Skoda's Marketing Communications - Research Paper Example

Skoda's Marketing Communications Table of Contents 1. Executive summary : page 3 2. Introduction : page 4 3. Marketing communication strategies of Skoda : page 5 4. Skoda’s Cake Car : page 11 5. Online marketing strategies for Skoda : page 13 6. Conclusions : page 15 7. Recommendations : page 16 8. References : page 18 9. Appendix : page 20 Executive Summary The recent recession and the destruction of communism in Czechoslovakia caused many problems to the existence of Skoda brand. Volkswagen came to the rescue of Skoda and they succeeded in bringing Skoda back in its profit making path. The innovative and creative marketing communication activities created by Volkswagen for Skoda have caught the attention of the public all over the world. The car cake advertisement was one among them which helped Skoda to increase their sales in UK market. Skoda has immense business potentials in the emerging Asian markets. Europe and America were almost saturated markets for Skoda. Moreover, the recent recession destroyed the economic back bone of these region whereas the Asian region seems to be unaffected by the recession. Skoda needs to target more on the Asian region in general and the markets like India and China in particular. However, they need to formulate right marketing communication strategies for this region. This report briefly analyses the current marketing communication channels of Skoda in the European market. Moreover, this report also recommends certain marketing communication strategies for the Asian region. Introduction Actually, we do not know how do marketing communication work (Fill, 2006, p.11). Still, it is an accepted fact that without effective marketing communication, marketing strategies may not be succeeded. Marketing communications are the messages sent and received by an organization with the help of related media. “Marketing communications can be used to differentiate a product, service or brand” (Ace, 2002, p.4). It comes under the promotion part of the four P’s of marketing; price, place, promotion, and product. It is the process through which customers are informed, persuaded and reminded about a commodity. The prominent market communicators are branding, advertising, graphic designing, packaging, promotions, public relation activities, sales promotions etc. (The Marketing Communication Mix Of Tomorrow, n. d) Marketing is a set of activities, institutions, and processes created by the marketers for effectively communicating with the consumers. It is the process of putting the right product in the right place, at the right price, at the right time. Communication is the blood of every marketing effort. If proper communication does not occur between the marketer and the customer, it is difficult to achieve the marketing objectives or goals. For effective communication and to integrate the marketing strategies, the marketers need to identify the nature of the market, size of the market, characteristics of the customers etc. The Czech automobile manufacturer, Skoda caught the attention of the media recently because of their innovative marketing strategies. Skoda was founded in the Czech Republic in the late 19th century and it is generating average 10% of the overall country’s export. The company has since then ventured into other countries such as Germany, Bosnia, China, Poland and UK. It owns manufacturing firms in Poland and Bosnia. In 1991, Volkswagen invested in the company and has since then been operating under Volkswagen. The company’s major models in the market currently include Skoda Yeti, Combi, Octavia, Super Combi, Fabia Super, Fabia Hatchback, New Octavia Estate, Fabia Greenline etc.The company’s biggest marketing strategy has been the incorporation as a Volkswagen subsidiary. Its strategy was to target various market segments with unique brand per segment (Miller, n. d) A wide range of innovative marketing communication strategies were implemented by the Czech automobile manufacturer, Skoda recently in order to boost their marketing efforts across the world. This paper briefly analyses Skoda’s marketing communication efforts. Marketing communication strategies of Skoda Before the takeover of Skoda by Volkswagen, Skoda’s performances were too bad in the international market. Since Skoda belongs to a former communist country Czechoslovakia, the decay of communism affected Skoda also. Volkswagen managers rightly calculated that the destruction of Skoda brand has nothing to do with the quality of the vehicles, but with the politics alone and they put forward the suggestion of acquisition of Skoda by Volkswagen. Skoda accepted the Volkswagen offer with both hand as they had no other option left for survival. It was not easy for even Volkswagen to put Skoda back into its profit making track. However, using innovative integrated marketing communication strategies, Volkswagen succeeded in finding the profit making habits of Skoda again. When Chris Hawken took over the helm of affairs of Skoda’s marketing department, he was quoted as saying that “All the research showed quite substantial levels of rejection of the Skoda brand by consumers, you didn’t need to be a rocket scientist to see that something quite serious and radical had to be done about the brand.” The marketing strategy of Skoda was suddenly turned completely to reflect three main pillars of strength