Audi is a brand of vehicle that is manufactured by a German automobile company, ranging from super-mini to cross over SUVs, accompanied by various body styles as well as different ranges of market price. Audi is leveled on the same brand as the Volkswagen Group (Oneighturbo). Audi is named after its founder- August Horch. Horch means to listen in German and on translation it means Audi in Latin. Though the Audi headquarter is in Ingolstadt, Germany, the brand is marketed and known worldwide.
This paper will give main focus on marketing the brand Audi, in regard to the product, market segmentation, the size and the growth Audi market, market analysis regarding strengths and weaknesses as well as fronting recommendations. The marketing strategy of Audi is to emphasize the ability of the car to beat other automobile manufacturers in the global market. Audi is a global brand and is widely embraced far and away from the company headquarters in Germany. The management of the Audi Company has been at the forefront of improving and evolving into new models since its inception. The car status has to be improved by all standards in order to avoid being overtaken by other new car ventures in the competitive market. Introduction
August Horch (1868-1951) established an automobile company in 1899 first as A. Horch & Cie. in Cologne Germany. However, due to the dispute between him and the advisory board, he quit the company. Later on, in 1909, Horch established another automobile company known as Horch Automobil-Werke GmbH (Baldwin and Laban). In 1910, the initial Audi automobile Type A 10/22 (16 KW) Sport-Phaeton in Zwickau (audiusa). Horsh continued to face tribulations and was evicted out of the company he had played an important role at creating (Audi Website). He proceeded to start a new company in Zwickau.
The Audi car first went to the market with an inclined-four engine, a 2612 cc model, thereafter a 3564 cc, and then 4680 as well as 5720 cc models came into the market (Baldwin and Laban). Volkswagen is the largest shareholder of Audi. It owns over 99 percent of the overall share capital. Furthermore, Volkswagen, in its own financial statements, owns the consolidated accounts of Audi. Audi however was at the helm of the heading the Audi Brand Group which is a subdivision of the Volkswagen group, consisting of SEAT and Lamborgini, that mostly focused on sports car (Volkswagen Group). The Audi has four rings as its badge, which is considered to be one of the oldest emblems of automobile manufacturing company in Germany. The four badges symbolyze the merger of four automobile manufacturing companies namely; the Audi, DKW, Horch and Wanderer. These companies form the connerstone of the current AUDI AG (Volkswagen Group). The figure below shows how the badge looks like;
The old logo used by Audi until 2009, courtesy of the Audi Website. The Audi Company today is currently having a reputation of high quality, durable production of cars. Their slogan, “Vorsprung durch Technik”, significantly implies “Progress through technology” (Volkswagen Group). Automobile users have been yearning for high-quality, durable and efficient cars, and apparently, this is what the company has been giving its clients. It is worth noting that the automobile market is very competitive and the company cannot downplay this notion, if it wants to retain the current status or increased sales in the global market. Market plan and Auditing
It is significantly imperative for any business to have a plan for the future in an effective manner so that it may be successful. It is equally important for any business to have a well established and outlined marketing plan in order to well sell its products. These are precautions that are carried out by every firm. In this regard, Audi, a global firm, is not left behind; starting from the moment it was established up to today. Audi has been effectively doing this through marketing its model. Through marketing the Audi model, the company sets down easy to accomplish objectives. The firm does the current position auditing as well as having policies of developing and implementing the current achievable objectives. Audi can achieve these through the following; * Setting corporate objectives such as profit and growth
* Gathering information through market research
* Assessing the current situation, referred to as the market analysis * Production of SWOT analysis (strengths, weaknesses, opportunities, threats) * Setting objectives of the market, such as market share, revenue among others * Implementing market plan
* Using reviews through market research
SWOT Analysis for Audi
The SWOT analysis gives a breakdown of the strengths, weaknesses, opportunities and threats that an organization is faced with (USDA, 2009). The strengths and weaknesses base their analysis on the internal factors that affect the organization while the opportunities and threats focus on the external factors. Strengths
One of the main strength the company relies on is the good reputation that it boasts of in the worldwide arena. The Audi Company has the capacity of producing a car of high quality as well as using premium pricing. The spending power is large since they have built the brand over a long period of time, and as a global company, have been profitable in the market during the past period. The company is able to produce quality cars and has a vast marketing budget, through promotion of its brands, through addition of luxurious features, thus having advantage in the otherwise competitive market. In addition, the company relies on the success and the good reputation of the previous models, which included the A6, as well as the quality of the cars, which attract higher prices, in turn ending up building the overall company reputation. Weaknesses
