Marketing Mix Strategy of the Volkswagen Touareg TDI - UK

Differentiation and Positioning

Differentiation

Differentiation refers to forming products which are specialized for particular sections by gaining competitive advantage in the market (Mullin, 2006). It depends on the target market of the product for its differentiation and the three competitors of Touareg DTI are:

Land Rover- Range Over

Sport utility vehicle are gaining more advantage in the market form full size cars. The price of Range Rover is starting from £79,950 but the biggest disadvantage is its space.  The space is compact while having seven seating option and third row has the option of folding seats. This shows the flexibility of the car but the experience is old dated. They have two versions of the care- 3.0 litre and V6 diesel engine and a hybrid version of both above.  It is lighter in weight because of the aluminum used by reaching from 0-60mph in 6.8 seconds.  The car can adjust as per the road surface as it has Terrain Response system in it in using it with dynamic mode.  This is achieved when the button is selected which adjusts the gear, ride height and throttle system as per the mode selected (Auto Express, 2015). It has rear camera attached to it for gaining the confidence to drive.  

Audi-Q7

The cost of the model is £50,340 and it can be opted on lease with $740/month with an engine of 333-hp 3.0 liter V-6. It has automatic gearbox which reaches to maximum to eight with a luxurious interior of 23 speakers attached.   The car reaches 60mph in 5.5 seconds and at present it can go to 166 feet at a speed of 0-70mph.  They have suspension, engine, and transmission providing comfort depending on the individual setting mode.  The visibility of the car is good on outer front by having navigation through Google Maps by having LED headlights for seeing on the road. It comes with 12.3 inch TFT screen for making the customer interface by acting cleverly.  They have an advantage such as virtual cockpit, recognizing the handwriting by having front ventilated seats with climate control feature (Caranddriver.,2015). The customers can also have $2400 package in which Audi will provide driver assistance which includes landing departure, recognizing traffic signals etc. It has seven seating space available with the travelers for taking maximum with their family with children. 

BMW-X5

The cost of SUV model is £56,725 with the top speed going to 147mph. The performance of the car can be judges with reaching 5.9 secs in 0-62mph as it is dynamic in nature. The con in the product is traffic lights as it comes directly to the face by way of reflection.  The speed of X5 is the best as it can bend through spaces living up to the expectation of a SUV.  The model comes with a pro to turn the car into Eco Pro mode which directly saves fuel by changing in certain features with a maximum speed of 47mpg. The deck of X5 is spacious as it can carry huge number of electronic items such as gadgets and gizmos. The car is backed in providing space for seating as it has only five seats in it by making it compact for travelers (Mills, 2015).  

From the above table it can be seen that every automobile is catering to the needs of the travelers based on certain criteria. The needs of the customers are different are different in their perspective as compared with other models. In case of Volkswagen Touareg DTI the cost of the product is less with other competitors in the market. So it can be said that Touareg DTI can be purchased from the price and luxury perspective. This makes the brand more effective for customers to purchase as per the features and design of the car.

Positioning

The positioning of the brand model Volkswagen Touareg DTI is based on individuals whom prefer sturdy car. This is best suitable for people who love adventures off road as the car is powerful in its aspects (Paley, 2007). This is used only for adventure proposes mainly in rough roads to get the experience of being adventurous in the meantime. This is done for the customers who love driving in off roads by fulfilling their needs by advertising their product. The symbol of Volkswagen refers to trust reliability and character which having strong customer loyalty (Hooley et al., 2004). This helps in creating a bond of relationship between the individual and the product. The competitors have to be in terms with Touareg DTI to make their share grow in UK and it is mostly shared by youth generation i.e. male.  He may be a college graduate or a working professional being single and enjoy the rides delivered by the product (Diwan and Bodla, 2011). The care weighs as per the style of the product in the automobile sector by managing customer value.  The product is positioned in the market as getting the ultimate experience by driving and has to be on social media like T.V., Facebook, and YouTube for trailers etc. for making the customers aware of the car.  They can position it as an easy drive off road vehicle by promoting it in UK market for gaining the experience of ultimate seating (Ellson, 2004). This positioning has made the market of Volkswagen as the most competitive market in terms of its competitor. The SUV model attached to the brand in form of various varieties act as a model to its market captured on the set. The model helps in generating an impact on the customers by utilizing the available resources with the product in the automobile market in UK (Puska, 2013).

