Automobile Brand Analysis Consumer Behavior

Spring 2011 Victor J. Chow Irene Dai

Key Objectives
1. A n a l yze V o l ksw a g e n s b ra n d stre n g th a n d e n ti i ty n co m p a ri n to co m p e ti rs so to 2. D e ve l p a cti n p l n to sh i th e o o a ft Vol ksw a g e n T W b ra n d to i e a l d l ca ti n w h i e m a tch i g G e rm a n o o l n h e a d q u a rte rs b ra n d i g n g u i e ln e s d i
3.

Agenda
1.Automotive Market Overview 2.Market Analysis and Sales Reports 3.Competitor Performance Analysis 4.Volkswagen Brand Vision 5.Survey format regarding Brand Image Perception 6.Brand Image Perception Ratings Survey results and key findings 7.Suggestions for VW based on Survey results 8.

Agenda
1.Automotive Market Overview 2.Market Analysis and Sales Reports 3.Competitor Performance Analysis 4.Volkswagen Brand Vision 5.Survey format regarding Brand Image Perception 8.
6.Brand Image Perception Ratings Survey results and key findings 7.Suggestions for VW based on Survey results

Analysis of Taiwan's automotive market

600,000
514,628 484,292 413,746

500,000
398,882

Pa st tre n d s
366,317 326,781

400,000

300,000

Pre se n t/ Fu tu 325, re tre n d s 294,423

229,495

200,000

100,000

2002

2003

2004

2005

2006

2007

2008

2009

2010

Analysis of Taiwan's automotive market

nTaiwan's auto market reached a record high in 2005 with. 514,628 units sold. 2008 saw Taiwans auto market decrease to a low of 229,495 units nPast sales trends indicated annual car sales of approximately 450,000 units, while current and future trends indicate a total market decrease to approximately 350,000 units per annum. -With 2 million Taiwanese (10% of total population) moving abroad to China for business and the Taiwanese habit of buying new cars every 10 years contributed to this drop of 100,000 units per annum shift. nThe Taiwan auto market is highly mature, with little possibility of large overall growth or shrinkage. nTaiwanese customers place an emphasis on deep-rooted brand image, a high degree of attention to customer

Domestic vs. Imported

100% 90%

C BU

C BU

9 80% %
70% 60% 50% 40% 30% 20% 10% 0%

C BU

C BU

C BU

CB

C KD

C KD

C KD

C KD

C KD

CK

nW i Ta i a n ' e n tra n ce i to th e W T O , ta ri o n i p o rte d ve h i e s h a ve th w s n ffs m cl g ra d u a l y d e cre a se d fro m 2 9 % to 1 7 . 5 % . l 2005 2006 2007 nT h e i p o rt ca r m a rke t h a s g ro w n ye a r b y ye a r, i 2008si g fro m 2009% i m n cre a n 1 4 .6 n 2 0 0 5 to 2 3 . 6 % i 2 0 1 0 . I co n tra st, th e d o m e sti ca r m a rke t d e cre a se d n n c fro m 8 5 . 4 % i 2 0 0 5 to 7 6 . 4 % i 2 0 1 0 . n n nT h i d i re n ce i a p p roxi a te l 9 % . s ffe s m y

2010

100% 90%

Seven domestically manufactured brands

29.2 29.3 32.1 34.6 38.1 32.0

80% 70% 60% 50% 40% 30% 20% 10% 16.8 15.3 14.3

15.9

14.7 15.6 11.8 11.3 8.7 6.1 4.1 0.4 8.3 5.9 4.8 3.4
19.1

12.7 4.5 10.7 5.8

11.0 6.0 8.2 6.6

11.0 8.7 7.6 5.3

10.9 8.7 5.5 4.3

20.1

nThe seven brands are as follows: Toyota is the largest, with Mitsubishi, 15.7 Nissan and Honda as the middle three brands and Ford, Mazda and Luxgen as the three small 0% brands. nMitsubishi, Honda and 2006 s market share is relatively stable. Mazdas market share 2010 (F) Nissan 2005 2007 2008 2009 has declined slightly, while Ford has faced the largest market share shrinkage. nIt should be noted that Luxgen emerged in 2010 at an alarming growth rate; but whether it has the ability to maximize its momentum with follow-up products remains to be seen.