The company has a challenge of having to charge exorbitant prices for its cars, including A6 to cover the costs, with the eventual aspirations that potential customers will cater for these costs. The company, in order to effectively fight other competitors, has to ensure that they manufacture new models through technology and innovation, which during many occasions prove to be quite expensive. This will eventually lead to high pricing in order to cover the costs of production, transportation and costs of promotion. Opportunities
Audi has in the most recent times released market price for its cars that none of its major competitors in the market have had an opportunity of meeting, thus gaining an ample part of the market. The Audi, which has been in the market for many years, has tremendously been growing, though other competitors have had to pull out of the market. The good economic environment is an opportunity for Audi to venture into the global market. Threats
Audi is faced by the threat of its other main competitors releasing new models of cars immediately after it releases its own, thus attracting new potential clients away. Other highly regarded competitors in the automobile industry such as the Mercedes and the BMW have been having a good reputation, and Audi have to ensure that this threat is contained. One of the models, A6 has been having an elastic product and the price fluctuation may result in revenue loss. Consequently, the SWOT analysis enables the Audi Company to embrace one of the following methods; * Matching; Audi Company may have to build on its strengths and take the advantages imposed by the opportunities, or; * Conversion; the company may resort to creating new and innovative strategies that will overturn the weaknesses into strengths and eventually into opportunities. Market Conditions
Besides using the SWOT analysis, Audi Company will employ the examination of the current market conditions prior to producing a good marketing strategy. Market examination can be done through carrying out research in relation to the opinions of the potential customers. The following are the major issues to be cross-examined; a) Market size; this implies that Audi will have to look at the overall size of the market, through measuring the market in terms of volume or value (price x volume). In this regard, it is equally important to ascertain that Audi owns a large market. b) Market share; this is the total sales percentage that a particular brand/product has as compared to the total market. In 2003, Audi boasted of 2.7% of the total market share in the United Kingdom.
From the initial perspective, this can percentage of market share can be deemed to be small, but when several factors are put into consideration, say, the number of automobile companies in the market, as well as the market share that Audi has in Germany, which is depicted to be three times the market share it had in the United Kingdom (Niedermeyer). c) Market growth; this refers to the actual rate of increase in the size of the market. Audi has been experiencing tremendous growth in market size. For instance, in the 2002, 2003 period, Audi had significantly increased the sales of its brand in the United Kingdom by 6.9%. however, this only portrayed the rise in market share by 0.6%. this therefore means that the Audi market is experiencing recommendable growth at a faster rate (Niedermeyer). d) Market segmentation; this is the appeal made by a brand to different parts of the market, mostly in different ways by transfrming the market mix. For instance, Audi Company has been on the forefront of changing the features of the Audi car so that it appeals to different individuals, such as women, youth, sporty individuals among others, through re-inventing different body size and engine size. The 4p’s of Marketing
The 4p’s of marketing is a marketing tool that looks at how the business is positioned to reap the benefits of marketing. The 4p’s are the price, product, place and promotion (Ehmke, Fulton, & Lusk, 2009). The graph
below is a representation of the benefits of using the 4p’s of marketing (Ehmke, Fulton, & Lusk, 2009).
The pricing of a product is a big determinant of how the market responds to the product. Factors that affect the pricing of Audi car include; costs; the company will be obliged to cover the costs in order to make profits. For instance, making and testing Audi car is quite expensive, hence it’s high pricing (Huber). Pricing of Audi is also affected by the price elasticity of demand; this implies the sensitivity of the product to change the price. Therefore, if the price is sensitive, lowering of a product’s price will lead to turnover increase. Audi does not experience price elasticity, hence the high pricing. High pricing is directly linked to heavy branding, limited competitors (lack of new automobiles in the A6 class), having a selling point that is unique, high unit cost since constructing prototypes,testing the product as well as the overall production of the product is quite expensive quality design, and having limited distribution ( Audi is mainly sold in the showrooms and via the internet) may, among others also increase the pricing. There are quite a number of pricing methodologies that Audi may embrace, including; Price skimming-this is the process of setting the initial price high so as to achieve maximum profit that is short-lived,-penetration pricing;- in this case, Audi may set lower prices in order to gain the market share.
