Question

Please read the case provided below and answer the following question:

COMPANY Case: Porsche: Guarding the Old While Bringing in the New

Porsche (pronounced Porsh-uh) is a unique company. It has always been a niche brand that makes cars for a small and distinctive segment of automobile buyers. In 2009, Porsche sold only 27,717 cars in the five models it sells in the United States. Honda sold about 10 times that many Accords alone. But Porsche owners are as rare as their vehicles. For that reason, top managers at Porsche spend a great deal of time thinking about customers. They want to know who their customers are, what they think, and how they feel. They want to know why they buy a Porsche rather then a Jaguar, a Ferrari, or a big Mercedes coupe. These are challenging questions to answer; even Porsche owners themselves don’t know exactly what motivates their buying. But given Porsche’s low volume and the increasingly fragmented auto market, it is imperative that management understands its customers and what gets their motors running.

Since its early days, Porsche has appealed to a very narrow segment of financially successful people. These are achievers who see themselves as entrepreneurial, even if they work for a corporation. They set very high goals for themselves and then work doggedly to meet them. And they expect no less from the clothes they wear, the restaurants they go to, or the cars they drive. These individuals see themselves not as a part of the regular world but as exceptions to it. They buy Porsches because the car mirrors their self-image; it stands for the things owners like to see in themselves and their lives.

Most of us buy what Porsche executives call utility vehicles. That is, we buy cars primarily to go to work, transport children, and run errands. Because we use our cars to accomplish these daily tasks, we base buying decisions on features such as price, size, fuel economy, and other practical considerations. But Porsche is more than a utility car. Its owners see it as a car to be enjoyed, not just used. Most Porsche buyers are not moved by information but by feelings. A Porsche is like a piece of clothing—something the owner “wears” and is seen in. They develop a personal relationship with their cars, one that has more to do with the way the car sounds, vibrates, and feels, rather than the how many cup holders it has or how much cargo it can hold in the trunk. They admire their Porsche because it is a competent performance machine without being flashy or phony.

People buy Porsches because they enjoy driving. If all they needed was something to get them from point A to point B, they could find something much less expensive. And while many Porsche owners are car enthusiasts, some of them are not. One successful businesswoman and owner of a high-end Porsche said, “When I drive this car to the high school to pick up my daughter, I end up with five youngsters in the car. If I drive any other car, I can’t even find her; she doesn’t want to come home.”

For its first few decades, Porsche AG lived by the philosophy of Ferry Porsche, Ferdinand’s son. Ferry created the Porsche 356 because no one else made a car like he wanted. But as the years rolled on, Porsche management became concerned with a significant issue: Were there enough Porsche buyers to keep the company afloat? Granted, the company never had illusions of churning out the numbers of a Chevrolet or a Toyota. But to fund innovation, even a niche manufacturer has to grow a little. And Porsche began to worry that the quirky nature of the people who buy Porsches might just run out on them.

This led Porsche to extend its brand outside the box. In the early 1970s, Porsche introduced the 914, a square-ish, mid-engine, two-seater that was much cheaper than the 911. This meant that a different class of people could afford a Porsche. It was no surprise that the 914 became Porsche’s top selling model. By the late 1970s, Porsche replaced the 914 with a hatchback coupe that had something no other regular Porsche model had ever had: an engine in the front. At less than $20,000, more than $10,000 less than the 911, the 924 and later 944 models were once again Porsche’s pitch to affordability. At one point, Porsche increased its sales goal by nearly 50 percent to 60,000 cars a year.

Although these cars were in many respects sales successes, the Porsche faithful cried foul. They considered these entry-level models to be cheap and underperforming. Most loyalists never really accepted these models as “real” Porsches. In fact, they were not at all happy that they had to share their brand with a customer who didn’t fit the Porsche owner profile. They were turned off by what they saw as a corporate strategy that had focused on mass over class marketing. This tarnished image was compounded by the fact that Nissan, Toyota, BMW, and other car manufacturers had ramped up high-end sports car offerings, creating some fierce competition. In fact, both the Datsun 280-ZX and the Toyota Supra were not only cheaper than Porsche’s 944 but also faster. A struggling economy threw more sand in Porsche’s tank. By 1990, Porsche sales had plummeted, and the company flirted with bankruptcy.

