Business Research Method – Volkswagen.Doc

I. Rational II. Situational Analysis III. Theoretical background IV. Conceptual Model V. Research Design VI. Sources I. Rational: According to James R. Healey (2011), reporter for USA Today, customers have lost confidence in Volkswagen’s quality. Volkswagen has been subjected to a real loss in the perception of its customers regarding its cars quality. This situation results mainly from a quality problem. In fact, according to Marty Padgett (May 14, 2007), for the website www. thecarconnection. om: “The CEO of Volkswagen of America admits the company generated a lot of ‘venom’ with the massive quality problems it experienced earlier this decade. ” This position is emphasized by a Hallmark representative who observed: “Volkswagen representatives point out that the company’s scores are improving, which is true. But so is almost everyone else’s. Shame on us that we haven’t moved up the ranking. ” Volkswagen had difficulty recognizing the problem as evinced by Trahan’s 2010 position on this matter. He was effectively thinking that the brand did better that it got credit for.

Nevertheless, according to James R. Healey (2011), for USA Today, the company now seems to be taking the problem seriously since the beginning of 2011. “We have some trouble in IQS that we have to fix” remarked Trahan earlier this year. In the 2011 IQS, Volkswagen owners reported an average of 131 problems per 100 cars, putting the company into a tie with Mini for 29th among 32 brands. The best was Lexus at 73/100, and the worst was Dodge at 137/100. Volkswagen’s score in 2010 was slightly worse than Dodge’s in 2011 at 135/100. That said, the company is still struggling to improve his score.

According to the 2010 IQS report, Volkswagen score was only slightly worse than the 2011 one, with 135 problems per 100 cars. Historically, Volkswagen has been known for the quality of its cars; quality is measured by a car’s reliability and its ability to make life easier for owners. To improve Volkswagen’s IQS score and thus reverse the trend in the US, the brand should reevaluate its quality standards that originally established its reputation. By doing so, Volkswagen could maintain its leading position in Europe while improving its market share in the US. This could enable the company to remain the most profitable automotive brand.

What position should Volkswagen take on the current quality situation? What are the causes of such loss? What departments should Volkswagen restructure to avoid the quality problems? II. Situational Analysis: The brand has always been known for its reliable cars. Jason Chavis (2010), contributor for the website www. ehow. com, easily stressed it out by reminding that, throughout the eighties and the early nineties, Volkswagen was plagued by a number of quality control issues, particularly in its American market. This resulted in a new goal for the company. Volkswagen wanted people to know that driving was fun again.

The famous “die deutsche Qualitat” motto results from this. Nevertheless, things have changed; the quality of Volkswagen products is recently decreasing. The Volkswagen Annual Report 2010 made obvious that Volkswagen does not really realize that its Quality Assurance is not as reliable as it used to be. The report clearly explains that the aim of Volkswagen is “to secure a pole position in terms of customer satisfaction and brand loyalty”. The problem is that Volkswagen needs to do more than securing a pole position. Volkswagen needs to reach this position. For instance, the J. D. Power – a ebsite providing consumers information by using consumer satisfaction data collected to help them in their buying decisions – and Associates 2011 Initial Quality Survey illustrates this situation quite well: Volkswagen reports 131 problems per 100 vehicles. This is very close to the last one, Dodge, with 137. To make a good comparison, Lexus is first with 73 problems per 100 vehicles. This situation is stressed by the fact that people seem not to trust Volkswagen anymore. As we can easily see in the Consumer Reports’ 2011 Car Brand Perception Survey, Volkswagen has received one of the worst ratings.

The results are given in a chart on wich figures are aggregates, reflecting a brand’s total perception level across seven areas. Volkswagen received one of the worst ratings, with an overall score of only 19. To compare, the lowest rating is given to Isuzu with 2 and the best rating is for Toyota with 147. Volkswagen does effectively not seem to have the image it used to have: the image of all German car manufacturers. Nevertheless, despite all these problems, the German car manufacturer’s Annual Report 2010 shows the willingness of the brand to keep the customers in the heart of the its decision.