When the market share is gained, the prices will eventually be hiked, competitor based pricing;-Audi may resort to setting the same prices as its competitors, demand based pricing;- when the demand is high, the prices are hiked. The company approximates the expenditure of consumers on its products. In this regard, the company will use the history of the previous sale of A6, cost plus pricing;- a firm may decide to increase a certain amount to the unit cost, a simple and a popular method. Audi may resort to use thi method so that it ensures that cars are not sold at a loss, predatory pricing;- this is the process of setting prices at a lower level with the main aim of driving away other competitors, eventually increasing the price when the competitors are out of the market, price discrimination;- this method ensures that different prices are charged for different segments of the market, for instance diplomatic personnel, government personnel, civil servants, and finally, psychological pricing;- this is whereby the consumers’ perception of the the pricing is given attention. Consumers would feel that they are not getting value for their money when the price is set high, and on the other hand, when the price is too low, they would thik that the product is of poor quality. Product
The product is what the customer buys, and therefore it needs to be branded well, have an attractive cover and satisfy the expectations of the customer (Volker). The product must be of high quality. Audi has a good performance, has ideal features such as air conditioning, CD player, cruise control as well as good reliability. Place
The place refers to the location of the business, and how reachable it is to the customers (Londre), or the channel of distribution. Audi is a company that is well established in the global market, thus needs no big expansion into new markets.
Promotion refers to the communication regarding a product so that customers are informed about it. It is the creation of awareness (Londre). Audi is mostly promoted through advertisements through the T.V, automobile magazines and billboards. This will eventually increase the sales since the customers will have been informed about its features and price. Recommendations
Audi is a brand that is recognized world wide and as such should endeavor to retain its current status, as well as bringing innovative technological cars in the market. This therefore means that the company should adopt new marketing strategies that many a times are used by various other companies in marketing their goods and services. For instance, different marketing strategies should be adopted for different Audi models such A6’s marketing strategy ought to be different from the rather cheaper, though well established A3 model. Even though, as mentioned in the preceding parts of this paper, Audi has a wide global market and therefore should not endeavor in expanding its market place, the product should strive to penetrate the existing market. It is imperative to increase the market share for Audi through venturing and penetrating the existing market, through changing marketing mix. This can easily be achieved through new product development and diversification of the existing market. Audi should also resort to developing a new car/product for the already existing markets. However, Audi has been endearing to achieve this goal through manufacturing of the new A6 model, though exposed to the already competitive car market.
The process of new Product development starts with both internal and external generation of ideas. Internal process involves research and development, while, on the other hand, external processes involve investors, consumers and competition. Audi Company should then put these ideas into analysis in order to ascertain their feasibility, therefore developing them through methods of prototypes, before testing for quality and safety of the products. Since Audi is competing in the massive world wide market, it is imperative for the company to maximize on the promotion of its products. In this regard, the A6 will be accorded several advantages over its main competitors, since the buyers will be fully aware of the offers that Audi has. The extensive promotion should be done by maintaining the already reputable brand name, hence improving sales. Furthermore, if the Audi brand name is maintained through A6, then the model will have a bright future. It is recommended that Audi strives in investing in maintaining the current market for its A6 product. This will eventually lead to increasing the market share as well as achieving long term profit margins and the gaining the set internal and external targets. In order to achieve this, investment in the long term must be carried out so that short term profit is reduced. Competitive pricing must well be established in the already competitive market, so that the potential buyers are not scared away by the exorbitant prices. The company should ensure that they minimize the costs, so that the innocent consumer is not made to pay for it. Conclusion
Audi is a company that manufactures durable and high quality cars for a long period of time, and this reputation should be withheld by the management. When the mentioned recommendations are followed to the letter, then the already reputable Audi Company will increase its market share, eventually increasing its sales. The management should ensure that the current market share is increased through new innovations, thus not giving enough space to