But Porsche wasn’t going down without a fight. It quickly recognized the error of its ways and halted production of the entry-level models. It rebuilt its damaged image by revamping its higher-end model lines with more race-bred technology. In an effort to regain rapport with customers, Porsche once again targeted the high end of the market in both price and performance. It set modest sales goals and decided that moderate growth with higher margins would be more profitable in the long term. Thus, the company set out to make one less Porsche than the public demanded. According to one executive, “We’re not looking for volume; we’re searching for exclusivity.”

Porsche’s efforts had the desired effect. By the late 1990s, the brand was once again favored by the same type of achiever who had so deeply loved the car for decades. The cars were once again exclusive. And the company was once again profitable. But by the early 2000s, Porsche management was again asking itself a familiar question: To have a sustainable future, could Porsche rely on only the Porsche faithful? According to then CEO Wendelin Wiedeking, “For Porsche to remain independent, it can’t be dependent on the most fickle segment in the market. We don’t want to become just a marketing department of some giant. We have to make sure we’re profitable enough to pay for future development ourselves.”

So in 2002, Porsche did the unthinkable. It became one of the last car companies to jump into the insatiable sport utility vehicle (SUV) market. At roughly 5,000 pounds, the new Porsche Cayenne was heavier than anything that Porsche had ever made, with the exception of some prototype tanks it made during WWII. Once again, the new model featured an engine up front. And it was the first Porsche to ever be equipped with seatbelts for five. As news spread about the car’s development, howls could be heard from Porsche’s customer base.

But this time, Porsche did not seem too concerned that the loyalists would be put off. Could it be that the company had already forgotten what happened the last time it deviated from the mold? After driving one of the first Cayenne’s off the assembly line, one journalist stated, “A day at the wheel of the 444 horsepower Cayenne Turbo leaves two overwhelming impressions. First, the Cayenne doesn’t behave or feel like an SUV, and second, it drives like a Porsche.” This was no entry-level car. Porsche had created a two-and-a-half ton beast that could accelerate to 60 miles per hour in just over five seconds, corner like it was on rails, and hit 165 miles per hour, all while coddling five adults in sumptuous leather seats with almost no wind noise from the outside world. On top of that, it could keep up with a Land Rover when the pavement ended. Indeed, Porsche had created the Porsche of SUVs.

Last year, Porsche upped the ante one more time. It unveiled another large vehicle. But this time, it was a low-slung, five-door luxury sedan. The Porsche faithful and the automotive press again gasped in disbelief. But by the time the Panamera hit the pavement, Porsche had proven once again that Porsche customers could have their cake and eat it to. The Panamera is almost as big as the Cayenne but can move four adults down the road at speeds of up to 188 miles per hour and accelerate from a standstill to 60 miles per hour in four seconds flat.

Although some Porsche traditionalists would never be caught dead driving a front engine Porsche that has more than two doors, Porsche insists that two trends will sustain these new models. First, a category of Porsche buyers has moved into life stages that have them facing inescapable needs; they need to haul more people and stuff. This not only applies to certain regular Porsche buyers, but Porsche is again seeing buyers enter its dealerships that otherwise wouldn’t have. Only this time, the price points of the new vehicles are drawing only the well heeled, allowing Porsche to maintain its exclusivity. These buyers also seem to fit the achiever profile of regular Porsche buyers.

The second trend is the growth of emerging economies. Whereas the United States has long been the world’s biggest consumer of Porsches, the company expects China to become its biggest customer before too long. Twenty years ago, the United States accounted for about 50 percent of Porsche’s worldwide sales. Now, it accounts for only about 26 percent. In China, many people who can afford to buy a car as expensive as a Porsche also hire a chauffeur. The Cayenne and the Panamera are perfect for those who want to be driven around in style but who may also want to make a quick getaway if necessary.

