Case | HBS Case Collection | February 2002 (Revised February 2006)
Volvo Trucks (A): Penetrating the U.S. Market
by Michael E. Porter and Orjan Solvell
Volvo Trucks has worked on a global strategy for several decades. Beginning in the mid-1970s, the company decided to enter the largest market for trucks: the United States. Over time, the company has struggled to get a significant share of the U.S. market and at the same time integrate operations around the world into a truly global strategy. However, the competitive structure (five-force model) differs significantly between Europe and the United States, and in spite of heavy investments, the global synergies seem far-fetched. This case illustrates clearly that entry and penetration of a market is a learning process for Volvo, where the initial strategic logic and underlying assumptions have to be changed several times.
Keywords: Market Entry and Exit; Competitive Strategy; Five Forces Framework; Truck Transportation; Global Strategy; Globalized Markets and Industries; Manufacturing Industry; Retail Industry; United States; Europe;
About Volvo Trucks
Owned by AB Volvo, Volvo Trucks is a global truck manufacturer based in Gothenburg, Sweden and is considered to be the world’s second largest heavy-duty truck brand. On January 1 2012, Volvo Group was reorganized and as a part of the process, Volvo Trucks stopped to be a separate company and was integrated into Volvo Group Trucks, with Volvo’s other truck brands UD Trucks (Nissan Diesel Trucks), Mack Trucks, and Renault.
In 1928, the first Volvo truck started its production lines. In 2011, Volvo Trucks employed about 19,000 people across the globe. Having its global headquarters in Gothenburg, Sweden, Volvo assembles and manufactures its truck in 15 countries. On an average, Volvo trucks makes and sells more than 100,000 units annually. In 1927, when Volvo manufactured its first vehicle in 1927, the first truck was already on the drawing table and in 1928, the LV series was showcased to the public. Though it was just a truck, but it achieved immediate success and it successfully sold 500 units in a matter of 3-4 months.
The cabs by Volvo are manufactured in the Umea, Sweden and in Ghent, Belgium whereas the engine is made in the central town of Skovde. In smaller facilities, Volvo has assembly plants in Russia, India, China, Australia, South Africa, Brazil, USA, Belgium, and Sweden. The sales are split into seven sales areas namely Asia, Japan, Africa/Middle East, Europe South, Europe North, North America, and Latin America.
Being a B2B brand, it might be perceived by others that this sector doesn’t really produce highly creative campaigns. However, the objective of Volvo Trucks was different from the mainstream ones. Their objective was imaginative B2B marketing. The target audience is much more mixed and decisions are influenced by people around them. In 2012, a new line of European heavy duty trucks was planned. They approached one of the famous Swedish agency Forsman & Bodenfors with a B2B campaign brief. There was something spectacular about the new five trucks, however, they wanted the great engineering to interest people in general.
Strategies adopted by Volvo Trucks
1. Viral Video Marketing
“Usually, in the commercial automotive (van and truck) industry, brands are rather traditional. Now we wanted to take advantage of the opportunities offered by social media. We quickly understood that there are more people interested in trucks than just men in the grey business suits. People around them are also big influencers: drivers, families, friends and spouses. Everyone has a say. That is why we planned a viral marketing strategy.” Anders Vilhelmsson, Public Relations Manager, Volvo Trucks.
Since Volvo Trucks didn’t have a huge budget to start off with, it was difficult for the company to create a global campaign for a scattered and mixed audience. The only way to be successful at this was to outsmart their competitors. This is why they came up with the idea of Viral marketing and PR.
“Working from the start, we had an insight that there are a lot of good drivers in the world. It’s a wide group of quite ordinary people. That made it more of a consumer campaign in broad media, but we didn’t have the money. So we figured out another way to reach broad, working with viral marketing and PR was the only way.” Björn Engström, Copywriter at Forsman & Bodenfors.
Series of Live Test
A series of live test videos were produced by Volvo Trucks in collaboration with Forsman & Bodenfors, They chose a viral marketing campaign which is a very unusual choice in the B2B category. For showcasing the new and different technical aspect of the new Volvo trucks, a series of live test videos were produced.
In 2012, the first video was released. In order to show the stable progress on the road of the Volvo FH, Faith Dickey, a tightrope walker, was challenged to walk across a rope tied between speeding trucks before the trucks went different ways through a two-lane tunnel.
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After a year, Claes Nilsson, Volvo president was standing on the front panel of a Volvo FMX construction truck. It was hoisted over 20 meters above the water in Gothenburg harbor. The clip showed that Volvo Trucks’ front towing hooks are extremely reliable.
Another video was posted by Volvo to show off the ground clearance of Volvo FMX by driving it over one of their technicians. There was another piece of extraordinary content shown by them. The video showed a hamster running on a treadmill specially designed along with a steering wheel to manage the steering of the truck in a quarry. Thereafter, Volvo posted a video of its smallest truck in Spain which showed furious bulls chasing it.
