Branding, Positioning and Segmentation at Volkswagen

This paper analysis the case study “VW Phaeton” by Röhm and Murphy (2005) about the launch of a luxury car by Volkswagen. Since the introduction of the VW Phaeton in May 2002, Volkswagen has been under pressure as the company did not reach their sales forecast, experiencing dramatic financial losses (Weernink, 2002).

It comments on the strategy of VW in terms of branding and positioning. It also considers segmentation, niche and mass marketing as essential issues for VW. Various aspects of these issues are discussed as well as their relationship to customer loyalty, and how they contribute to a business success. Finally, it is summarised why the future of the VW Phaeton is considered to be a bleak.

It could be shown that positioning is an outgrowth of segmentation, and therefore, presents an integral part of VW’s strategy. The paper shows that VW introduced the VW Phaeton to move up-market, and to polish the VW brand. However, the company did underestimate their own brand, which is associated with a people’s car. At the same time, Volkswagen missed to serve highly potential segments in the middle-class segment. In order to position the VW Phaeton in the upper-class, a comprehensive marketing campaign was launched, which could not add the missing emotional and prestige value to the VW brand. In the final section, it is argued why the future of the VW Phaeton is a bleak - mainly because of a strategic failure regarding the branding strategy.