The most recent economic downturn has brought down the sales of just about every maker of premium automobiles. When times are tough, buying a car like a Porsche is the ultimate deferrable purchase. But as this downturn turns back up, Porsche is better poised than it has ever been to meet the needs of its customer base. It is also in better shape than ever to maintain its brand image with the Porsche faithful and with others as well. Sure, understanding Porsche buyers is still a difficult task. But a former CEO of Porsche summed it up this way: “If you really want to understand our customers, you have to understand the phrase, ‘If I were going to be a car, I’d be a Porsche.’

4 Questions – Answer

1. Distinguish between the concepts of Needs, Wants and Demands, out of the three concepts which one you can relate it to Porsche customers . Briefly explain the concept of core competency , in your opinion what are the core competencies of Porsche.

2. Define and explain the concept of brand personality, describe the brand personality of Porsche brand in general, please justify your answers

3. Using relevant theory Analyze the buyer decision process of the Porsche Cayenne customer.

4. Identify, explain and justify the main consumer behaviour characteristics that influences the Porche buyers.

Answer 1

a) Distinguish between the concepts of Needs, Wants and Demands, out of the three concepts which one you can relate it to Porsche customers .

Ans. Needs are a state of self-deprivation in an individual.Needs are the basic requirements of a human being, like food, cloth, shelter etc. humans cannot survive lace of those requirements. education and health care are the extend part of needs in this modern world.
According to marketing language, human needs are state of felt deprivation. It is the basic underlying of marketing.

Wants are desires for specific satisfiers of needs.Specific products has the ability of satisfy specific wants.
Wants are a form of needs and which are greatly dependent on the human needs. Wants are unlimited. Customers want high value and satisfaction for money.

Demands are human wants backed by ability and willingness to buy. Primary demand refers to the demand of the products and services that can satisfy a particular type of need.

The basic difference between wants and demands is desire. A customer may desire something but he may not be able to fulfill his desire. The needs wants and demands are a very important component of marketing because they help the marketer decide the products which he needs to offer in the market.

You need Porsche car and you have the buying power, is your demand. So according my analysis out of the three concepts Demand is the one which can relate it to Porsche customers .

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b)Briefly explain the concept of core competency , in your opinion what are the core competencies of Porsche.

Ans : Core Competencies

One of the most effective core competencies of Porsche is that their reliability. Porscheplaced their managed to be one of the most reliable premium brands because of their engineering& consultation on engine and vehicle design.

With the SWOT Analysis the below points are is briefly discussed:

STRENGTHS :

Long Term Reliability Compare to Other Sports Car: High – performance sports car are generally high-maintenance, low-reliability vehicles. To consistently perform as intended, most sports cars need frequent and expensive attention and maintenance. In March 2010, J. D. Power and Associates ranked Porsche as providing the best long-term reliability of any brand in the US. What makes this designation truly exceptional is that the comparison was not made solely within the high – performance sports car segment, but was extended to all automobile lines including sedans, SUVs, trucks, BMW, and Honda: truly an extraordinary accomplishment for one within the notoriously temperamental high-performance sports car segment. Additionally, J.D. Power and Associates market researchers hailed the Porsche production plant in Stuttgart as “the best car factory in the world.” The figure below shows that their reliability matches significantly with their capability – manufacturing in Germany. Their reliability also focuses on their core competency perfectly. And it comes from their strong R&D team, which is their one of the main intangible resource.

Brand Image: The critical issue driving Porsche’s Leipzig plant decision appeared to be the primacy of Porsche’s strategy of quality, craftsmanship, and engineering excellence. Ultimately, maintaining the brand image was much more important to Porsche than saving on labor costs - especially when assembly costs comprise only a small portion of overall vehicle cost. In the end, Porsche emphasized design, research and technology development, and marketing to maintain its reputation for a commitment to excellence.

Best Quality at Comparatively Low Price: Porsche’s fifth and most recognized offering in the iconic Porsche 911 was ranked fifth in the 1999 international poll for the Car of the Century award. The Porsche 911 competes with the Ferrari Enzo, Aston Martin V12 Vanquish, Lamborghini Murcielago, and Bentley Continental GT, among others. These super cars offer outstanding performance but are extremely expensive with price tags in the range of $250,000 to $400,000. Porsche on the other hand has been able to produce equal performance and prestige, yet at more affordable prices ranging from $130,000 to $145,000.

