Today’s article, starts from reading the article published in Automotive News Europe dedicated to VW’s new market positioning strategy to launch Volkswgen ID.
We have always said that in order to win in the market, it is essential to have a proper positioning strategy.
Positioning means, making sure that you are recognized by your potential target audience.
We start from the premise that you cannot sell everything to everyone. And the article we are going to examine is a practical demonstration of this.
Each person has totally personal tastes, needs, ideas and budgets. Each of these elements is the basis of her buying process, which will lead her to select the products and services that most reflect her.
I read with much interest and attention the interview with Jochen Sengpiehl of Volkswagen.
Before analyzing in detail what Jochen Sengpiehl said in the interview, it is essential to take a brief snapshot of the Volkswagen Group.
In 2018, the Volkswagen Group had sales of 235.8 billion euros (+ 2.7 compared to 2017) and earned (net income) 4.62 billion (+ 6.1% compared to 2017). The balance sheet at the end of 2018 was 176.4 billion euros. up 19.7 billion from the previous year.
Article data source: https://www.autoblog.it/post/974085/gruppo-volkswagen-bilancio-2018-positivo
So we could say a real powerhouse.
It would be natural to think that a company so well positioned in the market, with such a high turnover, dealerships halfway around the world, should have no problem positioning its electric vehicles in the market. But is this really the case?
Market Positioning: Analysis
The electric market seems to be a fast-growing market. Dozens of new articles come out every day about new models and new technologies.
Not only that. The need to make green choices has become more and more concrete in people’s minds.
In recent years, we have seen a real global communication strategy in favor of electric cars versus the traditional combustion engine.
It is not my intention to talk about this aspect, and clearly this is not the place either.
Let’s stop with the facts. Today the electric car seems to be a key element, for car manufacturers, on which to develop their strategy in the medium and long term.
It is important to say that in pursuit of this strategy, all the major groups are making investments, in the range of billions of dollars.
Investments that compress corporate profits in the short term, but are likely to bear fruit in the medium and long term.
This last aspect is extremely important.
As I always say, it is crucial to structure a positioning strategy and consequently a marketing and communication strategy, which analyzes both the short, medium and long term.
Short-term strategy is tasked with ensuring the right cash flow. The medium- and long-term strategy has the task of planning the company’s growth and expansion in the market over time.
And now let’s look together at the interview with Jochen Sengpiehl, Chief Marketing Officer bei Volkswagen AG
Market positioning and content marketing for the development of Volkswagen ID
Automotive news Europe: Why did you start the campaign for the VW ID3 compact electric car a year before deliveries begin?
Jochen Sengpiehl: For Volkswagen’s fundamental transformation to e-mobility we are pursuing a completely new marketing approach. We are starting much earlier than usual and not just talking about the product. Because many people are not as familiar with e-mobility as they are with internal combustion cars, we want to provide information and break down misconceptions.
This first question is fundamental. Although everyone talks about electric, the market has not yet understood, fully, the potential and complications, of this new form of mobility.
So it is crucial, first of all, to make culture.
Market positioning: new segments
We are facing a new market segment that did not exist until a few years ago.
One of the first companies to implement a focus strategy in this niche was Tesla.
To win in the marketplace you need to position your company correctly and be focused in a niche.
This is also demonstrated in the words of Jochen Sengpiehl. So much so that in order to enter the world of electric Volkswagen has created a kind of focused Brand recognizable by the acronym ID.
In the medium-term strategy, you cannot focus on turnover
In the interview, Jochen Sengpiehl goes on to say , “The long lead time will help you better understand how customers will react to electric vehicles so you are better positioned to sell them.” We don’t just focus on pre-bookings. We want to learn what motivates our customers.”
As you can read, VW’s strategy, is not short-selling. They would risk not understanding the market and wrong strategic positioning.
They started presales 1 year earlier, not to guarantee sales, but to understand the needs of the target market .
Billion-dollar investments, they are not compensated by selling a few tens of thousands of models, but by winning in the market.
Factors that lead a person to purchase a product
To do so, it is essential to understand, why a person feels the need to buy an electric car.
What are the winning factors?
In the decision-making path, there are several factors that lead a person to purchase a product. In this case, an electric car:
- Ecological Factor: I don’t want to pollute the environment. This point is extremely important because so many authoritative sources show that the life cycle of an electric car, from production to disposal” has a greater impact on the environment than that of a combustion car. What do people think about this?
