We decide it to choose the Audi cars line A. Mainly because we have always been interested in the fact what is the reason behind the high prices of the Audi models. But before going into our presentation I would like to briefly talk about the car manufacturer Audi itself.
Auto Union AG car manufacturer company was created in 1932 with the merger of 4 brands(Audi,DKW, Horch and Wanderer) and so was the symbol the 4 circles created to manifest the union of the 4 brands. The headquarters of Audi AG is in Germany in the city of Ingolstadt. Since 1964 Audi is owned by Volkswagen with the majority of 99,7%. As we all know we Hungarian have a special connection with Audi as the car making company opened the plant in Győr which obviously meant a huge investment and the grate opportunity for everyone involved. AHM is the Hungarian Subsidiary of Audi AG and its started its operation in 1994.
The opening ceremony of the plant was a huge event not just for the town of Győr and the surrounding areas but of course and obviously for the country and for the whole eastern European region as we had to compete with some foreign towns for this Audi investment. Officially Göncz Árpád the then President of the Hungarian Republic opened the plant together with the major of Győr Balogh József and the management of Audi was represented by Jürgen D. Hoffmann the former board president of the Volkswagen group.
The success story since then continued. The main aim of the Hungarian Factory to create engine for several Audi and other models but since then the business Activity have widened and in 2011 the Hungarian Subsidiary produced 20th engine. Talking about pricing of course price setting consists of many steps and factors and here by we would like to compare the different Audi A type of cars.
A1 is super-mini class introduces to the market in 2010 mainly designed to compete it with Mini Cooper and offer a higher branded alternative of VW Polo. In every important element contains the techniques of the big Audi’s with the same knowledge and exactly with the same comfort level. This type mainly targeted at city people as it is shorter than 4 meters so it is very practical to use it in the city, with it’s relatively low consumption, not to mentioned the fact how easy to park it.
It is not directly communicated but I suppose we can say this is mainly aimed at younger women as man’s usually do not prefer small cars not even in the city. The basic model is not really designed for families but it has 5 door variation, which can be absolutely comfortable for smaller families. A3 is a smaller family car which was introduced to the market first 1996. This is the premium version of VW Golf cars with the same conservative design which is not really typical with Audi cars this is rather characteristic of VW models.
This is basically designed for higher earning ladies who prefer more classical form of a car and not the modern one. This has 5 door version, just like the A1 which can be good for the smaller families although even this model comes with small booty. Audi 4 is a compact executive car which was launched first in the late 1994 and since than there has already been 4generations of than car. The original aim of A4 was to succeed the former Audi A80 and the model is mainly targeted at higher positioned people in the business sector. This called to be one of the most important model of Audi. They have made the engine much more cost effective with decreased consumption.
The focus in the new models was the higher convenience combined with lower cost and this is a very big challenge successfully delivered by Audi in the A4 model. Audi A5 is the coupé version of A4. They are quite similar to each other although it is true to say that A5 is an earlier version then the A4, but this does not really matter. The A5 has very big potential for travelers or for people who like high speed because this is a car with a very high horsepower designed very convenience for long drivers. On the other hand it is true to say that this is not a daily car for a daily usage rather we can say it’s a luxury car with its relative high consumption matched with high horsepower as well but we can only enjoy it on the high ways.
The biggest competitor of Audi A5 the BMW 3cupè. Audi A6 its a high category car introduced in 2000. Technically its much more developed then Volvo. When introduced to the market is did not a hit off at first as there were several competitors on the market for this model and people did not really get the first version of A6. But know this is 3. generation A6 available on the market and this is extremely really popular. According to German automobile clubs by 2016 Audi will have had a widest range of s leisure cars with its pioneer A6. Officially A7 is an elegant 5 door 4 person coupé car which is available with four different types of engine.
This model was introduced in 2010 in Paris. This is a very high technology car very safe and convenient obviously matched with heat camera which is able to realize pedestrian if we would not there is also parking automate function of the car which helps us mainly the winner which helps us to park in to smaller spaces.
This is considered to be the sportiest whale of the Audi cars. This is absolutely a luxury car first introduced in 1994,suceeding Audi V8. Now there are the 3. generation models of A8. This mainly designed for man with several technical developments where dynamic and full with luxurious extras. It is matched with finger print scanner to prevent theft we can only start a car when the car recognized our finger print and of course we try only ones before starting a car. There are several competitors of Audi A8 just like BMW 7, S Mercedes and VW Phaeton.
