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Porsche Company’s Business Environment Case Study


Introduction

Porsche, a German-based automotive car manufacturer, began its operations in 1948 when it first produced its flagship model, the Porsche 356. The company focused on designing high-end sports cars, with the designs varying slightly over the years. However, in 2003, Porsche decided to diversify its products by launching a sports utility vehicle, the Cayenne. Consequently, the decision to position the new brand, while protecting the company’s parent brand, became a challenge. Predicting the extent to which the Cayenne would change Porsche’s image brand and identity posed significant challenges. This paper focuses on the role of customer opinion in deciphering Porsches brand and meaning.

Effects of Consumers’ opinion on Porsche’s Brand Equity

Porsche’s new Cayenne was set to face significant competition in an already crowded SUV market. Categories ranging from high-end Range Rovers to small jeeps, and light trucks characterized the SUV market. The introduction of the Cayenne was, therefore, expected to brood a class of consumers that only wanted to identify with the Porsche brand without appreciating the real heritage of Porsche as a sports car.

Porsche’s annual forecast of 20,000 SUV units annually already felt threatened by the move by other motor companies like Infinity, Lexus, BMW, Audi,and Cadillac, which were looking into developing luxury SUVs as well. The company planned to outdo the market by producing a faster and more comfortable SUV that sports car lovers would like. Its competitors were producing practical vehicles, which were mainly meant for off-roadpurposes (Mulligan 43).

Cultural critics took center stage in criticizing SUV’s in 1997, with Keith Bradsher, a renowned New York Times reporter, spending four years writing scathing critiques of SUVs. This led to a cold reception of SUVs globally. Bradsher questioned the safety of The SUVs, adding that they significantly contributed to global warming. He further presented SUV buyers as insecure and vain, as well as deficient in driving skills. Further claims were that SUV owners bought them for their functionality, despite the fact that most of them did not actually need the vehicles(Deighton et al. 5). Consumers began to question the long-term efficiency of SUVs with many opting for smaller, energy efficient cars.

Consequently, hostility towards the launch of Cayenne was intense in online forums such as the Rennlist. The critics sent posts portraying Porsche as an ego-expressive brand and a masculine identity marker. Rennlist was significantly used to vent displeasure to Porsche’s diversification in design, engineering and marketing decisions, with some Porsche owners indicating that they were leaving for rival companies like Maserati and Ferrari. Porsche’s brand equity suffered significantly, but the company was resilient and it continued producing more models.

Why Consumers’ Voice Matters

Honest consumer opinion and criticism are an important element of the performance of any company because it helps the manufacturers focus areas that need improvements to foster efficiency in future production processes. However, some of the opinions are dishonest and destructive, which can adversely affect the market value of the associated brands. The Cayenne debate was characterized by the presence of many consumers who did not have the appreciation for the model’s features and performance. Consumers felt that Porsche had failed as a brand by venturing into the SUV market because it had already established itself as a sports car manufacturing company (Mulligan 87).

Ultimately, Porsches resolve to effect changes in its production outweighed the consumers’ voice mainly because it hindered its future goals and projections. Based on the negative response witnessed by Porsche in sales, it is apparent that consumers’ voice matters in business.

Balancing the control of the brand and customer opinions

Branding is about manufacturing unique products that customers can identify with, while carving out new niches in search of new customer bases. Brand control is one way that companies keep up with the constantly changing markets. Porsche had identified a growing demand for the production of SUVs as revealed by the fact that most of its rival companies were planning to roll out SUV models(Jacobs 104). While the move was not received well by Porsche enthusiasts, the company was headed in the right direction, based on the prevailing market trends.

Since branding entails producing new series by enhancing performance and introducing new features that were previously not available, the only way that Porsche would have satisfied both the current enthusiasts and potential customers was by maintaining high quality and performance in the Cayenne. Sales were initially low, but the Cayenne would later capture a substantial market share. Half of Porsches profits came from its sales, lighting the fact that the Cayenne was not a failure after all. This experience is a revelation that companies need to balance brand control and customer opinions.

Conclusion

The business environment in the modern world requires companies to find new market niches for competitive. Porsche’s case brings out the need for companies to strive to keep their production going by finding new niches without compromising brand quality. While building the cayenne seemed like a mistake initially, the SUV was eventually a success. The senior management shrugged off negative criticism and planned to launch a new model; the Porsche Panamera. It is, therefore,clear that companies can still emerge successful by focusing on brand control more than customer’s opinions.

Works Cited

Deighton, John et al. “Porsche: The Cayenne launch.”Harvard Business School. 2012, pp. 1–23.

Jacobs, A. J. “Passenger Car Plants Before and After the Former East Germany.” Automotive FDI in Emerging Europe. Palgrave Macmillan, London, 2017, pp. 103-146.

Mulligan, Simon. Porsche. PowerKids Press, 2013.

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