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Group Report
Marketing Management & Planning
Prepared By: Maia Murray 3284560, Mona Askari 3173368,
Peter Tippner 3255073, Sarah Jacobs 2004091, Vineet 3251429
Executive Summary:
Volkswagen was introduced to Australia in 1953 and has sold over
600,000 cars since (Volkswagen, 2017). This makes Volkswagen Australia
a large competitor in the already extremely competitive Australian
automobile industry. Volkswagen Australia sells vehicles of all styles and
sizes both wholesale (fleet) and retail to customers (Volkswagen, 2017).
Before Volkswagen launches new products in Australia it is important for
the company to conduct a thorough market and situational analysis. A
situational analysis defines the internal and external factors of a
company or organisation and clearly identifies the capabilities,
customers, potential customers and the business environment and the
impact they may have on that organization or business (Lake, 2017).
This report highlights Volkswagens internal strengths and weaknesses,
and compares them to external factors that the company cannot
control, such as market opportunities and threats. Whilst Volkswagen has
a strong customer base, provides consumers with a varied product
offering appealing to many segments of the market, and leverages well
off its links to ‘German Engineering’, the recent emissions scandal

2 Volkswagen Situational Analysis
colloquially known as ‘Dieselgate’, has adversely affected company
sales and profits.
This scandal, combined with the macro environmental conclusions of
the importance the local market puts on environmentally friendly
products, highlights risks, and potential opportunities for Volkswagen
Australia to capitalise on. Throughout this analysis, a gap in product
offerings was also discovered. Namely, the lack of an alternatively
powered vehicle.
Volkswagen Australia must understand these factors for it to continue to
be a viable and competitive company within the Australian automotive
industry.

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Table of Contents
Executive Summary:……………………………………………………………………………………… 1
1 Introduction ……………………………………………………………………………………………….. 4
2 Company and Product Line Overview……………………………………………………….. 5
3 The Marketing Mix ……………………………………………………………………………………… 6
Product……………………………………………………………………………………………….. 6
Promotion ……………………………………………………………………………………………. 7
Place…………………………………………………………………………………………………… 9
Price………………………………………………………………………………………………….. 10
4 Market Situation……………………………………………………………………………………….. 12
Target Market…………………………………………………………………………………….. 12
Size, Growth and Market Share in Target Market …………………………………… 14
Competitor Analysis ……………………………………………………………………………. 15
Bargaining Power of Suppliers ……………………………………………………………… 15
Bargaining Power of Consumers ………………………………………………………….. 16
Threats of New Entrants……………………………………………………………………….. 17
Threat of Substitution…………………………………………………………………………… 17
Competitive Rivalry…………………………………………………………………………….. 18
Macro Environment ……………………………………………………………………………. 19
5 SWOT ANALYSIS………………………………………………………………………………………… 22
Internal Factors…………………………………………………………………………………… 23
External Factors ………………………………………………………………………………….. 23
6 Market Segmentation ………………………………………………………………………………. 24
Small Car …………………………………………………………………………………………… 25
Medium Car ………………………………………………………………………………………. 26
Utility Vehicle ……………………………………………………………………………………… 27
People Movers …………………………………………………………………………………… 28
Large, Luxury Vehicle………………………………………………………………………….. 29
7 Perceptual Map ……………………………………………………………………………………….. 30
Australian Car Industry………………………………………………………………………… 30
Volkswagen Car Range………………………………………………………………………. 31
8 Conclusion……………………………………………………………………………………………….. 33
9 References……………………………………………………………………………………………….. 35
4 Volkswagen Situational Analysis
10 Appendix……………………………………………………………………………………………….. 43
Internal Analysis
1 Introduction
This report provides a situational analysis of Volkwagen Australia, and
covers both the Internal and External factors that influence Volkswagen
Australia’s decisions to introduce new products to the market, along
with a comprehensive SWOT analysis, market segmentation description
and perceptual maps.
The internal analysis includes analysing the existing company product
line, along with the companies marketing mix, which covers product,
promotion, place and price. Product not only assesses current vehicles
sold by Volkswagen Australia, but also includes services attached to
these purchases. The Promotion aspect looks at the marketing efforts
already in place to promote products and services whilst Place critically
analyses how the products are sold. Finally, Price describes the pricing
strategies employed by Volkswagen Australia.
The External Analysis Section of this report addresses the current market
situation for the company, describes the target market, and analyses
what other companies are competing for Volkswagens market share. A
SWOT Analysis then explains the internal and external factors influencing
Volkswagen Australia.

