Porsche Case Study

Topics: Porsche, Four-wheel drive, Porsche 911 Pages: 6 (1534 words) Published: June 20, 2015
Porsche: The Cayenne Launch
Synopsis of the Situation
Porsche has a legendary existence of more than 55 years with a brand image of being high-end, masculine, status-oriented sports car. Finding great growth and revenue opportunities in the light truck industry, Porsche announced to extend the product line by launching an SUV named ‘Cayenne’. This offended the Porsche enthusiasts and their negative responses overwhelmed the internet, press and media. Further, SUVs being associated with soccer moms, safety and conservatism withered Porsche’s brand image and even led to face-to-face confrontations between Cayenne owners and Porsche sports car owners who declined to accept Cayenne drivers as their Porsche brothers. The community backlash intensified when Porsche shift from the German handcrafted heritage of the brand to Japanese manufacturing processes for the new model. Such negative online and offline buzzes critically challenged Mr. Wiedeking’s decision to build Cayenne. In-depth Analysis of the Situation

After 1992 under the leadership of Mr. Wiedeking, Porsche had been through major turnarounds. Company limited its production to two models i.e. Porsche 911 and Boxster in 1996; which were almost at the maturity stage of product life cycle. Hence, there was a need for a new model series to sustain the sales and revenue stream. A Sports Utility Car (SUV) was chosen as the new product category pertaining to its high demand in the U.S.; representing a lucrative sales opportunities and being the car type that relates to Porsche’s sporty image. Key Challenges faced by Cayenne

During the course of Cayenne’s development and launch various major challenges were posed to the company which endangered the new product’s success. The most prominent ones included: 1. Entering an Intensely Competitive Market

2. Expected Shift towards Smaller, Fuel-efficient Cars
3. Changing Brand Image
4. Displeased Porsche Online Community
5. Escalating Capital Costs
6. Questioned Brand Credibility
Analysis of the Cause and Effect of Each Issue
1. Entering an Intensely Competitive Market
The SUV market all over the world presented an impressive increase in demand and the projected sales in the U.S. and Europe were the highest among all other regions of the world. All the key competitors including Ford, Nissan, and BMW were either already playing in the market or already planning to enter with their unique value propositions; which suggested light truck market as a crowded one to compete in. Yet, the SUV market promised a quick investment recovery and high growth prospects to the company. Consequently, this threat of competitors was cancelled out seeing the absorption capacity of the market. 2. Expected Shift towards Smaller, Fuel-efficient Cars

Further, the heightening concerns about global warming activated the cultural critics. They debated over the escalating American consumerism for SUVs and strongly recommended small, fuel efficient cars against heavy, huge and high fuel consuming SUVs. Despite this, expect sales for SUVs showed an upwards trend. Moreover, Cayenne captured 0.03% market share of American and European market reflecting a good start. 3. Changing Brand Image

Secondly, the brand was – since its inception – associated with speed, maneuverability, high-end and class. Therefore, adding an SUV to the product line challenged Porsche’s brand image. The problem was not with the idea but it was the already cemented perception about SUV as a soccer mom’s car, feminism, family-orientation, conservatism and slow speed. This insulted the brand image and the enthusiasts were not at any cost ready to accept an SUV with a badge of Porsche. Therefore, Porsche had to put double efforts to erase the pre-existing SUV image and build the Cayenne’s new image as a faster, easy-to-handle and a fun car that sports car lovers will love.

4. Displeased Porsche Online Community
Next, the most sizzling issue was the displeased online...
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