Fundamental Marketing Issues for Porsche Automobile - Essay Example

Fundamental Marketing Issues for Porsche Automobile Introduction There has been a growth in the automobile industry with new modelsemerging in the market. This has brought competition in the market as every brand tries best to gain market share for its survival. However, many automobile brands have managed to maintain their competitiveness in the industry through a vigorous marketing strategy. One of such companies is Porsche Automobile. The firm has been operating since 1931 and deal in luxury and sports cars. The company deals with luxury cars where it aims at meeting the needs of wealthy customers within its market segment (Zoeller 2015). This was evidenced when the company produced a model, Porsche 911 which was among the most expensive and competitive cars ever produced in the automobile industry. It was manufactured for its customers who enjoy racing as well as status. Importantly, the organization builds three categories of cars, namely consumer models, racing models, and prototype cars. Out of all these models, the company produces more of racing cars than any other (Zoeller 2015). Because of this, the company’s primary marketing strategy is to produce cars that meet the needs of the wealthy customers. This makes it have a small market share because not all consumers can afford the cars, but at the same time increasing its profits (Zoeller 2015). The rest of the paper will discuss the Porsche Automobile marketing environment, marketing position, as well as the marketing mix. The report will conclude with the recommendation of ways the organization can increase its market share and continue its profitability. The marketing environment SWOT analysis Strengths Porsche Automobile has been in the market for the last eighty years, and this has given it a chance to gain brand recognition among its customers. Its high brand presence and reputation across the globe gives it the advantage. Secondly, the brand is preferred among the ultra-rich elites making the company to high price their models. Thirdly, the organization has few car models with a high range of variants making it have an advantage on brand extension. Fourthly, Porsche Automobile is a trusted brand for the provision of supreme style with sporty features. Moreover, the company has the popular brand in the racing and gaming industry and over 12,000 employees are ready to give support to customers (Company Spotlight: Porsche 2013). Weaknesses Porsche Automobile lacks presence in the middle-income segments despite their expansion at a higher rate (Taylor 2013). This makes the organization to loose on this market segment. Secondly, the very high maintenance cost in extremely competitive luxury car market works to the disadvantage of the company. Lastly, the cars produced by Porsche Company are highly priced hence preventing many customers with lower income from purchasing the brand (Company Spotlight: Porsche 2013). Opportunities Porsche needs to capitalize on the exclusivity and increased sales. The organization has untapped markets which it needs to venture as this will increase its market share and contribute to its profitability. The organization can also resort to future generation and concept cars. Moreover, increasing manufacturing facilities and distribution networks will promote the company’s presence win the emerging markets. Lastly, the number of wealthy individuals is increasing in the society, and the pride that comes with driving luxury cars give the brand the opportunity to tap on this social class. The racing models preferred by the wealthy class are likely to drive the brands sales when the organization promotes the models (Porsche Automobil Holding SE SWOT Analysis 2014). Threats Different governments have developed policies regulating automobile industry, and this poses a threat to brands entry into different nations. Secondly, the impending recession may decrease the purchasing power of the brand because of its high prices. Similarly, the organization is likely to experience competition from new entrants, as well as other luxury cars. The development of technology aids other models to produce luxury cars as they promote them through advertisements (Porsche Automobil Holding SE SWOT Analysis 2014). PESTLE Analysis Political The political stability of the brand markets makes it increases its sales and marketing. It favors the companys operation and profitability. Similarly, stable governments support the firms operation within and in oversea nation’s leading to its growth (Porsche Automobil Holding SE SWOT Analysis 2014). Economic The global recession and decrease in fuel prices is a factor influencing the uptake of the brand. The brand sales increase with the stability of the economy and reduced fuel prices as currently witnessed. Socio-cultural The brand is not welcome in other nations, which are more environmentally conscious. This affects the brand penetration in the market (Porsche Automobil Holding SE SWOT Analysis 2014). Technology Technology has influenced the models produced by this company. For instance, the seven gears Porsche Doppelkupplung (PDK) system among others has made the company stay ahead of its competitors hence enjoying a competitive advantage. Moreover, the brand has continuously received pressure from other sports car manufacturers, hence influencing its market (Company Spotlight: Porsche 2013). Laws The brand is affected by the new regulations such as CAFÉ in the US. Moreover, governments in communist or socialist nations such as Russia have put strict measures on such brands, hence affecting its operation in such markets (Taylor 2013). Porters 5 Forces Threat of new entrants The threat of new entrants is