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Audi: Market Development Essay


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An international marketing strategy takes advantage of the integration of global markets and is coordinated across countries in different regions. The strategy may also be adapted to suit some markets (Keegan & Green 8). A SWOT analysis will help Audi choose a rigorous and effective marketing strategy.

Audi’s strengths include a large portfolio with a wide range of elegantly styled cars. It is also a globally recognizable brand and is fitted with superior and technologically advanced features. The company’s weaknesses include their overreliance on sales from the Europe. The high maintenance costs of Audis may also deter some customers. Audi’s low scale operations hinder it from enjoying economies of scale, and its avant-garde design may not appeal to all.

Opportunities for Audi include the expanding premium vehicles market where Audi can leverage on brand recognition to penetrate new markets. There is also an increase in environmentally conscious car owners and Audi has invested in low emission cars. Threats to Audi’s business include high fuel costs, competition from BMW, Mercedes, and Lexus, and restrictive policies when entering some markets.

The candidate countries for Audi’s three-year marketing strategy are Angola, Haiti, Cambodia, Nepal, Uganda, and Iraq. The countries do not have Audi dealerships and the brand presence is low. Factors for Audi to consider before choosing a market include market size, competition in target market, cultural proximity, political risk, and availability of infrastructure.

A truly global strategy will have countries in different regions. The countries chosen are Angola, Cambodia, and Iraq. The three have some similarities that make them attractive new markets for Audi. One is rapidly growing middle and upper-classes with a desire for luxury goods.

The three countries are recovering from years of turmoil, and the economies are posting positive growth unlike much of the Western World. The masculine cultures of the three countries means that luxury brands, such as Audi will be very popular with those wanting to flaunt their wealth. However, poor infrastructure is a problem in the three markets and this could erode profitability.

Angola

In 2012, Angola recorded a GDP (gross domestic product) of 114 billion US$, with a GDP per capita of US$ 5,485 (The World Bank). Angola’s luxury goods market is one of the most attractive in Africa with brands such as Prada, Hugo Boss, and Porsche opening outlets. Competition will be high and Audi may have to employ a follow the leader strategy.

Mercedes, Porsche, BMW, and Jaguar have high sales in the country (CCP Luxury). Angola is relatively poor but it has about 6,400 millionaires and a growing middle class that is willing to spend on luxury goods (RBC Wealth Management 47). According to Hofstede’s 5-D Model, Angola’s culture is masculine; hence luxury cars such as Audi have a ready market (Hofstede).

Angola scores 7.6 on The Economist’s Political Instability Index, this means that the country is viewed as very high risk. This may be attributed to the fact that the country is recovering from a 27-year civil war (The Economist). Years of strife took a toll on the country’s infrastructure with close to 70% of the infrastructure destroyed. However, massive government projects are underway to rebuild and improve roads, power supply, telecommunications and education sector (Keeler Para 2).

Iraq

In 2012 Iraq’s GDP grew at 8.4% with the GDP per capita recorded at US$ 6,455. The Iraqi economy is slowly recovering from war (The World Bank). A sector showing rapid growth is the luxury cars segment. Buoyed by safer streets, cheap gas, and rising incomes, well-to-do Iraqis have started buying luxury cars (Business Monitor International).

Audi will have to compete with popular brands such as Jaguar, Range Rover, BMW, and Chrysler. Audi can use its global appeal to get a market-share. Iraq is a masculine country with a score of 52 on the 5-D Model; the people are competitive, assertive and ambitious. Luxury cars give people a chance to show off their success. With a score of 7.9, Iraq is considered a very risky place.

This is according to The Economist’s Political Instability Index; businesses could be met by many challenges. Years of conflict, sanctions and misdirected resources have effectively ruined infrastructure. However, reconstruction efforts funded by the World Bank, the US Government, and Iraqi Government should see the country’s infrastructure greatly improve. Areas of focus include telecommunications, energy, education and the transport network (The World Bank).

Cambodia

Cambodia, located in Southeast Asia, had a GDP of 14.1 billion $US in 2012. The GDP per capita was 946 $US that is low compared with its neighbors. In November 2013 Audi announced plans to set up a dealership in Cambodia in 2014.

The small but rapidly growing luxury car market already has BMW, Mercedes and Porsche as established players. Audi will have to bank on its strengths to beat the competition. Demand for these vehicles is being driven by the young and newly rich urban dwellers (Styllis). Using the 5-D Model Cambodia can be described as a masculine society (Hofstede). This explains the demand for high-end cars.

According to The Economist’s Political Instability Index, Cambodia has an 8.0 score making it very high risk. Violent protests against the authoritarian government are common. Years of civil war have left the country’s infrastructure in poor condition. Only 11% of roads are paved, telecommunications penetration is low and power supply is erratic (Business Monitor International). Progress is still slow and these are issues new entrants into the market will have to deal with.

Works Cited

Business Monitor International. Industry Research & Data-Emerging Market Analysis. Business Monitor International, 2013. Web.

CCP Luxury. “Angola: Africa’s Highest Growth Potential for Luxury.” CCP Luxury, 2013. Web. Nov. 2013.

Hofstede, Geert. Cultural Insights-Geert Hofstede. The Hofstede Centre, 2013. Web.

Keegan, Warren J and Mark C Green. Global Marketing. Upper Saddle River, N.J.: Pearson/Prentice Hall, 2005. Print.

Keeler, Dan. “Angola: On the Road to Recovery.” Global Finance Magazine, Feb. 2011. Web.

RBC Wealth Management. 2013 World Wealth Report. Toronto: Royal Bank of Canada, 2013. 47. Print.

Styllis, George. “Audi Plans to Enter Local Luxury Car Market.” Cambodia Daily, 2013. Web.

The Economist. Intelligence Unit – The Political Instability Index. The Economist, 2013. Web.

The World Bank. World Bank Data Bank. The World Bank, 2013. Web.

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IvyPanda. 2019. "Audi: Market Development." November 29, 2019. https://ivypanda.com/essays/audi-market-development/.

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IvyPanda. (2019) 'Audi: Market Development'. 29 November.

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