SWOT analysis

Renault

RENAULT SWOT

Strengths 

Wide range of models offered: Renault has a very wide range of models for every type of consumer taste and budget. Customers can choose among 17 models of cars.

Global presence: The group is available in 128 countries with a workforce of over 120,000 employees.

Actively involved in auto racing championship worldwide via team sponsorship: In 2014, Formula 1 enters a new era. After three years of research and development, the most significant technological disruption in twenty years has occurred with the introduction of the new-generation Power Unit engines by Renault ; the ENERFY F1- 2014

Alliance and brand associations with Nissan and the joint venture with Mahindra helped in global reach: Created in 1999, the Renault-Nissan Alliance is today the longest running transnational partnership between two major carmakers in the automotive industry. This strong collaboration helped these two companies to reach new markets and increase brand awareness and revenues for shareholders.

Weaknesses

Cases of recall of cars slightly affected brand image: In 2014, Renault announced the recall of nearly half a million vehicles for brake problems. Clio, Kangoo and Mercedes Citan are concerned. Nearly 155,000 copies in France recalled more than 400,000 in the world for the Clio 4. Mechanical problems were mostly behind these recalls.

Opportunities

Investment in hybrid and electric cars: The Renault Zoe is the electric car sold in France. Presented in its final version at the Geneva show in 2012, she plays the electric car available to the greatest number, with an affordable price with a battery rental.

Demand from emerging countries where automotive market continues to grow in a steady pace: The BRIC (Brazil, Russia, India and China) would account for 50% of global automotive demand by in 2018, according to a KPMG study. Renault is on the right track. Indeed, their second and third biggest markets are Brazil and Russia.

Threats 

In a context of increased competition, the rise in commodity prices and raw materials has a severe repercussion which is reflected on the MSRP to the end consumer. This variable drives the full mechanism of innovation in the automaker industry. By constantly innovating their product, automakers are seeking to introduce engineered raw material in order to reduce the end price of their vehicles.

Volkswagen

VW SWOT

Strengths

Global presence: The group operates in 153 countries worldwide and was the third biggest auto manufacturer in 2012. In France, nearly 1,000 points of sales are available. The group sells 60% of its vehicles outside Europe

Strong brand portfolio: Volkswagen Group owns and sells 13 automotive brands: Audi, Bentley, Bugatti, Lamborghini, Porsche, SEAT, Škoda, Volkswagen, MAN, Scania and other commercial vehicles. With such wide range of vehicle models the company satisfies nearly all consumer needs and have an access to an immense consumer market. Volkswagen has the largest of all global output range, the tiny Volkswagen Up to hyper luxurious Bentley Mulsanne limousine, through small Volkswagen Polo and Seat Ibiza, Volkswagen Golf and Audi A3 compact family Volkswagen Passat a whole host of 4×4, the Skoda Yeti to the Audi Q7 and Porsche Cayenne, convertibles, vans, pick-up …

Strong presence in China: While the automotive industry in France and Germany are going through a crisis due to shrinking sales, China is offering an exit to European car manufacturers by becoming the world’s largest auto market. China saw its passenger car sales jump 15.7% in 2013. In total, 21.98 million vehicles were sold in the country last year, a high record. It is the biggest market for Volkswagen vehicles. Indeed, the company captures nearly 20% of the market mainly with its Audi and Volkswagen brands.

Well performing brands: The company possesses very successful brands: Audi and Porsche. Audi brand is valued at $7 billion, while Porsche is valued at $5 billion. Audi is even the second biggest brand in the firm’s portfolio.

Weaknesses

Weak position in the US passenger car market: Last year, the German group has seen its sales increase by only 2.6% in 2013 (to 611,700 units). Its market share has shrunk to 2.6%. The percentage is dismal as the US is the second largest automotive market in the world, after China. The weak Volkswagen’s position in North America reflects the current sales results of the brand.