20.3

23.6

21.0

Agenda
1.Automotive Market Overview 2.Market Analysis and Sales Reports 3.Competitor Performance Analysis 4.Volkswagen Brand Vision 5.2010 and 2011 Strategy and Results 6.Survey format regarding Brand Image Perception 7.Brand Image Perception Ratings Survey results and key findings 8.Suggestions for VW based on Survey results 9.

Market Analysis YoY (Excluding LCV)

400,000 350,000 300,000 250,000 200,000 150,000 100,000 50,000
Year 2000 2001 2002 2003 52,414 2002 280,406 332,820 8.15% 2004 55,788 2003 328,553 384,341 15.48% 2005 61,454 2004 358,419 419,873 9.24% 2006 2007 2008 2009 54,925 2007 195,497 250,422 34.97% 2010 66,132 2008 215,471 281,603 12.45%

CKD, 76.

CBU, 2

0
CBU CKD Total Growth 61,185 49,226 2000 51,735 2001 251,879 209,752 258,504 313,064 -0.10% 261,487 -16.47% 307,730 17.68% 52,174 35,493 200548,777 2006 238,481 217,904 150,050 290,655 -30.78% 266,681 -8.25% 185,543 -30.43%

2009

Sources: Chunghwa Telecom

Top 5 Brands (CKD / CBU)

32.0%

TOYOTA CKD, 28.2%

22.0%

NISSAN CKD, 12.6% 12.0%

10.0% HONDA CKD, 9.7%

8.0%

MITSUBISHI CKD, 8.2%

6.0%

CBU FORD CKD, 5.8%

VW 4.9% TOYOTA, is No . 4 CBU brand BENZ, 3.4% in 2010 BMW, 3.1%
VW, 3.0% LEXUS, 2.3%

4.0%

2.0%

0.0%

06/27/11 2004

2005

2006

2007

2008

2009

2010

11

Agenda
1.Automotive Market Overview 2.Market Analysis and Sales Reports 3.Competitor Performance Analysis 4.Volkswagen Brand Vision 5.Survey format regarding Brand Image Perception 6.Brand Image Perception Ratings Survey results and key findings 7.Suggestions for VW based on Survey results 8.

No.

Market Analysis Top 10 Brands (CKD / CBU) Year 2010

CKD Brand Quantity % to CKD % to Total No. CBU Brand Quantity % to CBU 79,453 35,588 27,417 23,115 16,462 13,315 10,994 7,956 966 332 215,471 281,603 36.87% 16.52% 12.72% 10.73% 7.64% 6.18% 5.10% 3.69% 0.45% 0.15% 100% 28.21% 12.64% 9.74% 8.21% 5.85% 4.73% 3.90% 2.83% 0.34% 0.12% 76.52% 100% 1 TOYOTA 2 BENZ 3 BMW 4 VW 5 LEXUS 6 VOLVO 7 AUDI 8 MAZDA 9 SUZUKI 10 NISSAN CBU Total Total 13,734 9,520 8,668 8,526 6,544 2,652 2,311 1,953 1,829 1,676 66,132 281,603 20.77% 14.40% 13.11% 12.89% 9.90% 4.01% 3.49% 2.95% 2.77% 2.53% 100%

% to Tota

1 TOYOTA 2 NISSAN 3 HONDA 4 MITSUBISHI 5 FORD 6 MAZDA 7 LUXGEN 8 HYUNDAI 9 TOBE 10 CHERY CKD Total Total

4.88

3.38

3.08

3.03

2.32

0.94

0.82

0.69

0.65

0.60

23.48

100

Agenda
1.Automotive Market Overview 2.Market Analysis and Sales Reports 3.Competitor Performance Analysis 4.Volkswagen Brand Vision 5.Survey format regarding Brand Image Perception 6.Brand Image Perception Ratings Survey results and key findings 7.Suggestions for VW based on Survey results 8.

The goal is for the Volkswagen brand to become the most innovative high-volume manufacturer offering the best quality in the respective classes.
Martin Winterkorn, Handelsblatt, 19 March 2007

 Volkswagen the world s most innovative high - volume brand .

The Volkswagen Vision

Volkswagen the worlds most innovative high-volume brand.
The visions global objectives do justice to the Volkswagen world brand. In the long term, Volkswagen will use innovations to differentiate itself from the competition in all areas. Innovations at Volkswagen are always oriented to the needs of the high - volume market! Affordable advanced technologies in the high - volume seg ment are the goal.

