Marketing for Audi: a Roadmap for Game-Change - Case Study Example

Marketing Plan for Audi: A Roadmap for Game-Change AFFILIATION: Contents Introduction 3 Henry Ford as a Founder of Modern Automobile 5 Strategic Problems at Audi AG: The Influence of National Culture 5 History of Audi AG 7 The Neoclassical Times 8 New Product Idea: Marketing Plan 9 Marketing Objectives 10 Application of Strategic Choice Theory 10 SWOT Analysis 10 Strengths 11 Weaknesses 11 Opportunities 11 Threats 11 PESTLE Analysis 12 Political Factors 12 Economic Factors 12 Social Factors 12 Technological Setup 12 Legal System 13 Ecological Factors 13 Competitor Analysis 13 Conclusion 14 References 14 List of Figures 15 Marketing Plan for Audi: A Roadmap for Game-Change Introduction The innovative spirit remains a leading one in the modern firm because the competitive dynamics of each industrial market is changing dramatically with the passage of time. However, they are much stronger in the market of automobiles where the threat of running out oil in the world appears as real as life so nobody can deny the reality that we are depleting energy reserves of the globe. The companies are using one barrel of oil in order to find and process two of them, and in this way, we will not have the spirits of our ancestors to burn in the next one or two centuries. The conquest of seeking and developing alternative energy sources is pre-historical in nature, Ancient China is known to run on geothermal energy, and the chain of public baths was heated by the same source. The application of wind and solar energy remained limited to domestic usage only, and they never developed as the leading industrial sources of energy because they did not have the ability to power heavy mechanical equipment that has multiple usages in the fields of civil and societal works. The scientists had to develop means of transportation that ran on steam, but they caused a lot of noise and their efficiency was low as well. The fossil fuel came in and solved many problems that the ancient humans faced. The industry of airlines developed, and they have to thank the Wright brothers for that. The credit of vast growth of the airlines partially goes to those professionals who modified the invention of the geniuses so that it can run on fuel (Oh, et al., 2010). The fuel then contributed towards transformation of the world into the globalized community because it assisted people to travel to distant parts of the world. The fuel worked its magic on the growth of contemporary industry of transportation, and the invention of wheel was put to good use by placing a motorized means of transportation over it. Henry Ford as a Founder of Modern Automobile The legend of Henry Ford is considered the pioneer of the industry whom had the dream of creating mechanized cars in order to aid the humankind in terms of moving at much greater velocities than horses and carriages had to offer at that time. The invention of car was an exceptional milestone in the neoclassical history of mankind, but the machine could not have worked without the power source, and that service was again provided by the fossil fuel. The world has operated for over two centuries by applying oil as the prominent source of energy, and it will continue to do so for another two, but after that, humans have to either revert to basic states of living or they have to generate strengthened sources of alternative energies. Humans are more than capable of performing the abovementioned task. However, oil producers do not have the hearts to allow their bread and butter to compromise by the hands of scientists who claim to be able to develop energy sources other than the obvious one. Strategic Problems at Audi AG: The Influence of National Culture Audi AG is a German company that produces automobiles of the highest quality in the region of Europe. The organization is suffering from the strategic consequences of globalized competition, and the organizational focus remains on generating high quality products when the rest of the industry is have an objective of lowering the costs so that buyers can have a private means of transportation without spending much larger portion of their fortune. The Chinese companies have led the foundations of reverse production. The concept works to permit the company to know what kind of car its target clientele wants, and then they build the similar model within the economic constraints of the population. The Germans have a strong sense of cultural identity, and therefore, they consider themselves superior to other races (Naor, et al., 2010). The belief of superiority is a residual of Hitler’s philosophy that deemed the nation to be blessed with the ability and power to rule the world. However, French and its allies turned the objectives of Hitler into ashes; still the nation does not share their land with foreigners with much of the fondness and regard. The organizational culture of the Germans is greatly impressed with the national one, and therefore, the companies are no different in this regard. Everything happens behind closed doors, and the German organizations are taller than the American ones. The culture of command and control does prevail there and there is no room for participative management in the current setting of Germany. The employees do not take initiatives on their own, and they have to follow specific set of instructions in this regard. They behave more or less like robots according to the accounts of foreigners whom have the pleasure of working with them in the global workforce. The culture of command and control has made the company an outdated with the passage of time, and the marketing department is not vigilant enough to keep a close eye on the changing preferences of the customers, and in the shorter version, they do not have the foggiest idea about what their clientele wants from them. The Germans do not have access to international brands because the European Union needs to save the region from too much foreign competition in order to help its national and geographical identity in prevailing into the distant future. The innovation is also dying out in the country because they do not have the capability to learn the value and importance of human capital in terms of their intellectual capital and creativity. The organization is following a model of demand that pushes a specific set of products into the lives of the customers without valuing their needs and wants. The secret of future success in the market lies within the ability to create flatter organization and development of sense of team is also a critical factor with reference of patching