Although, Volkswagen says in this report that its competitive advantages are not secured through product quality and appeal alone. The brand reminds the theory following which customers’ loyalty to a specific brand is also influenced by the quality of service they receive. After-sales and customer service in the Volkswagen Group focuses primarily on establishing and maintaining long-term relationships with customers and partners worldwide. Its aim is to captivate customers with their outstanding commitment to good service combined with Volkswagen’s high quality standards.

But, as explained before, these standards are not that high. In fact, the current situation is that customers do not trust Volkswagen quality as they used to. This is due to a lot of reported quality problems. Nevertheless the brand has now taken into account this issue and now understands that it has to enhance the quality of their cars. According to www. businessdictionary. com, the brand image is developed over time through advertising campaigns with a consistent theme and is authenticated through the consumers’ direct experience.

To summarize the situation, the downswing in the perception of Volkswagen brand image is due to the last part of this definition. The company has failed to make the consumers enjoy the experience of having a Volkswagen car. As explained before, this is mainly due to the high number of problems experienced by consumers. In order to improve their brand image, the company has to improve its IQS score, which would prove to the consumer that Volkswagen cars are as reliable as they used to be, which would consequently improve the company’s brand image. III.

Theoretical background: According to Narasimhan, Ram, Mendez and David (2001) and the Wacker Theory (1989) on quality and evaluative judgment «Product’s improved quality will take several periods of good performance before customers will recognize its performance as being related to quality”. This means that customers’ point of view regarding brands’ quality will not change overnight. It will takes time to prove them that things have changed because customers are more and more dubious and because it takes time to have feedbacks concerning quality.

That said quality is not the only factor when it comes to purchasing a car. Indeed, according to Nadia Huitzilin Jimenez Torres (October 2007) from the Universidad de Burgos «Consumer purchasing decisions relating to foreign products are influenced by economic, psychological and sociological factors». a. The economic factor: According to the neoclassical school of thought, consumers are rational. They make buying decisions toward getting the most out of everything. They just take into factor the economy of use, convenience, efficiency in use, dependability in use and finally improvement in earnings.

Nevertheless in practice, these elements aren’t the only ones used or often poorly applied. Indeed, psychological and sociological factors are also used when making a buying decision. b. The psychological factor: Psychological factors affect the way consumers think and behave while making a buying decision. For example some consumers do compulsive purchases because of their mood, which often are completely irrational. According to Black, Donald W. (2007), Compulsive buying disorder (CBD) is characterized by excessive shopping cognitions and buying behavior that leads to distress or impairment. . The sociological factor: This factor is highly important for companies for whom brand image result from reputation. In fact many consumers from all around the world base their buying decision upon stereotypes. Sander Gilman (1985) argued that stereotypes are representations that are not accurate, but a projection of one to another. According to this definition the fact that many people believe that “Germans make good products” is a stereotype. This phenomenon might result to a biased representation of a product quality.

A company can benefit from the good image of another brand because they both are from the same country. This proves that the county’s reputation helps consumers to discriminate between firms and products they are not familiar with. Consumers can also be influenced by social factor. One can buy a product from the same brand his idol or friends wear because he wants to look like him or them. This is also true with word of mouth, which makes people like or dislike products. As we have seen many factors influence the perception of quality.

This diagram summarizes the steps that a consumer follow when analyzing a brand’s quality: [pic] The reputation results from the level of advertising and the brand’s reputation. Added to the perceived monetary price and the consumer’s perceived features of the good, it results to the consumer perceived quality of the product. IV. Conceptual model : [pic] Hypothesis: 1. The more adapted the communication message, the greater the brand ______image is 2. The better the reputation, the greater the brand image is 3.

