. Furthermore, Volkswagen further strengthens its positive brand image by being a brand that is able to reach out to a wide scale of consumers ranging from car enthusiasts, corporate executives and family people. By launching different categories for its car models, Volkswagen is able to fulfil each and every of its customers’ needs. The Beetle is the part of brand personality of the brand. Indeed, created in1960s, it has been recently reincarnated forty years later. Today, customers celebrate the 1960s spirit symbolized by the flower vase on the dashboard.

Brand reflection

After the purchase of Volkswagen drivers feel completely safe in a car on top of innovation. Indeed, the German automaker Volkswagen this year became the number one safety in its vehicles, award given by the American Insurance Institute for Highway Safety (IIHS). The hot ad agency Crispin Porter Bogusky created the new advertising last year for Volkswagen. Now there was a brand that had lost its luster and consumer loyalty. The brand reflection of owning a VW had become neutral at best, with many potential car buyers believing that the iconic German brand now was boring and stodgy. The declining sales of Volkswagen’s reflected this declining brand reflection. The agency came up with several edgy campaigns that, like them or not, injected some cool and fun back in the Volkswagen brand. Now owning a Volkswagen said you were hip and even kind of cutting edge about cars. The Volkswagen brand reflection was positive again, and sales rose (and are still rising). Of course, this coincided with Volkswagen also improving its product.

 

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Sources:

http://www.ccfa.fr/Renault-veut-devenir-numero-un-de,124737 http://www.creads.fr/blog/nouveau-nom-nouveau-slogan/nouveau-slogan-renault-changeons-de-vie-changeons-automobile/ http://www.volkswagen.fr/fr.html http://www.brandrepublic.com/go/volkswagen/

Consumer Analysis Pt.2 — Decision Making

Decision making process while buying a car appears to be very complex and involves many variables. Best way to represent the process is a flow-chart. Chart represents different stages of decision making process and visualises its complexity. Each stage narrows number of outcomes thus specifying actual need of consumer. Final stage — attribute mix doesn’t have one single decision, rather than mix of different attributes of desired intensity.

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Consumer Analysis:

Part 1 — Needs

Part 2 — Decision Making

Part 3 — Segmentation

Part 4 — Trends

Consumer Analysis Pt.1 — Consumer Needs

Car buying decisions are influenced by numerous criteria with different rate of importance. While rarely paying attention to all of them, consumers rely strongly on at least one of them, whem buying the vehicle. Patterns depend on geographical, demographical and psychographical factors, that will be studied in other parts. Here, we’ll try to list the main criteria, that eventually become part of a buying decision.

Safety has become one of the most important criteria, when choosing a new car. Public perception of automobile as a source of danger shifted priorities in buying decisions, making people pay more attention to safety of the vehicles. Even price is of lesser importance, when vehicle fails to correspond to basic safety regulations. However, safety ceases to provide competitive advantage after some basic general threshold, which is reachable by most manufacturers. Quantitative improvements on safety have yield only within consumers of upper middle class and above and those with families and children.

Surveys show, that quality is dominant criteria, when choosing a car. Vehicle by nature is an expensive good and consumers have certain expectations on it’s longevity and reliability. Failing to deliver expected quality standards may lead to decreasing image of a brand. Quality also corresponds to running costs of a vehicle: how often do consumers have to service it and acquire spare parts.

Obvious criteria, that’s crucial for almost any buying decision.

This criteria is part of running costs of a vehicle. Ever increasing prices of hydrocarbons influence running costs of a vehicles, that are operating on relevant fuels. Thus, high fuel consumption rates are commonly perceived as a negative criteria.

Corresponds to numerous technological features, presented in a vehicle, which may vary from multimedia systems to pneumatic suspension and adaptive cruise control (or even autopilot). This criteria is important for upper-middle class and luxury buyers.

Design is a common stimuli for updating lease of a vehicle, as newer models emerge (Annual or bi-annual updates of vehicles generally have mostly cosmetic improvements). Design is of strong importance within trendy consumers and women.

Is an important criteria for people of the ages above 35 and those, who intend to commute long-distance travels or uses car for work.

Some brands are associated with sport, another — with safety; some are for young and some mean that you are successful. Consumers often choose brands, that they feel or want to be associated with, even when they’ll lose among other criteria.