 Revised Marketing Mix

The marketing mix is a controllable variable depicting the 4Ps namely product, price, place and promotion. The marketing mix of Volkswagen is not different from other similar competitor but the brand equity of the company makes it stand out in the luxury car segment (Srinivasan et al., 2009). The Volkswagen Touareg TDI is midsized luxury car that is positioned by the company as luxury crossover SUV (Sports Utility Vehicle) in the UK luxury car market known for its penchant for luxury cars. The marketing mix is strategic marketing tool used by the marketing department of Volkswagen to cater to the identified segment of the target market more effectively. In the process the company designs a communication to capture the mind share of the target customers in UK with information about the product, its features and how it differs from the competitors like Land rover range rover, BMW X5 and Audi Q7, the pricing strategy offered by the company, the distribution channel (place) worked out by the company to make the product accessible to the target customers easily and the promotional measures undertaken by the company to deliver the information to the target customers effectively to maximize the profit and revenue for the company (Srinivasan et al., 2009).

In this context the company had designed the marketing mix earlier but with the current scandal regarding emission regulation where the company was charged with the allegation of crossing the emission limit by 40% causing the environmental hazard and legal implication impacting the business of the company and drop in the sales volume and sales figure (Sriram et al., 2006). Based on this scandal and the consequent impact on the business of Volkswagen Touareg TDI, the marketing department of the company has decided to develop a revised marketing mix to enhance the profit and revenue of the company and improve the image of the Volkswagen Touareg TDI model amongst its target customers. The revised marketing mix for Volkswagen Touareg TDI is examined below where the product, price, place and promotional mix is evaluated and the required changes effected to make them more attractive for the target customers and improve the brand image of the car (Sriram et al., 2006).

Product

Volkswagen as luxury brand is known for its features comprising seating capacity, storage capacity and gas mileage, image of high quality, extended warranties with five different extended coverage contracts, delivery facility and installation of the product with seats, stereo, cruise control and engine and sustainability of the product (Yoo, and Hanssens, 2005). In context to the Volkswagen Touareg TDI the product evaluation will be done on three parameters performance, ride and handling and refinement. The model uses 258bhp 3.0-litre V6 diesel engine that pulls effectively from low revs and delivers better control during overtaking at all speeds. The suspension on SE model provided comfort and control. But the R-line has lowered suspension and big wheels that make the ride not very comfortable. Both engines are faintly coarse when driven in high revs. The standard eight-speed gearbox is automatic with smooth shifts. It has lots of kits with strong engine and control in the interior offer easy use (Möller, 2006). But compared to the BNX X5 has plusher interior and better swift handling while the Volvo XCS is more spacious compared to Volkswagen Touareg TDI. It will improve the emission of toxic gas to make it more environment friendly car.

Price

Volkswagen always positioned itself as a premium brand with premium pricing strategy. All the products of the company are highly priced with the average difference exhibiting 10% higher than the competitive brands (Herrmann et al., 2007). The justification for the premium pricing was upscale driving and ownership experience of customers. The growing competition in the luxury car segment did influence the pricing strategy and the company reduced the pricing to only 5% higher than competitor with justification that it is too expensive compared to the quality delivered. In context to the Volkswagen Touareg TDI it was evaluated that the earlier pricing strategy adopted for the model was adjudged expensive. It was further escalated by the emission regulation scandal and the company was losing the market share to Land rover range rover, BMW X5 and Audi Q7. The company has priced the 5 version Land rover range rover, BMW X5 and Audi Q7 in the range of £43,605 to £48,405. It was changed to £39,470 to £43,918 for the five version and position it more attractive for the target customers compared to the rivals like BMWX3 and Land Rover discovery (Herrmann et al., 2007). The justification for the revised pricing strategy is the company will gain market share from its competitors.

