Porsche Case Study Analysis

For years, the Porsche brand stands for expensive, high-performance sports cars. A typical consumer for Porsche is a young, adventurous, wealthy male who enjoys living life on edge (19). This single-minded focus would change in 1998 when Porsche made an announcement to develop an SUV to be released in 2003 in the United States.

The new SUV would provide traditional Porsche styling and performance however combines components promoting family and outdoor activities. Porsche would be joining an already intensely competitive market primarily dominated by the Ford SUV. Additionally, the company would unintentionally anger loyal owners and Porsche enthusiasts – many of whom believed that the company has “sold out.”

Hostility towards the launch of the Cayenne SUV was intense – disbelievers began expressing themselves via online message boards such as Rennlist, where they’d vent their displeasure, in addition to the offline world. “Consumer-generated-advertising spoofing the Cayenne made its way around to the Internet, consumers circulated bumper stickers, license plate frames, and t-shirts for the Cayenne with slogans like ‘My other car is a REAL Porsche.’” What was said online would soon travel beyond the Internet world; mainstream press and television programs would quote Porsche owners in new stories and would eventually develop and reflect the “online zeitgeist of the Porsche enthusiasts” (11).

SWOT Analysis Strengths:

  • Strong brand
  • Loyal consumers
  • Target a new market niche
  • Brand extension
  • Corresponds with Porsche’s high technical and visual standards (4)
  • Traditional Porsche styling and performance with off-road driving capability (3)
  • Spacious and comfortable interior (3)
  • Based on survey, customers want an SUV (3)

Weaknesses:

  • Difficulty with product positioning (1)
  • Targeting a much different driver leading to a loss of brand loyalty
  • Angry Porsche enthusiasts
  • Partnership with Volkswagen
  • Japanese transmission (8)
  • Most of the assembly takes place in Finland as opposed to in Germany

Opportunities:

  • Gain new customers
  • Enter new market segment
  • Increase profit and market share
  • Publicity
  • Brand extension
  • Paves the way for future growth potential in sales, turnover, and earnings area (4)
  • Leads to future release of Porsche sedan

Threats:

  • Loss of brand loyal customers
  • Product positioning (1)
  • Online brand communities
  • Negative publicity (11)
  • Crowded market (4)
  • Already existing Luxury SUVs (4)
  • Perceived negative relationship with Volkswagen (7)
  • Assembly in East Germany opposed to Zuffenhausen (8)

Problem Recognition

From the announce of the launch of the Cayenne, Porsche’s CEO, Wendelin Wideking, knew that there would be problems – especially with devoted Porsche enthusiasts – and “admitted that the decision to build the Cayenne ‘was certainly not self-evident.’” He realized that Porsche was under a lot of pressure as the company was “’richly scolded’ for moving away from its ‘brand core.’”

It was necessary for the launch to be successful for the good of the company. The majority of backlash that Porsche received, however, originated from Porsche loyalists in online brand community forums. Due to the growing negativity prior to the release of the Cayenne, as well as during the release, Porsche received immense negative publicity for its new product and would continue to for many months following. During the month of the release, March 2003, Rennlist had its most activity in 5 years – hitting approximately 450 posts, a large jump from the month prior with only approximately 250 posts.

Problem Statement

Does Porsche continue with the development of vehicles far from their original “expensive, high-performance sports cars” vision despite negative feedback from customers and the press?

Evaluative criteria -The Cayenne, during its launch year, should meet, if not exceed, the vehicle sales units of the Boxster and the 911

  • As seen in Table 1, the Cayenne is able to surpass the Boxster by 2,192 units, while falling short to the Porsche 911 by 7,186
  • The Boxster has been on the market since 1996
  • The 911 has been on the market since 1964

In its launch year, the Cayenne should lead to an increase in total sales of 10% oIn Table 1, we see that sales are able to increase by 14.9% from the years 2001-2002 to 2002-2003 (the launch of the Cayenne) oIf this trend continues, there is possibility for an increase of 50% within the next five years

Alternative options oCreate a new hard-hitting media/advertising plan for the next model oTemporarily pull vehicle from the market in order to make necessary changes oPull the vehicle from the market indefinitely

Recommendations

If the Cayenne fails to see growth in its next five years in the market, the alternative options should be considered in order to see a sustained progression. The numbers displayed in the chart below are not necessarily bad, however they are not as impressive as previous years. The increase does show that there was a definite interest in the Cayenne and ultimately, did not end up hurting the company in any way. Further investigation should include surveying consumers – are they newcomers or loyalists? – In order to gauge the audience that was reached.

