Introduction
Luxury brands are highly specific products of consumer culture which are associated with the high cost and supreme characteristics. Such an approach requires specific marketing techniques and presents several unique challenges. The following paper aims at exploring the history of the Porsche brand, by determining cultural conditions that influenced it, identifying its perception by the target audience as well as the underlying messages it conveys and trying to project its future development. The research will provide us with insights into the specificities of luxury marketing and their differences from accessible ones.
Background, Historical Overview, and Brand DNA
Porsche was started in the early 1930s as a small company and gradually built the reputation of innovative designs. Interestingly, it was not initially conceived as a luxury brand, and while its image was associated with quality and responsibility, it was associated with a utilitarian approach for the first decade of its existence, combining quality with affordable pricing. Its first success was in 1934 when the company had obtained an order from Adolf Hitler to work on the concept of the ‘Volkswagen,’ or people’s car. This resulted in the creation of the Volkswagen Beetle, one of the iconic cars of the century. However, the company has quickly shifted the focus towards racing cars. By the end of the 30s, the company has built three racing prototypes (“Porsche AG history” par. 3), but the progress in the field was for some time hampered by World War II. Starting from 1946, the company has resumed the development of high-performance designs. Simultaneously, Ferry Porsche, Jr., son of the firm’s founder, has conducted market research aimed to determine whether there is a niche for expensive sports cars. This has determined the approach exercised by the company for several decades to come. By the early 1950s, Porsche has relocated to Stuttgart which allowed production growth. In 1951, the production passed the mark of 1000 units. At this point, the production still relied heavily on the manual labor, but the firm has already had a reputation of being the car of choice among the elite customers (“Porsche AG history” par. 5).
By 1956, 70% of the cars were exported overseas. The growing demand has triggered the expansion of the production capabilities and the introduction of the new services, such as car delivery and service, spare parts shops, and the sales department.
In 1964, Porsche 911, an entirely new design, was introduced. Both the design and the quality of parts indicated the shift towards the luxurious and expensive look and feel. Major investments in sophisticated research were also seen during this period. Finally, in 1973 the firm became a joint-stock company and was renamed Porsche AG (“Porsche AG history” par. 6).
The 80s marked the most prolific era for the company, with the steadily growing revenues up to 1986. However, starting from the early nineties, the market rapidly declined. Some reasons include the overall decline of the US economy and the constantly growing prices of the cars (“Porsche AG history” par. 9). To amend the situation, the company hired a new CEO, who immediately improved the cost-efficiency of the process and emphasized the affordability by introducing a comparatively inexpensive model, Boxter. This was a major turn in the company’s policies and proved to be a success. Another notable change occurred in 1998 when the firm announced a joint venture with Volkswagen and the addition of SUV to the lineup (“Porsche AG history” par. 9), which was the first move away from the sports car focus. Despite the obvious change of course towards a more acceptable pricing model, Porsche continues to occupy a fair share of the luxury vehicles segment.
The brand was initially founded by Ferdinand Porsche and Anton Piëch, However, before the early fifties, the brand was not a consumer-oriented automobile manufacturer – instead, it was an engineering company that offered its services to other firms, including German military-industrial complex during World War II and the racing vehicles. The latter served as a major shift in focus in 1951, when Ferry Porsche, Jr., the founder’s son, suggested that the consumer market may be in demand for cars that offer performance and are associated with the racing sport. A significant R&D base coupled with an already impressive record of success on track helped Porsche establish a luxurious reputation which was supported by constant innovation and dedicated customer care services. Another person who visibly reshaped the brand was Wendelin Wiedeking, who was primarily responsible for the change of brand’s direction in the late eighties and early nineties. By that time the company experienced a dramatic setback in revenues and while many sources focus on the policy of lean manufacture, Wiedeking’s main move was to create a line of more affordable vehicles, which, according to experts, was effectively destroying the reputation of a luxury brand. Despite the grim predictions, the company managed to retain its high-end reputation and at the same time avoid financial disaster associated with an elite automotive segment.
Since the Porsche brand was historically built on attention to the R&D segment, its codes are visibly tied to emphasizing the strong engineering base. From the early sixties, the company provided services for customers and subsequently created separate departments for customer care (Rosengarten and Stuermer 32). The attention to detail is also visible throughout brand policies as it is specified in the company’s mission statement and code of conduct. Because of the rich experience in manufacturing sports cars, the visual aspects of design visibly emphasize performance and speed, creating a distinct brand aesthetics Porsche is known for today.