Some of the brands are not environment friendly: The Volkswagen family is comprised of three sport car brands: Porsche, Lamborghini and Bugatti. These luxurious brands are known to emit high amount of CO2 and fuel inefficient. Besides, the company is strongly opposing to legislation requiring tighter regulations on CO2 emissions and energy efficiency due to the aforementioned reasons.

Opportunities

Positive attitude towards “green” vehicles: Vehicles with higher CO2 emission and inefficient fuel/km ration have a negative image for many environmentally conscious consumers. Thanks to international summits of environmental and climate changes issues are creating great awareness for the average consumer. The results are a positive impact and more receptive to the ‘green’ movement that has been spreading rapidly across the globe. Hence why most of the industry is embracing the development of green and fuel efficient vehicles for quiet sometimes now.

Growth through acquisitions: Volkswagen Group is very successful in acquiring other auto manufactures and getting access to larger consumer markets. That is why, to continue grow and to success in US market, Volkswagen should continue with this strategy.

Threats

New emission standards: Volkswagen strongly opposes stricter regulations for lower emission standards. If such legislation would be passed the business would have to make huge investments to engineer newer engines that emit less CO2.

Rising raw material prices: The availability or lack of certain raw material (edit. precious metals) is turning out to be one of the main problems that car manufacturing is facing nowadays. Depending of the need of particular brand, supply managers are seeing these issues as highly strategic and needs to be addressed without hesitation. For example, the industry is the main consumer of lead, with 60% of world production. However, according to some studies, the reserves will be exhausted by 2030. The precarity of the situation results in higher prices and shortages of supply. All this translates to several billion Euros in extra expenses for the automotive industry.

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edited by Roman Ayala

Elements and current marketing program of VW and Renault

In a very competitive market such as the automaker industry, Renault and Volkswagen relies on elements unique to each of then such as logos,slogans,innovation and quality to hammer on their current marketing programs. These elements can be observed in their TVC or advertisement campaign around the world.  Although their marketing mix are pretty much the same, these two automaker have chosen different attributes that are the core of their campaign.

For example, Volkswagen, primarily promotes the mechanical/engineering and power aspects of their vehicle. The reputation associated with German workmanship and precision, are the main ideas in which almost the entire campaign relies on. On a lesser extend, the emotional and environmental part comes into play.

Renault, on the other hand, plays the opposite side of things and highlights the emotional aspects associated with their cars.  By showing the relationship that each owner has with his/her vehicle, Renault is hoping to lure customers by showing the soft, elegance and comfort side of their vehicles. Below are some elements involved in the current marketing strategies used by the two automakers.

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The Volkswagen side of things

According to Vinay Shahani, the new VP-marketing at Volkswagen of America, “it is difficult for U.S. consumer to grasp the idea of the premium price tags pegged into their vehicle. Especially when they are trying to become the number one player in the mass production market”.

This is quite true for many as they do not see VW as a luxury brand. Nevertheless, Volkswagen exhibit higher price tags because of their reliance on craftsmanship and generally reputation of their cars.  The company chief argues that this is due to the prestige associated with German technology.

VW

Here are some elements involved in VW commercials in a way to conveying their message to the consumers.

Slogan: A very important medium for companies to create brand awareness by creating catching phrases or ideas. By constant exposure to these messages, the average consumers, identify themselves and instantly recognized the brand. Advertisement campaign such …”The power of German engineering” in the USA and ‘Das auto‘ in France, ” Why drive anything else” in Australia, emphasizes the engineering reputation for which is well known for.

Quality & reliability: Once again the German car maker is putting forward the quality of their vehicle at the forefront of their campaign. With the following TVC, the conveyed message highlight the fuel efficiency and design of the car.

Redesign company website: In a fast pace consumer world, especially the internet, the company revamped their website to keep up with the latest technology and marketing strategies. However, this can backfire, at times, when the site is streamlined to the minimalistic category. Nevertheless, VW updated the its website hoping to help consumers

Drive the new TDI technology: Volkswagen is trying to tap into those ‘environmentally conscious’ consumer. The Turbocharged Direct Injection , a technology that is widely used by the company, calls into the diffusion of diesel engines in the US.

