Porsche Marketing Strategy - Reina MISA PDF

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International Marketing with Cases, Julian Baumann

Marketing Strategy

Name: Julian Baumann Matriculation Number: 2323530 Semester: Fall Semester 2013/2014 Professor: Prof. Dr. Kai Uwe Wellner

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International Marketing with Cases, Julian Baumann

List of Contents List of Figures

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List of Tables

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1. Introduction

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2. The Company – Porsche 2.2. General Facts about the Company 2.2. History and product development of Porsche 2.3. Porsche Model Overview 2.4. Business Development in 2012 2.5. Porsche in Motorsport 2.4.1. Porsche’s History in Motorsports 2.5.2. The 24 Hours of Le Mans 2.5.3. Meaning of motorsports for Porsche 2.5.4. Innovations from Motorsport

4 5 5 7 8 10 10 11 12 13

3. Strategic and Operative Marketing Analysis 3.1. Strategic Marketing Analysis 3.1.1. Pricing Strategy 3.1.2. Positioning and Target Groups 3.2. Market Analysis 3.2.1. Economic Situation 3.2.2. Main Competitor’s for the Porsche 911 3.3. Branding 3.3.1. Interbrand Ranking 3.3.2. Porsche’s Interbrand Ranking 3.4. Communication 3.4.1. Porsche Homepage 3.4.2. Porsche on Facebook 3.4.3. Social Media

13 13 13 15 15 15 16 19 19 19 21 21 22 23

4. Key strenghts and weaknesses of Porsche 4.1. Porsche’s unique selling propositions – USP 4.2. SWOT - Analysis

24 24 26

5. Predictions for the Future 5.1. Strategy for 2018 5.2. Comeback - 24 Hours of Le Mans

28 28 29

6.

31

Conclusion

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List of References

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International Marketing with Cases, Julian Baumann

List of Figures Figure 1: Flyline Silhouette and Porsche 911 Figure 2: Timeline – History of Porsche Figure 3: Model variations of the Porsche 911 Carrera Figure 4: Porsche’s History in Motorsports Figure 5: Le Mans: Forget Reminiscing Figure 6: Porsche’s Motorsport Principles Figure 7: Interbrand Ranking 2013 Figure 8: Porsche Homepage Figure 9: Porsche’s Marketing in Facebook Figure 10: Porsche Twitter Figure 11: Porsche Youtube Channel Figure 12: Strategy for 2018 Figure 13: Ferry and F.A. Porsche

4 6 8 11 12 13 21 22 24 25 25 29 31

List of Tables Table 1: History of Sales and Profits since 1993 Table 2: Porsche Model Overview Table 3: Car Sales 2012 per Region Table 4: Porsche’s growth in regions Table 5: Porsche Sales per Model – Comparison 2011 and 2012 Table 6: Comparison – average price, profit margin Table 7: Interbrand – Automotive Brands in 2013 Table 8: Porsche’s main Competitors Table 9: Main competitors by Luxury, Performance and Price Table 10: Comparison – Facebook likes Table 11: Comparison – Facebook articles in November – December 2013

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5 7 8 9 9 14 16 17 18 22 22

International Marketing with Cases, Julian Baumann

1. Introduction On the front cover of my paper you can see two things typical for the spirit of Porsche car manufacturing. 1. The Flyline – a typical feature of every Porsche car. 1 The streamline shape was initially developed and designed for racing, but it soon became a genuine trademark for every single sports car produced by Porsche. All the seven editions of the famous 911 have only had slight modifications and all have the shape in common that is faithful to the first edition of the 911, which was produced in 1963. The shape of the silhouette goes back to the very first model designed by Ferdinand Porsche: The Volkswagen, which was originally ordered by Adolf Hitler in 1934.

