Audi’s Performance in Chinese Market

Introduction

Audi is one of the world leading luxury vehicle brand that is own by Volkswagen group. It enjoys the same reputation as BMW and Mercedes-Benz in the international market. In China, it expands rapidly during the past two decades. Currently, in the segment of vehicle market for business and governmental use, Audi has achieved satisfactory performance (Hua, 2010).

The aim of this essay is to study Audi’s marketing strategy in combination with marketing theories. Firstly, its marketing activity in China will be introduced. Secondly, relevant marketing theories that can be used to explain the activities will also be described. Thirdly, whether Audi’s marketing strategy has achieved expected effect and how it can be furthered improved will be discussed.

Detailed description of Audi’s marketing activity in China In Europe, Audi recently focuses on the middle level of market. However, in China, it adapts a quite different strategy. It typically emphasizes governmental market, high-end market among businessmen and also pays attention to local production. As early as in 1988, Audi has established cooperation relationship and founded the first joint venture with the First Auto Works of China in 1991 (Audi AG, 2010). This 20 years’ experience of localization makes Audi well understands consumers’ preference in China.

Since the First Auto Works was used to be an appointed manufacturer to provide cars for governmental use, the joint venture with this company offers Audi a unique advantage in entering the governmental market (Hua, 2010). Besides, Audi has also made great effort to make the design and pricing of its vehicles welcome among the target customers. In order to make localization radically, Audi firstly imported 4S (sale, spare part, service, and survey) concept to China and tries to make most (approximately 95%) of the car components manufactured locally in order to support the service in the 4S stores (Hua, 2010).

Relevant marketing theories According to Armstrong and Kotler (2006), before considering the marketingmix, SPT that include Segmentation, positioning and targeting should be examined carefully to make a company’s marketing strategy more practical. Segmentation refers to diving the market into different segments based on the needs, behaviors and characteristics of the customers.

Targeting is the process to evaluate the attractiveness of a segment and determine the segment to enter. And a target market covers a certain set of potential customers having common characteristics and needs that a company plans to serve, while positioning means to launch products according to the demands of target consumers (Armstrong and Kotler, 2006). Localization, as an important tool of marketing, is quite supportive to make practical positing strategies (Hooley, Saunders and Piercy, 2004).

Comparison of Audi’s action and book theories Through examining Audi’s marketing strategy, it was found that Audi has a clear understanding of the market and well planed targeting and positioning strategy. For instance, since Audi has target market include high-end vehicles for governmental and business use, it has to create compatible brand recognition. After Audi has realized that the Chinese consumers have a traditional feeling that Volkswagen is a economic car brand and the First Auto Works is brand of auto lorry, it timely separate Audi’s operation to another channel (Hua, 2010).

To support this change, it brings the concept of franchiser and 4S stores into the distribution channel of Audi. This has successfully built a noble feeling among customers. By the end of 2009, it has already own 146 franchisers across 89 cities in China (Xie, 2009). In order to make their vehicles meet the demand of targeted customers, Audi has also made great effort in production differentiation. According to Armstrong and Kotler (2006), differentiation can be defined as the act of creating differences to distinguish a company’s products from that of others. Audi’s vehicles, for example, A4, A4L, A6 and A6L are all designed with steady-going style bot not aggressive (Xie, 2009). These features are highly recognized by governmental officers and businessmen.

However, due to its unique targeting strategy, it has not win compatible brand recognition among the public. Although Audi enter much earlier than BMW and Benz in the luxury car market, its marketing strategy limited increase of public brand recognition even Audi has over 100 years’ history. Besides, although its styles are highly accepted by the targeting customers, there are a growing number of people who can afford luxury cars for family use in China. Lack of vitality is limit of its further market expansion.

On the contrary, its major competitor in China, BMW, has launched a series of marketing strategies to promote its high-performance, manoeuvrability, as well as stylish design to attract young people (BMW, 2009) in order to expand its market share. Therefore, although Audi has achieved success in the targeting market, it may consider further development through diversification in product line and advertising campaign. Conclusion

To sum up, Audi’s marketing strategy in China is different from its strategy in other parts of the world. It typically focuses on high-end market for governmental and business use. Through examining its SPT strategies, it was found that Audi has a clear understanding of its targeting customers and has developed correspondent marketing strategies. Localization is a major theme in its marketing strategy.

Besides, in the distribution and product design, Audi has also heavily emphasized the demand of targeting customers. However, its SPT strategy also sets certain limitations to its development. The small market niche in its SPT strategy limited its further expansion. Thus it is recommended that Audi can expand its product line and launch marketing campaign to attract more customers and to win more market share.

References:

  • Armstrong, G., Kotler, P. (2006) Marketing: An Introduction, 8th Ed., Pearson Australia Publishing
  • Audi AG (2010) Audi in China, online, available from: http://audi.ogilvy.com.cn/en/about/history/audi_inchina/audi_inchina.html [Accessed 5 September 2011]
  • BMW (2009) Annual report 2008, Available from: http://www.bmwgroup.com/annualreport2008/_downloads/BMW_Group_2008.pdf [Accessed 5 September 2011]
  • Hooley, G., Saunders, J., Piercy, N. (2004) Marketing Strategy and Competitive Positioning, 3rd ed. London: Prentice Hall.
  • Hua, Q. (2010) Audi’s 20 years in China, Auto marketing, vol. 24, pp. 12-14
  • Xie, W. X. (2009) New Marketing: A6’s Marketing Strategy in China, New Marketing, online, available from: http://www.chinavalue.net/Media/Article.aspx?ArticleId=48294&PageId=1 [Accessed 5 September 2011]