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Finally, this report explains the Market Segmentation Profiles of
consumers who would purchase from a range of different car sectors,
Small to Luxury cars. Market Segmentation is a set of characteristics that
identify the target market. Market Segmentation uses demographic,
psychographic, income, lifestyle and socio-economic information to
form a profile (Business Dictionary, 2017). The Market Segmentation
profile also includes brand positioning and a company position
perceptual map to help identify where Volkswagen sits in the existing
market.
2 Company and Product Line Overview
The Volkswagen Group, the parent company of Volkswagen, is
headquartered in Wolfsburg Germany, and is the largest carmaker
within Europe (Volkswagen Aktiengesellschaft, 2016). Within Australia,
Volkswagen has a long and intertwined history, not only within the local
automotive market, but also with Australian culture. Entering the
Australian market in 1953 with the iconic Beetle, the company has sold
more than 600,000 vehicles locally (Volkswagen, 2017a), and continues
to be a large automotive retailer within the Australian automotive
industry.
In Australia, Volkswagen offers 24 vehicle models (Volkswagen, 2017b),
which the company markets in the following groups: –
· Hatches and Sedans;
· SUVs;

6 Volkswagen Situational Analysis
· People Movers;
· Utes and Vans;
· Wagons; and,
· Performance.
These vehicles are sold from Volkswagen’s Australian retail network of
dealerships, each of which operates under a franchise arrangement.
3 The Marketing Mix
Product
Volkswagen Group Australia provides Volkswagen vehicles, parts and
accessories to the Australian public. They sell “new and pre-owned cars,
parts and accessories for all models, Volkswagen merchandise, as well
as offering finance options and car service centres” (IBISWorld, 2015).
Volkswagen provides vehicles for purchase which are reliable, practical,
appealing and accessible (Volkswagen Australia, 2017).
There is a range of sizes and vehicle types in the Volkswagen passenger
vehicle range which includes small and compact cars, mid-size and
large cars, wagons, SUVs and people-movers. This ensures a wide range
of audiences are catered for, eg. hatchbacks are well suited for
individual city driving; sedans suited to family city driving; SUVs suitable
for on and off-road driving; People Movers suited to larger families or
small group transportation; Utes and Vans suitable for use as personal
and working vehicles; Wagons suitable for family city driving and

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Performance vehicles suited for consumers who want extra power and
performance in their city-driving vehicles. Refer to
Appendix A.
Consumers can customise their car by choosing a colour from the
available range, adding certain extras and upgrades to the vehicle.
Volkswagen offers financing options if full upfront payment is not possible
for the consumer.
Once the consumer purchases a Volkswagen vehicle, they are also able
to continue their relationship with the brand and aftercare of the vehicle
through the Volkswagen Service Centres, which are generally found in
the same location as Volkswagen dealerships.
Volkswagen have a point of difference from other main competitors in
that they are a European car manufacturer, as opposed to competitor
brands which are mainly manufactured in countries such as Australia,
U.S.A, Japan and Korea.
Promotion
Volkswagen Australia’s Facebook page helps explain their brand
positioning and brand values: “The core Volkswagen values of
economical, reliable and robust engineering combined with practical
and appealing design that have made it vehicles accessible to millions
of people hold firm now just as they always have. Truly the people’s car.”
(Volkswagen Australia, 2017).
The channels of communication for their promotions include a mix of
mainstream advertising media as well as direct communications, and
an online presence which includes the Volkswagen Australia website,