Its a confidence thing – Australia-    This particular TVC tries to convey the ” Confidence” message to the consumer.

http://adage.com/article/cmo-strategy/vw-s-marketing-chief-stick-brand-voice-shops/291064/

Features speak for itself – India-

http://c.brightcove.com/services/viewer/federated_f9?isVid=1&isUI=1

VOLKS

Renault

Renault on the other hand, is pursuing a more aggressive campaign geotargeting the  Mobile consumers . By launching of ZOE for the electric car enthusiasts via their app (mainly in the UK for now) the company is seeking to increase their brand awareness and lower customers resistance and hesitancy regarding the electric vehicle.

But what the french automaker do the best in order to differentiate itself from the competition, is playing into the human emotions to convey their messages. according to the main advertisement strategy of the brand, humans are a complex and emotional being,  and to address it , there’s a Renault for every occasion and every important moment of our lives.

The main motto for the car company is ” drive the Change”

Here are a few samples of  tvc involving “Emotions”

The company’s, ” the Diamond” had subtle changes since 1925. It plays a crucial role in creating cognitive association in the mind of consumers helping the company to be well positioned amongst competitors.  The chosen colors of yellow ( joy, optimism and prosperity) and silver (innovation, creativity and sophistication) were in an effort to represent and associate the brand with main human emotions. These two elements (colors and emotions) helps Renault  to further accelerate one of their marketing strategic business target: portray their cars as a crucial element for ‘state of mind and emotional wellbeing’.

RENAULT

banking into environmentally conscious consumers:http://www.mobilemarketer.com/cms/news/advertising/17870.html

Cross screen brand awareness for the Clio

http://exponential.com/2013/07/17/renault-selects-exponential-to-launch-a-cross-screen-brand-awareness-campaign-to-promote-new-clio/

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Brand Portfolio Analysis

In order to analyse brand portfolio of Renault and Volkswagen, all the brands should be brought to some structure. Focusing attention on consumer vehicles, it’s possible to apply basic price differentiation to brand portfolio. In the graphic below the whole scope of brands of respective companies is differentiated by price with remarks on geographical and behavioural/demographic focus of certain brands.

Renault & VolksWagen Portfolio structure in consumer vehicles

Renault & VolksWagen Portfolio structure in consumer vehicles

Analysing the data, we  may see that Renault-Nissan has well-established it’s brands in broad scope of markets. Most importantly, the alliance has strong presence in entry-level market, which is characterised by high volume and high growth. That secures company’s development in near future in spite of all possible problems with other brands. It has 3 entry-level brands which cover all major developing markets with Dacia being the most important one. In the mid-range market, alliance is represented by it’s two core brands — Renault and Nissan. In order to gain growth at expense of competitors, rather than it’s own fellow brands, Renault and Nissan focus marketing efforts on different car segments, when presented on the same market, e.g. in Europe, Renault offers mostly sedans and coupes, while Nissan focuses on 4×4 and various kinds of SUVs. The Alliance has two brands in premium segment, which are presented simultaneously only on one market ‚ South Korea, where they share different car segments. In luxury&Sports segment company has only two car models: Renault Alpine and Nissan Gt-R.

     On the other hand, Volkswagen group has overwhelmingly strong presence in luxury and sports segment, covering all possible niches with it’s 4 luxury brands: Porsche, Bentley, Bugatti and Lamborghini. In premium segment, Volkswagen is traditionally presented with it’s Audi sub-brand. However, the core volkswagen brand is constantly moving upward, stepping on toes of Audi. But that’s a mid-range segment, where company has real mess. SEAT, being subject of losses, constantly fails to gain new markets. It’s desperately set to conquer European youth markets, but is still the least popular brand in volkswagen’s portfolio. On the other hand, Skoda, which was intended to become volkswagen’s entry-level brand, failed to fulfil this purpose so as well. The brand appeared to deliver exceptional quality and service, which justified incredible upward shift from entry-level reaching upper mid-range, the domain of volkswagen itself. However, Volkswagen managed to fire Skoda’s CEO and re-set it’s development a bit. The fact is, Skoda’s expansion was achieved at expense of other Volkswagen group brands, which means that it literally caused more harm than good. Now the group has to face the fact, that it has no presence in, most juicy in terms of volume, entry-level segment, and has to deal with cannibalisation of it’s brands in mid-range and upper mid-range segments.
The following graphic helps visualise degree of presence of each group in respective car-segments. Models range is centred on mid-range vehicles.
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Sources:
Annual reports: [Renault];[Nissan];[Audi];[Porsche];[Skoda];[Seat]