Figure 1: Flyline Silhouette and Porsche 911

2. Porsche 911 Porsche Sports Car - Designed for racing but perfectly suitable for daily-use/life. With certain features from racing, to unleash the power and real potential of a Porsche whenever it is wanted, but on the other hand a car appropriate for normal streets and easy to handle for everyone. Moreover, the early founders of Porsche were utterly convinced that driving is not just about arriving at your destination, but also about how to arrive there. 1 Screenshots taken from www.porsche.com 4

International Marketing with Cases, Julian Baumann

2. The Company – Porsche 2.2. General Facts about the Company 

70 % of all Porsche vehicles ever built are still on the road



18,4% - The highest profit margin in the industry



More than 30.000 race victories in different classes



6:57 – fastest lap time of a production car on the Nürburgring-Nordschleife by Porsche Spyder 918



7000 world-wide patents, proof of engineering artistry

Porsche – A brand that has shaped the evolution of automobiles like nobody else. A brand that is synonymous with race sports and most of all a brand that creates fascination. Porsche is responsible for plenty of childhood dreams and has been drawing the attention of observers for more than 50 years. In my paper I want to observe the company’s marketing strategies and its current development. Moreover, I want to give an insight into what makes Porsche so exciting and different from all comparable cars – even raise the question if there are comparable cars.

2.2. History and product development of Porsche 16 14 12 10 8 6 4 2 0 1994 -2

1996

1998

2000

2002

2004

2006

2008

-4 Sales in Billion €

Profit

Table 1: History of Sales and Profits since 19932

2 Numbers taken from http://en.wikipedia.org/wiki/Porsche , 27. December 2013 5

2010

2012

International Marketing with Cases, Julian Baumann

In 1993 Wendelin Wiedeking has taken over Porsche as CEO and has shaped the nearer future of the brand. His efforts to consolidate the brand, not only saved it from bankruptcy but brought it back on track with the introduction of new successful models, for instance the Porsche Cayenne, who has turned out to be the best-selling car these days. After the failed takeover of Volkswagen and heavy losses in 2008, Porsche experienced an astonishing transition and can now be regarded as the most profitable car manufacturer in the world.

1947 Ferry Porsche

19 60

1972 Dr. Ing. h.c. F. Porsche AG

19 70

1963 Porsche 911

1993 – 2009 Wendelin Wiedeking

19 80

19 90

1975 911 Turbo

1996 Boxster

1948 Porsche 356

2009 Volkswagen AG

20 10

20 00

2013 Macan

2002 Cayenne

2005 Cayman 2009 Panamera

Figure 2: Timeline – History of Porsche

The story of success started back in 1947 after the 2 nd WW when Ferry Porsche, Ferdinand’s son took over the company. In 1948 Ferry built the first sports car named Porsche, the 356 was a worthy predecessor of the famous Porsche Carrera 911, who was first presented to the public in the Frankfurt Motorshow in 1963 as more comfortable replacement of the 356. In 2013 the Porsche 911 celebrated its 50 th years anniversary with a specially designed edition. In the meantime five other models were introduced and are now part of the Porsche sports car family. 6

International Marketing with Cases, Julian Baumann

2.3. Porsche Model Overview3 The following table is revealing Porsche’s current portfolio. Most of the models can be purchased in different options: i.E. Cayenne – Cayenne Diesel – Cayenne S – Cayenne Turbo

Porsche 911

Boxster

Cayenne

Cayman

Panamera

Macan

90.417 €

49.243 €

59.358 €

51.385 €

83.277 €

57.930 €

1963 -

1996 -

2002 -

2005 -

2009 -

2013 -

Table 2: Porsche Model Overview

As for the Porsche Carrera 911 there is a variety of different options to choose from. For more than 50 years the Porsche 911 has shaped the evolution of sports cars. As a story of big success Porsche remains faithful to the traditional design and the famous “Flyline” – the shape of the 911. Porsche itself calls the 911 “The Benchmark” in performance combined with everyday practicability. The price structure goes from roughly 90.000 € for the basic version of the 911 to more than 207.000 € for the Porsche Turbo S Cabriolet.4

Figure 3: Model variations of the Porsche 911 Carrera

3 Screenshots taken from www.porsche.com , 17 December 2013 4 Porsche, 2014, Models – 911, http://www.porsche.com/germany/models/911/ 05 January 2014 7

International Marketing with Cases, Julian Baumann

2.4. Business Development in 2012

With 143.096 cars delivered to customers in the fiscal year 2012, Porsche achieved its most successful year in the entire history. The most important markets for Porsche deliveries are the USA, China and Germany. With around 25% of total sales and 35.043 units sold the USA has once again justified its role as the leading global market. The 911 had a considerable increase in sales of 40% in the United States. Porsche was able to continue the growth in all main markets. There was also positive impetus from the BRIC countries. Porsche has overcome the struggle in its home markets in Europa, where many countries are still negatively affected by the financial crisis. The number of delivered vehicles in Germany rose by 17% to 17.487, despite the tough situations on the market.