8 Volkswagen Situational Analysis
Volkswagen Australia Facebook and Volkswagen Australia YouTube
channel. Sales promotion material is featured at the Volkswagen
dealerships, and personal selling is done via sales staff within the
Volkswagen car dealership centres. Public Relations is also utilised, for
example having various Volkswagen car model reviews featured in
newspapers and car magazines.
There are different advantages for using each of these types of
promotional element: Refer to
Appendix B.
Volkswagen’s most recent campaigns are promoting their 1% finance
comparison rate for the Golf and Polo, and have also concentrated on
promoting the Tiguan SUV. In November 2016, Volkswagen launched a
new retail campaign which focussed on Volkswagen’s 1% finance
comparison rate for the Golf and Polo ranges. This campaign was
created by DDB Sydney, and was launched with two 30-second
television commercials and was supported by radio, digital, press and
out-of-home advertising (Campaign Brief, 2016). Refer to
Appendix C.
In September 2016, Volkswagen launched a new campaign for its
Tiguan SUV. The campaign was also created by Volkswagen Australia’s
advertising partner DDB Sydney, and the television ad created to
promote the Tiguan SUV was also supported by executions for digital,
print and out-of-home to support the campaign (Canning, 2016). This
campaign centred around a couple enjoying all the best that the new
Tiguan has to offer, getting so caught up in the moment they even
forget their daughter is sitting in the back seat of the vehicle! Refer to
Appendix D.
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An update of advertising for the Tiguan SUV released in April 2017, also
by DDB Sydney, saw Volkswagen launch a nationwide campaign which
showcases its desirable and advanced technology. This campaign
featured a 60-second cinema ad, 30-second TV ad with a 15-second
reprise, as well as two bespoke 15-second ads, outdoor and a range of
digital media (Campaign Brief, 2017). Refer to
Appendix E.
In addition to promoting finance comparison rates and promoting their
flagship vehicles, there are additional price offers communicated in
dealerships and via the Volkswagen Australia website. This gives
customers a more detailed overview of price discounts and bonuses for
selected vehicles.
Place
Volkswagen Australia sell their products through several intermediaries,
the two main ways is through their merchant retails and wholesale.
Volkswagen Australia has over 29 dealerships dedicated to Volkswagen
alone and over 100 dealerships selling Volkswagen used and new
(Volkswagen, 2017). By definition, a retailer, or merchant, is an entity
that sells goods or commodities directly to consumers, through various
distribution channels with the goal of earning a profit (Hudson, 2016).
Volkswagen also sells fleet vehicles wholesale, “If you need more than
one vehicle for your business, then our fleet program is for you”
(Volkswagen, 2017). The fleet program offers business, nationals,
government and semi government purchases. Wholesale is the business
of selling of goods in large quantities and at low prices, typically to be
sold on by retailers at a profit or used for business (Hudson, 2016).

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Volkswagen are direct distributors of their products. This strategy is called
Direct Distribution. Direct distribution involves distributing direct from the
manufacturer to the consumer, providing directly to its target customers
(The Marketing Mix, 2017). The advantage of direct distribution is that it
gives a manufacturer complete control over their product (The
Marketing Mix, 2017). Volkswagen has benefitted from this due to its
European Origins. It builds trust with the brand to customers. Refer to
Appendix F.
Another distribution strategy employed by Volkswagen is an Exclusive
Distribution Strategy. Exclusive Distribution means that only the
manufacturer or select resellers can sell a product. This works more
effectively with specialty products that you can promote as prestigious
because you are the sole supplier and the intermediary is the sole
reseller (The Marketing Mix, 2017).
This multi-channel approach to selling is beneficial to Volkswagen
Australia because it promotes exclusivity of the product as well as
reliable due to availability through the company.
Price
Customers can purchase a Volkswagen in Australia through four
different methods. Volkswagen Australia offers trade in’s, cash, lease or
loan (Volkswagen, 2017). Offering a few options to customers ensures
that whatever situation the consumer is in they will be able to purchase
what they ‘need’ from Volkswagen. The prices of Volkswagen vehicles
in Australia range from $16,990 – $116,990 brand new (Volkswagen,
2017). The prices reflect the type of product being offered. Pricing a

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product too high or too low could mean lost sales for the organisation
(Learn Marketing, 2017). A pricing strategy that Volkswagen use is the
Premium Pricing Strategy, which is one where the price is set high to
indicate to the customer that is “Exclusive”. This pricing strategy is in line
with their European background, safety and reliability.
Another strategy used by Volkswagen is Skimming Pricing. The
organisation sets an initial high price and then slowly lowers the price to
make the product available to a wider market (Learn Marketing, 2017).
The objective with this strategy is to make a big return in the beginning
and as the product gets older and new product lines are introduced
they are easy to sell. An example is the End of Financial Year sales. The
way that Volkswagen would determine their pricing strategy is by
following a pricing process. Refer to
Appendix G.
The Basic Pricing Process for Volkswagen would start with Developing
the Marketing Strategy, this includes identifying target market, market
segmentation profile, detailed market analysis.
Making a marketing mix decision about what type of positioning the
product will have and who will buy it, Volkswagen then will estimate how
the product will sell. This information can be predicted from previous
products sold, competitors and customers willingness to purchase.
Finally, the costs are calculated, the environment is assessed, objectives
are identified and the price is set. All the steps are dependable on the
previous step (Martin, 2014).

