Case Write-Up Porsche: The Cayenne Launch Porsche is a well-known in the world of automobiles. Itentered the market for sports cars more than six decades ago and developed a niche for itself as an expensive, top-of-the-line sporting vehicle. For forty years since the launch of its first sports car, the eponymous company built and maintained a brand image of a classic sports car hand-crafted by German engineers, carrying forward the legacy of its founder, Ferdinand Porsche. However, the problem arose when the company decided to extend its product category and tap into another market segment: SUVs.
Threats to the Company Launching a SUV was a very critical decision to make for the company since it had the potential to tear down its half a century old legacy and strong brand image. Before making such a big decision and digressing from the classic version of rear-engine sports cars, Porsche’s CEO, Wendelin Wiedeking, failed to take into account the increased criticism being generated against the launch of a Porsche SUV. Given the time that had elapsed since marketing research was carried out and the product was launched, a lot of resistance had stemmed against the SUV, along with concerns of increasing competition and saturation (Ross, Westerfield, and Jordan, 331).
This highlights the timeliness and application of the research findings to the launch of the new product (Parasuraman, Grewal, and Krishnan, 9). The write-up will explore the various aspects of the decision undertaken by Wiedeking and analyze if it was justified or not. Understanding the Position of the Company Given the unpredictable nature of economy and the subsequent impact it would have on the sales of expensive sports car market, the decision to dilute the brand image was an important and controversial action taken by the company.
Reviewing the history of sales of sports car, it can be established that Porsche was hitting low sales in the 1990s. A year before the launch of the SUV in 2003, the sales of the company declined after maintaining a steady level for the past 6 years. However with the introduction of the brand, its sales steadily increased and the SUV became one of the best-selling cars of the US.
Was it a stroke of luck or was it shrewdness on part of Wiedeking that pushed the sales of Porsche higher than expected? Nature of the Decision and the Market Decision-making entails three distinct models: rational, intuitive and predisposed. In the rational model, the manager makes use of decision tools such as researches and proceeds with the process of decision-making with scrutiny and detail. Intuitive decision-making discourages the use of statistics and researches and relies more on the hunches of the manager. The predisposed model refers to deciding upon a solution and then finding evidence to buttress it.
It is clear that Wiedeking did not go for the predisposed model nor was he inclined towards the intuitive model. Moreover, when examining the relationship between market research and decision-making, it can be ascertained that the decision-maker has the authority to make the decision independent of the findings of the research; a direction that Wiedeking seems to have taken. The decision-making process starts when a marketing situation presents itself which asks for a decision to be taken. Decision-making activity covers two main components: marketing research and the internal and external milieu of the organization (Parasuraman, Grewal, and Krishnan, 13).
After studying these factors, the final decision is taken. In the case of Porsche, Wiedeking decided to introduce the SUV after looking at the increasing demand of the vehicles in US. Moreover, Wiedeking asserted that the demand of a sports utility vehicle would be high. The case study documents that Wiedeking undertook market research to find out the current marketing trends regarding the sales of SUVs. It can also be documented by those marketing trends which showed that people who owned Porsches were also buying SUVs and showed interest in buying a SUV by a Porsche.
Having found a favorable segment of the market, Wiedeking then decided to proceed with the development of the SUV without giving much heed to the reactions of the consumers. This factor falls under the category of the external factors affecting the organization’s success. Consumer The question arises as to how important is the response of the customer and is it a recommended practice to not pay heed to the customer reactions.
According to Paul Christ, it is imperative for a company who is considering a major change in the product to value the responses of the customers and to appease their concerns. As has happened with many companies in the past, such as Coca Cola’s 1985 decision to change its product formula, it is of utmost importance not to underrate customers and their “relationship with a brand” (Christ). The online community did show a religious attachment to the purist brand image Porsche maintained. The comments represented a deep-seated opposition against the introduction of a product that altered and diluted what Porsche’s heritage and legacy was.
Besides Coke which had to reverse its market decision after the strong resistance that it received, even Gap had to follow on the same lines after opting for a decision which its customers did not support. Competition Faragher contends that at the time Porsche introduced its SUV, the market was already quite competitive and a number of companies like Ford and Chrysler were offering SUVs at a lesser price (197).
This highlights the concept of timeliness of the research. The time elapsed after the marketing research was carried out to the launch of the vehicle; there was an increase in the suppliers for the SUV market. Sales were largely dependent on the promotion and marketing of the product. Sales for the SUV increased not only because of the demand for the vehicle but also because of the brand image. However, this also meant that the company did lose the trust of many of its purist customers, as depicted by the negative comments posted on online forums.
Product Customer relationship management (CRM) entails that if the organization wants to move from short-term customer responses to longer-term consumer value it needs to focus on the preservation of its customer base as well as its expansion (Wierenga, 323). What Wiedeking realized was the importance of endorsing the brand image of Porsche as a sports car and making the customers believe that the Cayenne was a versatile extension of the company’s original products, which for Wiedeking signified a move from a short-lived consumer reaction to a long-term increase in sales.
Recommendations Promotion Wiedeking knew that the vehicle’s strength lay in its brand name and so he vehemently emphasized on its Porsche identity. He asserted that the new vehicle had the characteristics traits of all Porsche cars, including their chassis, performance and design (Taneja, 25). By promulgating this, he maintained the brand image of the product. Furthermore, he marketed the vehicle in such a way that it qualified the needs and wants of the customers. After surveying the market, Wiedeking was positive that there would be a demand for a sports utility vehicle by Porsche.
He marketed the better functionality of the Cayenne in comparison to other Porsche cars because the quality of the road network favored SUVs. Moreover he focused on a particular market segment whereby customers wanted to have a Porsche but did not want to drive them (Taneja, 25). According to Susan Jacobs, president of a marketing firm contends that if Porsche is able to delineate that the SUV is a flexible addition to its current product category, it can fare well in the market.
This meant that the company had to appease the emotional demands of its customers (Elsbach, 126). Wiedeking in this regard had to ensure that the Porsche SUV resembled its predecessors in terms of its look as well as engineering technology. Consumer Relationship Management For a company as large as and having a brand image as strong as Porsche, the launch of the SUV remained a very controversial decision. Although the vehicle picked up sales and hard core fans did cool down with time, it is recommended that when the company is at such crossroads, it should take into account the response of the customers.
Relevance of Research Findings Timeliness of the research should also be addressed since by the time the SUV entered the market, several suppliers had established themselves. Thereby, periodic market research needs to be undertaken to apprise the company of the current market situation. This is important as many companies in the past have had to reverse their decisions due to opposition by the customers.
In the case of Porsche, Wiedeking was able to balance the brand image of the Porsche and the demand for SUV. He was able to manage the customer relationship by focusing on the longer term value rather than the short-term reaction. This may not be the case for every company and so it is pertinent to address customer concerns. Works Cited Christ, Paul. Why Marketers Need to Involve Customers in Important Decisions. KnowThis. com, 2010. Web. 13 Mar 2012. Elsbach, Kimberly D.
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