Building brand equity
A Skoda case study

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Page 4: Brand strategy

Skoda 3 Image 5Volkswagen faced some important decisions concerning the Skoda brand. Using the Skoda brand name to launch a new product, through the strategy of brand extension, enabled Volkswagen to enter new market segments. The development of the Octavia highlights Volkswagen’s confidence in the Skoda brand. Skoda and Volkswagen decided that the brand needed a broader product base and that Skoda’s movement into another product category would provide instant recognition and market acceptance - simultaneously improving market share.

Positioning involves developing features of the marketing mix, such as ‘product’ and ‘pricing,’ in a way which takes into account consumers’ thoughts and perceptions. At the same time, the positioning process provides Skoda products with key advantages over other products in each market segment.

Skoda’s product range is priced towards the lower end of the market. This creates a ‘fit’ with the strategy of the Volkswagen Group which already has products ranging from prestige cars towards the top end of the scale, to those which were competitively priced at the lower end. Audi, for example, is pitched at the premium end of the market to compete with BMW, Seat is pitched to compete with Alfa Romeo and Fiat, while Skoda is positioned as a competitively priced, quality product, to compete directly with brands such as Rover.

The Octavia

The Octavia is available as a five door hatch and estate car, with a clean, aerodynamic, modern design and an attractive, sleek appearance. The prominent front grill will be incorporated into the design of future vehicles. With the Octavia, Skoda aims to:

  • satisfy the future market requirements
  • set the trend and the pace for further development
  • present and develop its own identity
  • communicate the metamorphosis of the Skoda brand.

The car’s fully galvanised steel body is mounted on a vehicle platform engineered by Volkswagen, representing high quality workmanship and meeting current world safety standards. The Octavia made its world debut at the Paris Motor Show in October 1996. Its presentation involved not only a new car but also a new production concept. Skoda’s new manufacturing plant, incorporating modular production, is one of the most modern in the world. With the launch of the Octavia, Skoda was able to maximise the synergy of the partnership with Volkswagen and communicate the new, modern face of Skoda.

Skoda 3 Image 6The reaction to the Octavia has been overwhelmingly positive and sales are strong in Western Europe. It is due to be launched in the UK in May 1998 and already press and public interest is high. Skoda had always been a one-model manufacturer but with the arrival of Octavia, Skoda now competes in the small and medium sectors. The market segment in which Octavia will compete is the lower medium segment - undoubtedly the UK’s most competitive. This segment is the heartland of the company car market, which is predominantly status and image driven.

Octavia represents everything that the redeveloped brand stands for - i.e. an attractive price, modern European product, high quality, style and safety. The Octavia has become the first Skoda product to be built on a Volkswagen Group platform and has been constructed using the latest technology at an all new, purpose-built, state-of-the-art, factory in the Czech Republic.

Skoda | Building brand equity