low because of different factors that cause barriers to entry. Some of the factors include the high cost of producing luxury cars, technological advancements, and its brand recognition (Martay 2013). Bargaining power of suppliers There is little bargaining power of suppliers because the brand makes their engine parts. Bargaining power of buyers Bargaining power of buyers is medium because it is hard to find a better value than the Porsche brand (Martay 2013). The brand’s customers are willing to pay a premium. This is because the company targets wealthy customers who are ready to pay whatever the amount to get what they want. Threat of substitutes Threats from substitutes are medium. This is because of the companys strong brand name and image, which make it the brand of choice. Most of the target market segment does not look for a substitute because the brand has what it takes to satisfy their luxurious needs (Martay 2013). Additionally, the alternatives do not offer the same quality as Porsche, giving it advantage from the substitutes (Company Spotlight: Porsche 2013). Rivalry between competing firms The rivalry between the competing firms is high. This is because the sports car industry produces a naturally competitive environment characterized by players such as Ferrari and Lamborghini among others. They compete for limited revenues in this market segment (Martay 2013). Marketing positioning Segmentation It is no doubt that Porsche is one of the leading luxury sports cars in the world. The brand has about nine models, which have different features targeting certain market segments. The organization has segmented its market, according to the needs of the customers. Similarly, the company has divided its segmentation according to behavioral and descriptive elements (Zoeller 2015). The descriptive elements include demographic, geographic and psychographic. Currently, the brand has produced different models that target younger customers and females. The increasing age of 48 in 2007 to 51 in 2012 of the firms clients made the company work hard to reduce the aging of the customers buying the brands. It is one of the brands to focus on gender and age of its customers. For instance, its campaign slogan, “Engineered for magic, every day’ targeted women because it had an image of a mum in a Porsche 911 in front of a learning institution (Company Spotlight: Porsche 2013). Additionally, the organization uses female tennis star Maria Sharapova with the aim of engaging the female, young audiences who are the target. The marketing strategy and target achieved positive results since the growth rose from 8% to 15% on models such as Cayenne and Panamera since 2011 (Zoeller 2015). The company also uses psychographic segmentation approach based on customer’s psychology, lifestyle, personality and values to promote understanding. The target under psychographic includes ambitious and driven individuals and those who are about power and control. Similarly, some of the profiles under this strategy include elitists, the proud patron owner, the bon vivants and the fantasists (Zoeller 2015). Lastly, the organization uses traditional geographic segmentation where it groups its market based on countries, continents, regions, and states. It is a global brand and located its dealership in nearly every corner of the world. It has a product mix tailored to every location and region. All targets are high-end car users. Targeting The brand evaluates the market’s viability through market segment before deciding the target. The brand uses a hybrid marketing strategy where it focuses on its large share of the premium sports car and sport CUV segments (Zoeller 2015). It does this using a marketing mix based on the messaging and responses from the psychographic segmentation of its market. The company tries to appeal to every consumer that its brand is meant for everyone. It aims to increase sales to target customers of differing performance and price levels in every segment. Majorly, its brands target businesspersons and prosperous families willing to pay high prices. Positioning The organization positions itself as a brand for elites and extremely prosperous customers. It offers products of high quality at a premium price. The brand is a lifestyle because of its legendary status as well as the attribution of the products. It also achieves to position itself to customers through quality, price, and use aimed at maximizing the brand (Zoeller 2015). Marketing mix Price The organization has diversified the range of products with different price tags. Although the brand deals with luxury cars, which are expensive, there are affordable models to middle-income earners. The price range of the products depends on car models. For instance, Porsche cars range approximately $50,000 to $ 845,000, and this is based on market segments as well as a model (Mbaskool 2015). Therefore, the fair prices of some models have helped the organization to meet the luxurious needs of the middle-income customers. This has contributed to increasing the sales volumes, as well as market share acquisition. Similarly, the price variation among its models has changed the public perception that Porsche is meant for high-end individuals. Products Porsche has developed different models in the market to meet the different needs of the consumers. Some of the models include Cayman, 911, Macan, 918 Spyder, Boxster and among others (Mbaskool 2015). Similarly, the brand uses these models to target different consumers in the market to its advantage. For instance, the company launched a campaign, which aimed at promoting 911 Porsche to young audiences and women. The company achieved its mission by increasing the number of car ownership among younger age and