Porsche Case Study

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Current Situation
For years, the Porsche brand stands for expensive, high-performance sports cars. A typical consumer for Porsche is a young, adventurous, wealthy male who enjoys living life on edge (19). This single-minded focus would change in 1998 when Porsche made an announcement to develop an SUV to be released in 2003 in the United States. The new SUV would provide traditional Porsche styling and performance however combines components promoting family and outdoor activities. Porsche would be joining an already intensely competitive market primarily dominated by the Ford SUV. Additionally, the company would unintentionally anger loyal owners and Porsche enthusiasts – many of whom believed that the company has “sold out.” Hostility towards the launch of the Cayenne SUV was intense – disbelievers began expressing themselves via online message boards such as Rennlist, where they’d vent their displeasure, in addition to the offline world. “Consumer-generated-advertising spoofing the Cayenne made its way around to the Internet, consumers circulated bumper stickers, license plate frames, and t-shirts for the Cayenne with slogans like ‘My other car is a REAL Porsche.’” What was said online would soon travel beyond the Internet world; mainstream press and television programs would quote Porsche owners in new stories and would eventually develop and reflect the “online zeitgeist of the Porsche enthusiasts” (11).

SWOT Analysis
Strengths:
-Strong brand
-Loyal consumers
-Target a new market niche
-Brand extension
-Corresponds with Porsche’s high technical and visual standards (4) -Traditional Porsche styling and performance with off-road driving capability (3) -Spacious and comfortable interior (3)
-Based on survey, customers want an SUV (3)

Weaknesses:
-Difficulty with product positioning (1)
-Targeting a much different driver leading to a loss of brand loyalty -Angry Porsche enthusiasts
-Partnership with Volkswagen
-Japanese transmission (8)
-Most of the assembly takes place in Finland as opposed to in Germany

Opportunities:
-Gain new customers
-Enter new market segment
-Increase profit and market share
-Publicity
-Brand extension
-Paves the way for future growth potential in sales, turnover, and earnings area (4) -Leads to future release of Porsche sedan

Threats:
-Loss of brand loyal customers
-Product positioning (1)
-Online brand communities
-Negative publicity (11)
-Crowded market (4)
-Already existing Luxury SUVs (4)
-Perceived negative relationship with Volkswagen (7)
-Assembly in East Germany opposed to Zuffenhausen (8)

Problem Recognition
From the announce of the launch of the Cayenne, Porsche’s CEO, Wendelin Wideking, knew that there would be problems – especially with devoted Porsche enthusiasts – and “admitted that the decision to build the Cayenne ‘was certainly not self-evident.’” He realized that Porsche was under a lot of pressure as the company was “’richly scolded’ for moving away from its ‘brand core.’” It was necessary for the launch to be successful for the good of the company. The majority of backlash that Porsche received, however, originated from Porsche loyalists in online brand community forums. Due to the growing negativity prior to the release of the Cayenne, as well as during the release, Porsche received immense negative publicity for its new product and would continue to for many months following. During the month of the release, March 2003, Rennlist had its most activity in 5 years – hitting approximately 450 posts, a large jump from the month prior with only approximately 250 posts.

Problem Statement
Does Porsche continue with the development of vehicles far from their original “expensive, high-performance sports cars” vision despite negative feedback from customers and the press?

Evaluative criteria
-The Cayenne, during its launch year, should meet, if not exceed, the vehicle sales units of the Boxster and...
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