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12
External Analysis
4 Market Situation
Target Market
At the end of the September quarter, 2016, the population within
Australia was approximately 24.2 million people, with an annual growth
rate of approximately 1.5% (Australian Bureau of Statistics, 2017a). At the
time of collection of the 2016 census, over 18.4 million motor vehicles
were registered in Australia, with an average vehicle age of 10.1 years
(Australian Bureau of Statistics, 2016).
The Motor Trades Association of Australia describes the retailing of new
cars as a sub-group of the overall Australian automotive industry, an
industry with a reported revenue in 2014-15 of approximately $221,900
million (Motor Trades Association of Australia, n.d.). Within Australia,
consumers have a choice of over 400 vehicle models (Aca Research,
2017), promoted through 64 automotive brands. This number out
shadowing the likes of larger markets such as the United States and the
United Kingdom, each with 38 and 42 automotive brands respectively
(Dowling, 2017).

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Even with the closing down of Australia’s three main automotive
manufacturing companies, Holden, Ford, and Toyota; the forecast for
car prices within Australia is to remain steady, with the local market
being described as the most competitive market on the planet
(Dowling, 2017).
Volkswagen is a German word which when translated to English, means
‘peoples car’. In this sense, Volkswagen is true to its name in that the
automotive manufacturer aims to produce “affordable premium
vehicles” (Dong, 2016) that can be sold worldwide. Within Australia, the
company’s 24 vehicle models achieve this, with recommended retail
prices varying from $16,990 for the economical Polo, through to $116,990
for the top SUV model (Touareg). Similarly, the range of car models
suiting different utilities is just a broad with the company offering small,
economic city cars, family orientated station wagons, commercial, and
sports vehicles. This wide range of product offerings, is designed to
maximize its success within the various automotive market segments.
Most consumers that are targeted by Volkswagen are people who
indicating a for practicality and a European style and standard.
Volkswagen market heavily off the term ‘German engineering’, which is
synonymous for precision, perfection, reliability, and importantly, safety
and quality. Compared alongside the company’s vehicle offering, it is
evident that the target market for Volkswagen is a consumer ranging
from young, first car buyers all the way through to older, wealthier
consumers, all of whom value safety and reliability.

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Size, Growth and Market Share in Target Market
During the 2016 calendar year, a total of 1,178,133 new vehicles were
bought by Australian consumers, a rise of 2.0% from 1,155,408 purchased
in 2015 (Federal Chamber of Automotive Industries, n.d.). This rising trend
is of a similar magnitude to the growth in population as previously
described. Toyota, Mazda and Hyundai sold most vehicles within
Australia, with Volkswagen occupying 8
th position, selling a total of
56,571. Refer to
Appendix H.
Recently Volkswagen has been involved in an emissions scandal,
colloquially known as ‘Dieselgate’, in which the Environmental
Protection Agency in the United States discovered software in their
diesel-powered vehicles which could artificially alter engine
performance to minimize emissions during testing, in order to improve
results (Hotten, 2015). This has influenced the way that consumers see
Volkswagen. Whilst the sales of diesel Volkswagen’s in Australia has
dropped significantly, from 38.4% in 2010 to 10.4% in 2016 (Charlwood,
2016), this may reflect the overall trend in Australia where over the same
period diesel sales reduced from 7.7% to 4.3%.
Whilst there is no solid data to suggest the long term effects of this
scandal on total Volkswagen market share, sales figures in 2016 were
approximately 6% lower than in 2015, with the most popular models sold
being the Passat (5th most popular vehicle in the medium cars under
$60,000 category), and the Amarok (8th most popular vehicle in the
utility vehicle category) (Davis, 2017). The demand of the Amarok is no
surprise, with the popularity of SUV’s in Australia growing significantly,

