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Old 20th December 2004, 19:33   #1
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Default Skoda-A brand and product case study

Skoda Auto
1996. A relatively unknown company in the middle of Czechoslovakia (now Czech and Slovak) took the bold decision of entering the Indian market. While their decision was "bold", what also made it something worth pondering over was its ability to build a new product. Grounds-up.

Here is the story of a brand you and I probably never heard of until it entered India. Skoda Auto is a case of a brand brought from the depths of the unknown to a state today where it enjoys healthy brand equity across Europe and Asia.

1991 and Skoda is taken over by the VW group. 5 years of relentless cost-cutting, technology improvements, plant revitalisation and new product development led to the development of the Skoda Octavia. The Skoda Octavia was designed around the famed VW Golf platform. Armed with a quality product to support the existing Skoda Felicia, Skoda did a soft launch in European markets and started to receive rave reviews from the word go. For a company, who's product line never really got the thumbs-up from customers, especially in terms of quality, this was a giant step by it. A gamble which if it hadn't taken off would have probably signed the death-knell of the company.

Skoda Auto India- Brief History

What's important to our story though is Skoda Auto India and the journey it has taken to become one of the most respected brands in our country. In 1996, Skoda did a due deliberation of entering the Indian market with its all new Skoda Octavia (A4). Back then, it decided to enter the Rs. 6-8 lakh segment with the 1.6 litre, 100 bhp Petrol version. They were looking at local assembly of the car. Initially they tried to enter in JV with a North India based Automotive group, but failed to do so as the 2 partners couldn't agree on the terms. Also quality levels that the VW group demanded couldn't be met by most of the ancilliary and accessory manufacturers within our country. This delayed the Skoda Octavia's launch for another 5 years, even then it was launched as an SKD.

Late 2001, Skoda launched the Skoda Octavia in the Ambiente trim in 2 engine versions. 1.9TDi and 2.0 MPFi. The 1.9 TDi engined Octavia to date is its largest selling car in the country and at one point in time constituted 95% of all Skoda Octavias sold in India. The 2.0 MPFi alas hasn't managed to make a mark in its segment. The initial response to the car had been fabulous. Starting off with nearly 300 cars a month, Skoda today sells nearly 600-650 cars on an average every month. This has been possible through the constant expansion of its dealer network and improvement in services, coupled with product variants such as the Elegance, the L&K, the Rider and the RS, all launched with a span of the last two years.

Today Skoda Auto not only sells the Octavia, but has also launched the Skoda Superb, a D-segment luxury sedan with a 3.0 litre 190 bhp Petrol engine. Also since its launch, Skoda has shifted from being an SKD assembler to a CKD assembler since early 2003 and the Octavia today sports a 40% local content, testament to the fact that Indian suppliers have come a long way in terms of quality and delivery since 1996.

While these are just facts about the brand's history in India, let's look at reasons why the Octavia and Skoda have been successful in India.


First up, the size of the Skoda Octavia is perfect in terms of size. Slots itself right in the Lancer and Honda Accord it tries to offer the best of both worlds. Its not too big to make it difficult to maneouvre and neither is it too small to be uncomfortable. As a C++, entry D-segment car, it really pioneered the segment by offering class leading features and quality levels that a segment above and below couldn't offer.

Which leads us to the sense of indestructibility that the Skoda Octavia has. Right from the moment you open that door, you know you are in a quality automobile. The door itself needs some effort to shut for first-timers, making it clear that you are cocooned in a shell of safety. To add to that feeling is the 4-star rating it has received in the Euro NCAP, proof of a fact that lies right in front of your eyes. The front seats offer adequate lumbar support making long drives an ease. The dashboard, though a bit too grey for the tastes of a lot of people, feels strong enough to last the vagaries of child, adult and cleaner abuse. The steering wheel feels compact and sporty, the chrome dials in the higher versions providing relief to your eyes. Its trip computer offers you varying information in terms of trip distance, average fuel consumption etc. What really is the highlighting point though is that cavernous boot. At 528 litres it really can swallow your entire family's cupboard. Though it is also the reason for complaint, especially since it eats away into rear-seat space and legroom.