Branding strategies

Renault

First, let’s take a look to Renault sub-Brands.

Motorsports

The automaker Renault gained notoriety by the impressive winning results obtained while participating in its city to city race in the early 20th century.  By 1975 and after years and continuous success, the company decided to create its own sporting event and division named “Renault Sports”.  It was born  after the merging of “Alpine Sports” and “Gordini 1” and since this inception, Renault Sport sponsored various sporting events such as F1 racing and Rallies.

On 2011, the brand is refocusing on the better development or improving of engines for the F1 series. It’s one of the reason why Renault name is synonym with the of World Manufacturer’s Championship title won by Red Bull in 2010, 2011, 2012 and 2013 — In fact, the entire fleet of Red Bull vehicles uses Renault engines.

Further, the entire fleet of new Formula E championship vehicles are also made of Renault vehicles. This new championship focuses on harnessing powers of electric engines rather than the original internal combustion engines.

Dacia

One of the most remarkable strategies of Renault was the creation of Dacia. Financial figures shows the importance of brand for the company : 30% of the overall sales generated by the company is due to this subsidiary.  Dacia produces ‘low price range’ vehicles that can easily satisfy the needs and wants of general consumers found in developing countries.

New project

Future projects by Renault include the launching of  sports car and luxury sub-brands. The Bloomberg website reports that the automaker main goal with this strategy is of counteract the the multi-brand structure of Volkswagen Group.  In fact, Volkswagen owns several luxury brands like Porsche, Bugatti and Lamborghini.

The merging with the Japanese automaker “Nissan” has proved useful for the Asian car maker. With the tandem work by the two companies, Nissan developed a strategy that ultimately led to the launching of “Infinity”, a premium sub-brand brand that has brought wonderful results for the company. The main objective behind this creation was gaining a stronghold in the premium automotive segment.

Further, in the 1960’s, the company and Alpine had signed a partnership which allow Renault to sell the Alpine brand in its own dealership. However, poor results forced Renault to slowly fade the partnership in the 90’s. Business opportunities and economic events made Renault to re-think their strategies and nowadays, are once again, looking to re-launch the Alpine brand. The new thinking behind this change is that Alpine will re- positioned as prestigious brand for the company and thus hoping to contribute to development of the portfolio of Renault-Nissan.

Another development  of Renault is the launch of “Initial Paris”, a sub-brand for premium vehicles segment with company badge. The lineup was introduced in Frankfurt auto expo 2013 and is currently in development for several car platforms. The special edition of Renault Clio was recently introduced, bringing the “Initial Paris” cars to market. The strategy marks attempt of Renault to shift upwards in the market, possibly gaining new niches in premium segments.

Volkswagen

Motorsports

Recently Volkswagen brand clinches its second consecutive World Rally Championship. With its Polo R WRC driven by Sebastien Ogier, the German automaker won ten out of the thirteen races of the World Rally championship. It’s the second consecutive title for Volkswagen in this competition.

Sub-Brands

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By looking the assortment of brands in its portfolio,  we can observe that the Volkswagen group is comprise of several consumer car brands. With this multi-brand structure the company has a great share of the car market. However, many of the brands that form part of this portfolio are luxurious brands (Bentley, Lamborghini, Porsche…). That this mean that the German automaker doesn’t have a budget brand like Dacia for Renault? If it is so, it will really be a shame for a company like Volkswagen. It is well known that the entry level price tags on cars are performing with fabulous results in terms of sales around the world.