Office for Engineering and Consultation: The founder of Porsche, Ferdinand Porsche, opened an office for “engineering and consultation on engine and vehicle design” in Stuttgart, Germany on April 25, 1931. The company, Dr. Ing. h.c. F. Porsche KG, did not have to wait long for contracts to build vehicles for German manufacturers such as Auto Union, Zundapp, NSU, and Wanderer. In perhaps a bit of irony, Ferdinand’s company designed and sent into mass production the “Ur Beetle” – the first VW “Bug” and the basis for a design that has not lost its appeal some 75 years later.

Continuous Innovation: Porsche largely generates innovative technologies through its racing programs. According to Porsche Motorsports, Porsche “is the most successful manufacturer by far in the history of international sports car racing.” With over 50 years of racing experience, Porsche has accumulated a wealth of technological expertise and employs some of the brightest engineering minds in the world. Porsche has consistently developed classleading technologies that competitors find difficult to imitate. For example, the sevengear Porsche Deppelkupplung (PDK) system can allows drivers to shift between gears without interrupting the flow of power. The Porsche Torque Vectoring (PTV) system can sense the vehicle steering angle and speed, accelerator pedal position, yaw rate, and vehicle spend to vary the torque distribution to rear wheels to ensure more predictable and stable vehicle maneuvers at all speeds. The technology Porsche has developed and continues to develop – produces exceptionally reliable performance at comparatively low prices.

Global Strategy: In 2010, Porsche sold 14 percent of its volume in Germany and over 26 percent of its volume in the US. Porsche has been delivering its international scope. China has become an area of extraordinary expansion for Porsche. Porsche has always expanded to international markets exclusively through exportation – a less expensive option as compared to greenfield ventures or establishing new bases of operation. With the exception of its contract with Valmet in Austria for the Boxster/Cayman, Porsche produces all of its car within its labor union dominated, Bavarian borders.

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c) Define and explain the concept of brand personality, describe the brand personality of Porsche brand in general, please justify your answers

Ans : Brand personality is a set of human characteristics that are attributed to a brand name. A brand personality is something to which the consumer can relate; an effective brand increases its brand equity by having a consistent set of traits that a specific consumer segment enjoys.

Understanding Brand Personality

Brand personality is a framework that helps a company or organization shape the way people feel about its product, service, or mission. A company's brand personality elicits an emotional response in a specific consumer segment, with the intention of inciting positive actions that benefit the firm.

Examples of Brand Personalities

Customers are more likely to purchase a brand if its personality is similar to their own. There are five main types of brand personalities with common traits:

1. Excitement: carefree, spirited, and youthful
2. Sincerity: kindness, thoughtfulness, and an orientation toward family values
3. Ruggedness: rough, tough, outdoorsy, and athletic
4. Competence: successful, accomplished and influential, highlighted by leadership
5. Sophistication: elegant, prestigious, and sometimes even pretentious

Dove, for example, chooses sincerity as its brand personality, to attract feminine consumers. Luxury brands, such as Michael Kors and Chanel, aims for sophistication. Their brand personality focuses on an upper-class, glamorous, and trendy lifestyle, which attracts a high-spending consumer base. REI, the outdoor recreation retail store, has a rugged brand personality; they focus on inspiring their audience—who are typically outdoorsy, adventurous people—to be strong and resilient.

The brand personality of Porsche brand in general :

High-end and elegant

Most people have never owned or even stepped inside a Porsche before, but practically everyone has a strong idea what they're all about. Exclusivity. Performance. Engineering. Even as a high-performance automaker, Porsche's reputation stands above the others. Obviously, it wasn't just the strength of their vehicles that got them there. Publicity and the effective marketing of their image as a stand-in for quality and elegance captured the public's intrigue. This may have initially begun with the fact they made an essentially good product, but it's taken them far to run with it.