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making up 37.4% of total vehicle sales in 2016 (Federal Chamber of
Automotive Industries, n.d.), a rise of 2% from the previous year.
Competitor Analysis
The main competitors that Volkswagen face in the Australian Market are
Holden, Toyota and Ford. The recent emission scandal within
Volkswagen has posed a significant threat to the brand worldwide. As
mentioned previously, the decrease in sales and market share has had
the least impact in Australian market’s. Within the parent Volkswagen
company, 5 million cars worldwide were recalled. This gave competitors
in the market place an opportunity to gain more of a market share.
The competitor analysis for Volkswagen Australia will be analyzed using
Porter’s five forces. There are five forces which build the nature of
competition in industry: Bargaining power of suppliers, bargaining power
of customers, threat of new entrants, threat of substitute product and
competitive rivalry (Porter, 1979).
Bargaining Power of Suppliers
Volkswagen Australia rely heavily on the parent company “The
Volkswagen Group”. The Volkswagen Group send cars from their
manufactures around the world in Asia, Africa, Europe, North America
and South America (Cars Direct, 2012). Volkswagen vehicles are
currently being manufactured in all those locations, but not all factories
make every single Volkswagen model (Cars Direct, 2012). The two major
regions of manufacturing are North America and Asia (Cars Direct,
2012). The manufactures of Volkswagen worldwide have low bargaining

Volkswagen Situational Analysis
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power due to the amount of manufactures there are and how big the
company is.
Volkswagen has over 30 stand-alone franchise dealerships in Australia
(Volkswagen, 2017). The dealerships are the only way that consumers
can buy brand new cars from Volkswagen. This indicates high
bargaining power of the supplier (Volkswagen) in Australia.
Bargaining Power of Consumers
Volkswagen is a strong competitor in the Australian market as stated
previously. However, there is a variety of automobile brands which
creates a tough competitive market (Porter, 2008). The increased
availability and affordability of cars in Australia allows Australians to
travel further than was possible before: taking longer trips, attending
cultural outings, gaining employment further afield (ABS, 2013). The
attitude of consumers has changed and almost 50% of households in
Australia have more than one car (ABS, 2013). Refer to
Appendix I. This
indicates that the bargaining power of consumers is low. In a report by
the Australia Bureau of Statistics it concludes that More Australians are
driving, with many using it as their main method of transport (ABS, 2013).
With an increasing number of passenger vehicles, this high level of
passenger vehicles use is likely to continue (ABS, 2013).
Although there is a huge automobile market in Australia, the previous
information does not suggest that it is directed towards any type or
make of car. Australian new car sales figures for January show the
Mazda3 and Toyota Corolla leapfrogging the Ford Ranger, Toyota HiLux
and Toyota Camry, to come in at first and second place respectively

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(Whichcar, 2017). Australian consumers prefer Asian and Australian
branded cars because they are familiar and trusted by consumers
(Whichcar, 2017).
Threats of New Entrants
It is apparent that there is no way of stopping new companies from
entering the market. Huge changes are being made in Australia that
are directly affecting consumers and their need to import. David
McCowen from Drive.com says “Australian motorists will soon be able to
save money through bypassing car dealers to source new cars
from overseas”. (McCowen,2016). The Federal Government announced
in 2016 that parallel imports of new cars are part of planned changes to
the Motor Vehicle Act that will go to parliament this year
(McCowen,2016). This will impact existing car markets in Australia.
Another trend amongst consumers is Electric Cars. While the idea is not
protectable, new companies are coming to Australia to benefit from the
trend. Tesla owners enjoy the benefit of charging at home so they never
have to visit a gas station or spend a cent on gasoline (Tesla, 2017).
Volkswagen is soon to launch the e-Golf I.D. (Maclean, 2016). The threats
of new entrants to the Australian market is high due to the technological
trends advancing in Australia and new import laws changing making it
more accessible for consumers to purchase overseas.
Threat of Substitution
Volkswagen Australia produces over 40 types of cars in most sub
categories (small, large, luxury). The threat of substitution is high within
the industry because most car companies offer the same type of range.

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Another consideration is the type of transport available. Within Australia
most major cities offer public transport, cycle hire, alternative transport
and walking paths. A study conducted by the ABS found that “in 2012,
of all adults who travelled by passenger vehicle to work or study, over a
half (53%) stated that a lack of public transport services (at all or at the
right or convenient time) was one of the main reasons for not taking
public transport” (ABS, 2013). And that “Cycling, an environmentally
friendly alternative to a passenger vehicle or public transport, was not
common among Australians” (ABS, 2013). It can be concluded that the
threat of substitution to motor vehicle use in Australia is low.
Competitive Rivalry
There are over 64 car companies that operate as corporations or
franchises within the Australian Market. And with only 64 car brands on
sale, Australia is the most competitive market in the world, given only 1.1
million new cars each year are sold (Dowling, 2014).
Car manufacturers are all competing for an ever-changing
demographic. This means they are forced to produce new products
and influence customers to choose their brand over others. Ford
Australia stated, “We have a very established customer base that is
largely (centred) around established Australian families, but there is a
dynamic element of new blood in Australia,”
With such a small market, brand equity is one of the most important
factors within the Australian car industry. Brands form a company culture
to stay relevant and build strong bonds with consumers. It becomes a
way of life, not just a car. Leveraging brand equity with a strong