It is our goal, to give more clarity to the Volkswagen brand and to sharpen its profile. In the next ten years, it will evolve to the most innovative volume manufacturer. Therefore , the attribute innovative describes a further and new brand value of Volkswagen. Innovative does not mean technology for its own sake we always focus the customers needs. (Speech PhD Winterkorn , Mallorca , 05/15/07

The Volkswagen brand guidelines

IN

LE

NO

AB

VA TI

LU

VE

VA

RESPONSIBLE

The valuable brand value

Volkswagen offers more performance for the price: more car, more service, more value. With its outstanding vehicles and services, Volkswagen sets standards in every class. Volkswagen embodies the virtues of German car manufacturing: precision, dependability and competence. The result: its products are robust and retain their value. Quality and dependability are primary brand characteristics that assure customers that they have made the right choice.

The innovative brand value

Volkswagen is always one step ahead of time and consistently places the needs of its customers at the centre of its actions. Speed and flexibility are the most salient characteristics of its activities. Volkswagen develops highquality innovations that remain up-to-date and offer the customer the greatest individual benefit.

The responsible brand value

Volkswagen acts with the future in mind and takes responsibility for people, the environment and society. Volkswagen thus makes a crucial contribution to a world worthy of being lived in now and for future generations. Volkswagens products are accessible to many people. They symbolise constancy and vision. Volkswagen is a trusted partner that guarantees its customers carefree mobility on roads all

Why these values specifically?

The combination of the three Volkswagen brand values is credible, relevant and differentiating. The Volkswagen brand values are a key to the long-term success of the brand.
Valuable : Expresses an indispensable quality in the car market, satisfies customers basic rational and emotional needs and is an extremely important factor in reclaiming customers for Volkswagen worldwide. Innovative : Only through innovative products , technologies and services can Volkswagen differentiate itself from competitors to sustainable and long-term effect.

Responsible : As a global player , Volkswagen takes responsibility for people, the environment and society.

Agenda
1.Automotive Market Overview 2.Market Analysis and Sales Reports 3.Competitor Performance Analysis 4.Volkswagen Brand Vision 5.Survey format regarding Brand Image Perception 6.Brand Image Perception Ratings Survey results and key findings 7.Suggestions for VW based on Survey results 8.

Study Design
Objective n To provide information on awareness and images of the principal car brands and models sold in Taiwan Method n Online survey Survey scale n (with 1= definitely no, with 2= mostly no, with 3= neither, with 4= mostly yes 5= definitely yes) Surveyed brands n Volkswagen, Toyota, Nissan, Ford, Hyundai Sample size n 38 Interviewing period n June 22 to June 26 2011 Contents n Overall impression of car brands and brand image ratings

The Automotive Brands 1.Volkswagen- Das Auto/Drivers wanted 2.Toyota- I love what you do for me 3.Nissan- Shift the way you move 4.Ford- Built Ford tough 5.Hyundai- Drive your way

The Questions
1.Is concerned about making safe cars 2.Makes good quality, reliable cars 3.Makes cars which are reasonably priced 4.Makes technically advanced cars 5.Makes well-styled cars 6.Makes cars which are fun to drive 7.Makes cars whichhavelow running costs 8.Provides good after sales service 9.Makes cars that have personality and character 10.Is a company that acts in an ethically and

Agenda
1.Automotive Market Overview 2.Market Analysis and Sales Reports 3.Competitor Performance Analysis 4.Volkswagen Brand Vision 5.Survey format regarding Brand Image Perception 6.Brand Image Perception Ratings Survey results and key findings 7.Suggestions for VW based on Survey results 8.

Make safe cars

4.5 4 3.5 3 2.5 2 1.5 1 0.5 0 VW Toyota Nissa n Ford Hyu d i na
4.1 3.6 3.2 3.1 2.5

