hen VW first unveiled its new luxury vehicles in fall 2002, Motor Trend hailed the $35,000 Touareg as an “exceptionally nimble” and addictive SUV. It said that the $65,000 luxury sedan, Phaeton, “justified every dollar spent.”

But passionate VW dealers grumbled about the obscure product names and said they were doing just fine selling Jettas and Passats.

For a brand nearly synonymous with the “Love Bug,” competing in the crowded luxury-class market would be a challenge. VW had to override the image fostered since its inception in the 1930s as “the people’s car.” In 2003, the line started at about $15,000 with Golf and ended at around $22,000 with Passat. Introducing vehicles that stretched the price point well beyond that, VW had to convince dealers they could sell the concept of a VW logo on a luxury vehicle with the same cachet as Mercedes-Benz, BMW, or Lexus.

“VW was entering two new, hotly contested, up-scale market segments,” Campbell says. “We needed to demonstrate our ability to compete and build vehicles that fit into these segments.”

According to Unity Marketing’s Luxury Market Report, which surveys
attitudes among consumers with an average income of $135,000, three primary attributes define a luxury product: superior quality, distinctive style and design, and the right price/value relationship.

Nothing thrills luxury buyers more than buying something luxurious for less. Only 21 percent of luxury consumers always or almost always select the more luxurious option in an automobile.

“Old luxury was defined by the product, and certain features and attributes that the product had,” says Pam Danziger, founder of Unity Marketing and author of Let Them Eat Cake: Marketing Luxury to the Masses — As Well as the Classes (Dearborn Trade, 2005). “New luxury is consumer-centric. It’s how the consumer interprets and experiences luxury.”

As for marketing these luxury products, Danziger says that to reach the fickle rich, “you have to present luxury to your audience in an experiential way.”

VW’s strategy for its 2003 North American Dealer Meeting was to market its vehicles to its dealers as if they were the target luxury customers — offering exclusive access to its private proving grounds, thrilling test-drive experiences, and high-class hospitality. It hired MVP Collaborative, an event and communications company based in Madison Heights, MI, to help it create this luxury experience.

VW’s prime objective for the event was to “educate, excite, and enthuse” U.S. and Canadian dealers so they would advocate for these new vehicles back at their stores. If VW could convince North American dealers that its new luxury models delivered more bang for the buck than their competitors, the dealers would gladly ramp up their sales force to tap unmet demand for upscale VWs.

It measured its success in sales. By the end of 2004, Touareg exceeded sales goals by 8 percent, and Phaeton by 17 percent.