Few consumers buy products at random. This is particularly true for durable products, such as washing machines, freezers and cars, which are likely to be kept for a long time. Branding is a form of product differentiation which quickly and effectively communicates a lot about a product and helps reduce the random nature of product selection by the consumer. A brand comprises a range of features which identify the products of a particular organisation. This could be a name, sign, term, symbol or other creative element.
Branding helps consumers to identify closely with products which satisfy their needs and provides them with a deeper understanding of the qualities and characteristics associated with the product. In terms of their perceptions, branding provides consumers with a clearer picture of what the product offers.
The success and popularity of brands change with time. Over different periods and for different reasons, some brands become more popular and have a better image than others. With an increasing number of well-differentiated brands in today’s market-place, it is important for organisations to evaluate the distinctive qualities of their brands and use these qualities to develop each brand’s success.
Skoda is an example of a brand whose popularity has gone up and down like a roller-coaster in its 100 year history. From the heady days of the 1920s, when it produced the Hispano-Suiza - the Rolls-Royce of cars in those days - to its lowest point of communist domination, and in the UK where the brand suffered the darker side of British humour.
As the strength of many other brands in the motor industry increased, the Skoda brand became weaker - representing outdated and negative brand perceptions. Today, however, this is no longer the case; the brand is enjoying a renaissance.
The importance of public relations
‘Public relations practice is the planned and sustained effort to establish and maintain goodwill and mutual understanding between an organisation and its publics.’ (Institute of Public Relations)
It would have been impossible to transform the Skoda brand image overnight. It takes years to change perceptions and this is why public relations was key to Skoda’s rejuvenation. Public relations is essentially a long-term process, sending messages to the public, designed to build and develop the reputation of a brand over a period of time. Above all, public relations must work to a planned programme with clear objectives, and it must be sustained.
Although Skoda enjoys a premium brand image in central Europe (where the company originated), the situation in the UK has been very different. From the late 1940s through to 1989, Skoda manufactured in a communist-dominated market. This climate allowed little outside intervention in terms of modern technology and new ideas, and suppressed innovative and creative methods of working. In those days, its cars were cheap to buy but Skoda could not hope to compete on an equal footing with cars manufactured in the West and in such a competitive market-place.
The problem facing Skoda in changing its image in the UK was that the public’s view of the brand was outdated and lagged behind the reality of the product. Public perception of Skoda was poor and therefore relegated to the music hall jokes pioneered in the 1970s.
Volkswagen AG, Germany, bought Skoda Automobile, the state-owned Czech car manufacturer, in 1991. Volkswagen investment enabled Skoda to develop new products on a par with western competition and since then, increased its strength as a brand all over the world. Production has increased from 172,000 units in 1991 to 410,000 units in 1998, (138% increase) to keep up with customer demand.
A key strategy for developing demand for Skoda cars was brand building through public relations. It was essential to convert the negative feelings that many people had towards Skoda’s vehicles into positive perceptions. This is known as the PR transfer process. The negative perception surrounding Skoda, however, was carried over from the rear-engined vehicles produced in the 1970s to subsequent models like the Felicia, despite huge product improvements and brand offerings.
Skoda’s past image problem remained because the general public’s prompted awareness of Skoda, whilst very high at 94%, had not translated into awareness of 'new Skoda' as associated with Volkswagen ownership and of the new cars, the Felicia and Octavia. It was vitally important to educate the public on the Skoda proposition as the public’s understanding of the brand was out of date and misinformed.
Building the brand
The challenge for Skoda has been twofold.
a) Moving negative perceptions to neutral perceptions
This involved showing the public that the 'new Skoda' had replaced the 'old Skoda'. An integrated press and public relations programme was planned and implemented to communicate the new face of Skoda. This involved on-going media communications which incorporated:
- factory visits to see the new state-of-the-art manufacturing plant in the Czech Republic
- one-to-one interviews with designers, engineers and R&D personnel
- press product launches, motor shows, sponsorship opportunities and exposure marketing. Exposure marketing involved taking the cars out to the market-place, i.e. the Felicia and Octavia have been displayed to the public in shopping centres, train stations, county shows and at large exhibitions such as Gardeners World at the NEC.
- advertising which has been vitally important - the Octavia advertising campaign has been Skoda’s most impactful campaign ever, in terms of spend, reach and execution.
b) Moving neutral perceptions to positive perceptions
Moving neutral perceptions forward involves making drivers think, 'OK, the car has improved, but why should I buy it?'
Creating positive perceptions and encouraging people to buy cars cannot simply be achieved by product marketing. The process is far more complicated and involves communicating to the public the values represented by the brand. Skoda’s brand values are reflected in:
- Skoda’s commitment to producing cars that provide potential customers with practicality, functionality, robustness and reliability.
- Skoda’s commitment to quality and giving customers what they want at reasonable prices.
- The Skoda Network of dealers, most of whom are small, family-owned businesses, have good relationships with their customers and provide high levels of personal attention.
- The Skoda ownership experience suits customer needs, providing good quality cars at reasonable prices and enabling customers to spend the money they have saved on hobbies or holidays. Skoda has the highest loyalty rate (i.e. repeat buying) in the industry (83% compared with the industry average of 48%).
Skoda’s brand values are:
- value for money
- customer care
The first new model born from the alliance between Volkswagen and Skoda was the Felicia. It was essentially based on the Favorit but provided Skoda with a much improved product designed to re-establish the brand and re-educate the general public’s perception of the brand. The Felicia was welcomed into the market and praised by the press and the public.
Since its introduction in the UK in 1995, it has won several industry awards and increasing sales indicate its position as a winner. Not only have Skoda’s new products won awards but Skoda, the manufacturer, was ranked number one in the Top Gear / J.D. Power Survey for customer satisfaction in 1998. All of which has been used to underpin the public relations strategy.
