Advertising Plan

It's A Skoda. Honest.

The Profitable Return on Brave Communication

SKODA. YES, SKODA

This paper relates the turnaround of a brand so maligned that until recently the very notion of an IPA submission on its behalf would have had a marketing audience bracing themselves for the inevitable punchline.

ABSTRACT

Despite the car industry's stranglehold on the nation's airwaves (863m was spent on automotive advertising in 2001, second only to retail expenditure), there are remarkably few established effectiveness cases. The category's purchase cycle is typically made scapegoat: the fact that cars are bought infrequently and after much consideration means that car advertising expenditure is unlikely ever to pay back over the short-term. (1) In Skoda's case, however, we believe that we can already demonstrate a short-term return on advertising investment. (A return on investment achieved despite the brand's history and a category share of voice of less than 2%.)

For all the smart integration of marketing efforts on the brand's behalf (DM, PR and design efforts were swiftly aligned behind a new strategic approach) our story is in some ways an old-fashioned case of 'only advertising can do this', as the brand's very public problem demanded broadcast as opposed to private communication.

The pub version of the Skoda brand turnaround is this: ridiculed brand and ailing business stumbles on decent car and radical advertising and the VW Group's ugly duckling is reborn as a swan.

The truth, inevitably, is more complex than this. This paper scrutinises four key periods:

1. A brief history of Skoda's UK performance until 1997, a period of creeping growth within the limits of the budget sector and against a small base of loyalists.

2. The (failed) launch of the Octavia (2) in 1998.

3. The launch of the Fabia (3) (and brand re-launch) in March 2000 onwards demonstrating the broad effects of brand marketing and intermediate evidence of advertising effectiveness.

4. A specific focus on the 2001 relaunch of the Octavia, a model whose sales curve we noticed had behaved contrarily, and an analysis which allows us to strip out new product effect.

1. PRE 1997

British consumers know nothing of Skoda's genuinely splendid engineering heritage, having first become acquainted with the brand during the dog days of communist rule in Czechoslavakia and Skoda's unhealthy monopoly on car production. The Skoda joke, a uniquely British phenomenon, the unfortunate outcome.

As the jokes peaked in the late '80s, change was afoot. Czechoslovakia's Velvet Revolution prompted courtship from Volkswagen and a partnership which soon bore fruit in the form of the Felicia, a car impressive enough to win seven consecutive What Car? 'Budget Car Of The Year' Awards. (4)

Though ridiculed as a brand, Skoda's UK sales grew through the mid '90s (Figure 1), and extraordinary levels of loyalty were achieved (see Figure 2).

No one could argue that the Skoda brand was ill-defined or its franchise particularly open to competitive incursion. But nor could it be argued that Skoda was making genuine inroads against the broader consumer base; rejection figures for the brand remained stubbornly fixed at around 60% over the period. (5)

And as the brand's future product reality became more obvious, it was apparent that Skoda's image deficiencies would soon become a critical commercial limitation. Higher quality, more expensively priced cars would be rolling off the production line (as VW moved to a shared platform production strategy), Skodas that would have to compete for different consumers and against a new competitive set.

Skoda's brand rehabilitation in the UK was not just a matter of pride then, but a commercial imperative.

2. THE LAUNCH OF THE OCTAVIA, 1998

The first unarguable demonstration of the product transformation led by Volkswagen emerged with the launch of the Octavia in 1998. Launch reviews were invariably flattering:

'The Octavia is far and away the best car Skoda has ever made.'

What Car?

The Octavia's 10m launch advertising budget remains Skoda's largest ever. Skoda braced itself for success.

The launch was a failure:

* Only 2,569 Octavias were sold in 1998 (that's an advertising cost per car in the region of 4,000). By the year end, Octavia accounted for only 12% of Skoda sales, so that the Felicia remained overwhelmingly the Skoda car most often seen on the road.

* Skoda's brand image was unaffected, with no significant image improvements recorded over the launch period.

The failure, in retrospect, was one of strategy. The Octavia's marketing had been model-specific and product-centric, targeted at the small band of brand considerers; in short, Skoda was behaving like a brand without a problem rather than facing the truth and addressing the stigma.

3. 20002001: FABIA LAUNCH (BRAND RELAUNCH) ONWARDS

i) Strategic foundations

When Fallon was awarded the advertising account in 1999, it was clear a new approach would be needed if Skoda's next launch of the Fabia supermini wasn't also to fall on deaf ears. Although the Fabia was once again rumoured to be 'great product' it was clear that product alone wouldn't be enough to drive people to reappraise the Skoda brand. And indeed that we had to win reappraisal of the Skoda brand for any product to achieve its potential.

While, again, positive motoring press coverage was to accompany the Fabia's launch, we understood the role for marketing to be to complement product endorsement by directly attacking the prejudice against the Skoda brand. (6)

Despite the Fabia winning the What Car? 'Car of the Year' Award at launch the popular press gave us a truer representation of the car's likely reception:

'I see the Fabia has been named "Car of the Year" but I don't think I'm ready to drive one yet. I still think that it's less embarrassing to be seen getting out of the back of a sheep than getting out of the back of a Skoda.'

The Mirror, (February 2000)

We concluded that the stigma attached