as a platform upon which the sorry brand name of Skoda was going to be rehabilitated. They are: direct marketing, advertising and public relations (Rivera, n. d). Volkswagen put more efforts in bringing back the Skoda brand in its profit making path. They have restructured the entire marketing team of Skoda and more aggressive custom made marketing strategies were formulated for each market. Earlier, Skoda was using almost similar marketing strategies for the entire global market. Volkswagen has realized that it was difficult to communicate to an Indian customer same way like they communicate with the American customers. Both America and India have entirely different culture, social and economical setups even though both the countries have a democratic administration. India, China, Brazil, Russia etc are the emerging or rapidly progressing markets in the world whereas the Western markets are exhausting for Skoda. Therefore, Volkswagen formulated different marketing strategies for these emerging regions with the help of effective communication tools for these regions. “One way of stimulating consumer demand is to make it easier for the consumers to pay” (Brierley, 2002, p.6). Volkswagen worked on the above principle in order to regain the lost pride of Skoda. The negative perception about the Skoda brand was a major obstacle in front of Volkswagen when they determined the marketing strategies for Skoda. So Volkswagen incorporated different strategies in their communication messages to each market in order to get rid of the negative perception about the Skoda brand. They succeeded in their efforts ultimately and currently Skoda is competing with some of the topmost brands of passenger cars, especially in the emerging markets like India and China. Beyond this point management chose the onus of further knowing and conceptualizing the target market in a way that will fit into the communication strategy. Previous communication strategies place emphasis on owners of Skoda products. But the new strategy chose to broaden the scope of the strategy to capture the entire population thus extending the corridors of the market size. Given the financial limitation posed by a merger budget for marketing communication in relation to other competitors such as Nissan, Skoda had to make real the fact that its product would be at the core of the communication stream of the corporation. Consumer public relations became acknowledged as another vital component of addressing the perception details in a cost-effective manner (Rivera, n. d) “Skoda choose to listen to the market demand and produces cars according to the demands and desires of the consumers, incorporating factors, such as the current economic recession and environmental factors” (Miller, n. d). Skoda has prepared its marketing strategies based on the changing needs of the consumers. The automobile market is one of the worst affected industrial sectors as far as the recession problems are concerned. Moreover, the call for environment protection is more than ever now and the current consumers are keen in purchasing environmental friendly cars. Skoda knows these things very well and prepared different types of cars suitable to the different types of consumers in the market. According to Miller (n.d) Skoda Motors are flexible in product production and they have human centered approach of working, therefore they are less rigid compared to other automobile” (Miller, n. d). In other words, Skoda makes the cars in correlation with the market demand and conveys their commitments to the changing consumer demands with the help of suitable marketing communication strategies. Effective marketing communication strategies will have the following characteristics; sender, encoder, channel, decoding, receiver, feedback and noise (Fill, 2006, p.4). Senders are normally the product manufacturers. They usually attach or encode many things to their advertising materials for the successful and effective communication with the consumers. It is not necessary that all the encoded features are the real ones. Some product manufacturers even attach fabricated or manipulated or misdirecting detail about their products in their advertising campaigns or communication campaigns with the consumers. Print, TV, internet etc are the usual channels of communication with the consumers. The consumers are the ones who receive the encoded data from the product manufacturers. They usually decode or analyse the data they received and then take their purchasing decisions. Smart customers are able to eliminate the noises (Noises are the exaggerated or unwanted claims about the product) in the received message. After that they will inform their feedbacks to the product manufactures. In short, marketing communication is similar to radio communication. In radio communication, a carrier wave is necessary to carry the signals to long distances whereas in marketing communication, exaggerated claims are normally do the job of carrier waves. "For effective marketing communication, “the communication should break through the surrounding noise and grab hold of the potential consumer’s attention” (Fill, 2006, p.3). Skoda normally introduces its premium models with the help of TV ads, print and poster ads, PR and direct mail campaigns etc. The exclusive PR campaigns help Skoda to catch the attention of journalists and to keep Skoda in a positive light in the