the road to success in the years to come. History of Audi AG The company has its headquarters in Bavaria, Germany and it specializes in production and provision of luxury rides in the region. The head-office manages operations of international operations as well. However, the major percentage of its production sells in the Europe while Americans deem them expensive and overly designed. The image of basic and simple car is prevalent and famous in the market of the featured nation. Additionally, the organization of Audi is a functional subunit of Volkswagen and more than 99% shares are owned by the umbrella entity. The company’s name is inspired from that of its owner, and it is rather a Latin translation of Horch as the pioneer’s name was August Horch (Rolland & Bazzoni, 2009). The logo of the company features a joint structure for four rings, and each of them stands in the representation of every company that was added in order to create the consortium that is commonly known as Audi AG in the present day. The company is a member of informal band of three major producers of luxury cars in the world along with BMW and Benz. Actually, the company was created in the year of 1885 by the hand of its featured founder. The original name of the organization was Wanderer that lately became the branch of Audi, and in recent years, it has ceased to exist. On 14th November 1899, Horch dared to create the company with the title of A. Horch and cie in the district of Ehrenfeld, Cologne. The owner transferred his newborn organization to a new location after three years of its inception. The new headquarters were formed at Reichenbach im Vogtland. The owner did not get tired from creation of new companies and this time, he changed the title of the company to August & Cie, Motorwagenwerke in the Zwickau. This time, the company was a joint stock, and the company did not run smoothly because the founder could not live with the chief financial officer of the company, and therefore, he left the organization in order to find better things to do with his entrepreneurial talents. Horch was restricted to use his name as a brand because of legal issues so he had to reinvent his company by using a Latin translation for his surname. The son of Franz Fikentscher who was a close associate of August gave them the new name of the company. The kid was deep absorbed into his studies of Latin when Horch and his friends were busy in tackling each other in order to find a suitable name for their incepted organization, and the child wanted to give his opinion in this regard, but he remained silent out of fear. Finally, he opened his mouth and said that would it be a good idea to use Latin translation for Horch as the title of the new company that you hold so dear. He added that Audi is the translation of Horch in Latin. Everyone accepted the term with open hearts and moved on with the development of new organization. The Neoclassical Times Audi produced its first model with the name of Audi Type A that was an inline four engine model. The cylinder size of the machine was 2.612 cc. The company manufactured a Type B model with the capacity of 3.42 cc. Upgraded models further strengthened the product line with the engine capacity of 4.6 and 5.72 cc as well. The company became modern as it entered into the latest period of the 20th century, and it integrated modern techniques and technologies of the production as well. Four organizations namely Audi, NSU, Auto, and Union joined hands in order to create a latest version of the company that is also called Audi AG. The Volkswagen introduced the Audi brand in America by the year of 1970. The first child of the next generation of cars was Audi 100. The company remained a leading car supplier in the world, but recently the organization is facing difficulties regarding safeguarding its share in the market. The company needs to focus more on the utility side of the travelling solutions they provide rather than designing the luxurious ones. New Product Idea: Marketing Plan The organizations that are operating in the industry of manufacturing automobiles have to find better ways to produce cheaper products and services, but the company of Audi is failing in this regard consistently because they are working in order to produce automobiles that are expensive, and they are difficult to learn as well. The living in the modern times is simple, and the customers have to have products that do not require too much mental energy in order to operate (Baker & Hart, 2007). The organizational life represents significant amount of challenge to the employees, and they need all of their brains to get the job done in their professional lives, and if they have a hard time with their car then, they will surely suffer in professional terms. On the other hand, leading brands of Audi are both expensive regarding capital and operational costs as well. The company needs to produce a convertible device that can operate on at least two of the fuel options that are nowadays available. The regular gasoline and compressed natural gas will be the obvious choices that every client wants in his or her car. The company has to struggle in the development of the third one in their new product that should have the ability to run on charging so that the customers can have the option of using powerful fuels on the needed basis only. The company has to live out of the era when having luxurious cars was a status symbol. However, in the recent times, economic realities changed dramatically, and therefore, people have to posses cars that should not fall too hard on their pockets otherwise they cannot have the product utilized to the fuller extent (Clemons, et al., 2002). The company has not been able to produce sales of significant nature in the recent times, and the major reason for that devilish development is internal than external. Marketing Objectives Following are the objectives that suggested marketing campaign would work to achieve: - Development of feedback system that customers will use to register their demands, suggestions, and requirements with the company Marketing department will run surveys as well Development of cheaper products and effective products Increment in marketing activities Growth of global clientele by at least 5% Application of Strategic Choice Theory The companies have to align their strategic outlook with the external forces that are work in the industry. The Audi does not value human capital, and this is the most major and dangerous undoing of the organization in the long run perspective (Calabrese, 2012). Additionally, this paper will provide a detailed SWOT and PESTEL analyses