After the introduction of the first Volkswagen luxury car in May 2002, sales are still far behind the Volkswagen’s expectation (Handelsblatt, 2003). It seems that the VW Phaeton faces the same destiny as its antique namesake Phaeton.
In the Greek mythology, Phaeton was the son of Helios, the sun god. Helios has driven the family chariot across the sky, wearing the rays of the sun as a crown, lighting the day. One day Phaeton convinced his father to lend him the beautiful chariot. But Phaeton, in contrast to his father, was not able to drive the chariot appropriately, and drove the chariot so close to the earth that he boiled the oceans and scorched the land. So Zeus had to stop him by killing him with a lightning bolt (Vaughn, 2003).
Volkswagen certainly had not considered this explanation when naming the Phaeton, but referred more likely to the second meaning of Phaeton; an elegant carriage of the 17th century which the owners drove on their own.
Nevertheless, there are signs that the Volkswagen engagement in the high-class (luxury) car market is tougher than expected. It seems people are less persuadable to buy a high-quality car of the experienced and renowned German car manufacturer.
This shows the divergence of the formerly targeted 12.000 to 15.000 units (Weernink, 2001) annually in global sales 2003 which is opposed by the actual numbers of only 2.600 units in Germany – the main market of the Phaeton – from January to October (Kraftfahrtbundesamt KBA) and estimated sales of 3500 units worldwide (Handelsblatt, 2003). The targeted sales of 20.000 units in 2004 (Weernink, 2003) seem to be completely unrealistic.
But the Volkswagen top-management remained silent. Although Volkswagen always claims that the Phaeton’s technology, specifications and passenger protection is absolutely comparable with the competing Mercedes S-Class, BMW 7 and Audi A8, customers seem to spot a big disadvantage of the VW Phaeton – the lack of perception and the missing customer benefit of expressing the driver’s status.
Table of Contents
1 Introduction
2 Customer wanted
3 The luxury car market in Germany
4 Volkswagen’s current performance in Germany
5 SWOT analyses applied to the VW Phaeton
6 The PEST analysis
6.1 Demographic environment
6.2 Economic environment
6.3 Natural environment
6.4 Technological environment
6.5 Political-legal environment
6.6 Socio-cultural environment
7 Strategic recommendations
8 Conclusion
Objectives and Topics
This assignment examines the strategic marketing challenges faced by Volkswagen following the introduction of the luxury vehicle model "Phaeton". The central research objective is to analyze why the product has failed to meet sales expectations, assess the competitive environment of the German luxury car market, and evaluate whether the brand identity of Volkswagen is compatible with the luxury segment.
- Strategic analysis of Volkswagen's market diversification and luxury segment positioning.
- Evaluation of the German luxury car market dynamics and competition.
- Application of marketing frameworks including SWOT and PEST analysis.
- Performance assessment of Volkswagen product lines using BCG and GE models.
- Development of strategic recommendations for the Phaeton's future viability.
Excerpt from the Book
1 Introduction
After the introduction of the first Volkswagen luxury car in May 2002, sales are still far behind the Volkswagen’s expectation (Handelsblatt, 2003). It seems that the VW Phaeton faces the same destiny as its antique namesake Phaeton.
In the Greek mythology, Phaeton was the son of Helios, the sun god. Helios has driven the family chariot across the sky, wearing the rays of the sun as a crown, lighting the day. One day Phaeton convinced his father to lend him the beautiful chariot. But Phaeton, in contrast to his father, was not able to drive the chariot appropriately, and drove the chariot so close to the earth that he boiled the oceans and scorched the land. So Zeus had to stop him by killing him with a lightning bolt (Vaughn, 2003).
Volkswagen certainly had not considered this explanation when naming the Phaeton, but referred more likely to the second meaning of Phaeton; an elegant carriage of the 17th century which the owners drove on their own.
Summary of Chapters
1 Introduction: Provides an overview of the VW Phaeton's poor initial sales and sets the thematic tone by comparing the car's launch to the Greek myth of Phaeton.
2 Customer wanted: Discusses Volkswagen’s diversification strategy and the failure to attract the target audience of non-conformist luxury buyers.
3 The luxury car market in Germany: Analyzes the competitive landscape, showing how the market is dominated by established brands like Mercedes-Benz, BMW, and Audi.
4 Volkswagen’s current performance in Germany: Utilizes the BCG matrix to illustrate that Volkswagen's core success lies in high-volume, mid-range cars rather than luxury vehicles.
5 SWOT analyses applied to the VW Phaeton: Breaks down internal strengths and weaknesses alongside external market opportunities and threats.
6 The PEST analysis: Examines external environmental factors including demographics, economic conditions, and socio-cultural shifts that influence luxury car demand.
7 Strategic recommendations: Suggests that Volkswagen should focus on cost-efficiency and performance adaptations rather than competing directly with established luxury giants.
8 Conclusion: Summarizes the finding that the Phaeton lacks market demand and represents a strategic misstep in Volkswagen’s attempt to enter the luxury sector.
Keywords
Volkswagen Phaeton, Luxury Car Market, Marketing Strategy, SWOT Analysis, PEST Analysis, BCG Matrix, GE Model, Automotive Industry, Brand Identity, Market Positioning, Economic Recession, Strategic Management, Consumer Behavior.
Frequently Asked Questions
What is the core focus of this assignment?
The assignment investigates the underperformance of the VW Phaeton and evaluates the strategic viability of Volkswagen's expansion into the luxury automotive market.
Which key frameworks are applied to the case study?
The author utilizes standard marketing and strategic frameworks including the PEST analysis, SWOT analysis, the BCG Matrix, and the GE model.
What is the primary research question?
The central question is why the VW Phaeton failed to meet sales targets and whether the "Volkswagen" brand name, traditionally associated with mass-market vehicles, serves as a significant hurdle in the luxury class.
What specific methodology does the author use?
The author performs an internal and external environmental analysis using secondary data, market statistics, and industry-standard management frameworks to assess product and market performance.
What topics are discussed in the main section of the paper?
The paper covers the luxury car market environment, Volkswagen’s product performance portfolio, specific macro-environmental threats (PEST), and strategic recommendations for the Phaeton project.
Which keywords best characterize this work?
Key terms include Volkswagen Phaeton, luxury market positioning, brand identity, strategic marketing, and competitor analysis within the German automotive industry.
Does the author suggest that the Phaeton has a future?
The author is skeptical, noting that the product is currently not demanded by customers and recommends that Volkswagen should focus on reducing prices and adapting features rather than maintaining the current luxury strategy.
How does the author relate the name "Phaeton" to the product's situation?
The author uses the Greek mythological story of Phaeton, who lacked the ability to control his father's chariot, as a metaphor for Volkswagen's perceived lack of control and strategic failure in the luxury car segment.
- Quote paper
- Sven Röhm (Author), 2003, VW Phaeton - Did Zeus' anger hit sales of Volkswagen's luxury car, Munich, GRIN Verlag, https://www.grin.com/document/24473
