Question

For many decades, Porsche pursued a focused differentiation strategy. Using a clear strategic profile as a focused differentiator, Porsche was very successful and very profitable. More recently, the Porsche brand is repositioning itself from focused differentiation to broad differentiation by changing its competitive scope. What are the risks inherent in such strategic positioning? What are the benefits? Do you think Porsche will be successful in carving out a new strategic position as a broad differentiator? Why or why not?

Answer 1

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Although Porsche shares a category within the automobile sector with a broad range of brands including the likes of Mercedes Benz, BMW, Ferrari, Lamborghini and Aston Martin it's been ready to etch out niche within the car segment that a lot of others have did not do or are now trying to repeat . This segment Porsche likes to classify as the because the “Sports Luxury” segment. It is indeed a risky strategy considering the brand may lose its identity and sales if they cannot appeal to the intended audience. Also, the automobile landscape is unforgiving in competitive terms and a small gap in sales can translate to huge losses over time.

However, Porsche have a well worked strategy whereby their category differentiates itself from premium likewise as super-luxury brands. All Porsches are sports cars no matter its format and are designed with the aim of having the ability to be used everyday. The advantages of marketing themselves in this way is that Porsche operates within a segment that's quite luxury than the likes of Mercedes Benz and BMW, it's also sportier than these brands and therefore the intention of its purpose of having the ability to be used everyday means it's considered the foremost reliable sports car within the world. One could literally drive it routinely a day and thrash it around a track on weekends.
This change within the brand activity didn't dilute the sports car brand. They marketed their SUV into the sports luxury segment also meaning that it had been still selling to an equivalent target market as before. Consumers that weren’t ready to buy a Porsche 911 because of its its functional shortcomings had the power to experience the brand as a vehicle that might be more useful for families and commuting.
The ramifications of the successful differentiation and positioning of the Porsche brand means it's ready to own a segment within the car sector that no-one else has been successful in emulating. This permits Porsche to be the foremost profitable auto company within the world and affords it the power to still be at the forefront of building reliable and desirable sports luxury vehicles.

The threats recently have come from the likes of Jaguar with their F-Pace SUV and F-Type Sports compact . Although Jaguar is considered a luxury brand it doesn't have an equivalent positioning that Porsche has when it involves reliability, prestige and value. Maserati too has recently launched its SUV and is consistently trying to enhance its brand image but suffers from an equivalent perception that Jaguar does. At present, Porsche seems to be ahead of the curve but they need to continuousl innovate with the same vigour and outperform their competitors.