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message, delivered through strategic communications and creative
planning, sets products or services apart and increases consideration
that may ultimately end in a sale (Shinn, 2016). Refer to
Appendix J.
Volkswagen is in one of the most competitive markets in the world.
Therefore, the competitive rivalry is high.
Macro Environment
Political, Legal and Environmental Factors
Following the Volkswagen emission scandal in Germany, the
government has narrowed in on The Volkswagen Group. In Berlin, the
German ministry of transport has started to conduct tests on 29 models
of Volkswagen cars (Reuters,2017). Volkswagen Australia has approval
from the Federal Government for most of the 29 models sold in Australia
(Volkswagen,2017). Marketing efforts of Volkswagen Australia can
benefit from this legal isolation.
Although, consumers in Australia who have been sold models involved
in the scandal are questioning why they have not received
reimbursement from Volkswagen Australia. Volkswagen has been
questioned by Australian government to explain why they have not
provided Australian customers reimbursements for cars which were
fitted with ‘Dieselgate’ devices (Bainbridge, 2017). As a result, Australian
consumers who are not currently receiving compensation feel
secondary to American Consumers.
Furthermore, Australian consumers are concerned about carbon
emissions and pollution in the country. The Government has introduced
a Direct Action Plan to reduce the emissions by 5% by 2020; the plan is

Volkswagen Situational Analysis
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based on the Emissions Reduction Fund, a tool by means of which
credits are awarded for decreasing emissions (Marketline,2016). Due to
the current emissions scandal of Volkswagen, it would be a challenge
for the company to increase its sales in a market that’s focus is
environmental pollution.
Social Factors
Volkswagen is a German brand which can be identified with high
quality, reliability and innovative cars (Volkswagen, 2017). They
manufacture a range of family, luxury sport, and small economic cars.
Compared to other brands their cars are expensive. Due to a rise in fuel
prices, the demand of customers has shifted from large vehicles to fuel
efficient cars (IBIS World, 2017). The CEO of Carsales Greg Roebuk said
that the emission scandal may not affect the Volkswagen car sales in
Australia as the cars offered are economic in fuel. However, due to a
dip in petrol prices it may push customers to Volkswagens petrol car
options, instead of new electric offerings (Blackwell, 2016).
Economic Factors
The automotive manufacturing industry in Australia is facing some
challenges due to hikes in production prices. There is increasing
international competition and high exchange rates (The Senate, 2015).
Another factor considered is that big automotive manufacturers such as
Ford, Holden, and Toyota, have ceased the production of cars in
Australia. This has led to a decline in small passenger cars in Australia. To
reflect the current market Volkswagen has decreased the prices of golf
‘7.5’ hatchback and other small cars to meet the demands of
consumers. The price reductions is a reaction to the decline in the sales

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of Volkswagen cars which is over 20% annually (Tripolone,2017). The
Australian car manufacturing sector has become so small that each
company began to rely on the other for survival (Courior Mail, 2014).
Technological Factors
The rate at which technology is changing personal
transportation accelerates every year, which can make predicting the
arrival of future car tech a dicey proposition (Forbes, 2015). The
technology is becoming advanced progressively. Australia is investing in
the research and development of driverless cars (DudleyNicholson ,2016). It will be among the first market to invest in cars driven
by Artificial Intelligence (AI). Volkswagen is a big player in the
technology race. It has collaborated with Nvidia to expand AI in its
vehicles; the CIO Dr. Martin Hoffman said that AI is the future of
Volkswagen cars and they are planning to launch self -driving vehicle
by 2020 (Russell,2017). This can be an advantage for Volkswagen to
invest in AI as the Australian market is investing heavily in this advanced
technology.

Volkswagen Situational Analysis
22
5 SWOT ANALYSIS
SWOT analysis is the analysis of the internal, strengths and weakness and
external the opportunities and threats in the market. Below is a table that
highlights the internal and external factors influencing Volkswagen in the
Australian Market.