market. A product will catch the attention the public if it promotes discussions, reviews and comparisons in the market. If the journalists and auto experts speak loudly of a car, then the public will definitely convinced. In other words, the consumers value the opinions of the journalists and the experts more than the marketing messages of the company. Only the PR campaign will enable the product manufacturers to catch the attraction of the journalists and hence Skoda focuses more on PR “The direct mailings tried to build on loyalty levels among Skoda drivers and get across the brand's new image” (Case study - the re-branding of Skoda, n. d). Skoda is keen in communicating with its customers even after the sales of their vehicles. Skoda customers or the drivers will get all the information about the new developments at Skoda. Whenever, Skoda introduces a new product or business strategy, they are keen in informing such things to their existing customers. The above strategy helped Skoda to convey its existing customers the message, how important they are to the company. According to Head of Marketing for Skoda, Mary Newcombe, “We’d been busy telling people what we didn’t stand for - and that we were better than they thought - rather than what we did stand for” (Turner, 2008). Skoda always tries to perform above the customer expectations. While most of the other organizations try to provide exaggerated statistics about their products to the customers, Skoda adopts an entirely different strategy. Skoda always tries to give fewer details about their product to the customers. In their opinion, the customers may lose their confidence in a brand if they develop a feeling of betrayal or cheating. In other words, exaggerated claims may bring only short term goals whereas in the long run such exaggerated claims may destroy the brand. If a product performs far better than the claims of the manufacturer, the trust level of the consumers in that brand will definitely be increased. Thus, Skoda focuses more on avoiding exaggerated claims in their ad campaigns. “The result was the creation of a new brand strategy under the slogan ‘Manufacturer of Happy Drivers’. The Skoda website has also been revamped completely to reflect the ‘Manufacturer of Happy Drivers’ positioning” (Turner, 2008) Skoda UK faced severe problems even under the Volkswagen ownership because of its pedigree. “In early 2000, nearly two-thirds of British consumers said they wouldn't consider buying one, although the line had in recent years won awards for its design and quality” (James, 2002, p.1). In order to overcome the challenges related to bad reputation, Skoda UK has implemented a combination of advertisements in UK with the help of television ads, public relations and direct marketing. Skoda has realized that television ads are more effective in UK than in countries like US because of the huge popularity of television in UK. The above efforts were succeeded and the company increased its sales more than 23% over the course of the 18-month campaign in United Kingdom. Even though the advertisement budget allowed for Skoda UK was far less than its competitions, Skoda was able to overcome such problems with the help of creative ads. Skoda spent around 70% of its advertisement budget for the television ads in UK considering the huge popularity of television programs in UK. Skoda’s cake car advertisement caught the attention of the people not only in UK, but all over the world. Skoda spent around Skoda’s Cake Car Skoda’s cake car ad has created immense publicity among the consumers all over the world. This television ad is widely regarded as one of the all time greatest creative ads. The consumers are fed up with the traditional advertisements and it is difficult to catch the attention of the public with the help of conventional ads. Skoda has realised the potential of creative ads in effective marketing communication and was ready to spend huge amounts for that. Skoda Fabia was the car which made use of the cake car advertisement. (This ad can be watched at http://www.visit4info.com/advert/Skoda-Fabia-Confectionery-Car-Skoda-Fabia/45968) According to a panel from American Association of National Advertisers, the selling of a creative idea can exceed that of an ordinary idea by a multiple of 10. Skoda done it brilliantly with the help of its TV ads aimed to change the perception about the design and construction of its cars (Dahlén, et al, 2010, p.320) (Mail online, 2007) Shot at Shepperton Studios, the cake took eight people 10 days to make. While the basis of the chassis is seen being built up with sponges, the moulded parts of the bodywork are made with a mixture of Rice Krispies. A home economist reveals in a "behind the scenes" video that the cereal was "the best edible material which will set to the exact shape of the panel" - something anyone who's made an Easter egg "nest" cake will confirm (BBC News, 4 June 2007) Skoda’s cake ad campaign on TV has caught the attention of many people (See appendix for the still pictures of the cake ad). The above commercial was lasted for around 60 seconds only it is reported that Skoda has spent £500,000 for the preparation of the above advertisement. This advertisement pictures the making of a Skoda car just like the making of a cake. The above ad was extremely funny and cute as the consumers of all age ranges were attracted towards it. In this ad, bakers