Some significant image achievements were gained from the Felicia. Research showed a +112% feeling that Skoda offered good value for money and +57% that the cars had recently improved. The Felicia’s new target markets showed gains amongst older affluents (+6%), younger family men (+3%) and married working women (+2%). The new Skoda owners were younger, more affluent and more highly qualified - often from managerial and professional occupations.
With four new products to launch, 1998 marked the beginning of a most important year in the brand’s 100 year history:
- April - Facelift Felicia
- May - Felicia Fun
- June - Octavia hatchback
- September - Octavia estate.
Bringing the Octavia to the market
Although the continuing success of the Felicia had steadily improved Skoda’s brand image, Skoda faced its biggest challenge to date with the launch of the Octavia in June 1998. The Octavia was the first Skoda to be based on a Volkswagen Group platform and represented Skoda’s entry into the medium sized car segment, considered to be the most competitive segment.
It was a great leap forward for the much maligned car manufacturer and would undoubtedly have a huge impact on taking the brand image even further along the positive scale. The launch represented Skoda’s commitment to continual product improvement with the Octavia acting as a product and image flagship. It also meant that Skoda had moved from a single product offering in the UK market to a wider product offering.
The greatest benefit of the Octavia is that Skoda has now entered a new segment of the market, attracting new customers. The Octavia range helps Skoda to:
- offer a car to fulfil all household needs. For example, the Felicia could be perceived as the smaller second car with the Octavia becoming the main family car.
- offer more access to new customers who are not currently interested in the specification of the Felicia.
- appeal to the business user market, i.e. as a company car. The Octavia has a similar specification to western competitors and reflects Skoda’s brand values.
Marketing the Octavia
Marketers need to understand who their customers are likely to be. An on-going image and awareness tracking study was used to build up profiles of owners who might profess an interest in buying an Octavia. The Octavia clearly identified a new target market - different to the Felicia target market.
Octavia owners were likely to be:
- family men and working women
- more highly qualified and in professional occupations.
Socio-economic grouping provides a reliable picture of the relationship between occupation and income and also helps to provide a basis for understanding their priorities and needs. In terms of media consumption, those likely to buy the Octavia are likely to read more broadsheet newspapers than Felicia owners and are best represented by ABC1 TV audiences.
Developing positive perceptions has become central to the marketing strategy for Skoda. Marketing is the process of developing and implementing a strategy to plan and co-ordinate ways of identifying, anticipating and satisfying consumer demands, in such a way as to make profits or satisfy a range of other marketing objectives. It is this strategic planning process which is at the heart of marketing.
Skoda’s marketing strategy involves a variety of approaches. The strategy has been designed to communicate clear brand messages through the promotional mix, whilst expressing brand values and the ownership experience.
Marketing activities include:
- exposure marketing events organised nationally and at dealer level
- test drive campaigns
- 'The Skoda Challenge' - a test drive at dealerships where potential customers are invited to drive both Skoda and competitor models
- local and national press advertisements
- television advertising of brand values
- public relations and publicity activities with both print and broadcast media
- local sponsorship activities
- dealer marketing where dealers are encouraged to integrate their marketing into national initiatives for maximum effect. This involves sponsoring local events and devising customer rewards for customer loyalty.
Skoda had several communication objectives when marketing the Octavia. These were:
- the Octavia is a completely new and modern car to appeal to different car segment customers
- Skoda customers get much more for their money compared to competitor models
- the Octavia is designed with the same quality standards as any Volkswagen Group product
- the Octavia experience is a Skoda experience.
The advertisements for the Octavia comprise straightforward messages communicating 'the way things should be', showing the car's design and specification. This theme has been carried across press, poster and TV advertising, all shown in sepia colour, defining a unique marketing territory for Skoda - communicating the ownership experience and brand values. Skoda has also helped dealers prepare for growth through marketing and product training.
The role of press and public relations in the Octavia launch
The press and public relations department was established in 1995 and is responsible for creating and implementing the brand’s PR strategy. Since the launch of the Felicia in 1995, the role of press and public relations has been fundamental in communicating the huge changes to the Skoda brand. The first task was to create a relationship between the brand and the media. This was achieved with press releases, press product launches, regional press tours, factory visits to the Czech Republic and briefings with journalists. This strategy has paid dividends in the amount of editorial coverage seen in the media.
The press strategy focused on communicating how Skoda has changed, e.g. Volkswagen’s involvement and investment, new products, associated products, new factory, new manufacturing plant, dealers, history and heritage. Every aspect of the brand and how it operates was communicated to the press and public to create a new understanding of the brand.
The Octavia press campaign was fuelled by the huge success which Octavia achieved in Europe. During 1997, the car was short-listed for the European Car of the Year and the brand became the fastest growing car brand in central Europe, overtaking Fiat which had held that position for almost ten years.
1998 saw the launch of the Facelift Felicia, the Felicia Fun, the Octavia hatchback and the Octavia estate. It is now on the threshold of even greater success, as a result of further investment, new product development and a considerable improvement in brand image. The continual release of new and improved models, repeated car and customer satisfaction awards help to justify Skoda’s growth plans and changing image for the UK market.
This launch provided an opportunity to show the modern Skoda brand and communicate its brand values. Following the launch, positive reports appeared in motoring magazines, national and regional newspapers, and in broadcast media. Public relations had a fundamental role in developing an integrated communications strategy for Skoda which enveloped the whole company, rather than just a single department.
By emphasising values of the new Skoda brand, it helped to develop a wide platform for the products through informing, communicating and creating understanding in the market-place.