Both the 1950s rise and the 1990 dilution of the brand were influenced by historical and social factors in Europe and the US. By the end of World War II, when Porsche resumed its activity, the European world was already familiar with the concept of a luxurious car, which created the necessary initial demand for a consumer-oriented expensive sports vehicle. By that time, Germany was among the world’s leaders in heavy industries and manufacture, which allowed the engineering talent and ambition of its founders to be fulfilled. Around the same time, other prominent high-profile brands emerged on the German market, pioneered by Mercedes-Benz. The fascination with rapidly developing science and technology and its manifestation on the consumer market also catered to the brand’s aesthetics, which prioritized quality, high performance, and technological innovation over visual emphasis on richness, such as interiors decorated with wooden panels and leather.
Simultaneously, in the United States, the low gas prices coupled with the historical necessity for a private vehicle (reinforced with aggressive policies of General Motors) created a unique set of conditions where the performance did not hamper the accessibility. This has led to a peculiar situation where powerful cars were recognized and sought for but could not be exported because of the poor adaptability to the European pricing environment. The European manufacturers, on the other hand, were able to satisfy the American requirements, which explains the brand’s orientation at the foreign market during the late fifties. Finally, the primary cultural condition responsible for the decline in the demand for luxurious cars was the growing environmental awareness coupled with the ongoing oil crises, which made the high-performance cars both more expensive to maintain and less attractive because of its environmental impact. Roughly at the same time, the first policies directed at decreasing ecological imprint were suggested, which further undermined the brand’s attractiveness and reputation.
Brand Building and Development Issues
As was previously mentioned, the initial market entry was performed after research and with a specific audience in mind. The target audience of the brand was what can be described as “the top guns” – people who value power and control. These individuals are attracted to the exclusive image of a winner created by the brand’s success on a racing track and maintained to this day (Zoeller par. 5). They also value the opportunity to be noticed by the peers, which can easily be achieved by the car’s unique exterior. The design of the Porsches, initially intended for improved aerodynamics, later became a mainstay of the company and is traceable in all models. Another initial target group termed “the elitists,” values reputation above the attributive value of the car. These two segments of the audience are largely common for the luxury cars market (Wiedmann and Hennigs 53).
However, Porsche soon discovered that the actual audience was wider than expected, mainly thanks to the relatively affordable pricing model. This led to the inclusion of two more segments: those oriented at performance and speed and attracted by the competitive capability of a sports car, but restricted by the budget (“the bon vivant”) and the those interested purely in the car without the intention to impress the peers (“the fantasists”) (Zoeller par. 5). Finally, over the years, as the brand gained a reputation of classics, the fifth segment emerged – those who consider the historical image of a car its primary value.
Traditionally, the brand was competing with other manufacturers of luxurious vehicles, such as Lamborghini, Bugatti, Rolls-Royce, and Ferrari. In this period, the advantage was primarily gained by relatively modest price tags. In comparison with other manufacturers of the elite segment, the average prices of Porsche cars were cheaper by 15 to 35 percent, the policy which is maintained to this day (although, admittedly, the current positioning of the brand does not allow considering it a luxury in the purest sense) (Wiedmann and Hennigs 114). Another competitive advantage was the quality of the produced vehicles, which can be illustrated by the fact that around 70% of all Porsche cars ever built are still operational (Rosengarten and Stuermer 12). With the change in trends that came in the nineties, a new competition emerged in the form of hybrids and electric cars. Currently, the technology of electric vehicles is inferior to its internal combustion counterpart in terms of performance.
This, however, means that the companies which manage to achieve results immediately garner attention and a reputation of highly technologically proficient. The high prices and low availability of such products also cater to the image of uniqueness and align with the perception of luxury. Finally, electric and hybrid cars are more environmentally friendly, which gives them an upper hand in light of recent social and cultural trends. To be able to compete under such conditions, Porsche launched the “Engineered for magic, every day” marketing campaign which reshaped the brand’s image. The campaign coincided with the launch of two new product lines, the SUV (a rapidly growing automotive market segment) and a sports coupe, both of which distanced themselves from the established sports car image. Overall, the campaign suggested accessibility of the brand for a non-luxury-oriented audience, and was a success, with reported 35% rise in the first year of its launch (Zoeller par. 7). However, the success is mostly attributable to the dilution of the luxurious image as a reaction to its overall loss of appeal.