prepared different parts of the Skoda vehicle with the help of the ingredients of a cake and then assembled it in the shape of a Skoda vehicle. Even the engine, body and logo made out of the cake ingredients. Apart from the cake car advertisement, Skoda has developed lot of other interesting television advertisements. In one ad, a distraught parking attendant reports to a man returning to his car, "I'm afraid some little vandal has stuck a Skoda badge on the front of your car." In another, shot on-site, a pompous English dignitary on a tour of a Skoda factory showers praise on the new plant as well as on the car. At the end of the tour, he whispers to the guide, "I hear you make those funny little Skoda cars, too." Each ad ended with the tag line, "It's a Skoda. Honest (James, 2002, p.2) The above television ads stood out among the conventional ads and caught the attention of numerous fun loving British people. The increased popularity and sales of Skoda cars in Britain was the result of the above humorous and thought provoking advertisements. The major theme of all the Skoda television advertisements was concentrated on only one aspect; the beauty of Skoda cars rather than anything else. The above television advertisements helped Skoda to raise their sales revenues to unexpected levels in UK. “Skoda UK sales in 2001 grew by 23.2%, to more than 36,000, compared with an overall market increase of 10.5%. Skoda's market share jumped to 1.5% in 2001, up from 0.8% in 1999, according to Skoda figures” (James, 2002, p.3) Chris Hawken, the marketing manager of Skoda UK, “cut several elements from the typical mix, including event marketing and sponsorships, and focused on three areas: advertising, public relations and direct marketing” (James, 2002, p.2). The advancements in technology and the entry of internet, mobile phones etc were forced Hawken to think in terms of new channels of marketing communication in place of traditional marketing communication methods. Online marketing is a channel used effectively by Skoda UK to reach the potential customers in European market especially in UK. Online marketing strategies of Skoda Voted for by over 600 motorists who had just bought or were thinking about buying a new or used car, the users analyzed more than 60 of the UK's top motor manufacturers, dealer groups and car supermarket websites. Each website was judged on a range of criteria which included measuring the quality of the customer service online; website design; the use of animation and engagement with the customer; ease of navigation; and the search tools and features available. As well as winning the top award, Skoda was also highly commended in the 'Best Motor Manufacturer Home Page' and 'Best Motor Manufacturer for Purpose Intent' categories (Reading Room Drives Skoda's online marketing campaign forward and wins prestigious award, 2008) Skoda’s online marketing campaigns attracted the attention of many people all over the world. Skoda realized that online marketing is the best way of reaching individual customers with the help of customized advertisements. Emails are the major feature for the marketers as far as online marketing is concerned. It is faster, cheaper, yet more effective than most of the other advertising channels for the marketers. Moreover, electronic media are more environmental friendly compared to all the other medias and being a socially responsible organization, Skoda put more efforts on their internet marketing or online marketing efforts which enabled them to become the winners in the online marketing category. Internet marketing strategy requires only computer skills to reach the customers whereas the other conventional advertisements need lot of other skills. Compared to the other expensive marketing strategies like audio, video and print advertisements, sales promotions etc, internet marketing is cheap and more effective. Search engine optimization (SEO) is required for such marketers to rank their web site higher in search engine rankings. It is quite possible that thousands of similar websites are entering the internet over a short time period and if the website fail to optimize, its ranking will be much lower and the visitors may not reach there. Skoda knows these things very well and they are always maintaining their website up to date. Conclusions Skoda, the Czech automobile manufacturer was able to adopt right strategies at the right time which prevented the total collapse of the organization. The destruction of communism in Czechoslovakia was almost resulted in the destruction of Skoda brand also. But Volkswagen came to the rescue of Skoda and took over the charge of Skoda. With the help of innovative marketing communication strategies, Volkswagen succeeded in bringing Skoda back in its leading positions in the global car making industry. In UK, television programs are more popular and hence television advertisements were the major marketing communication medium for Skoda in UK. Even though the advertising budgets were too low, Skoda was able to catch the attention of the public with the help of innovative and creative television ads, public relation campaigns and online marketing strategies. The cake car advertisement constructed for the UK people with the help of confectionary or bakery people has created immense interest among the UK consumers. Online marketing is another major marketing communication means