The better the anterior experience with the product, the greater ______the brand image is 4. The better the media planning, the greater the brand image is V. Research Design a. Nature of proof: A correlational study seems the most adapted in this situation. This will allow us to delineate the important variables associated with the problem. These variables are the communication, the reputation, the customer’s anterior experience. We want to know how the potential and the already granted customers think of Volkswagen. It is now obvious that the study will be a descriptive one. . Unit of analysis: We want to know how many of the population would be interested in buying a Volkswagen car, depending on their opinion about the brand. Thus, we decided to stratify our sample in three groups: country, sex and age. c. Sampling: Stratified sample: [pic] d. Interference of the researcher As the study is a correlational one, this will take place in the same natural environment in which employees normally function, thus in noncontrived settings. Moreover, this kind of study is conducted with minimal interference of the researcher, such as manipulation of variables.

According to all these elements, we clearly face a field experiment. e. Source of data & data collection methods: In order to get the most accurate sources, the sources that matched as good as possible, we will use primary data. To collect them, we have prepared one interview, one questionnaire and two observations. The first one, the interview, deals with the variable of the communication; the second one, the questionnaire, is taking care of the reputation; the two last ones deal with the previous experience of customers and the communication. f.

Managerial implications: g. Gantt-chart: 1. The more adapted the communication message, the greater the brand image is. Interview : 1) Age / Sex / Nationality / Occupation 2) Do you currently own a Volkswagen ? If yes : Why have you bought one ? If no : have you own one in the past ? – If yes : Why have you changed ? – If no : Why ? 3) Have you ever seen a Volkswagen advertisement ? If yes : on which media did you see it ? Do you remember it well ? Do you remember what was the message communicated during the advert ? If yes : Did you feel concern by it ?

Do you think there could be a better ccccccccccccccccccccccccccccmessage (open question) ccccccccccccccccc Did that make you want to own one (open question : why ? ) ? If no : for what reason do you think you have never seen one ? What did you think about Volkswagen 5 years ago ? [pic] Observing 1. Observation of the number of returns in the selected country 2. Number of person who has replaced their Volkswagen by another Volkswagen VI. Sources: – Marty Padgett (May 14, 2007), VW Focused on Prices, Quality, http://www. thecarconnection. com/news/1014959_vw-focused-on-prices-quality; James R. Healey (2011), VW: We know you’re nervous, but our quality is improving http://content. usatoday. com/communities/driveon/post/2011/08/vw-quality-problems-warranty-costs–/1 – Jason Chavis (2010), History of the Volkswagen Brand http://www. ehow. com/facts_4966661_history-volkswagen-brand. html – The Volkswagen Annual Report (2010), http://www. volkswagenag. com/content/vwcorp/content/en/homepage. html – Syvetril Perryman (2011), J. D. Power Associates 2011 Initial Quality Survey http://businesscenter. jdpower. com/news/pressrelease. aspx? ID=2011089 Consumer Reports’ 2011 (January 2011), Car Brand Perception Survey http://www. consumerreports. org/cro/cars/new-cars/news/2011/01/2011-car-brand-perception-survey/overview/index. htm – Narasimhan, Ram, Mendez, David (2001), Wacker Theory (1989), Strategic aspects of quality: A theoretical analysishttp://findarticles. com/p/articles/mi_qa3796/is_200101/ai_n8943712/? tag=content;col1 – Nadia Huitzilin Jimenez Torres (October 2007), The purchase of foreign products: The role of firm’s country-of-origin reputation, consumer ethnocentrism, animosity and trust http://www3. va. es/empresa/uploads/dt_13_07. pdf – Sander L. Gilman (1985), Difference and pathology: stereotypes of sexuality, race and madness – Black, Donald W. (February 2007), A review of compulsive buying disorder http://www. ncbi. nlm. nih. gov/pmc/articles/PMC1805733/? tool=pmcentrez – Uma Sekaran & Roger Bougie (2009), Research Methods for Business: A Skill Building Approach – Janine Frauendorf (2006), Customer processes in business-to-business service transactions