women. Moreover, the variety of models enables the company to tailor them to meet the needs (Mbaskool 2015). For instance, there are expensive models that only meet the needs of very wealthy people in the society, gives them class, and recognition. Through the products, the company has been successful in meeting the needs of its customers across the social backgrounds and geographies. Place Porsche Automobile has its headquarters in the US and has decentralized its services to the major continents. The organization has a dealership in the leading developed nations, which has contributed to its success in the luxurious racing vehicles. The dealership makes it easy for potential customers to get first-hand information as well as the products without wasting much time traveling to the US. Similarly, the decentralization has made it possible for the organization to reach different markets such as those in Europe and Asia. This has been in favor of the company because it can meet the growing needs of the consumers in different markets. Moreover, it has been able to tailor the models based on the terrain and geography of different places. The result has been a success with improved sales volumes in Europe, its dealership base (Mbaskool 2015). Promotion Promotion is one of the ways organizations use to make consumers aware of their products. Porsche uses promotion in different ways to create awareness of its models. For instance, the company was engaged in a promotional campaign dubbed, "Engineered for Magic, every day". It aimed at targeting certain segments of the market, which were young audiences and females (Mbaskool 2015). The company also used different celebrities to promote the 911 models. Moreover, the company also resorted to integrated marketing campaign featuring direct mails, mobiles, online, television, and other elements with the aim of changing the perception of consumers on products. The company had earlier conducted a study and found that consumers perceived the cars like race cars and could not be driven every day (Peterson 2011). Therefore, there was a need for the company to promote its brand towards changing the public image to make it sell. Conclusion and recommendations Porsche has been in the market for approximately 80 years and ranked as one of the leaders in the manufacturer of sports and racing cars. The organization has different marketing strategies, which has seen it maintain its competitive lead with Ferrari and other models. Its strong brand name acts as its selling point among many consumers. More so, the wealthy elites like the brand because of its luxurious nature. Although the brand has a small share in the market, it has continuously increased its profits because of its market segmentation. Despite the positive results witnessed, the company has a gloomy environment that might challenge its success in the coming days. For instance, the new changes in the US CAFÉ laws might make the company stop export of cars or adapt to the rules. The high fines imposed on defaulters might scare potential buyers. Similarly, consumers are increasingly price sensitive to the products they buy. The economy has not recovered fully; hence, most consumers may not buy luxurious cars, particularly expensive ones like Porsche. This will affect the consumer’s purchasing power. The fluctuating fuel prices also bring gloom to this brand and it will affect the sales. Despite all these, the organization can adapt strategies to see it overcome all the environmental challenges. One of the recommendations to improve the competitiveness is to introduce fuel-efficient cars. This can be reached by customization of current models or those to come. The push for green energy and effect of globalization is increasing hence there is a need to conserve the oil usage to reduce carbon emission to the atmosphere. The company can also adopt new technologies to developed vehicle, which uses the green energy. Secondly, the organization needs to expand in the emerging market. Currently, the organization does not operate in Africa and other Asian nations. This is a loss to the company because these emerging markets have a potential, and other brands are continuously gaining market share because of their marketing strategies. Latin America accounted for 1.7% of the company’s sales in 2010 and still growing each year. The same trend can be initiated in emerging markets in Africa to realize good results. Lastly, the company needs to maintain the brand image. This can be achieved through being close to customers as well as enhancing the marketing mix. Frequent promotions are expensive, but trey benefit the company in the long run. Moreover, tailoring products that meet different market segments will help the company to maintain its image and achieve customer loyalty. References Company Spotlight: Porsche 2013, Marketwatch: Automotive, 5 (7) pp. 10-14 Martay, C 2013, Porsche case presentation. Available from https://prezi.com/wn- mwek8trl6/porsche-case-presentation/ [April 12, 2015] Mbaskool 2015, Porsche automobile Holding. Available from http://www.mbaskool.com/brandguide/automobiles/1822-porsche-automobile-holding- se.html [April 12, 2015] Peterson, T 2011, Porsche launches integrated campaign to shift consumer perception. Available from http://www.dmnews.com/porsche-launches-integrated-campaign-to-shift-consumer- perception/article/199269/ [April 12, 2015] Porsche Automobile Holding SE SWOT Analysis 2014, Porsche Automobile Holding SE SWOT Analysis, pp. 1-7 Taylor III, A 2013, Porsches Risky Recipe, Fortune, 147(3), pp. 90-94, Zoeller, S 2015, Target market segment strategy: Porsche. Available from http://www.stephenzoeller.com/target-market-segment-strategy-porsche/ [April 12, 2015] Read More