Environmental awareness is rising among populations. Green and anti-pollutant movements gather pace and become more and more popular. Finally they influence car buying decisions. Automobile became one of the symbols of pollution — shame of humanity. Still unable to abandon automobiles, people may find salvation in improved ecological qualities of a car(lesser CO2 emissions, low fuel-consumption rate).

Criteria, that goes hand in hand with price and quality. Buying decision in certain situations may be influenced significantly by rate of depreciation of a vehicle.

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Consumer Analysis:

Part 1 — Needs

Part 2 — Decision Making

Part 3 — Segmentation

Part 4 — Trends

VW vs Renault; the advertisement strategies

With a nice cup  of java and some cookies, I sat comfortably on the couch and with my laptop in hand.In this particular setting, spend an entire afternoon watching VWs and Renault TV commercials through YOUtube. Not only I had a blast seeing all the advertisement ads from both of these car manufacturer, but I also learned a lot about both brands. The striking similarities in terms of product is a far cry when it comes down to their specifics regarding their intended target.

True, their market segments are similar, however each manufacturer relies in different aspects of their products to lure consumers into choosing their brands. By invoking different feelings and desires, they are doing their utmost  in order to  swade potential consumers into becoming loyal fan/followers.  Nevertheless, each brand use different advertising strategies and key words in order to accomplish their intended missions. VW relies heavily on german technology and ‘savoir faire’.  They pinpoint the reliability, efficiency and precision of german engineering. It also calls into action the feelings of friendship, enduring relationships and faithfulness as it can quite be observed in this ad.

Now Renault brand on the other hand, uses key words such as beauty, comfort, fun and sexy. The Twingo line of “keeping up with the modern times” is essentially aimed not for the older, but ‘hip’ consumer segment as a way to convey their intended message across. The  ads below  for the Renault twingo says it all.

In all, both brands relies heavily in consumers feelings and all the fun is really spending the whole afternoon learning about their entire universe and having so much fun while doing it.

Automotive Industry Overview

Statistical overview

     Automotive industry is growing year after year. Developed market saturation prompts car manufacturers to search for new markets within the developing countries. The rise of the middle class in these emerging economies is a par with the demand of personal vehicles. Engines of growth in 2014 are new members of European Union, Chile and Colombia.

Source: SkotiaBank

Source: Thomson Reuters

     Automotive market has its peculiarities — it’s seasonal. Sales tend to increase from April to June and decline from November to January.

     The largest source of revenue for automobile manufacturers are in the B2C consumer sector. Commercial fleet sales (B2B) are also significant source of gross income (roughly 20% of total sales).

     Although car companies update and renew their models every year, not every update fit the same mold. It could be makeover/facelift (which is mostly redecoration or addition of non-vital features) or complete redesign (when company changes vital parts of the vehicle). The second option is much more costly, as it requires significant expenditures in R&D, testing and certification.

     Significant portion of revenue could come from additional services, that car companies present. That could be warranties and financial services (e.g. leasing).

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Porter’s 5 Forces

Threat of new entrants:

    It may seem, that it’s nearly impossible to come and start car manufacturing from scratch, being competitive. However, recent example shows, that it’s not so. Moreover, oversea manufacturers (Chinese and Indian mostly) tend to expand to new markets, increasing competition pressure.

Power of Suppliers:

     Old wisdom will tell us that it will be almost impossible to get into the automobile manufacturing marke. It certainly takes tremendous financial investment and as such, rather difficult to start from scratch. It is a very competitive market that deters many of those who are looking to get into the market.

     Despite all this, recent example shows, that it’s not so. Chinese and Indian manufacturing companies are challenging this old notions. Their products are targeting emerging markets and slowly gaining market shares. The increase competition are being felt my incumbents  such as VW and Renault  all around these EMCs prompting them to adopt new market strategies in order to alleviate the pressure nd remain leaders in their domain.  mostly) tend to expand to new markets, increasing competition pressure.

Power of Buyers:

     Consumers have certain bargaining power, as they always can find alternative for one vehicle, probably of foreign origin. However, they typically don’t buy cars in large quantities, which diminishes their buying power.

