Essay on Porsche Case

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Porsche: The Cayenne Launch

Executive Summary
• The Strategic Opportunity is to increase our market share of the Luxury SUV segment to 30% with sales revenue of $3.4 Billion by 2006.
• Strategic Problem is the inability of Porsche to:
• Sustain its core brand image of sports cars and
• Leverage and extend the Porsche brand name while entering a new market segment, hence losing a potential sales of at least 4000 Cayenne units during the launch year in the SUV segment.

• Critical Insight & implication :
• Porsche unresponsiveness towards social media lead to a decline in their brand image and potential market opportunity for Porsche product.

Strategic Alternative:
1. Execute Digital Marketing Campaign.
2. Do not execute Digital Marketing Campaign.

Recommendation:
•. Invest 0.25% of the total revenue in digital marketing campaigns in order to enhance and extend the
Porsche Brand Image as a Sport and Luxury Car manufacturer.

Market attractiveness is high, Luxury segment has been growing at a rate of 19% per year 1996-2003
Porter’s Five Forces
Threat of New Entry

Competitive rivalry

Threat of substitutes

Barganing power of the Buyer

Porter’s 5 forces

Why?

Mitigation

Threat of new entry
(High)

Multiple luxury brands entering this new segment Capitalize on their unique collaboration platform and make it hard to duplicate

Competitive Rivalry within Industry
(MED)

New segment in the market few strong players By merging the Sport and Luxury, Porsche will maximize value proposition to users

Barganing power of supplier

Competitors are developing products to enter this $ 6.7 Billion market. Right time, right product, on our launch year we captured 15% of the luxury SUV segment..
Right time, right product, right segment for Porsche

• Why is the market entered?
•

From 1996 – 1998 the annual growth of the luxury SUV segment was above
50%.

• What do we Bring to the market?
•
We are providing the Porsche DNA to the SUV luxury segment.
• What do we Meet upon entering the market?
•
Value and exclusivity demanding customers.
•
Well established competitors on the luxury segment. (MB, Lexus, BMW)

• How
•
•

is the company penetrating the new market?
By using the exclusive brand name.
Using existing customers and distribution channels.
Market is accepting our product (2003 sales - $1.48 Billions)
But are we stretching enough?

A higher market potential is available.
(550,000 units)
600000

500000

400000

Industry: Automobiles
Category: Sport Utility Vehicles (SUV’s)
Segments: Premium SUV
Sub-segment: Premium Luxury SUV
Product Market Share: Luxury & Sports vehicles

300000

200000

100000

0

Premium SUV

Premium Luxury SUV

Porsche's Cayenne

Units Sold

Brand extension will bring bigger market potential for Porsche.

Insights
• Market penetration
20,603/135,845=
15.17%
Current
market demand Asdkfja;lsdg;as

Porsche’s competitive position is strong.
Relative Strengths
•
•
•
•
•

Reputed Brand Name.
Good economies of scale.
Cayenne in line with sports car image.
World wide distribution channels.
Porsche is flexible and strategically agile. Relative Opportunity
• Exploit relationship with Volkswagen.
• Market share trend for SUV market is increasing- create superior offering.
• Expansion with sports car image.

Relative Weakness
• Engine similarities with Volkswagen.
• Non responsiveness to online communities. • Sports car image.

Relative Threats
• Declining parent brand sales.
• Loosing loyal customers.
• Brand image is at risk.

Porsche is limited to a particular segment due to their strengths.

Porsche is well equipped to succeed in this segment.
Competitive Advantage
Superior inputs
Superior partners

Superior data
Superior technology

Superior operations

Superior agility

Superior branding

Superior Offering and position
Superior access

Superior customers segment

Superior customers

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V
G
O

Vision
“ Increasing customer enthusiasm by providing a unique purchase and ownership
Objective
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