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Comparison between Skoda versus Volkswagen in Europe for the Last 5 Years

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Comparison between Skoda versus Volkswagen in Europe for the Last 5 Years

Introduction

Volkswagen overtime faces essential decisions to make about the Skoda brand. The use of the brand Skoda to launch new products primarily through the strategy of the extension of the brand enables Volkswagen for the last five years to enter new segments in the market. Skoda and Volkswagen have almost similar strategies in the market.  Volkswagen strategy has influenced numerous lawsuits and recalls that kept the issues of emission-manipulation in the mind of the buyers since the revelation of the problems. Both of them continue to have competitive marketing strategies in the market. The paper shall provide substantial details on the comparison between Skoda and Volkswagen.

Comparison between Skoda versus Volkswagen in Europe for the Last 5 Years

To begin with, the Volkswagen strategy involves cutting on the costs to curb the bloated spending. The capital expenditure for Volkswagen was at around 6. 8% in 2015 in 2017 was around 5.9 % and in 2018 at 4.8% (Blackwelder, 2016). The key challenge for Volkswagen is to maintain the cutting of costs discipline even as it seeks to invest in electrification. On the other hand, the Skoda strategy involves expanding especially at this time when Volkswagen has laid back to allow its other brands to flourish in its expansion approach.

The Skoda's range of its products gets priced towards the market in the lower end. The strategy creates a 'fit' in comparison to the strategy employed by Volkswagen Group whereby the products already range from prestige automobiles towards the upper end of the marketing scale to those that were priced competitively on the lower end (Schmitt & Van Biesebroeck, 2013). An example to illustrate is the Audi that gets pitched at a premium level in the market to be able to compete with cars such as BMW. SEAT gets pitched in competition with Alfa Romeo as well as Flat whereas Skoda gets positioned as a product that is competitively priced in the market to compete with other brands such as the Rover directly (Machkov'' & Collin, 2015).

Skoda aims to develop and present its own identify whereas Volkswagen already has an identity but uses other car brands such as Skoda to remain competitive on the global stage. Skoda gets pitched by Volkswagen to develop its own identity that is independent of Volkswagen although they present an almost similar range of products (Zork''ciov'', ''imorov'' & ''ikov'', 2014). The deepening in demand for the Volkswagen brand is what makes it necessary to pitch Skoda to compete against other brands in the market. Volkswagen is a world leader in the car industry that already has its name it does not require to present and develop its identity like is the case for Skoda.

Skoda has the strategy to satisfy the future requirements in the market whereas Volkswagen has the strategy to maintain its brand. Volkswagen has slowed down its operations and increased the operations in Skoda (Rawlinson & Wells, 2016). The opening of new manufacturing plants for Skoda due to its competitive nature and also the maximization of the partnership synergy with Volkswagen helps to communicate the new face of Skoda effectively. The slow down by Volkswagen means an increase in the activities in Skoda because the brand in Europe is doing very well (Oldenkamp, van Zelm & Huijbregts, 2016).

Volkswagen strategy is to move it back upmarket to overcome its woes in the market such as a failed China strategy for export whereas for Skoda the strategy is to boost the appeal and image. Skoda's market strategy is in its image to make it competitive in the market to be able to access the market that Volkswagen has not reached in the last five years (Bhadauriya & Gupta, 2015). The Volkswagen market strategy involves focusing on the upmarket.

Volkswagen and Skoda have a product portfolio strategy. The reworking of the product portfolio clears deeper into the differentiation of the sold by Volkswagen and Skoda. The marketing strategy by both of them after the acquisition allows them to avoid the eating into each other (Drahokoupil, Myant & Domonkos, 2015). The portfolio strategy also looks into the product differentiation for both Skoda and Volkswagen. The strategy by both of them is to remain competitive in the market even after the acquisition but without so much similarity in the range of their products that they eat into the sales of each other (Oldenkamp, van Zelm & Huijbregts, 2016). They have a similar product portfolio strategy.

Volkswagen strategy in the last five years seeks to curb the competition coming from Skoda. Volkswagen strategy is to have Skoda moving to Germany so that they can pay a little bit more for the shared technology (Schlegelmilch, 2016). The strategy by Volkswagen to curb Skoda because of its upward improvement in the market against the Volkswagen that is not doing very well may not be the best plan.

The brand rivalry between Skoda and Volkswagen over the last five years intensified. Volkswagen strategy involves the cutting of costs and on the other hand spending more finances on the German factories whereas Skoda's strategy has more superior reviews on its cars as well as the profitability has rivaled the profitability for Volkswagen (Kompalla, Kopia & Tigu, 2016). Volkswagen strategy is to reduce from Skoda what seems to be the unfair advantages it has in the market through the combination of the German technology with labor that is cheaper. Volkswagen strategy is to reaffirm itself as the top-selling brand even with the rise of launches of the new electric cars. Skoda plans to make a new range of products for the future to remain competitive (Iushkina, 2016).

Conclusion

Volkswagen and Skoda strategies are rival to each other. The two however have very similar approaches in the market. The Skoda marketing strategy however is much more superior to the Volkswagen strategy going by the tremendous growth in the market. Volkswagen is getting rivaled by Skoda's marketing strategy which explains why Volkswagen marketing strategy is to cut the competition coming from Skoda. The product portfolio strategy by both of them is an indication of the rivalry arising from the two brands eating into each other products. Volkswagen and Skoda have similar marketing brands and that is why they continue to eat into each other's market as well as the sales.

References

Bhadauriya, V. S., & Gupta, S. (2015). Automobile industry in India: An analysis.''Journal of Management Value and Ethics,''5(2), 50-57.

Blackwelder, B., Coleman, K., Colunga-Santoyo, S., Harrison, J. S., & Wozniak, D. (2016). The Volkswagen Scandal.

Drahokoupil, J., Myant, M., & Domonkos, S. (2015). The politics of flexibility: Employment practices in automotive multinationals in Central and Eastern Europe.''European journal of industrial relations,''21(3), 223-240.

Kompalla, A., Kopia, J., & Tigu, G. (2016). Limitations of business strategies and management systems within the automotive industry.''Inted 2016, 3817-3827.

Iushkina, D. (2016). ''koda's Marketing Strategy of Penetration the Czech Market with Electric Cars.

Machkov'', H., & Collin, P. M. (2015). MARKET ENTRY STRATEGIES OF PASSENGER CARMAKERS-THE CASE STUDY OF THE CZECH REPUBLIC.''Central European Business Review,''4(3).

Oldenkamp, R., van Zelm, R., & Huijbregts, M. A. (2016). Valuing the human health damage caused by the fraud of Volkswagen.''Environmental pollution,''212, 121-127.

Rawlinson, M., & Wells, P. (2016).''The new European automobile industry. Springer.

Schlegelmilch, B. B. (2016). The Future of Global Marketing Strategy. In''Global Marketing Strategy''(pp. 221-249). Springer, Cham.

 Schmitt, A., & Van Biesebroeck, J. (2013). Proximity strategies in outsourcing relations: The role of geographical, cultural and relational proximity in the European automotive industry.''Journal of International Business Studies,''44(5), 475-503.

Zork''ciov'', O., ''imorov'', L., & ''ikov'', M. (2014). Corporate Identity as a Strategic Tool for Companies to Remain Competitiveness in Car Industry during Current Financial and Economic Crisis.''Journal of Applied Economics & Business Research,''4(1).

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