Availability of Substitutes:

     Car manufacturers compete not only with each other, but with other means of transportation as well. Consumers may switch to motorcycles, trains, buses, Segways or even bicycles, all of which are much more suitable for cities. Ever-increasing fuel prices tend to influence buying decisions even more and not in favour of automobiles.

Competitive Rivalry:

     As automotive industry is highly capital intensive, it’s makes profit margins tend to be small. In such situation, handful of car manufacturers easily finds itself in an olygopolistic situation, when they always try to avoid price-based competition.

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Current trends

     Rising fuel prices force car manufacturers to focus on production of highly efficient low-consumption engines and develop hybrid technologies. Some companies experiment with alternative energy sources, like hydrogen fuel-cells and bio-fuel.

     But most obvious and inevitable future for car industry are electric engines. Being much more effective in every way, electric-powered cars have one significant setback — their batteries. The one, who’ll develop technology that’ll make re-charge as fast and easy as re-fuel will thrive.

     The other field of development are connected cars. Car companies introduce new features, that connect vehicles to the internet and to each other, which helps avoid traffic jams and even collisions. Self-parking cars, adaptive cruise-control and even autopilot are no longer science fiction. Additional benefit of such systems is amusement of driver and passengers, that comes together with numerous multimedia systems of connected cars.

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Sources:

Statista.com

SkotiaBank — Global Auto Report [PDF]

Kurmann&Partners — 2013 Automotive Report [PDF]

Automotivefleet.com

History of Volkswagen

Porsche Type-12. Ferdinand Porsche’s idea of “volksauto” from 1931. Inspiration for Volkswagen Project.

     Volkswagen started as an idea of Ferdinand Porsche, who wanted to create a new kind of car, that would have been affordable to everybody, still being efficient in exploitation. In 1937 German Labour Front joined Porsche and found “Volkswagen” in order to commence mass production of such vehicle. The first car was presented in 1939.

     The WW2 shifted focus of production to military vehicles, which were still based on the same cheap platform, as proposed “volksauto”. After the war the future of “Volkswagen” was uncertain. However, British officer Ivan Hirst, who was responsible for maintenance of the factory as it was ceased to Britain by Americans, noticed the exceptional qualities of the “volksauto” and presented it to British Army command. The car made good impression, followed by placement of contract for 20000 cars.

     After war, restriction placed limits on maximum car production in Germany, bringing it to 10% of 1936 amounts. The still damaged by war bombardments factory was offered for sale to numerous automotive industries in the world: American, British, Australian. It was even offered to Ford Motor Company free of charge. But nobody took the burden. The enterprise seemed very risky and nobody believed that damaged plant could produce the car and even didn’t consider the car itself to have any potential in sales, being far from what everybody considered as an automobile, luxury item.

     Therefore, company was re-structured as a trust and ceased to State of Lower Saxony. After that company started to expand to new markets, offering cars in USA, Britain and other regions. Being rather modest in the beginning, sales plummeted in those regions, as car became extremely popular within younger consumers.

     Up until 1961 model range of company was limited by two models: Type 1 (Beatle) and Type 2 (Commercial utility vehicle). But in 1960s model range was expanded by 2 new models, which introduced new approach in manufacturing, using more sophisticated features, like automatic transmission and electronic fuel injection. Company also decided to upper-middle class car market, founding new devision and giving it a name “Audi” — brand of luxury automobiles, that ceased to exist in 1944.

     In 1970s sales of classic Volkswagen models started to decline dramatically. To counterweight the trend, company started to introduce new models, that borrowed some crucial Audi designs: Passat (re-badged Audi 80), Scirocco, Golf and Polo (re-badged Audi 50).

     Being the most successful model, Golf was conquering one market after another, becoming the most popular car model in many countries. However, in 1980 Volkswagen sales in USA started to decline and after several unsuccessful, but costly attempts to re-gain the market, company decided to target developing markets. In 1982 cooperation contract with Spanish SEAT was signed, where Volkswagen’s majority share reached 75% in 1986.

     In the end of 1980s, Audi brand reached the same level of consumer perception, as BMW and Mercedes, leaving upper-middle class segment empty in Volkswagen’s portfolio. Attempting to fill the void, Volkswagen started to re-position itself on the market, moving upward. Seat with newly acquired Czech Skoda were filling the market, that was previously occupied by VW.

