Skoda Case Study Skoda Acknowledged

Skoda Case Study

Skoda

Acknowledged at one time as one of Europe's leading producers of quality, highly engineered cars (D & AD, 2003, p. 5), Czech Republic-Based Skoda Auto developed a terrible reputation post World War II after it was nationalized by the Czechoslovakian Communist regime, and began producing low-quality cars. In end 1991, German-based Volkswagen bought Skoda and subsequently transformed the car after investing heavily in the company's production facilities and workforce (D & AD, 2003, p. 5). Volkswagen's involvement managed to turn the company's fortunes around in several European markets. The United Kingdom consumers, however, continued to hold highly negative perceptions of the brand in spite of Skoda cars winning "best in class" car awards and the accolades of motor journalists. Thus, the negative image of the brand posed a major problem for Skoda UK especially since Volkswagen had set sales goals for Skoda that called for an increase in worldwide volume by almost 31.5% over current sales. The increased sales targets particularly affected Skoda UK since the country represented the car manufacturer's fifth largest market (James, 2002).

The extent of the problem faced by Skoda UK is revealed by a February 2000 survey, where 60% of respondents polled had said that they would never consider buying a Skoda (James, 2002). Apart from this, however, an analysis of Skoda's overall marketing strategy of segmentation and differentiation, clearly reveals that the brand had a very good chance of succeeding if a change in consumer perceptions could be brought about. To start with, Skoda could now boast of one of the world's most efficient car plants, which produced cars on par with competitors in terms of function, style, and value-for-money (D & AD, 2003, p. 5, 14). In fact, it can be argued that Skoda's cars actually rated better than competition in the area of product differentiation. The Fabia, for instance, was later adjudged as the car of the year and "best in class" in the small car or Supermini segment by the "What car? Car of the Year" awards. Priced from £7700 to £11900 on the road, including 3 years unlimited mileage warranty and roadside assistance, the Fabia was acknowledged as a car that was keenly priced with superb future residuals, chic styling, excellent build quality, a spacious and airy interior and driving responses that few could better (Carsource).

Similarly, the Octavia, a mid-sized car that was launched in the UK in 1998, was a vehicle with wide ranging abilities and finely balanced levels of practicality and luxury. The Octavia also offered a choice of models and features ranging from a distinctively designed hatchback and a ruggedly styled 4 x 4 to a sporty and good looking estate. Thus, the Octavia, too, was seen as offering excellent value-for-money. Indeed, a testament of the car's competitive advantage lies in the several awards to its credit, including "Best Diesel Estate" in 1999 (Platinum, 2004).

Apart from the very real competitive advantage that Skoda enjoyed in its Fabia and Octavia range of products, the company also had the element of price in its favor. As one journalist later observed, "people who used the term Skoda to mean 'partially reinforced shoebox with badly fitting windows,' now found they were using it to mean 'really clever choice if you're in the market for a well-built, crisp-to-drive hatchback, which appears to be German in all but price." (Smith, 2003) The preceding analysis of Skoda's products and pricing tactics makes it evident that the car manufacturer was following an overall strategy of differentiation in the "family car" (Platinum, 2004) and youngish, middle-class women (English, 1999) market segments, which the Octavia and Fabia were targeting respectively. Further, the analysis so far also reveals the product and pricing tactics adopted by the brand.

While Skoda may have had a competitive edge in its product and price offering, the fact is that its UK marketing team still had to address the tremendous disparity between the product and its image. This could only be achieved through changing the entire country's perceptions of the brand (James, 2002), which meant that a great deal of careful attention had to be paid to advertising and promotion. Indeed, it is apparent that Skoda recognized the importance of this task judging by the radical, innovative approach of the campaign it released. Using self-deprecating humor to convey the single theme of "we know what you think about Skoda, but think again," (D & AD, 2003, p. 6) the Skoda campaign challenged assumptions about the brand using three, carefully chosen media of TV, Direct Marketing and Consumer PR (James, 2002).