Branding meticulous design and a quality product

There's a good saying that quality tends to sell itself. That idea has never rung so true as with Porsche, who have built their brand identity around the fact that their quality and attention to detail is second to none. Marketing and ads may unfold in a familiar fashion by sports car standards, but it's worthy to note that Porsche goes that extra mile in revealing the minutiae and intimate details of their designs. The thing that sets Porsche's design philosophy aside from many others is their obsession with the tiniest facets that others might dismiss or overlook completely. Even if that extra ton of effort only shaves a few extra pounds off of a car's weight, that kind of ingenious design sounds fantastic on paper, and they absolutely capitalize on that fact.

Prestigious history and success in motorsports

The older and more established an automaker becomes, the more their marketing department has got to work with outside of the typical car appeal and specs. Porsche's longstanding history as the world's premier sports car specialist has earned them a prestige that would be hard-bought anywhere else. Similarly to that, their list of sponsored successes at high-profile races such as 24 Hours of Le Mans is a further testament to prospective customers that Porsche is killing it wherever possible. It is worthy to note that their aesthetic designs typically haven't changed as much as other long-standing sports car makers such as Corvette. Porsche weren't looking to constantly reinvent their vehicle. Instead, they strove for perfection the first time around, and further iterations have built upon that flawless foundation. That sort of dependability is synonymous with Porsche now.

A strong social media presence

As social media becomes more ubiquitous, major automakers have a quick and direct way to reach a large segment of their consumer base at a very low cost. Porsche have made ample use of social media outlets such as Facebook and Twitter to play against their elitist image and rebrand themselves as a company that can relate to the public at large. Porsche's success with social media networking is thanks in large part to the quality of their posts, ranging from company history facts to aesthetic snaps of their latest models.

Porsche listen to their customers

Porsche actively peruses their car forums in search of legitimate feedback from their customers. Many reasonable criticisms given by owners online are actually addressed in later iterations of the given model. This isn't something you would regularly come to expect from a major automaker, much less one with the high-tech loft of Porsche. This practical interaction with their customers creates a positive feedback loop that keeps their existing consumer base coming back for more. For Porsche's high-end bracket, it's every bit as important to retain their niche market as attracting new customers via active marketing.

Porsche are transparent about their process

As any fan of Porsche knows, that sophisticated engineering is the main draw behind the brand's appeal. Through social media, Porsche frequently includes "behind the scenes" looks at their vehicles. With everything being shown to the public, it's easy to gain a major fascination for the inner workings of their vehicles. What's more, seeing such ingenuity broken down in an informative video could spark a lifelong passion for cars in a viewer, and they would always remember Porsche as the ones that got it all started.

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d) The buyer decision process of the Porsche Cayenne customer:

Buyer Decision Process Porsche is one of the most well-known brands in the world. In customers' minds, Porsche stands for exclusivity, class, and high quality. The company's marketing strategy is oriented towards identifying the needs and preferences of a small group of customers and on developing car models that satisfy these needs. However, Porsche was forced to introduce several models on the market that were not in accordance with what typical customers of the company usually prefer. These models refer to lower-priced cars, but also to high class SUVs like Cayenne and Panamera. The buyer decision process of a typical Porsche customer focuses on selecting cars that reflect their high social status, their financial power, and their preference for exclusive products. They are not interested in the utility or price of the cars in comparison with other customers that are interested in how much the car costs, its size, or its fuel economy performance. Porsche buyers also take into consideration the car's performance, but they focus on the sensations they have when driving such a car. The buyer decision process of Cayenne and Panamera customers is slightly different. The difference relies on the needs that Cayenne and Panamera customers have in comparison with typical Porsche customers. Cayenne and Panamera buyers are also interested in the utility of their car. They are interested in the storage capacity of their car, and in what they can do with it.

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e) The main consumer behaviour characteristics that influences the Porche buyers.

Consumers buyer behaviour is influenced by four major factors: 1) Cultural, 2) Social, 3) Personal, 4) Psychological. These factors cause consumers to develop product and brand preferences. Pleasse refer to above answers.