On the move the car continues with that sense of indestructibility. The rough-road package really takes on the potholes with as much aplomb as corners making it a great ride-handling compromise. Its ride-height though is what impedes its progress, making speed-breakers a bitta troublesome to conquer. Nevertheless, careful drivers shouldn't have a problem. Even then, Skoda has offered sump guards to protect your car's vital moving parts.


The 1.9TDi though is a dream. With 90 bhp to boot, it really is quite a powerful diesel engine, even though it isn't a CRDi. The RS though is in a different league altogether. 148 bhp from a 1.8 Turbo Petrol, it whisks the car to 100 from standstill in a little over 8 seconds and tops-out at 220 kmph.

Finally though, the reasons why the Octavia as product has succeeded is clear. Size is right, the engine is powerful yet frugal, but most importantly it feels like its been built from a single slab of granite. Tough all around, its ideal to deal with the Indian conditions. Some of the few reasons why 8000 people every year lap up the Octavia and trust it for themselves and their families.

Branding,Marketing and Advertising

The name. Its been the bone of all problems for Skoda. If you notice, like Hyundai it has suffered the same problem of being mispronounced. Some "Czech experts" in our country called it Koda, others as Skoda. But the true pronounciation is Shkoda. Notice, right above the S is a flick. Not that I am an expert of the language, it clearly demonstrates that it isn't normal pronounciation

A great marketing guru once said that "90% of all advertising is a waste". Skoda's advertising though falls in the 10% bracket, the "not a waste" one. When Skoda planned to enter the Indian market, they as usual, went and asked agencies to pitch for their account. A relatively small Mumbai based ad-agency called IB&W won the account. Their focus was simply to highlight the quality product that the Octavia is.

The baseline/tagline or slogan in common lingo was "The most well built car. In 1.9 TDi and 2.0 MpFi.". The headlines started first with "Namaste India", and then followed on to headlines such as "The driver's seat curves in all the right places. So your back doesn't curve in all the wrong". All of which highlighted the features of the car. Advertising does a beautiful thing which other marketing tools can't. It subconsciously creates an awareness and liking for a brand which eventually turns into loyalty. And that's what these ads did.

IB&W's Creative Director, Mr. Ganesh Balasubramaniam and his team were instrumental in making the brand a success. My meeting with him really made me see through what goes into creating such great ads. The man's total commitment to quality has shown that even though the account moved on to Orchard in early 2003, it came back to IB&W six months later since Orchard could never replicate the success that iB&W brought to Skoda. They are a very small team of 4-5 people, but this crack creative team have really shown how good ads can generate sales.

Of course besides great ads, word-of-mouth marketing brought the brand to an icon status. People were happy with the product and were also slowly getting pleased with the ever improving service levels at the dealer and Service station end.

Sure, given Skoda's success in India, one would really expect them to launch cars quickly. But their policy seems to be one where they carefully test market and launch their products. With a 15,000 unit capacity plant at Shendra, Aurangabad, Skoda really now has upped the ante on its competition. Its carved a niche position for itself, one that offers good quality products at competitive prices. It enjoys a very good brand equity today, all in a short span of 3 years.

Sometimes it isn't always about a breathtaking product. Or sales alone. Its about values that the brand stand for. Its about offering the customer the best service he deserves. Its about getting a good product with good sales-support, a brilliant marketing campaign and honest intentions to stick around. That's what makes Skoda one of India's most loved car brands.

Revvmaster

Last edited by Revvmaster : 29th December 2004 at 13:34.
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Old 20th December 2004, 20:04   #2
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Awesome write up there Revv. As usual the master in presenting the case studies of auto companies.. Great read

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Old 20th December 2004, 20:10   #3
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Great write up Rev. But I believe Skoda is looking for another agency. This may not be true though. Skoda also has a great reputation as bad pay master.
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Old 20th December 2004, 20:43   #4
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Excellent Write up , Makes a very good read. I wonder what would have happned to the C segment had they gone ahead with their original plan in 1996.
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Old 20th December 2004, 20:51   #5
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Awesome revv !!

skoda also suceeded where people began to suggest skoda to other potential buyers - so impressed were they with the quality !! word of mouth publicity helped skoda a lot during the initial period after their launch. also the fact that the diesel and petrol versions were priced the same helped !!
and these were the same people who asked - what skoda ? when skoda came to India.