Makes good quality, reliable cars

4 3.5 3 2.5 2 1.5 1 0.5 0 VW Toyota Nissa n Ford
3.8 3.8 3.2 3 2.6

Hyu d i na

Makes cars which are reasonably priced

4 3.5 3 2.5 2 1.5 1 0.5 0 VW Toyota Nissa n Ford
2.9 3.8 3.4 3.4 3.5

Hyu d i na

Makes technically advanced cars

4 3.5 3 2.5 2 1.5 1 0.5 0 VW Toyota Nissa n Ford
3.8 3.5 3.3 2.9 2.9

Hyu d i na

Makes well-styled cars

4.5 4 3.5 3 2.5 2 1.5 1 0.5 0 VW Toyota Nissa n Ford
3 4.2 3.3 2.9 2.8

Hyu d i na

Makes cars which are fun to drive

5 4 4 3 3 2 2 1 1 0 VW Toyota Nissa n Ford Hyu d i na
4 3.4 3.4 3.2 3.1

Makes cars whichhavelow running costs

4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 VW Toyota Nissa n Ford Hyu d i na
2.9 4.4 3.6 3

3.4

Provides good after sales service

4

4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0

3.5

3.7 3.3 3.2

VW

Toyota

Nissa n

Ford

Hyu d i na

Makes cars that have personality and character

4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 VW Toyota Nissa n Ford Hyu d i na
3.2 4.4 3.5

3.3 2.9

Is a company that acts in an ethically and socially responsible way

4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 VW Toyota Nissa n Ford Hyu d i na
3.5 3.7 3.4 3.2 3

Demographics
Wha is your ge r? t nde
Male Fem ale

30%

70%

Demographics
What type of automobile ( s ) do you currently own?

Positioning Map

Dimension II (32.9%)

Hyundai

For d

Makes car s that have per sonality and char acte Volkswagon Makes well-styled car s Makes cars which are fun to drive Nissan Makes technically advanced cars Makes safe car s Makes good quality, reliable cars Acts ethically and socially responsible way

Makes cars which are reasonably priced Provides good after sales service Toyota Makes cars which have low running cost
Dimension I (65.2%)

Key Findings
On the positioning map, Volkswagen is seen as a brand that: n Makes cars that have personality and character n Makes well-styled cars n Makes cars which are fun to drive

The Volkswagen brand is seen somewhat correlated to the following: n Makes cars which are fun to drive n Makes safe cars

The Volkswagen brand is not correlated to the following: n Makes good quality, reliable cars n Acts ethically and socially responsible way n Provides good after sales service

The Volkswagen brand is seen negatively correlated to the following: n Makes cars which have low running cost n Makes cars which are reasonably priced

Conclusions
Volkswagen is in the upper range of overall brand impression brandings, with a brand image that is positive with consumers.

The brand power of Volkswagen is very strong, but the current purchase intention is very low when compared with other KD brand competitors. n Survey showed that there was only 1 Volkswagen owner versus 15 Toyota owners, 7 Nissan owners and 7 Honda owners.

However, Volkswagen in Taiwan is not correlated enough with the Volkswagen

Agenda
1.Automotive Market Overview 2.Market Analysis and Sales Reports 3.Competitor Performance Analysis 4.Volkswagen Brand Vision 5.Survey format regarding Brand Image Perception 6.Brand Image Perception Ratings Survey results and key findings 7.Suggestions for VW based on Survey results 8.

Suggestions
Increase Marketing & Communications activities to focus on value, innovation and responsibility. n Further educate consumers on the value of German craftsmanship and engineering to improve attitudes and perceptions. - Maximize country of origin effect. n Educate salespeople sell their products value to their prospects rather than the price. - Sales are a very important in-store factor. - Do not compete on price. Show Volkswagens value: more performance for the price. n Improve & increase activities of Volkswagen Owners Club for post purchase customer satisfaction. n Make high quality innovations more well known, through conventional and grass roots marketing campaigns. n Educate consumers on Blue Motion technologies through increased education and exposure. - It's a whole range of innovations and refinements that help you save fuel and money, without taking the fun out of driving. - Strong message arguments that focus more on Steak rather than Sizzle. n Increase model mix of diesel and hybrid models.

Suggestions
Continue increasing brand power and presence in Taiwan market through marketing strategies like: nBrand/Product Placement in Top Television Dramas n Joint Promotion with Rental Car Companies - Allow every person the opportunity to drive a Volkswagen vehicle to increase positive word-of- mouth n Have product launches that are visible to both the media and public n Utilize celebrities as communications sources that are in line with Volkswagen brand values to enhance company images and brand attitudes n Improve purchase environment, maximize influence in store environment through store image and atmospherics.

Suggestions
Utilize Halo Effect as physically attractive source leads to attitude change. More directly and simply put, use more beautiful girls!!!

Thank you !