#45 Volkswagen in India
As the German paper Handelsblatt reports, Volkswagen intends to increase it’s marketshare in India from currently less than 2 percent to about 10 percent. Ambitious plans, especially when one looks at the competitive environment. Although Volkswagen will be introducing the base model of its new Polo at just under 7,000 Euros, its competitors are still ahead in the marketing battle based on price. General Motors’ Beat base model will cost only about 5,000 Euros and Tata’s Nano starts at 1,700 Euros. Other competitors such as Renault, Nissan, Toyota and Honda are on the way to position cheaper models as well. India will be a difficult nut to crack for Volkswagen. Then again, to which other markets would carmakers turn to nowadays. Despite the global economic crisis, India’s market for cars grew by an astounding 16 % in 2009.
November 14, 2014 @ 1:50 pm
For the increase of the marketshare I think it is crucial that Volkswagen focuses on trends in India as well as the discovery of specific needs. According to a study conducted by Nielsen the Internet has a substantial impact on final purchases, which means that a good online performance is a necessity. In my opinion, Volkswagen did a good job as they constructed a homepage adapted to the Indian market. On their website they listed value adds as well as detailed information about the models which are sold in India.
Regarding trends in India, I would like to point out that there is a change in power equation in urban households, emergence of working women both in urban and rural India and greater empowerment of women. As a result, the buying power of Indian women increases, thus Volkswagen could also consider to offer cars especially for women.
Regarding Hofstede’s dimension of national culture India has a higher power distance than Germany. Consequently, it is essential that each car expresses the social status of the owner. Furthermore, India exhibits a lower uncertainty avoidance than Germany. As a result, Indians appreciate innovation and experimenting with new things more than Germans. Volkswagen considered this point by adding information about their innovations to their homepage.
All in all, I think that there is a good chance for Volkswagen to increase the marketshare, but I am not sure if an increase of more than 8 percent is realistic.
Sources:
http://profit.ndtv.com/news/economy/article-how-internet-is-changing-consumer-behaviour-in-india-313535
http://articles.economictimes.indiatimes.com/2012-03-27/news/31245046_1_indian-women-women-power-consumer-spending
http://geert-hofstede.com/india.html
November 8, 2016 @ 6:00 pm
If Volkswagen will be successful in India, they have to understand that there is a big cultural difference between India and the main markets of Volkswagen like Europe and the US.
If we consider Hofstede´s cultural dimensions it´s very obvious that one of them can make the difference between success and defeat, the power distance.
The value for power distance in India is 77, compared to Germany with 35 and the US with 40. This value means that in India the individuals are not equal. It also means that the less powerful people are fine with the fact the the gap between powerful and less powerful people is very huge.
In this case, VW has to consider the price situation of the competitors. All of them provide a cheaper alternative to the VW Polo. For the poor society in India, VW has to offer a cheaper car which is affordable for them.
Another option is to start with a luxury car for the higher society. In this market VW has to compete with brands like Mercedes or Ferrari. A middle class car like the Polo or the Golf won’t make sense due to the huge gap in the society.
The only chance to increase the market share in India is to introduce a very cheap car for the lower society and a luxury car for the powerful ones.
Sources:
https://geert-hofstede.com/india.html
June 24, 2017 @ 2:03 pm
I think it is essential for Volkswagen to consider carefully the cultural differences in India before introducing the base model of its new Polo. Especially the power distance, which is an important culture dimension of the Hofstede model, is in India much higher than in Germany. With a score of 77 India is indicating a high-class and a top-down structure in society. Due to this fact it is a difficult situation for the middle-class car VW Polo, although the Indian car market is increasing. Therefore, Volkwagen should rethink their price situation and the type of car that should be introduced, if they want to be successful with the VW Polo.
December 17, 2021 @ 12:17 am
During its initial entry steps into the Indian automobile market, I believe Volkswagen’s challenges not only included its late entry into the Indian automobile market as the 18th entrant, but also its low brand awareness levels, its lack in financials when it came to advertising investment, and its overall consistency regarding the six models it hoped to make available to Indian consumers by the summer of 2010. According to Volkswagen Das Auto, Volkswagen’s challenge “was to make a big noise on a small budget with a single story that would weave together multiple models” (Das Auto). In order to tackle these issues, Volkswagen first decided to implement its three brand values, responsible, valuable, and innovation, as well as its rich and complex brand identity by introducing these values sequentially. Volkswagen decided to first focus on innovation in order to spark conversation and rally individuals. Innovation also served as the backbone for both Volkswagen’s communications and creative departments in order to inspire creativity and communicate their commitment to the brand’s identity. For example, in late 2009, Volkswagen purchased every ad space in Times of India in order to communicate its ambition and commitment, provide opportunities to discuss its innovation plans and range of products, and introduce its new factory Pune. After it established its first value and vision, in order to showcase their various models with differing strengths and aim them at different buyers, Volkswagen had to ensure they all united under the same level of consistency and innovation commitment. Considering how the Beetle served as one of Volkwagen’s most unique vehicles, Volkswagen decided to uniquely launch the New Beetle by innovatively segmenting and targeting successful and affluent women instead of men. As it continued investing in its vehicle innovations and advertisements in newspapers, it surprisingly reached its goals as its main goals were to not only increase its awareness and reputation, but to also sell record breaking cars for both its more affordable and expensive cars.
While it has stayed true to its brand identity and innovative methodologies, it nonetheless still faces problems today, particularly when it comes to balancing quality and price. Considering how many of Volkswagen’s models have been labeled as premium quality and higher-priced, it will be difficult to reach out and incentivize consumers with middle to low socioeconomic status to purchase these kinds of vehicles, not only because of the established power distance between India and Germany, but also because many brands and their vehicles have already established strong ties and relationships within India’s automobile market throughout the years. However, if Volkswagen continue staying true to their values for innovation by creating quality cars at a more affordable price to those of middle and lower socioeconomic status while also investing in digital advertisements that promote innovation similarly to its newspaper approach in late 2009-2010, only then could it potentially increase its market share within the Indian automobile market.
Source:
https://articlesnepal.files.wordpress.com/2015/07/vw_s-communication-strategy.pdf
February 6, 2022 @ 1:16 am
Well, they definitely did not do this correctly by the looks of things. International markets will destroy your products with cheap knock-offs. It is extremely important ath Volskwagen to look into other competitors when entering the car market of a different country. Entering the Inda market was not a great idea with the lack of research that was done before entering. A good option would be for them to start making better luxury cars for the Indian market that would be hard to knock off. If they put some thoughts and research into this market they could of taken off since it is a growing market.