Marketing Segment Analise-India Case Study

Market Segmentation Analysis of Volkswagen India.
Market Segmentation Analysis of Volkswagen India.
Volkswagen India provides a prime and standard understanding and example of how insightful market segmentation and a fundamental knowledge of several different consumer personas and attributes could lead to successful vehicle marketing. By carefully carrying out an analysis and targeting its intended audience as well as using various marketing means and platforms, like the social media, where these consumers are actively present and participative, VW India is able to effectively reach its potential consumers and offer them a type of service that aided them in their success and yielded their renowned reputation in the face of the world. This paper seeks to explain the concept of market segmentation, its importance and challenges in regard to the case study of VW India.
Description of Market Segmentation.
Market segmentation is the process of dividing a market into distinct groups of buyers or consumers who have different needs, characteristics, natures or behaviors and who might oblige completely separate products or marketing programs from the same organization or group. A market segment is applied in the manner that it comprises consumers who respond in a more similar way to a particular set of marketing efforts (Allenby et al., 2012). The application is usually based on concept of geographic divisions, demographic, psychographic and behavioral variables. Market segmentation is important because it allows a company to be more efficient with their time, money and other resources. Secondly, the process helps a company reduce risks of unsuccessful or incentive market campaign and also as a way of prioritizing its target audiences.
In the case of VW India, the group has sufficiently used market segmentation to divide its large and heterogeneous markets into smaller divisions that can be reached and served more effectively and efficiently providing them with products and services that will match their requirements (Volkswagen AG, 2016). The company has five car segments namely; Budgeted, Compact, Mid-size, Premium and Luxury car segments. Previously, the company had been focusing on producing vehicles for consumers in the market looking for Sedan, SUV and Hatchback. The company is also presenting itself in various other segments as the premier developer and manufacturer of high volume vehicles such as Passat; a car which was globally launched in 2007 with the aim of covering the target market of the luxury segment (Volkswagen India, 2017). Further, in July 2008, VW India launched a world known vehicle and India’s bestseller brand, Jetta, in order to expand their portfolio and satisfy its consumers in the mid segment.
The company continued its market segmentation process in December 2009 when it launched the New Beetle and SUV Touareg in its focus of the high end segment. Again, in the same month, the group began construction of the hatchback version of Polo while targeting a massive segment of small car buyers with a plan of capturing the world market with the same product, Polo. After release of Vento with the aim of targeting the mass market segment, VW India is currently offering each segment with a car except the budget cars segment and it has more plans of targeting ultra-low-cost hatchback segment in the country (Gupta, 2019).
Benefits and Challenges to Market Segmentation and Risks Involved in its Use.
Firstly, segmentation has helped the Indian division to focus more on itself. The process has been an effective method that they have used to increase focus on its various segments. It has aided the automobile company focus more on producing small car segments, a notion that did not exist in the beginning during the start and launching of the group (Altmann, Falk & Grunewald, 2014). Therefore, basing their focus on new car models and their market strategy on new segments has increased its profitability. Secondly, market segmentation has increased competitiveness because naturally, once a group or a company focuses on expanding their varieties there will be competition between segments. Similarly, with VW India, it has increased competitiveness within the company leading to creation of new segments and brand loyalty. Thirdly, the concept has enabled the company to expand its market within India and even globally, in fast and gradual manner. This growth was facilitated by the company’s idea of geographic segmentation where it was concentrating their focus on a particular territory.
As much as there are various benefits of market segmentation, the process also faces numerous challenges. In this context, VW India has, over time, suffered the problem of ignoring potential audiences in its art of focusing on one particular segment at a time. In 2009, when the company started focusing on the high end segment by releasing the New Beetle and the SUV Touareg, lovers of the previous bestseller, Jetta, stopped their purchases because of intimidation and a feeling that the reign of the latter was not yet over (Awan, 2014). Secondly, during its creation of various segments, VW India completely forgot about the important idea of individuality, a notion that has been the root of profits to its main company in India. The group faced the challenge since the development of specific segments meant that some potential customers whose model characteristics would not be met, were totally left out.
The group, in accordance to the mission and vision of the root company, has a long term strategy that is ought to be achieved in 2025 and beyond. The first goal is to shape mobility for the present and generations to come. Under shaping mobility, Volkswagen aims at providing plausible answers to questions of today and tomorrow, with its sharpened TOGETHER 2025+ Group Strategy. However, in alignment with this goal of making mobility sustainable for now and future generations, VW India is facing a risk of failing to achieve the dream due to its existing market segmentation and the planned one that is to come (Claycamp & Massy, 2016). To realize the dream, the group is supposed to provide full service and satisfaction to all of its customers and markets regardless of the category they fall into, and market segmentation is critically putting all that to risk.
Role of Primary Data.
The three sources of primary data used by the company are surveys, direct observations and interviews and focus groups that are created and developed by the researcher. In its research, VW India, performed its surveys by handing out questionnaires to its customers and all other individuals available for concern in cities of Mumbai and even rural regions in the country (Volkswagen India, 2017). The company collected information about the most desired model and the segment that most of the people like and moreover, the face to face interaction aided the company further expand its market.
Secondly, the VW performed direct observation using interaction and communication with the subject in a more personal level of quantitative research. Through this, the employees of the company were able to monitor, evaluate and measure the behavior of every respondent on their views on market segments and the products as well as markets that the company should pay more attention to (Volkswagen AG, 2016). From this method of data collection, VW India found out that most of the people in India desire the SUV model stating that the vehicle, with its high volume and capacity as well as the strength of its engine, is good for business in the economically developing nation. Thirdly, the company gathered a group of people from the population and asked them insightful questions regarding the product that they think is the best by the company, their personal preferences on the segment that requires more focus and their feedback on the same. The answers of the focus groups were similar to those from the second method with an addition of the Jetta model as the company’s best model.
Role of Secondary Data.
The sources of secondary data that the company used in its market research and market segmentation were collecting information from the internet, reviewing the existing information and the results of its market research and also following the guidance of the main company’s agencies and industry bodies as well as the government in India and Germany (Volkswagen AG, 2016). The company carried out and a quantitative analysis on the internet paying attention on the most preferred models, the bestsellers by the company and individual comments of people on social media.
Secondly, having had another similar encounter of collecting information in its initial market research, VW India simply revised its previous results on the topic and compared them to the current progress. Finally, being one of the divisions of the Volkswagen Company in Germany, the employees of the group in India were closely following the guidelines of the sole employer on the methods involved in market segmentation and market expansion (Pirinsky & Wang, 2011). All these methods had similar but varying results due to the different ta...