The Volvo Case Study – Strategy With RS

How do companies build brand equity among its customers?

Let us take Volvo – the Swedish automobile company & witness how it built its brand equity.

A successful brand should always stand for ‘one’ thing in customers mind known as Determinant Benefit – benefits that customers desire, competition is not giving & your brand gives.

Volvo decided the determinant benefit it wished to own in customers mind was ‘safety’.

Research indicated that fatalities during crash happen because the driver & passengers were not secure during collusion or sudden breaking – in such cases death happen due to secondary impacts.

Therefore, they reasoned that if the occupants of a car can be secured then the chances of them surviving a crash would improve.

This led Volvo to introduce the 3-point safety seat belt, which has now become a standard feature in cars. So focused was Volvo is on owing ‘safety’ in peoples mind that it designed its logo to subliminally cue in seat belt (reference above).

To completely own safety in peoples mind it posed to itself a bold question – What can we do do avoid crashes, because If crashes did not happen then driving would become safer!

This question made Volvo look at what caused crashes?

They looked at cyclist. In London almost 19000 accidents related to cyclist happen on the roads. And the main cause – during nighttime the cyclist become almost invisible resulting in more accidents.

Volvo decided to do something about this social issue.It decided to launch Life Paint. It is a spray containing reflective particles, which stick together on any surface or object – helmet or clothes. This coating is invisible by day but glows, like a headlight, in darkness – which makes the cyclist & his helmet visible so that they are not missed in the darkness.

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Volvo, instead of selling Life Paint, gave it away free at cycle stores.

How will Volvo gain by distributing Life Paint free?

Life Paint is a part of Volvo’s strategy to own ‘safety’ in people’s minds so that whenever they think of safety they remember Volvo.

Volvo wish to own this association not just in the minds of drivers but of everybody else.

Does its efforts stop with Life Paint?

Not really.

It has also introduced Active Bending Headlight that bends around corners so that visibility of drivers improves & in the process reduces chances of accidents.

In some of its models it has introduced Intellisafe – sensor / cameras are mounted on cars which will detect when pedestrians or other vehicles or cyclists are in close proximity to cause accident … if it sense that then it will automatically apply brakes to avoid accident.

What are benefits for Volvo through LifePaint?
1. It will generate a positive Buzz.
2. It has embedded principles of Behavioural Sciences into its Business Model – Reciprocal Principle – when someone does good to you, you too feel like reciprocating & Likability Principle – people prefer to do business with people they like.

Business Lessons for us:
1. Learn to frame the business issue well
2. Be proactive
3. Embed principles of Behavioural Sciences into your business model.

BTW – Nissan has developed a car paint that glows in the dark (referenced below)

 

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In this series, Rajesh Srivastava, Business Strategist and Visiting Faculty at IIM Indore gives you a regular dose of strategy case studies to help you think and keep you one step ahead as a professional as compared to your peers. Rajesh is an alumnus of IIM Bangalore and IIT Kanpur and has over 2 decades of experience in the FMCG industry. All previous Strategy with RS posts can be found here

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