Volvo Trucks were getting a reputation for creating viral videos which showed stories about the innovation in its new series. They had set the bar high in the market. The pillar of the Live Test series was ‘The Epic Split’ since it was featuring Jean-Claude Van Damme aka ‘JCVD’, the famous martial arts action movie star. With 2 Volvo FM trucks, he performed a spectacular stunt.
Anders Vilhelmsson, Public Relations Manager at Volvo Trucks said
“The campaign actually consists of 6 different films. ‘The Epic Split’ is a fantastic film, but it was built up to by the other films in Live Test series. Without the other films it couldn’t have been as successful. All of them are viral hits.”
It was shot in a single take in Spain where the ‘The Epic Split’ placed the Van Damme on the top of two trucks reversing at low speed. The idea behind this video is to showcase the precision of Volvo Dynamic Steering that helps two truck drivers to maintain the accurate distance as well as speed while driving in reverse. Popularly known as ‘The Muscles from Brussels’, Van performs his famous ‘splits’ stunt, standing on the wing mirrors of both the trucks.
This video was one of the biggest hits of the series and collected over 75 million views on YouTube. The reason behind success is the entertainment value provided by the stunt legend and the control of amazing steering by the truck drivers. The stunt is visually appealing.
Here’s what Cilla Pegelow, Account Director at Forsman & Bodenfors, explains
“I think the viral video worked on multiple levels. Relevance is very important for us. But it also had to be spectacular enough to reach the broader mass. If you should take ‘The Epic Split’ as an example and you’re not within the target group, you just see Jean-Claude Van Damme doing the epic splits. If you are in the target group then you see two truck drivers skillfully driving backward as never seen before and only then Jean-Claude Van Damme doing the splits. This is how the viral works.”
Public Relations Strategy
Volvo Trucks adopted a clever PR strategy that compensated for their weak advertising budget. The first thing to be noted is Volvo Trucks’ Facebook and YouTube channels which provided excessive free reach. Another thing is the approach adopted by Volvo Trucks PR team. They produced press information which was distributed online to the news media. This helped bloggers and news media to share the story.
On the millions of views on YouTube, Cilla Pegelow, Account Director at Forsman & Bodenfors said
“Awareness is what we wanted with the viral. It wasn’t the number of views that was our ultimate goal, but the actual engagement and fan base. The number of views on YouTube is only the enabler of that.”
Number of views on Volvo Live Series
The number of views so far (August 2016):
- The Ballerina Stunt – 9,640,847 views
- The Hook – 3,469,055 views
- The Technician – 1,329,026 views
- The Hamster Stunt – 6,895,459 views
- The Chase – 11,457,005 views
- The Epic Split feat. Van Damme – 84,189,303 views
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The videos are accompanied by teasers and numerous spoofs.
There are over 100 million views on YouTube and have been shared approximately 8 million times. More than 20,000 reports about the videos were there in the media worldwide. Also, it was a highly successful awareness campaign which boosted confidence and gave the Volvo Trucks sellers a new tangent to pitch on.
“If you look into it more – our sales people have used the material as a conversation starter. Sometimes, the first thing the customers bring up is ‘The Epic Split’ for example. We have also been looking at the people buying trucks of different brands. When asked if they believe that the films have in any way improved the chances of them choosing a Volvo – almost half of them say yes,” says Anders Vilhelmsson, Public Relations Manager at Volvo Trucks.
The concept of viral video marketing produced a huge ROI for Volvo Trucks. The production was not heavy on pockets of the creators as compared to a typical automotive launch media budget they might have had. As per the estimations, the whole campaign achieved over 126 million Euros worth of earned media. This was a massive return if we see the company’s relatively small investment. Their concept of ‘The Epic Split’ has become one of the most successful automotive launch films in the history.
Apparently, there is no universal recipe for a successful viral video. In order to create a successful viral film, you need to take different steps to maximize the chances of your video going viral. It is important to note that the content should be relevant to your target group. The idea behind Volvo Trucks video marketing concept was to showcase the innovations in the trucks along with making people interested in trucks.
Since YouTube is unlike TV where watching a 30-second ad is not mandatory. Therefore, the video should be interesting as well as engaging enough from the very start. One should integrate everything needed i.e. Social Media, Online media, PR etc.
Contradictory to the popular belief, the Live Test series is proof that B2B is not boring. Traditional advertising is quite outdated in the digital world. A lot of efforts are required in the untraditional entertaining films. For making a viral video, it has to spectacular enough for TV to cover it. One doesn’t know if viral videos work but at least give it a try.
Discussed above is the case study of world’s second largest manufacturer and seller of heavy-duty vehicles, Volvo Trucks. The way they leveraged viral video marketing and created an imaginative concept that was far from the world of B2B.
Did this case study on Volvo Trucks triggered you to create an imaginative concept for your business? Which Test Series you liked the most?
Image Credits: intoday.in, wikipedia, best-marketing.eu