The Skoda company began back in 1895 when Czech entrepreneurs, Vaclav Laurin and Vaclav Klement began making bicycles in the Czech town of MladaBoleslav. They very soon expanded into motorcycle manufacture and by 1905 had made their first motor cars. In the early days the vehicles were quite grand and were as stylish and innovative as many of the famous names of Western Europe and America. The Skoda reputation for quality was such that during the twenties it was the only manufacturer granted a licence by the famous Hispano-Suiza company marque to build its luxury limousines.
After the second world war Czechoslovakia became more and more isolated from outside influences and new vehicle production at the Skoda factory became increasingly basic and functional reflecting the values of the now established Communist government. Raw materials were poor and with little outside intervention Skoda was unable to keep up with western motor manufacturers in terms of style and innovation.After the Velvet Revolution in 1989, the newly formed Czech Republic began rebuilding its economy in the free market and Skoda quickly realized that things had to change if it was to successfully compete in this market. Skoda began the search for an economically sound partner with financial, technical and managerial resources to help improve the efficiency of its factories and assist in the company’s future development. A number of leading automotive manufacturers demonstrated a keen interest, but the Czech government decided to accept the Volkswagen Group proposal, with the full approval of Skoda’s management, engineers and Union members. A key element in accepting Volkswagen for this partnership was the guarantee of the independence and self-reliance of the existing factories and Skoda marque.
The Felicia hatchback made its UK debut in May 1995 with a 1.3 litre engine and was followed in 1996 by an estate car, plus a new 1.6 litre version with the engine from the Volkswagen Golf. A similarly sourced 1.9 litre diesel engine version will follow by the end of 1996. The Felicia is a high quality, good specification product which takes on Western, Japanese and South East Asian rivals on their own terms, but with a considerable price advantage. The Felicia range pricing starts at £6299 on the road. It should immediately become obvious to the reader why Skoda has been transformed. The buyer is able to get exceptional value for money by purchasing a modern looking car with all of the best Volkswagen technology but at a bargain price.The emphasis has been on the partnership with Volkswagen and the value for money pricing. The safety, reliability and quality of the cars has also been highlighted through components being supplied by Europe’s top manufacturers (Siemens, Bosch, Lucas, Blaupunkt, Continental etc).
A major factor in altering people’s perceptions of Skoda is the belief that substantial change has taken place and will continue to take place. It is the link with Volkswagen which is perceived by the public as offering proof. In the past, the stereotyped view of a Skoda owner is an older male on a low income, but this is no longer the case. The changes that have taken place in the last few years have attracted younger people, females and people with higher incomes to purchase the new Skodas. If we then go on to examine current owners’ feelings about the Skoda which they drive, the evidence indicates a high level of satisfaction.
Questions:
1- What was the main issue highlighted in this case?
2- Discuss how partnerships with other companies help the implementation of effective marketing strategy.