The build quality , the engine , the FE - all contributes to one fabulous car. yes there were cries about not enough dealerships and A.S.S but these issues seem to be well sorted out now. another pointer on how Skoda has worked to make itself a majorly successful car maker in a market like India.

trust me - my next car is surely gonna be a Skoda or its parent The Audi TT

cheers

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Old 20th December 2004, 21:14   #6
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Fantastic Write up Revv. Frankly today in India there is no other company like Skoda...I mean from the worse condition it has come up...were there any other company in its place..that company wont even be manufacturing bicycles today!!!! In India, today Skoda only has one car, the Octavia (Ok..i know there is the Superb too), ripping its segment in pieces. But I see no one complaning that they arent launching cars..thats wat they have achieved!!! Skoda Auto Zindabad!!
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Old 20th December 2004, 21:53   #7
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Awesome stuff revv!

Thanks for the history lesson. though you left out one amusing point.

When Skoda first started selling cars in India, they were operating out of a hotel room! They didn't want to invest too much until they were somewhat sure of success. I wonder how much confidence that would have instilled in a prospective customer if they knew about it!

"Yes sir, for the Skoda head office, just call Hotel XYZ and ask for room number 69."

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Old 20th December 2004, 23:58   #8
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Quote:
Originally Posted by rtech
Awesome stuff revv!

Thanks for the history lesson. though you left out one amusing point.

When Skoda first started selling cars in India, they were operating out of a hotel room! They didn't want to invest too much until they were somewhat sure of success. I wonder how much confidence that would have instilled in a prospective customer if they knew about it!

"Yes sir, for the Skoda head office, just call Hotel XYZ and ask for room number 69."

Rt
Hahaha... great input there Rtech. Of course they seem to have learnt their lessons hard. And learnt them well... staying in hotel rooms i suppose.

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Old 21st December 2004, 00:47   #9
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Awesome write up Revv.
As Stratos pointed out from where they came its just fantastic. Skoda was once criticised like hell and some still do but not in India but just see where they are now atleast in India ... this reminds me of Hyundai it is now criticised badly but there will be a day when Hyundai will be saluted by people. I salute Skoda.
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Old 21st December 2004, 10:46   #10
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Amazing & very informative write up dude, keep them coming
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Old 21st December 2004, 10:51   #11
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Its posts like these that keep me glued to this site!
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Old 21st December 2004, 11:03   #12
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hey nice write-up rev. Skoda's success can be noticed in the way its name has turned from a small joke to a big story of success. At first when I read AI article abt Skoda plannin to introduce the Felicia, i was shocked. The car looked to cheap and the price was too much. Good they did not launch it. The Octavia would have suffered if they had done so.

Their advertising and branding was also one of the best. The new ad "You have to be well built to carry your loved ones" is also amazing. Just a year or 2 before launching the Octavia , Skoda was also testing the Octavia Estate. Had seen the Octavia sedan and Estate quite a few times in Juhu. Cars were always stationed in Sea Princess. But i guess they are waiting for the right time to launch the Combi.
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Old 21st December 2004, 11:07   #13
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Hey V12

They might have been testing the Octi Combi but I doubt whether it will be actually launched in India. India hasnt really taken the estate wagons to heart. Skoda must have noticed this and hence must not be finding the Combi a good proposition though an estate with that awesome frugal diesel engine will be quite tempting for outta town trips.

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Old 21st December 2004, 11:08   #14
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revv,
that was amazing.great read.
the transformation from being mocked around everywhere to where it is now speaks volumes of the quality of the product.
the octavia has also proved to be the right step for VW in showcausing their cars.
but the superb,octavia and the fabia all look the same.
now that they have won over the public,they shud do something to atleast make the cars look different from each other.
also skoda can set a precedent by starting a separate performanace division on the the lines of AMG,Brabus ,so that u dont have to go some other place to get ur car modded.
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Old 21st December 2004, 11:09   #15
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Quote:
A great marketing guru once said that "90% of all advertising is a waste".
Ha, the only problem is no one knows which 90%!

Well written Revv. Unlike in Europe, the one advantage Skoda had in India was that they could start on a clean slate. No one knew what a pathetic brand it was before and their cars reeked of the quality that our 118 NEs did.

VW must be applauded for achieving what they did with the turnaround. As for the Octavia...it is among the best deals for your money.

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