Volkswagen Changing perceptions and positioning - Stretching a brand

Volkswagen (VW) is a famous international brand name that has traditionally been associated with the mass market, its most famous model being the Beetle. Indeed, it is currently exploiting nostalgia with the new Beetle retro-model.

However, not content with sticking to the categories where it enjoys success, the company is also attempting to move into the prestige- and luxury-car segments dominated by established brands like Mercedes and BMW.

Its first venture into this market segment is with the new Passat V6 Syncro, which is out of the price range of the typical VW buyer. Evidently, other models are planned at higher level segments and prices. Even though VW owns Audi, Bentley, and Lamborghini, amongst other brands, many people are skeptical that it can stretch its own brand upwards, when consumer perceptions still associate the VW-branded cars with smaller and less prestigious vehicles. Its "badge value" (brand associations) would not appeal to customers of BMW, Mercedes, or even Audi. Additional problems arise when consideration is given to the fact that other brands such as Volvo and Toyota's Lexus are also shifting their position to target the prestige market that demands performance, luxury, and marque. VW acknowledges the issues but says it will give customers more product. But is product what the luxury car owners are really buying? More likely, according to research, it is status, prestige and self-expression that determines their decision, and VW will need to do a considerable amount of consumer perception management and distributor education to successfully bring any of its VW branded models into that league.

Excerpted from Branding in Asia by Paul Temporal. Click on the book title to order from Amazon.

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