If Porsche sees that they have reached one audience versus another, they should begin thinking about launching a big advertising plan in order to attract the consumers that they have not yet quite reached. While Porsche is clearly a successful brand, it is just as important for the company to make sure they focus their attention on brand awareness.

While there is much news covering the launch of the SUV, much of it is negative. It is important to emphasize the positives and the company can do this by a budget increase in advertising. Negative feedback and word of mouth is what is damaging the potential growth of the company and the sales of the Cayenne. It is important that Porsche does their best to represent themselves well on these brand online communities by encouraging owners to defend their brand.

Implementation and loose ends

  • Detract notice of negative press, Internet (Rennlist), and other damaging sources -Increase brand awareness, publicity, and advertising
  • Focus on not only new market segment, but also on retaining brand loyalists -Hold focus groups and surveys for owners of rival SUVs and owners of Cayennes

Additional Questions

  1. How much and in what ways has the launch of the Porsche Cayenne changed the meaning of the Porsche brand?

a.Since the launch of the first Porsche in 1948, “the brand has stood for expensive, high-performance sports cars.” For years, the design, appearance, and overall sports car appeal varied very little. This single-minded focus would change with the announcement of the Cayenne. No longer would the Porsche limit itself to the sports car – it would enter the SUV world as well. However, with this launch did not come a brand redirection rather an extension. According to Wiedeking, “he wanted the vehicle to combine traditional Porsche styling and performance with off-road driving capability and a spacious interior, placing more emphasis on ‘sport’ than ‘utility.’” The Porsche Cayenne would be “a real Porsche in terms of chassis, performance, and design” (3) and further corresponds with Porsche’s high technical and visual standards (4). This being said, there has been no actual change to the brand of the Porsche; instead, the Porsche has taken an opportunity to grow by extending its brand.

2. What is the value of Rennlist online brand community to Porsche? How does it help and/or hurt the brand?

a.An online brand community is incredibly helpful for any company as it provides real-life opinions and firsthand experiences in an uncontrolled environment. It gives prospective buyers a chance to discuss and have their questions answered by experienced users. There is no pressure to say the right thing, no monitoring by the company, and there is an unbiased and honest point of view. Used effectively, Porsche can use this forum as a valuable source for research and development for the future free of charge. However, if the feedback is negative, this gives Porsche little to no control of what is being said about their brand for the entire world to see. In this particular case, the Cayenne received so much backlash on the online community, that it was later able to spillover into the offline world – further creating additional, unneeded negative publicity for the release of the Cayenne.

3. Should Wiedeking listen to the Rennlist brand community? How does the Rennlist brand community affect Porsche ownership experience?

a.While Rennlist is a good source of information, it also is simply a place for people to vent and share their personal opinions without a filter – what holds true for one does not hold true for all. I think it is certainly important to keep the comments in mind and hold some reliability to the website and what the consumers have to say. Additionally, it is important for Wiedeking to acknowledge that the website is not an accurate representation of all Porsche consumers across the spectrum.

4. What learning should Wiedeking bring to the launch of the Panamera launch? How does the Cayenne launch make the Panamera launch easier? More difficult?

a.The release of the Cayenne certainly has the ability to make the launch of the Panamera much easier. Consumers are now expecting innovation and change; the disbelief period has now passed and loyalists are becoming more open-minded.

However, for those Porsche loyalists who are already on the fence with the company due to the release of the Cayenne, there is a chance that the release of another non-sports car might push consumers away, causing the loss of more loyalty. The chance of gaining more consumers and maintaining success and gaining additional profit with the release of a new sedan will greatly surpass the loss of few consumers.