implemented by Skoda in UK. Online marketing helped Skoda to devise customised ads for the individuals based on their tastes. Skoda never tried to include exaggerated claims in their ads; they concentrated more on conveying the beauty aspects of the Skoda cars to the customers. The success of Skoda’s marketing communication campaigns in UK can be attributed to the carefully devised sales promotions and advertisements. Skoda customers always got more than what they anticipated out of the Skoda products which is the major reason for the success of Skoda products not only in UK, but all over the world. Recommendations Even though Skoda succeeded in establishing in UK market, same thing cannot be said about other markets. The European and American market is almost saturated for Skoda because of the heavy completions whereas the emerging markets like India and China offer more opportunities to Skoda. But, Skoda is trying to sell out the same UK model cars like Octavia, Fabia, Laura etc in India and China also. Skoda should remember that India and China are entirely different countries with different geography, population size, culture and economy and hence the European models may not suit to the Asian region. In other words, Skoda needs to make different models of cars suitable for the Indian and Chinese conditions. Considering the huge size of population and the economic growth, the investments made for Indian and Chinese operations may not cause problems to Skoda. Along with new models, new marketing communication channels should also be opened by Skoda for their Asian operations. Skoda should realize that the cake car ads or the online marketing may not succeed in India or China as it did in UK. Indians and Chinese people are attracted towards movies and sports activities and hence advertisements with the help of celebrities like Sachin Tendulkar or Jackie Chan would be more effective in India and China. Skoda’s products are intended for the rich or medium income people. They don’t have a product suitable for the poor or ordinary people. The Indian automobile manufacturer TATA recently unveiled world’s cheapest car, NANO, worth only $ 2000 for the poor or ordinary people of India. Skoda can also think in terms of producing a cheap car intended for the poor or ordinary people. Considering the serious threats normal vehicles caused to the environment, most of the car manufacturers are now thinking in terms of making environment friendly cars. Obama has already announced a package called cash for clunkers in order to assist the people who exchange their old cars for the new fuel efficient environment friendly cars. In other words, the era of petrol or diesel car is going to stop in the near future itself considering the available stock of oil resources and the environmental problems these cars are generating. New hybrid cars or electric cars would be the future cars and Skoda needs to think in terms of developing such cars. References 1. Ace C. (2002). Effective promotional planning for e-business. Publisher: Butterworth-Heinemann (January 9, 2002) 2. BBC News, (4 June 2007), No piece of cake, [Online], Available at: http://news.bbc.co.uk/2/hi/uk_news/magazine/6705541.stm [Accessed on 06 November 2010] 3. Case study - the re-branding of Skoda, (n. d). [Online], Available at: http://tutor2u.net/business/marketing/casestudy_skoda.asp [Accessed on 06 November 2010] 4. Dahlén, M., Lange,F. and Smith T.(2010), Marketing Communications: A Brand Narrative Approach, John Wiley and Sons, 2010 5. Fill.C. (2006) Marketing Communications: Engagement, Strategies and Practice, Publisher: Financial Times/ Prentice Hall; 4 edition (24 Aug 2006) 6. James D. (2002), Rebuilding Reputations - Skoda goes from trash to treasure[Online], Available at: www.amaphoenix.org/files/Rebuidling%20Reputation.doc[Accessed on 06 November 2010] 7. Miller, L. (n. d), Marketing Communications [Online], Available at: http://www.articlesnatch.com/Article/Marketing-Communications/1035315 [Accessed on 06 November 2010] 8. Mail online, (2007) How to bake a car: the amazing story behind Skoda's new TV ad [Online], Available at: http://www.dailymail.co.uk/tvshowbiz/article-457080/How-bake-car-amazing-story-Skodas-new-TV-ad.html [Accessed on 06 November 2010] 9. Rivera,B. (n. d), Consumer Psychology For Marketing, [Online], Available at: http://www.ubscure.com/Art/89754/185/Consumer-Psychology-For-Marketing.html [Accessed on 06 November 2010] 10. Reading Room Drives Skoda's online marketing campaign forward and wins prestigious award, (2008), [Online], Available at: http://www.readingroom.com/news/reading-room-drives-skodas-online-marketing-campaign-forward-and-wins-prestigious-award.aspx [Accessed on 06 November 2010] 11. Turner, C (2008), How Skoda created the most talked about ad of 2007, [Online], Available at: http://www.utalkmarketing.com/Pages/Article.aspx?ArticleID=10631&Title=How_Skoda_created_the_most_talked_about_ad_of_2007 [Accessed on 06 November 2010] 12. The Marketing Communication Mix Of Tomorrow, (n. d), [Online], Available at: http://www.sales-and-marketing-for-you.com/marketing-communication-mix.html, [Accessed on 06 November 2010] 13. Brierley S (2002). The advertising handbook. Publisher: Routledge; 2 edition (January 11, 2002) 14. Appendix: Skoda Cake Ad on TV (Mail online, 2007) (Mail online, 2007) (Mail online, 2007) (Mail online, 2007) (Mail online, 2007) Read More