Assignment:
Advertising Strategy Progressive Insurance:
Create a 2-page summary of the case reading in your own words which includes:
Summary of the key background information of the case
Which commercial(s) should Heather day select to market Progressive's Snapshot program? Why?
Include full analysis based on data provided and what you determine to be the brand's objectives
Consider the strengths and weaknesses of the various commercials
What are the challenges in selling UBI?
How did Progressive grow without advertising in the past?
What challenges does serving standard customers pose to Progressive?
How does UBI fit into Progressive's product portfolio?
Advertising Strategy Case:
The Volkswagen Beetle has a long running history for being an affordable, German-manufactured car that was an integral part of life for consumers in the 1960s. The original Beetle had many flaws in manufacturing that had made the car more "human" and "endearing" to its drivers, and allowed for individualism and uniqueness through its flower power, retro appearance. From 1970 to 1993, auto sales in the United States suffered a steep decline in sales from over half a million to less than 50,000 cars sold. Volkswagen knew that they needed a new strategy to increase sales, and decided to launch a new campaign to a younger target market. By re-launching the new Beetle, Concept 1, Volkswagen could retain its retro appearance, its loyal customer base, and rebrand the car with a nostalgic approach. Upon the launch in 1998, VW targeted their sales to be 200,000 cars, which was a 45% increase over unit sales the year before. New marketing campaigns for the Concept 1 Beetle would be challenging for VW to define and accurately and successfully implement a new media campaign, their target audience, and position the product prior to its nationwide re-launch.
When establishing the re-launch strategy of the Concept 1, VW needed to address a few key problems for the brand; these including the overall brand image, and the decision to brand the car (either with its retro design, or with a new modern approach). Another key issue for the VW brand was the effects of WWII on American consumer behaviors. Because of the war, Americans were more hesitant about buying foreign and imported cars, and American companies saw a shortage of car parts, resulting in expensive repairs. Due to all of these factors, luxury foreign cars were not affordable to most Americans at this time. Another problem that VW had to remain aware of was their competition- Japanese brands such as Honda and Toyota were gaining market share and proving to be great competition to VW. The Recession in 1982 also created issues for automotive companies with drastic declines in sales, where VW was almost forced to exit the American market all together.
Volkswagen had to re-launch the Beetle, but had the opportunity to do so in two large-scale options. First, they could launch the Concept 1 under the already existing Drivers Wanted campaign, thus aligning the Beetle with other Volkswagen models under one umbrella brand. This campaign showed positive trends in advertising recall, brand awareness, overall brand attitude, and intent to purchase decisions by consumers. While this route for the re-launch effort would serve as a constant for the Volkswagen brand to bring together their drastically different models, the Beetle had already gained such a large following under its own original campaign as a retro, small, cute, & friendly, "for the people" car. Those in support of launching under this umbrella brand believed that the existing Drivers Wanted campaign held a creative foothold on the market- enough to support this re-launch. However, with the car's existing reputation, combined with VW's nostalgic approach to its re-launch effort, the umbrella brand approach may counteract the feeling that VW aims to align with the Concept 1.
Another issue for VW to consider when re-launching the Concept 1 was their pricing and distribution models. Because of the car's size, it would undoubtedly be placed in the small-car segment of the market. Previously, the Beetle had positioned itself in America as a low-price, affordable car. However with its upgrades to meet United States laws and policies, the Concept 1 had raised its price to range between $17,000-$18,000, which at the time would be the most expensive-priced car on the market for the small-car segment. By continuing with this pricing model, the company would no longer be able to position to car as an affordable and low-priced option, and may face backlash from their customers who could chose to upgrade to a higher-priced segment of the car market. However, for VW to lower the price of the car, they may find themselves in poor relations with dealers, as these dealerships may not want to endorse or even sell the car in fear of lower price margins for themselves, or a lack of reaching set profitability goals.
When the VW Beetle first launched, their drivers have been described as a "cult-like following," with its widespread popularity all over the United States. The Beetle was a sensible first car mainly for students on a budget. Despite the drawbacks of the original model, its drivers were loyal to the car and found human qualities in its flaws. VW drivers had a very specific description at this time. They were younger and more educated than average drivers, and often favored an active role when driving. VW drivers are seen as confident above all, as well as well informed, creative, self-sufficient, as well as holding a unique life attitude and willingness to experiment. When re-launching the Concept 1 Beetle, VW aimed to preserve these values and loyalty with their existing consumers, as well as reaching out to new target markets. There was four core values that they wanted to capture the essence of: honest, simple, reliable, and original. To retain such values and create the nostalgic and humanistic feeling of the car, VW first showed attention to the design of the car, making sure it encompassed original design attributes such as rounded edges and human-like features to evoke friendly and open feelings associated with circles. With the first introduction of the Concept 1, VW experienced outpourings of emotion and connection to the car and the Beetle brand. Interviewers surveyed every possible segment of the market- young and old, male and female, even those with differing personal values or styles. Most prominently, feelings towards the Beetle were nostalgic and loyal still, as they had been with the original Beetle, and enthusiasm for the Concept 1 launch from the general public is what would push the Beetle to its new success. Its older, original drivers saw the car as not only practical transportation, but also held a personal connection to it. Newer and future consumers of the Concept 1 were excited to experience the hype of the car, and the individualism it would bring them. Driving the Concept 1 would allow its drivers to express themselves where they may not be able to do so in other aspects of their lives. There was a confidence quality associated with Beetle drivers, even so that one interviewee described that "the person will not make the car... the car will make the person." Driving this Beetle is an opportunity for consumers to identify and express themselves uniquely and confidently.
The Beetle's target audience began as "the people's car," for all Americans on a budget, and seeking freedom and individuality. Although these values remain true, the new Beetle Concept 1 would be positioned as a personal car, for its drivers to express themselves. VW's new audience would be focused on potential buyers aged 18-34, as well as baby boomers. While Beetle fans spread far and wide across age, income, gender, and other demographic elements, most of their new potential buyers all embodied similar qualities of confidence, individualism, and a desire to be the center of attention. In order for consumers to affectively express themselves- their confidence and individuality- the new Beetle must be a car that drivers wanted and were proud to be seen in. With VW's 1997 advertisement of the VW Golf, the brand aimed to appeal to younger, more "hip" generations of consumers with its tagline that the car will "fit your life, or complete lack thereof." The popularity of this advertisement through its theme music and low-price, affordable description of the car accurately reached its younger generations.
The Drivers Wanted campaign was an enormously successful campaign for VW, bringing a 178% increase of sales through extensive consumer surveys, personal visits to over 95 VW dealerships, and giving consumers as well as dealers the ability to drive the car themselves. With the help of Arnold Communications, VW was able to accurately determine their target market of these younger generation
"Gen-X" drivers in order to implement this campaign. With this campaign, Volkswagen attempted to take advantage of consumer perception and emotional connection to the brand- they wanted to know and change how consumers felt and thought of the VW brand through its affordable German engineering. After declines in sales and brand perception, VW was focused on this strategy to regain market share in the auto industry, as well as in the minds of consumers.
Attachment:- Progressive Insurance.rar