The tasks of a product manager are wide and sometimes even difficult. They do not only have to think about of the future developments which are in evitable but also they have to focus on the current market how they react to the product, how much they like it and how the product portfolio acceptance and popularity changes as they always have to be ready to adopt to this changes fast. If I was the product manager of Audi I would implement several changes at Audi product. Manager makes sure that product management makes sure that the various departments are networked effectively to facilitate the product development, manufacturing and marketing process for every individual model.
If we want to maintaining our leader position int he competitive environment- and particularly int he premium sector. Besides this we can never forget the importance of being cost effective together with maintaining one part of the production into Hungary was also inline with being cost effective as the labor force is much cheaper in the Eastern European region that it is in Germany. Moreover we can not forget about the very attractive tax benefits the Hungarian Government provides for big investors and providing work for a big volume of people. This help us to maintain our profitability on this highly competitive market.
There are the main questions the product management of the company. Not only have to keep in mind but also have to be able to workout solutions to them. First and probably the most important those question:-In what direction should the Audi Group develop in the medium and long term. An other point to think about is what megatrends can be expected. More personal approach investigate the question of what we think the future will be like. And last but not least we have to think about what of product range we need to inspire our customers.
The right answers to the above questions are probably the same that every car manufacture and or maybe it is no exaggeration to say that at every company. But we have to workout the proper answers now if we want to keep our leading position. Obviously to be able to do that we have to deeply investigate same of the following factors such as the special characteristics of a given market, the national and cultural differences. the buying behavior of the people the political and economic environment and obviously how all these are changing.
Focusing how only on the Audi line A my exact segistions would be the following example of Audi A2 which was finished to produced in 2005 as it was not a profitable enough model. For example there is Audi A4 which was first produced in the late 1994, its original aim was to succeed the former Audi A80 and at the beginning it was the highly popular car on the Western European market but sales have been falling due to the constant developments and much more modern style of the other either smaller or much bigger types of line A.
As for the Hungarian market it has never really being a highly popular model as the basic price of the simplest A8 is around 8 million HUF and consumers might have the impression that this is a kind of an in-between car, I mean for a little lower amount of money we can buy a more modern designed which is as big as A4 and on the other hand for a little higher amount of money we can by the special engine futuristic designed A5- just to have one of the several possible examples.
According to the product classification products are from the point of durability ,long lasting products which means that there warranty last minimum for 3 years this is out of question that it is reflected in there prices I would like to stop here for a minute as we all know that we can use for many years (up to twenty or more) even the cheapest types of cars. Of course how long we can use them depends on many factors among which quality might be one of the most important but we can not neglect the product depreciation originating from the usage.
The pricing of Audi line A cars vary from 5 million HUF up to over 21 million HUF and the final price of each and every model is determinate by several factors. As we all know there are different types of pricing and in the car market the most typical is one type the competition based pricing method namingly the Sealed- Bid- Pricing. In this type of pricing method the market process are very important just as much the per item, profit contents sometimes the sold volume is a priority to sold value car makers always have to follow closely the developments innovations, marketing activity and promotions of there competitors.
Everybody remembers that one of the biggest losers of the economic crisis were or probably steel has been the car manufacturer’s. Several car makers decreased the prices of there models without extras while others did not have this opportunity and in very price sensitive segments it can mean additional risk as the market reactions are unpredictable. Kia for instance did not choose this rather they opted for the execution of the warranty for all thee models up to 7 years.
On the other hand image is another determining factor and the negative example to that is Dacia Duster which could not be successful with it’s relatively ugly brown outlook and low quality. As for Audi there reaction was to focus on the small city car the so called super- mini class with A1 which was further developed packed with a lot of extras coming with the slogan: ‘The Next Big Audi’- funnily a super- mini car.
Continue with the Audi1 example which was designed to compete with Mini Cooper, VW Polo and Mercedes Benz Smart and BMW1. Let me compete the prices as it is a very important factor here. To start with the cheapest version we can by Mercedes Benz Smart for 3 million HUF, Mini Cooper for 4 million HUF. Close to that comes VW Polo for 4.4 million HUF and a more pricy alternative is Audi A1 with 5.7 million HUF and BMW1 is the most expensive with 6.3 million HUF.
My suggestion would be to skim the prices of Audi A1 to be competitive on the Hungarian market the cheaper version could come with fewer extras it could be a so called low- cost model. And I think it would not be a real problem as all of these cars are targeted on young, dynamic consumers who prefer and can afford premium brands.
Obviously these are not family cars but city cursers designed to make our lives even more comfortable and stylish. Increasing the price of Audi1 model is according to my imagination is absolutely out of question as Audi1 is already high priced in its own category. Raising the price I think would mean a sharp fall in the sales. All in all let we can definitely say that this was a very interesting study not only about Audi and the car making industry but also about the price setting and all the factors and features that influence our choices