Beetle: The Birth, Growth, Death and Revival of a Cult Brand

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Case Details:

Case Code : MKTG071
Case Length : 14 Pages
Period : 1941-2003
Pub Date : 2003
Teaching Note :Not Available
Organization : Volkswagen
Industry : Automobiles
Countries : German

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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The End of an Era Contd...

By the end of the 1990s, more than 21 million Beetles had been sold. The car had earned the status of a cult brand4 in the 1960s and 1970s across the world, especially in the US. By the 21st century, the original Beetle had been in production for nearly 70 years. Naturally, Volkswagen's decision to end its production disappointed many Beetle fans. A BusinessWeek writer summed up the feelings of millions of such people, "I got a real twinge when I heard that Volkswagen just produced its last Bug."5 However, Volkswagen's decision was not totally unexpected -industry watchers (and especially the Mexican people and media) had been aware of this eventuality for quite some time.

The car had been the vehicle of choice for most taxi drivers in Mexico City, with more than 80,000 Beetles on the roads in the city.

During the early 2000s, many cheaper foreign cars (such as Ford Fiesta, Fiat Uno and Chevrolet Pop) began eating into Beetle's market in Mexico. Around the same time, Mexico City authorities decided to give taxi permits to only cars or cabs with four doors, to ensure passenger safety and convenience.

This decision was nothing short of a death knell for Beetle, since it had only two doors. The above two factors, severely eroded demand for the car.

Sales in Mexico had dropped to mere 5,000 by 2003, from over 98,000 a decade ago. Given these circumstances, Volkswagen seemed to have been left with little choice...

Excerpts >>

4] Cult brands refer to those brands that make deep, unique emotional bonds with their customers. Patrons of these brands exhibit extreme loyalty towards them and even act as unofficial brand ambassadors. Generally, these brands start small and achieve cult status over a period of time. Besides Beetle, some other cult brands are Harley-Davidson, Star Trek, Apple, Screaming Eagle (wine) and Mazda's Miata.

5] 'Farewell, Beloved Bug of My Heart,' BusinessWeek, August 01, 2003.

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