     In 1990s company was anchoring it’s brands on markets, covering broad range of classes, from cheap entry-level vehicles to luxury cars. In late 1990s VW expanded even further, buying Lamborghini, Bentley and Bugatti, entering luxury sports cars market.

     2000s were the time of model range expansion for every VW brand, most notably by utility-class vehicles as Audi Q7 and VW Touareg.

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Sources:

VW Group website

Autoevoulution.com

History of Renault

Louis and Marcel Renault at Paris-Bordeaux rally (1903)

     Renault began with three brothers who were extremely enthusiastic in automobiles. First cars of Renault  were selling successful, furthermore, company actively participated in automobile racing, which was extremely dangerous at the time, yet very spectacular. Winning one race after another, Renault cars inspired more and more people to buy their first automobile. Company grew very fast — in 8 years it conquered taxi markets of France and England, had established production of very successful trucks.

     During the first World War, company gave birth to several military projects: troop transporters, airplanes and tanks. War contracts gave significant boost to company development, which allowed it’s expansion into new areas — it branched to agricultural and industrial machinery. By 1928 Renault was producing 50000 vehicles per year, covering very broad range of models.

     After capitulation of France in WW2 Renault reduced to collaborate with occupants, which lead to heavy bombardments of plants rendering them useless for production till 1944, when factories were opened once again. But production could not reach pre-war levels, as company was unable to recover from damage. This led to company’s nationalisation by French government in 1945 and changed its name to Régie Nationale des Usines Renault.

     In 1946 Renault launched model 4CV, which was developed by Louis Renault during the war. The model instantly became a huge success, rivaling Volkswagen Beatle at 500,000 sold units per year.

     By 1970 company was producing roughly million cars per year. In 1970s company was expanding globally, setting up collaborative ventures all over the planet, with Dacia being one of such projects.

     1980s were a turbulent time for Renault — despite success of their models, company was loosing money. Trying to revitalise the company, Georges Besse, chairman at the time, was selling off many of Renault’s assets. Policy of cutting costs eventually stabilised company by 1987. But certain financial problems prevailed through the 1990s.

     In 1996, as a measure to resolve financial situation, company was privatised and in 1999 Renault-Nissan alliance was born with 36.8% stake of Renault in Nissan (currently — 42%). Shortly after the creation of an alliance, controlling stake in Dacia was acquired, followed by the acquisition of automotive division of Samsung. In order to finance new acquisitions, company sold off many assets, parting with Renault Trucks division in 2001, which became part of Volvo.

     In 2000s company’s development was significantly fuelled by huge success of Logan project. And by the end of decade Renault-Nissan alliance ventured into Z.E. project, which focuses on “zero emission” vehicles, powered by electric drive.

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Sources:

Renault web site

Autoevolution.com

Introduction

Renault and Volkswagen are merely divisions of much larger bodies, Renault-Nissan Alliance and Volkswagen AG (which itself is part of Porsche Automobil Holding SE). These bodies consist of multiple car brands and form very complex internal structure. They currently rank as #5(Renault-Nissan) and #2(Volkswagen AG) in car units production.

Volkswagen Group Structure [Link]

Renault Group and respective brands [Link]

Such complexity poses certain influence on marketing strategies of numerous car brands of those automotive groups. Each brand should market their production very delicately and with much targeting precision in order to prevent sales cannibalisation, when one product competes with another of the same automotive group.

Being much more complex than Renault-Nissan, Volkswagen Ag inevitably faced such situation, when one of it’s brands — Skoda started to compete with Volkswagen and Seat, cannibalising their sales in severe quantities, rendering Skoda’s marketing campaign ineffective regarding total revenue of automotive group. Renault-Nissan seems much more accurate with targeting audiences, distributing their brands geographically.

     Anyway, marketing decisions contain burden of complexity and should be managed delicately. Any step that may seem successful for one brand in present may lead to losses for another one in future. We will concentrate our efforts on analysing marketing strategies for these companies, trying to establish the most optimal scenarios that will contribute to the whole group. We will further analyse marketing decisions and potential of these automotive groups in european region, focusing on certain car models.