STRENGTHS WEAKNESSES
Strong brand history with
iconic and popular cars
such as the Beetle and
Kombi
German company with links
to ‘German Engineering’
Market depth and
significant popularity in
Europe
● No current presence
in the electric or hybrid car
market.
● Weak market share
within Australia.
Negative publicity
linked to the Volkswagen
Emission Scandal.
OPPORTUNITIES THREATS
Market demand for electric
and hybrid vehicles.
Market demand for
autonomous vehicles.
Focus on environmentally
friendly vehicles to offset the
brand damage done by the
Volkswagen Emission
Scandal.
Be the first company to
launch self-driving cars in
Australia
● Fluctuation in raw
material prices required to
build the vehicles.
● Fluctuation in
exchange rates as all
models are manufactured
outside of Australia.
● Changes to emission
laws can impact the
company which has no
electric / hybrid models on
offer.

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Increasing
competition from other
manufacturers.

Internal Factors
The internal factors influencing Volkswagen Australia are its strengths
and weaknesses. Strengths are helpful to the company and outlines
what Volkswagen Australia has that other car companies do not. The
strengths identified with Volkswagen Australia is its link to its German
heritage. Marketing of Volkswagen Australia plays heavily on its
“German Engineering”. The strength in the European outlook is that
consumers believe European cars are better made. Consumer reports
support the idea that European vehicles tend to be of higher
performance and safer than Japanese vehicles. This is something that
Volkswagen has above their Asian, American and Australian
competitors. The weaknesses identified within the Volkswagen
company is the lack of hybrid and electric car. The electric Golf is set to
be sold in Australia by 2018, but currently there is a gap in its product
offering. Another weakness is the emission scandal that is affecting
Volkswagen world-wide.
External Factors
External factors can be identified through the opportunities and threats
to the company. Opportunities represent the external situations that
bring a competitive advantage if seized upon (Jurevicius, 2013). Threats
may damage a company so they should avoid or defend against them
(Jurevicius, 2013). Opportunities are developing AI (self-driving) cars and
hybrid cars and bring them to Australia first. The threats are that the ever

Volkswagen Situational Analysis
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changing environment of the Australian market makes it difficult for
anyone to succeed. The changing import tax laws in Australia may
affect sales.
6 Market Segmentation
Kotler, Burton, Deans, Brown and Armstrong (2013) define market
segmentation as the process of “dividing a market into groups of buyers
who might require separate products of marketing mixes”. Solomon et
al. further describe segmentation as the “process of dividing a larger
market into smaller pieces based on one or more meaningful, shared
characteristics” (Solomon et al., 2014).
Broadly, market segmentation can be achieved through Geographic’s,
Demographics, Psychographics, and Behavior. This report focuses on
the Volkswagen brand in Australia, therefore the geographic dimension
of market segmentation is not applicable, and is omitted from the
following analysis.
Volkswagen offers an array of vehicle models in Australia, ranging from
small economical and cheap city cars, through to exclusive and
technologically advanced SUVs. Similarly, within each vehicle model,
the company offers a range of options, all of which slightly alter the price
and create sub-segments within the identified broader market
segments. This strategy of offering a wide range of vehicle models,
combined with offering many options for each model, is a result of the
market segmentation process undertaken by Volkswagen.

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Within the scope of this essay (Volkswagen Passenger and Light
Commercial vehicles only), it is evident that Volkswagen has divided the
market into five distinct segments. These being the small car, medium
car, utility vehicle, people movers, and large luxury vehicle segments.
These five segments capture all of Volkswagens current products
available in Australia, and are summarised below.
Small Car

DIMENSION DESCRIPTION
Demographic Young, middle class customers, or customers who don’t frequently
travel with family (i.e. retirees, empty nesters, couples with no kids).
Behavioral Customers wanting a practical solution to daily commuting, at a
price that offers value for money. Customers looking for a second
family car.
Psychographic Busy customers who live within larger cities who mainly travel low
daily kilometers on congested city roads. Environmentally aware
customers.
Example vehicle Polo/Golf

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Summary: This category is defined by the young, quality and safety conscious consumer who is
focused on economy and reliability. They are typically trendy professionals, seeking a practical
commuting solution to their busy inner city lives. Consumers in this segment either have no
children, or have independent children as size is not an overly strong consideration for them.

