We can segment car buyers needs similar to Maslow’s ‘hierarchy of needs’ pyramid. Thus, while advertising vehicles, certain levels of needs can be addressed, depending on segment.
Entry-level segment products satisfy basically first two levels of needs: ability to transport something safely + some exclusively utilitarian features(e.g. large trunk,). Mid-price vehicles have to add emotional component to the mix: comfort, performance, excitement of driving. And premium segment products should possess certain status-markers, that’ll establish buyers within desired social groups. So, advertising campaign, promoting different car segments should focus on addressing specific features, that’ll satisfy respective need levels.
Positioning your car brand may appear somewhat tricky. There are a lot of factors to take into account, such as desired margin, potential volume and your own capabilities to support that volume. Recent study[LINK McKinsey 2020] reveals the following structure of car market.
Thus, Premium segment secures (to some extent) revenues even for lower sales volumes. In order to successfully operate in mid-price segment you have to be pretty confident in your capabilities to support large volumes of car sales. And entry level implies some really harsh limitations — you have to be extremely efficient in order to break even in production of low-cost vehicles.
Such limitations stimulate upward shift in car brand positioning, because it may seem a bit easier to operate in premium segment, than in mid-price, not to mention harsh environment of entry-level segment. Recently, French car manufacturers have followed exactly the path. They began to reposition themselves, shifting upwards in direction of premium segment, settling just below Audi, BMW and Mercedes. However, Renault is not one of them. This car manufacturer suppressed the urge to follow the trend, focusing instead on concentrating it’s effort on further expansion in mid-price and entry level segments. However, Renault keeps probing premium class with it’s niche initiatives like Alpine and Initiale Paris. But still, core brand positioning of Renault is “People’s car”.
Positioning itself in mid-price and entry level has its own draw-backs. The brand faces the problem of contradictory perception of itself in minds of consumers. Entry-level and affordable vehicles tend to be not associated with quality. Thus, if positioned in both segments, entry-level implications seriously impact sales of mid range vehicles. That’s why car manufacturers try to establish separate brands for different segments — they try to avoid mis-match in associations and targeting. Renault established it’s low-cost entry-segment Dacia brand with a specific purpose to operate on entry-level market and diminish influence of such operation on core brand. However, on some markets, where entry-level segment was worth much more than mid-price (developing markets), Renault didn’t use at all Dacia brand, instead using it’s own badge. The strategy appeared to be successful, as it basically associated mid-price attributes with entry-level price, seriously increasing sales in entry-level segment. But at the same time increasing popularity of entry-level cars, shifted brand perception towards entry-level attributes, thus diminishing sales in mid-price segment.
In order to overcome this situation, Renault came up with a marketing initiative, targeted to reinforce company’s image as quality car manufacturer. They designed double-logo system, where traditional Renault logo was supported by Quality made Renault logo.
The two logos appeared (and continue to do so on some markets) simultaneously on any kind of media used for advertising. At some moment in time company finally realised that they win manufacturers title of F1 for 10 years in a row, where 3 teams use their engines and that that could be used as support for establishing Renault as “Quality brand”. So, they came up with third logo, that joined the duo and aimed to support and prove the “quality made” one.
On some markets(e.g. UK) the three logos follow each other in the final part of every TV advertising. Renault even launched additional supportive campaign to reinforce the statement even further, trying to fix a stable association of a brand as a champion of F1:
These efforts aim to establish Renault as “People’s champion brand”, implying that both quality and affordability can be attributes of the same vehicle. They support the statement by success in most sophisticated car championship in the world. Renault also supports 3 other major championships: Formula Renault, World Series by Renault and Formula E.
All these initiatives lead us to Renault’s positioning as “People’s Champion” — car brand that integrates affordability and “champion” quality in the same
Volkswagen has much more trouble with positioning, then one can think of… To begin with, it’s hard to justify almost premium price for a car, that has “People’s car” (almost “Folk’s car”) in it’s name. However, that doesn’t appear to be an issue outside Germany (and I’m not sure about “Folk’s car” part). The main problem in VW positioning is with it’s family, where all the bunch(VW, Skoda, Seat) tends to occupy the same segment and even has the same upward shift trend.
Initially, as was mentioned before
, VW destined Skoda to become entry-level brand, however, rebellious Czech brand wanted higher margins and found ways to outperform it’s Spanish brother, Seat, in conquering European markets as a mid-price brand, and even stepping on toes of VW. Eventually, Skoda’s CEO was fired, but the brand was already firmly established in mid-range segment. Seat, on the other hand, under-performs constantly and faces never-ending troubles in gaining at least some profits, having trouble with it’s mid-price positioning.
But what’s the positioning of core brand, Volkswagen? In the late 1990s VW implemented strategy of upward shift from people’s car perception towards premium segment. It used AUDI’s premium technologies in VW models, which were marketed as premium features for affordable price. The tagline later transformed in “The power of German Engineering”, which implied the overall state-of-the-art quality of VW cars and justified higher prices. The tradition continues, as VW advertises it’s vehicles, focusing mostly on their specific features and technical qualities.
In majority of cases these appear to be cross-platform features, that are simultaneously implemented in various VW brands in different segments. Having little trouble with quality, company succeeds with that strategy as is strongly associated with quality and performance.
In spite of having a bunch of brands in premium and luxury segments, VW itself constantly probes premium segment with various efforts. VW Phaeton is one example, where company failed to extend it’s perception to premium segment. Right now company plans to extend both to entry level and premium segments. Volkswagen apparently is amazed by how much cash Audi generates
and wants to share the pie.