To address this ‘glitch’, Volkswagen is planning to launch its own and new low-cost car destined to the Chinese market. With a starting price tag of 6000€” the German is planning to build these cars in China or India, where partnerships already existing. The company boss, Dr Heinz-Jakob Neusser, mentioned that decision will be taken in the next one year and if the answer is yes, the plan will take at least 3 years. Originally this new brand won’t carry the VW logo, but that could change.

Another strategic plan of Volkswagen is the re-positioning of the Beetle model in a sub-brand category. Due to excellent sales results (120, 000 cars in 2013), the automaker is seeing it like a perfect opportunity to profit of the ‘cult’ image associated with this particular model. So, the plan is to further develop the Beetle (VW Bully = family car, Beetle Coupe = Sportive car)

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edited by Roman Ayala

Consumer Analysis Pt.4 — Trends

     Changes in consumer demands have more or less homogenous global vector, focusing on several major fields. When shaping their buying decisions, car consumers tend to look up the information on the web. On-line dimension is by far the most vital, surpassing all other medias.
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     The graph, based on DAT group data, shows the relative evolution of different sources of information that affect buying decisions of car consumers in Europe. It can be clearly seen that Internet has overcome all other sources of information, dwarfing expensive commercials.
     The other trend is the development of vehicle’s digitalisation. Thus, consumers demand more and more features, that allow connectivity in vehicles. GPS & Bluetooth have become a must, and more and more manufacturers try to introduce internet connectivity with various additional services as well.
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     The graph, based on report by McKinsey forecasts development of automotive market worldwide till 2020 and shows the increasing share of internet-connected cars in released units. Various car manufacturers start to introduce built-in Spotify radio, internet-based vehicle management and try to establish machine-to-machine communication features, that’ll optimise road traffic and prevent accidents. The other options that gain more and more demand are active safety features, like automatic cruise-control, evasive manoeuvring and collision prevention.
     With current global trends of focusing on sustainability and eco-friendliness, consumers look more and more on CO2 emissions of the vehicles. Various government and NGO incentives focus on promoting alternative vehicle powertrains. The most notable development occurs in electric vehicle markets. This kind of powertrain is currently considered as the most perspective, supported by huge PR campaigns and brave initiatives like GigaFactory.

EV: The Renault offer

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     For a few days now, Renault has intensified communication about their new electric car: ZOE. Looking for a way to differentiate away from the competition, the company is proposing two different types of commercial propositions to prospective customers :

  1. Car Purchase + Battery rental
  2. Car rental + Battery

From these two options, the car rental + battery seems to be the best one. With the offer, Renault is looking to satisfy prospective consumer with the lowest amount of investment. In reality, the high price tags of electric cars is one of the main factors that’s preventing consumers from transitioning from prospective to  buyers. Unfortunately, consumers at times, are short sighted and fails to see the whole picture regarding electric vehicles. For them, tag price is at their focus point , especially under uncertain economic condition like the one we’re going through. Hence, they fails to see the huge saving that an electric vehicle can generate.  For example, the price of the Renault ZOE is 21, 900 euros. The same as it is for a “Megane Estate”

The big idea behind this ad is that Renault is the proposition put forward by the automaker. By proposing the deal, Renault is hoping  to install the feeling of having made the right decision  while enjoying all the advantages of an electric car.

Further, proposes to the new client a special offer in every dealership:

  • Car rental
  • Rental battery
  • Installation of the  electric outlet at home by Renault employees
  • And the electrical connection to connect you car everywhere.

All of these perks comes up with a price tag of 169 Euros per Month. Astonishing!

By creating this offer behind their electric vehicle, Renault tried to address  all possible questions and objections that customers might have about electric cars. As the price and equipment can be daunting for some consumers, Renault takes on charge all the installations ,thus facilitates the using of his electric car.

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edited by Roman Ayala

 

 

 

 

 

 


Source:

Renault