Rest of the World – 23.130 USA – 36.170

Europe – 47.184

Germany – 16.090

China – 33.590

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International Marketing with Cases, Julian Baumann

Car Sales 2012 per region North America

China

Europe

Rest of the World

16.16% 27.39%

32.97% 23.47%

Table 3: Car Sales 2012 per Region

The following table indicates Porsche’s increase in sales for every single market. The two main drivers of Porsche’s growth were once again the USA and China. 5 Region Europe (Incl. Germany) USA China Rest of the World

47.184 16.090 36.170 33.590 23.130

Change to 2011 + 11% + 16% + 33% + 32% + 19%

Table 4: Porsche’s growth in regions

After the USA China is the other main market for the delivery of Porsche cars. It is the biggest sales market for the Cayenne as well as for the Panamera model. In general, Porsche’s main players are the Cayenne, the 911 and the Panamera. In particular the Porsche Cayenne can be seen as a symbol for the positive trend in the 5 Dr. Ing. h.c. F. Porsche AG. Annual Report 2012, p. 28 9

International Marketing with Cases, Julian Baumann

last years with 74.763 units sold.Porsche claims to have increased its deliveries to customers by 84% of the last 3 years. This is a remarkable development for the company, which was in heavy losses back in 2008.

Porsche Sales 2011 - 2012 2011

2012 143096

Combined Sales

116978 27331 28218

Panamera

77822

Cayenne

Boxster/Cayman

59873 11740 11280 26203 17607

Porsche 911

Table 5: Porsche Sales per Model – Comparison 2011 and 20126

2.5. Porsche in Motorsport Ferry Porsche in 1970: "We drive races firstly because it’s part of our history and secondly because you can gain a lot of experiences in races also because our engineers can learn a lot.“ Racing has always been a significant part in the history of Porsche. Over the years Porsche achieved more than 30.000 victories in races completely different from each other:

Formula 1

24h of Le Mans

Fa

Targa Florio

Rally Paris - Dakar

m/

10

ov

International Marketing with Cases, Julian Baumann

Figure 4: Porsche’s History in Motorsports

2.5.1. Porsche’s History in Motorsports Porsche regards racing as a part of the on-going engineering development. Targa Florio is the oldest open road race in the world, with the first race held in 1906. After 11 race victories the brand Porsche became synonymous with this racing classic. Ever since then you cannot imagine Porsche without motorsports, building lightweight and efficient race cars. In 1970 Porsche finally claims the victory of the 24 Hour Race of Le Mans for the first time. Ferry Porsche and Ferdinand Piech were the leading engineers in motorsports and the Porsche 917 the guarantee to success. Porsche’s policy was to introduce new cars in races to receive publicity, which was later followed by the introducing of the new serial cars on the market. In the 80s Porsche dominates Le Mans and claims 7 victories in a row for the cars from Zuffenhausen. In 1984 Niki Lauda wins the Formula 1, Porsche engines were the driving force of two more Formula 1 wins. In 1986 the Prosche 911 4x4 wins the Paris Dakar dessert race with an allwheel-drive car. Until today Porsche’s last appearance in Le Mans was in 1998: in celebration of Porsche’s 50 th anniversary the 911 GT1 is developed and wins double overall victory in Le Mans.

2.5.2. The 24 Hours of Le Mans "The most famous endurance race in the world, marked by sportsmanship and quest for performance, has told an heroic chapter of automobile history since 1923.“ 7 Porsche’s successful racing tradition is inextricably linked with the legendary race of Le Mans. With its 16th overall victory in 1998 Porsche set a milestone and is still the reigning record holder of Le Mans. 7 24h Le Mans, 2013, La Legende, http://www.24h-lemans.com/fr/la-course/lalegende_2_1_1710.html , 27 December 2013 11

International Marketing with Cases, Julian Baumann

NOW Porsche has stated a mission. After years of absence, the race company wants get back into the fight for the prestigious title in this most famous of all endurance races. Porsche starts with great ambitions and wants to win the title. For the product development they can rely on the determination of their engineers, which never stands still. "To use the past, our tradition, as a source of inspiration for creating innovation."8

Figure 5: Le Mans: Forget Reminiscing

2.5.3. Meaning of motorsports for Porsche Decades have seen Porsche's engagement in motorsports. Countless victories in Targa Floria and Le Mans, have not only proved Porsche's ability for innovation but have been leading the way in the development of new technologies, in pioneering and shaping the history of the automobile itself, always striving for peak performance. When developing a new car the engineers always start at zero, question every single detail and leave the past behind.