Price (Distribution Channel)

Volkswagen like most of the other luxury car maker appoints dealers and super dealers to sell the cars. The distribution channel (place) in the automobile sector comprises of middleman and dealership that source the cars by directly purchasing or by taking help of local bank and selling them to direct customers. In case of Volkswagen the company provide the control to dealership and prefers to work like franchise and function based on the guidelines of the company (Hartmann, Nair and Narayanan, 2011). The aspects under this marketing mix focus on channel decisions, packaging, storage and transportation. In context to the Volkswagen Touareg TDI the company used the same distribution model to make the cars available to the target customers. As such there will no change in the place (distribution channel) adopted by the company in the revised marketing mix.

Promotion

The promotion mix strategy undertaken by Volkswagen focus on integrated promotional mix that include personal selling, advertising, sales promotion, personal selling, publicity and public relation to communicate with the target customers and build the brand image and create product awareness related with the Volkswagen Touareg TDI (Naik and Peters, 2009). Each of the elements of the integrated promotional mix adopted by the company will be evaluated to understand how it enhances the marketing mix and increase the market share and profit.

At an industry level the company has own sales team that prospect, secure and grow the client base. In addition it sell to the authorized Volkswagen dealers and take care of the logistics and relationship (Winer, 2009). The dealership promotes the cars and sells to end customers. The advertising as promotional measures is used extensively by the company in print, electronic and digital media. Similarly the company organise different events including Volkswagen sign and drive event to promote the Volkswagen Touareg TDI. The company indulges in innovative publicity that helps the company to garner significant publicity in the UK market and registered in the minds of the target customers (Briggs, Krishnan and Borin, 2005). Volkswagen maintains in-house public relation department taking care of media hits, gaining publicity for brands and products and building the relationship by engaging in social networking sites like Face book, You Tube and Twitter.

 People, process and physical evidence

But with the advent of service industry the traditional marketing mix of 4Ps is extended to 7Ps and it include people, process and physical evidence. In context to the Volkswagen Touareg TDI model marketed by the company these additional 3Ps also play significant roles (Lovelock, 2011). The people signify the marketing and customer service team who entertain the customer and make the purchase experience more rewarding. The company has trained the employees to cater to the customers effectively. The process of the company from manufacturing to marketing is well structured and helps the customer at every stage of the purchase (Briggs, Krishnan, and Borin, 2005). The company has dedicated customer service team to take care of complaints, grievances and feedback. The physical evidence is related with the design and appearance of the Volkswagen dealership so that it makes a lasting impression on the customers visiting the place and give them a sense of trust and comfort and thereby by making them purchase the products from the outlet. In fact the three additions to marketing mix enhance the competitive advantage of the product like the Volkswagen Touareg TDI and impact the profit and revenue of the company positively.

Recommendations

The problem identified in the marketing mix is related with current scandal of emission regulation of the Volkswagen Touareg TDI. It was identified to be 40% higher than the federal emission regulation set by the UK government and the company needs to reduce the nitrogen oxide emitted by the engine damaging the environmental balance of the country (Close et al., 2006). It is part of the product defect and it constitute the first P of the marketing mix of 4Ps (Product, price, place and promotion). Based on the revised marketing mix developed by the company it is recommended that Volkswagen needs to modify the product and pricing strategy adapted by the company to cater to the target customers and improve the image impacted by the scandal of emission. The first recommendation is to modify the product defect and reintroduce the product in the UK market (Chintagunta, Nair, and Sukumar 2009). The second recommendation is change the pricing strategy by reducing the price hike higher by 3% to make more attractive and make the Volkswagen Touareg TDI value for money product. The third recommendation is design the new advertisement to communicate the revised marketing mix to the target customers effectively and attract them to buy the product.

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