Audi Marketing Strategy

ASSIGNMENT

MARKETING STRATEGY

CASE 1-1

AUDI

BENNY YUMNAM

Roll No. B064

PTMBA

Trim-VI

Questions:

1. Describe and evaluate Audi’s Brand building initiatives.
2. How important are quality gain in Audi in closing the revenue gap with BMW and Mercedes.
3. State the role of SUV models in Audi’s competitive strategy
4. State the strength and weakness of Audi’s financial performance.

Q1.        Describe and evaluate Audi’s Brand building initiatives.

Ans:

Audi is one of the largest German companies that deals with manufacturing, designing, marketing & distribution of automobiles. As per the case, Audi has some problems areas and to overcome these problems certain initiative were taken up. Some of them are listed below:

1. Outdated sales and marketing network
2. Buggy electronic system
3. Sales were not outside Europe
4. New models were required to match the depth of BMW & Mercedes offerings
5. Audi needed to match the revenue and profit horsepower of Mercedes and BMW
6. Less profits due to fewer expensive models in the market compared to BMW & Mercedes

To counter the above problems,

1. Audi boosted its visibility in U.S. Of Audi’s 263 dealerships, 127 share floor space with other brands.
2. To expand the sales and marketing network, it had a premium-car market in China with 65% share.
3. Winterkorn cancelled a dealership sharing agreement with Toyota and set up a network of 100 exclusive dealerships.
4. It’s also planning to spend $130 million on building a dealer network in Russia over the next 5 years.
5. New models with 4 wheel drive systems were introduced.
6. The auto maker’s navigation and information system wins high marks as user friendly and intuitive. Audi has been considered as the iPod of cars.
7. It even came with a 610 hp engine sports car that can accelerate from 0 to 60 mph in just 3.7 seconds.
8. It unveiled a bold, more sculptured look for A6 and A8 sedans with deep front grille giving Audi an edgier look, which hit the market. This was achieved by hiring Italian designer.

All of this initiatives gave some good results:

1. Audi was ranked 1 by Auto Moto & Sport
2. AutoWeek  voted Audi’s A6 sedan as Car of the Year
3. Audi was ranked 11th out of 37 in quality in J.D power
4. Profit were soaring ( details in next question)

Q2.        How important are quality gain in Audi in closing the revenue gap with BMW and Mercedes.

Ans: 

• Due to the improvement in quality of the automobiles of Audi, their revenue per vehicle went up from $25,125 to $41,389 in 1994.
• Sales have nearly tripled to more than $32 billion in the same period.
• The share price soared to $347 from $79 in 2000.
• During the late 90’s, Audi had introduced new models in their collection.
• From Audi TT sports roadster, which polished Audi’s image as design leader, to A4’s powerful four-cylinder motor created new generation of popular Audis in those times.
• Again the profit rose from 7.4% to hit a record of $1.15 billion in 2004.
• It was during this year that new models were launched in Europe. This model includes A6 sedan, redesigned A4 sedan and the A3 hatchback.
• The sales in Europe nearly matched BMW’s sales previous year, with 559,428 vehicles to BMW’s 579,632.
• It even outsold Mercedes and BMW models with comparable engines.
• It was in 2004 that Audi’s ranking improved too. As per J.D Power’s in 2004, Audi moved up three places to rank 11th out of 37 auto brands, one place above BMW and one notch below Mercedes.

Q3.        State the role of SUV models in Audi’s competitive strategy

Ans:

The no. of models Audi were offering to the customer were less compared to BMW and Mercedes. In fact, Audi dint have SUV in their collection till 2004. SUV was one the models which Audi dint have. BMW and Mercedes already had SUV in their collection by then.

It was only in 2006 that Audi launched its first SUV, the Q7, which cost roughly $40,000 hit European showrooms in early 2006, followed by a baby SUV, the Q5, one year later. This launch was much awaited by consumers and this gave Audi the momentum to grow.