of the situation that faces the company in current times. SWOT Analysis Following is the SWOT analysis of Audi that will play a vital role in terms of guiding the managers about selecting an appropriate strategy in order to save the future of the legendary name in the market of automobile: - Strengths The company has the significant brand name in the world of Europe, and it can use that asset to stimulate demand in the entire global arena of consumerism The company has provided top quality products for over a century now and the clientele is therefore, loyal as well. The leadership of the company is looking to make a powerful different in dictating the future of the organization, and their vision will save the company well in the future. Weaknesses Lack of viable strategic focus Cost of production is increasing with passage of time The profits are decreasing worldwide Poor performance of marketing department in terms of understanding and meeting consumer demands and wants Human resources are not fully developed in nature Opportunities The company has to design a cheaper product line in order to stimulate demand in the global market More fuel options have to be offered by the company The company needs to develop a strong marketing campaign in order to create demand for the upcoming products such as hybrid cars and electronic ones as well Threats The growing competition in the global market Probability of failure of new products Customers might not choose the novel products, and could opt to live with regular options of Ford, General Motors, and Honda PESTLE Analysis Political Factors The EU is trying to help the businesses in the conquest of growth and development so the company can rather have the chance of expansion rather than sitting back and witness degradation of the organization The political system of Europe has developed a bubble like environment that is shielding the companies from external competition The government is supporting education and professionals with adequate degree of skills are available Economic Factors The economic setup of Europe is healing out of the recession and the trends of expansion are notably present The economies of scale and scope can be availed by the businesses because of favorable fiscal climate of the region The demand for consumer products is on the rise and the consumers have extra income that they will love to invest in cars and other pleasures of life Social Factors The literacy rates in European nations are off the charts, and therefore, highly trained human resources are present The professionalism is the defining attribute of the social setup Human capital is creative and they have to seek jobs in the near future because of clouds of unemployment is going to remove in the nearing times Technological Setup Technology is cheaper and easily accessible The computer and operational technologies are well understood by human resources The technological advances are readily made sellable by the relevant companies in Europe Legal System The legal system is strong, and the companies cannot evade taxation system as well The companies have to comply to the minimum wage requirements The customers are well aware of their rights and privileges Ecological Factors The customers and governments are educated about environmental degradation The taxation of ecological nature is being applied in various societies Competitor Analysis The General Motors have 17.9% share in the year of 2012, and the more than 152 billion dollars in terms of sales and revenue. The costs remained just under 25 billion in the abovementioned year. The Ford occupied the market share of 15.1%, and the company generated 134 billion dollars in sales and revenues. However, the costs remained more than the sales and the company faced a loss in millions. Honda at the same time generated 11.84 Trillion in sales and revenues. The market share of the company reached 6.79% in the year of 2012. The net profit of the company was 211.48 billion in dollars. The Audi had a market share of reached only 2.14% in the year of 2012, and the sales remained awful at only 64 billion, and the costs were 17 billion in dollars. The company is doing hopelessly in the recent times, and GM and Ford are occupying significant market shares whereas, the former company is leading the show because its cost structure is efficient in terms of generating profits. Ford cannot generate them because it is operating with increasing costs, and the sales revenue is becoming less and less with the passage of time. GM is working to innovate and offering new and improved hybrid cars in order to validate its competitive advantage in the present market conditions. Conclusion This paper has been developed in order to highlight the reasons that noticeably contributed towards strategic turmoil of the company named Audi. The company needs to integrate various types of changes in order to increase organizational effectiveness. The culture of teamwork and customer centralism is the way to go for the organization before it can be completely wiped from the global market. References Anonymous., 2009. Audi A3. [Art] (Audi). Anonymous., 2010. Histoical Oil Prices. [Art] (Thomas and Reuters). Anon., 2012. FDIs Division amongst Major Economies of the World. [Art] (World Bank). Anon., 2013. Logo of the Company. [Art] (Audi AG). Baker, M. & Hart, S., 2007. Product Strategy and Management. Prentice Hall, New York. Calabrese, A., 2012. Service productivity and service quality: A necessary trade-off?. International Journal of Production Economics Vol 136 No. 2, p. 800–812. Clemons, E., Gu, B. & Lang, K., 2002. Newly vulnerable markets in an age of pure information products: an analysis of online music and online news. System Services Vol 1 No. 1, p. 2949 - 2958. Naor, M., Linderman, K. & Schroeder, R., 2010. The globalization of operations in Eastern and Western countries: Unpacking the relationship between national and organizational culture and its impact on manufacturing performance. Journal of Operations Management Vol 28 No.3, p. 194–205. Oh, T. H., Pang, S. Y. & Chua, S. C., 2010. Energy policy and alternative energy in Malaysia: Issues and challenges for sustainable growth. Renewable and Sustainable Energy Reviews Vol 14 No.4, p. 1241–1252. Rolland, D. & Bazzoni, J. O., 2009. Greening corporate identity: CSR online corporate identity reporting. Corporate Communications: An International Journal Vol 14 No.3, p. 249 - 263. List of Figures Figure 1 Historical Oil Prices 5 Figure 2 FDIs Division Amongst Major Economies of the World 3 Figure 3 Logo of the Company 7 Figure 4 Audi A3 8 Figure 5 Graph of Market Share 14 Read More