Medium Car

DIMENSION DESCRIPTION
Demographic Middle class families or companies seeking a comfortable and
professional looking sedan.
Behavioral Customers used to driving sedans such as those offered by other
successful Australian companies such as Ford and Holden.
Psychographic Family consumers who seek space, quality and safety in a
vehicle. Due to the range of options and models available within
the medium car range, this could also be stretched to include
thrill seekers and consumers wanting to highlight their status
through the more exclusive and optioned vehicles.
Example vehicle Passat

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Utility Vehicle

Summary: Middle class customers who are families with multiple children seeking safety
and space for driving holidays. Similarly, business professionals looking for a quality sedan
as a company vehicle.

 

DIMENSION DESCRIPTION
Demographic Typically, a working age male or industrial company seeking a
flexible work vehicle.
Behavioral Customers requiring a vehicle for work (typically tradesman) or
those that want the flexibility to travel off road.
Psychographic Utility driven pragmatic customers who seek comfort and
quality in a work vehicle. Customers who want to explore the
outside world (4WD and camping) on their weekends.
Adventurous customers.

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People Movers

Example vehicle Amarok
Summary: Tradesman or industrial companies who wants ruggedness, reliability, and
flexibility in a comfortable 4WD utility vehicle. Customers in this segment want a
vehicle that not only meets the demands of their working life, but can also satisfy their
adventurous nature on weekends.

 

DIMENSION DESCRIPTION
Demographic Large families or businesses that are required to move groups
of people. Customers who are parents that are required to
transport their children and friends to school, sports, holidays,
etc.
Behavioral Large families that frequently conduct driving holidays and
seek comfort and space. Families transporting their children
and friends to various weekend sports.

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Large, Luxury Vehicle

Psychographic Customers that are practically minded in their transportation
solution.
Example vehicle Multivan
Summary: Customers in the people mover segment are typically large families or
businesses, that seek comfort, space, and practicality in their transportation solution.

 

DIMENSION DESCRIPTION
Demographic Middle age, financial successful customers. Executives.
Behavioral Customers accustomed to high end, quality items. Customers
who have previously owned SUVs are used to their size, driving
position, and practicality.

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7 Perceptual Map
Australian Car Industry

Psychographic Customers primarily interested in their social status, wanting to
highlight their social class. Adventurous.
Example vehicle Touareg
Summary: Customers segmented in the large, luxury vehicle segment is typically
middle to upper age, wealthy professionals seeking
prestige, comfort, safety. These
customers are interested in highlighting their social class and look at themselves as
adventurous.

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Volkswagen Car Range
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8 Conclusion
This report investigated and analysed the market situation of
Volkswagen Australia. The main points covered were the Internal,
External and Market Segmentation of Volkswagen in the Australian
Market.
The Internal Analysis identified the company Volkswagen, and
established the types of products provided by Volkswagen, which
included tangible products and services. The promotion of Volkswagen
indicated that in markets outside Europe, Volkswagen markets their
products as “German Engineering” and European made. The report
covered the distribution strategy and the pricing strategy that
Volkswagen uses to stay relevant in such a competitive market.
The External Analysis addressed the target market within the Australian
market and how Volkswagen uses the target market to gain market
share. Their extensive product categories are reactive in the Australian
market. Porters 5 Forces were used to investigate the competitors in the
market. The competitor situation indicates that the Australian market is
one of the most competitive in the world. The Macro environment of the
company was analyzed using the PESTLE model. This identified the
political trouble that Volkswagen is involved in world-wide through an
emission scandal called ‘Dieselgate’. It is affecting company sales and
indicates to consumers that Volkswagen is not ready for the current
trends in the market. The current trends analyzed in the SWOT analysis
concluded that consumers want cars that are hybrid or electric and
there is a competitive race for self-driving cars.

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The Market Segmentation Profile intricately investigated who was the
consumer for each product category that Volkswagen have, from
economy to large luxury cars. A perceptual map found where in the
Australian market Volkswagen sits and finally, a perceptual map
indicated the product offerings to better understand who would be the
consumers of each product.
The main issues identified in the report included the ‘Dieselgate’ emission
scandal that has greatly affected sales world-wide for Volkswagen. Also
that the changing environment of the Australian automotive industry is
a competitive market to compete in, and that offering a large product
range to suit every consumer need is key to being relevant within this
industry.

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10 Appendix
A)
B)

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C)
D)
E)

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F)
G)
H)

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I)
J)