- Economic Factor: I want an electric car to save money. What is the actual savings? How much does an electric car cost compared to the same combustion model? How many miles do I need to drive each have to amortize the cost? If the batteries fail, how much does it cost to replace them? Are there specialized workshops, or am I forced to go to the dealer?
- Comfort Factor (user experience): what is the range of an electric car, compared to a combustion car? If I have to stop and recharge the batteries, how long does it take to recharge? How many electricity distributors are there? Can I make a long-distance trip?
Well we have only touched on the main points, but only by answering these and other questions, Volkswagen and the various car manufacturers, are able to design the right strategy in the medium and long term.
Designing the right strategy, means identifying your target audience.
Automotive news Europe: Who is ID3’s target customer?
Jochen Sengpiehl: Using demographic and social psychographic data, we first identified a global target audience that we call the “aspiring middle class.” With all innovations, however, you have this diffusion curve. Golf appeals to the masses. Tesla appeals to innovators. After the innovators come the early adopters. We want to target early adopters. That’s why our communication is more edgy than our conventional cars. If you get the early adopters, the others will follow.
To fully analyze this statement, we must start by understanding who the early adopters are .
Early adopters are those who start using a product, or a technology, before they are released. In the IT field, they are called beta testers. That is, those who receive software well in advance, use it for free, in some cases are paid, and are responsible for reporting issues and possible improvements.
For example, I am enrolled in the Trusted Tester program, by Google, referring to Local Guides. Thanks to this program, I can know in advance what’s new from Google regarding some of its services.
Essentially, Volkswagen is looking to its target market and various communities for its early adopters, what we might call, testers & influencers.
Competent people who are part of the community and have a good, natural ability to influence people near them.
Defining the Target for Volkswagen ID
And now we come to the definition of the target audience according to Jochen Sengpiehl: “…people of all ages are interested in electrification. That said, most people are younger than combustion engine car buyers. Early adopters earn a lot of money, work in startup companies, live in urban environments, are well educated and move a little faster than others.”
In this last sentence, the target audience at which Volkswagen is aiming to conquer the target market emerges.
Win early adopters and win the market. Volkswagen, like the world’s other major automakers, knows full well that the electric car market is not going to explode anytime soon.
I would venture to say that everyone hopes this will not happen, for the simple reason that we are not ready yet. If we all had to have an electric car tomorrow, apart from the logistics, columns etc… there would not even be electricity to recharge the batteries.
Rightly, Volkswagen’s strategy aims for the medium and long term, when the different nations will also be fully organized.
So it identifies its ambassadors, early adopters as people who:
- they earn a lot of money
- work in startup companies
- live in urban environments
- are well educated
- move a little faster than others.
Here is the target audience defined. Having understood the target audience, the positioning strategy can be defined.
Market positioning strategy and content marketing
Market positioning strategy is also implemented with content marketing.
The last point I want to highlight and elaborate on is just that.
Creating culture. And culture passes through
Early adopters are looking for concrete, useful information that explains in detail how and why.
Jochen Sengpiehl explained this concept very quickly when talking about ID.Hub.
I apologize but I must repost the passage from the interview that delves into this topic, but only then is Volkswagen’s strategy clear.
Jochen Sengpiehl “Thanks to data-driven marketing, we know where they come from, we know where they go, what content they like and what they don’t like. With our recently launched ID.Hub, we will learn how to improve ourselves. We have never worked like this before. Other companies started selling electric cars many years before us. We need to kick off our efforts and make sure we get it right.”
Conclusions
How to implement your market positioning strategy with content marketing
Reading this article, you are probably telling yourself that only large companies have this requirement.
Absolutely not. Small and micro businesses also have this need. I could say that, perhaps the need is even greater, because they don’t have the budget, market and notoriety of the big groups.
I often give this simple example but one that is more relevant to our market, which is made up of micro businesses.
If you want to open a new restaurant or pizzeria, you should know that, most likely, you have dozens of other restaurants near you.
So you have a need to differentiate yourself.
Why should a customer decide to enter your restaurant instead of one of your competitors?
Because you have decided, a priori, what your target audience is.
Don’t open the usual pizza restaurant, where the definition “Typical Italian Restaurant” may attract only passing tourists.
But you have defined a very clear niche. You’ve defined, precisely, who you want coming into your restaurant versus the competition.
Basically, you have defined your prospects and customers.
You could make a restaurant for couples only, or dedicated to the homosexual world, or to non-sellers, or to animal lovers.
Narrow but specific target audience. True you snub the masses, but engage targets who will recognize you as an expert. You will be their restaurant of choice.
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