Cultural Significance
During its height (the 1960s to 1980s) the impact of the brand’s image could be observed far beyond the intended audience. The outstanding characteristics of the cars produced by the company conveyed to the customers the meaning of power and technological superiority. The reputation was so strong that it created a sense of belonging to a certain community or getting access to a specific group eligible for benefits of using the cat. Many owners of Porsche, racing enthusiasts, and collectors mention the sense of connection which immediately establishes upon meeting another Porsche on track or in the street (Niver 46). Another key message often reported by the customers and visible in the company’s policies is putting the customer at the center of the company’s activities. As was mentioned earlier, the initially limited production rates coupled with the outstanding R&D department and resource base allowed Porsche to provide supreme care to its customer base. Upon recognizing the benefits of such an approach (and pressed by a growing customer base overseas), the company decided to invest in dedicated customer care and maintenance departments, which further improved loyalty and fostered a strong connection between the brand users. Even outside the customer base, the image of Porsche was recognized. A poster of 911, one of the most successful models, could easily be found on a wall of a typical American room belonging to a teenager (Niver 5). Over the years, a Porsche came to symbolize a lifestyle rather than a product. While not being extensively featured in media as a result of product placement technique, it nevertheless became associated with several celebrities. Janis Joplin’s custom-painted 356c, for example, came to symbolize freedom and to this day remains one of the best-remembered and recognized attributes of the era.
Similarly, the iconic yet ill-fated Dean’s “cursed” Porsche is firmly ingrained in the urban lore. Finally, several performers used Porsches in their art as a symbol of the American dream, such as Will Smith in his “Parent Just Don’t Understand” (Niver 72). However, as was detailed above, the brand’s image changed in the later years, with the most prominent turn after an “Engineered for magic, every day” campaign. Its focus was on the family-friendly orientation including, among other things, an image of a woman in a Porsche with a school bus in the background, which is a dramatic departure from the previous exclusive image. Other means were used to suggest the possibility of using it in everyday life rather than as an expensive accessory. Since the campaign was successful, it is possible to assume that currently the brand is associated mostly with quality and performance since it is unlikely to expect fascination with racing and high speed from the new target group-oriented towards family values. The SUVs which currently comprise a significant segment of the brand’s product line also convey the characteristics of sports cars but are distanced from the long-maintained image. Thus, considering the changes in the brand’s policies, as well as the fates of its competitors who displayed a reluctance to adapt to changing trends and eventually faced disastrous outcomes, we can expect further pursuit of the taken direction. Specifically, in ten years Porsche will likely still exploit its luxury image but at the same time further expand its scope to cover conventional audiences. Besides, we will probably see increase inaccessibility. In other words, the brand will further distance itself from the luxury segment.
Summary
The characteristics of Porsche allow us to define it as a luxury brand before the 1990s. Its products were high in demand, limited in availability, and were characterized by a high price tag. Importantly, the price was justified by high-quality standards, which is not necessary for a luxury segment (Wiedmann and Hennigs 81). It also conveyed a sense of privileged club membership, boosting the demand further. Its marketing strategies were directed at the exclusive audience with such attributes as wealth, power, and control, and appealed to those favoring performance over usability. Over time, however, the marketing changed priorities to resemble that of accessible products. Currently, it is actively involved in seeking a customer base and tries to cover a bigger audience, which dilutes the aura of a “private club” and emphasizes conventional use instead. Since the change is driven primarily by major social, economic, and cultural changes, the luxury management is unlikely to be adopted by Porsche in the future. On the contrary, the current conditions of the market necessitate further distancing from the luxury management and emphasizing accessibility and sustainability instead of exclusive power and performance.
Works Cited
Niver, Heather. Porsches, Milwaukee: Gareth Stevens Publishing, 2011. Print.
Porsche AG History. n.d. Web.
Rosengarten, Philipp, and Christoph Stuermer. Premium Power: The Secret of Success of Mercedes-Benz, BMW, Porsche and Audi, Victoria: Palgrave Macmillan, 2012. Print.
Wiedmann, Klaus-Peter, and Nadine Hennigs. Luxury Marketing: A Challenge for Theory and Practice, New York: Springer Science & Business Media, 2012. Print.
Zoeller, Stephen.How to Segment Your Target Market: Porsche Case Study. 2016. Web.