Case Study: Skoda trades on bad rep

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[london] Why does a Skoda have a double rear window heater? Answer: To keep your hands warm while pushing the car. How do you double the value of a Skoda? Fill the gas tank.

As these commonly heard jokes prove, the Czech-made Skoda automobile suffered a major image problem in the U.K. Today, however, Skoda's former reputation for cheap, shoddy workmanship has been replaced by one of top quality at a value price. That's thanks to an ongoing integrated campaign including design, PR, in-store marketing and direct marketing, revolving around irreverent and frank advertising from Publicis Groupe's Fallon Worldwide, London.

The question is now whether that perception change can carry over from consumer auto sales to Skoda's newest target: company car or fleet sales.

Volkswagen AG took a stake in Skoda in 1991, but it wasn't until the German automaker upped its stake to 100% in 1999 that the re-engineering of Skoda truly began. Despite rave reviews in auto trade magazines for some of its models, and a $15 million launch campaign-Skoda's biggest ever-from Grey Global Group's Grey Worldwide, most Brits in the mid- to late-1990s were embarrassed to be seen dead in a Skoda.

never buy

In fact, a February 2000 market research study conducted two months after the Skoda account moved to Fallon found 60% of respondents insisted they would never buy a Skoda even though the cars themselves scored highly on J.D. Power & Associates' customer satisfaction surveys.

Fallon, working with Havas' direct marketing specialist Archibald Ingall Stretton, London, met the issue head on when it created the $6.7 million launch for Skoda's Fabia small car with ads carrying the self-effacing tagline "It's a Skoda. Honest." A direct-mail piece to Skoda owners was designed to look like a letter from a fellow Skoda buyer, with favorable press clippings attached. Media was handled by Grey's MediaCom. Skoda's market share rose from 0.8% to 1.3% in 2000 and the campaign was awarded a U.K. Marketing Society award for brand revitalization.

The 2001 direct marketing campaign included a "win a car" promotion in Auto Express that generated the magazine's best-ever response, with 27,245 entries from 90,000 readers.

Two new spots this year feature potential customers who know a Skoda makes sense, but are still too embarrassed to own one. The tagline: "It's a Skoda, which for some is still a problem."

In one of this year's ads, a customer hurls himself out of the car and runs into the woods when the salesmen pulls over to let him drive. In the other, a woman about to buy a Skoda sneaks out of a dealership when the salesman fetches coffee. "It's an even harder push against the doubting Thomases that are still out there," said Fallon Managing Partner Michael Wall.

Skoda's unit sales are now up to 35,000 (see chart below), and its next test comes in the next few weeks when the first TV ads break for Skoda's full-size, executive-style Superb model, targeted at the company-car as well as consumer markets.

Company cars, or fleet sales, accounted for 853,000 of the 2,063,000 cars sold in the U.K. in the first nine months of 2002. Skoda has just 0.81% of the fleet market, compared to a 2.01% share of retail sales during that time frame.

Direct marketing will figure heavily in the Superb launch campaign, targeting the company manager who draws up the list of company cars employees choose from. One print piece listing Skoda's features reads: "Damn. If there are still people hoping to find a reason not to buy the Skoda Superb we have some bad news."

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