"Sports car or Race car? 8Porsche, 2014, Mission 2014 – Le Mans, http://www.porsche.com/microsite/mission2014resettozero/international.aspx , 01 January 2014

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International Marketing with Cases, Julian Baumann

- To Porsche there is no difference"

What is experienced on the race track influences the development of the standardproduction vehicles. Racing embodies Porsche's principles. Porsche set out 3 principles that shape both the engangement in motorsport, as well as every single standard-car going through Porsche's production:

Spirit Principle

Motorsport

Vision

Figure 6: Porsche’s Motorsport Principles

2.5.4. Innovations from Motorsport Porsche’s identity is on the race track. As a consequence, the experiences from racing are directly applied on the road. Thus, many major changes in cars have been implemented in racing first: 

Porsche Doppelkupplung (PDK): shifting without interruption of traction Introduced in motorsport in 1984 for the Porsche 956 In 2008 first introduced for the Porsche 911: 60% faster than automatic gear box



Turbo charger: turbine driven forced induction device for higher performance and efficiency.9 Introduced in 1970 in the Porsche 917, winning the 24h Le Mans In 1974 the Porsche Turbo is published as the first serial car with turbo charger10



Ceramic Brakes: higher performance and reduced weight The 911 GT2 in 2001 is the first serial car to be equipped with Porsche Ceramic Composite Brake (PCCB)



In 1991 Porsche became the first car manufacturer in Germany to equip all

9 Orel/Brümmer. (2009) Generation Porsche, Kempen: teNeues Publishing Group. 10 Kubiak, Achim. (2005). Faszination 911,Delius Klasing Verlag, Bielefeld, p.89 13

International Marketing with Cases, Julian Baumann

production models with airbags for driver and front passenger as standard.

3. Strategic and Operative Marketing Analysis 3.1. Strategic Marketing Analysis 3.1.1. Pricing Strategy A recent interview with Porsche CEO Matthias Müller give insight into Porsche’s pricing strategy. He mentioned that it is a sensitive balance between luxury and sports cars, whereas driving pleasure and performance should always be the priority.11 Porsche understands itself as a premium car manufacturer with high brand value, which means that creating cheaper models can be a negatively perceived by existing customer’s, who are in fear of losing the exclusivity that they purchased along with a Porsche. 50.000 € is the magic number. A Porsche car should not be below this level in order to preserve Porsche’s brand image. An average Porsche is sold for more than 90.000 €, this is extraordinary high regarding the sales numbers of 143.000 units in 2012. Porsche can command a high premium for the products. This is one of the reasons why it has been the most profitable car manufacturer for several years.12

Brand

Average price in €

Profit Margin per car

Profit margin in %

90.064

16.590

18,4 %

11Manager Magazin, 25.03.2013, Interview Porsche Chef, http://www.managermagazin.de/unternehmen/autoindustrie/a-889808-2.html, 09 January 2014 12 Wirtschaftswoche, 07.08.2013, Was die Autokonzerne an ihren Autos verdienen, http://www.wiwo.de/unternehmen/auto/gewinnmargen-was-die-autokonzerne-an-ihren-autosverdienen/8606442.html#image, 12 January 2013 14

International Marketing with Cases, Julian Baumann

Table

126.429

15.000

11,9 %

36.465

3.821

10,5 %

35.715

3.495

9,8 %

40.796

2.012

4,9 %

n – average price, profit margin

3.1.2. Positioning and Target Groups The positioning of a product refers to the way it is perceived by the customers. In this context I want to apply the definition of the two pioneers in this field of studies:

“But positioning is not what you do to a product. Positioning is what you do to the mind of the prospects.”13 There must be a reason for Porsche being received as “the world’s best small sports car”, a Volvo as “the safest car” and a BMW as “the ultimate driving machine”.14 Trout and Ries describe the positioning of a product as the ultimate competitive advantage on the market. In today’s glutted market with more information than any customer could handle, people won’t compare every single product with each other, they are driven by their opinion and emotions about the product. That is why marketers must focus to win the hearts and mind of the consumer in an over communicated market. As indicated Porsche belongs to the segment of high-class sports car manufacturing:...