The study aims at understanding the Company’s position in relations to its competitors, as well as working to identify a firm’s core competencies and other competitively distinct company resources. Also analyze the profits the firm is generating from various product lines and customer accounts.
Also a study of competitive strategy to analyze the industry context in which the firm operates. These include Porter’s five forces, SWOT analysis, analysis of strategic groups of competitors and others. Depending on the industry, the regulatory context is also examined in detail.
In Competitor analysis, profiles of each competitor in the market, focusing especially on their relative competitive strengths and weaknesses using SWOT analysis is done using the benchmarking which also includes examining competitor’s Product differentiation, Present Sales, Future Sales, Marketing and Promotion Strategies, Technologies and other key factors.
Audi AG is a German manufacturer of automobiles marketed under the Audi brand. The company name is based on the surname of the founder August Horch, the name itself an English cognate with the English word “hark”, meaning listen – which, when translated into Latin, becomes Audi.(Wiki 2010)
The Audi Group – with the two brands Audi and Lamborghini – is one of the world’s most successful car manufacturers in the premium segment.
Sporty, sophisticated and progressive – the premium vehicles from the Audi brand
Customers are delighted by Audi’s technological innovations, pioneering, and design and build quality. The company’s main aim is to satisfy the customer by providing world class technology, designs, safety and comfort.
Sales of Audi vehicles by region
Share in percent
Europe without Germany
China (incl. Hong Kong)
Audi AG today
Volkswagen AG is the largest shareholder of Audi AG which holds over 99 percent of the share capital. (Viknesh 2006)
Audi’s saw a dramatic growth since 2000s, by delivering 653000 to 1003000 in 2008. The sales increase came globally specially 19.3% from Eastern Europe, 17.2% from Africa, 58.5% from Middle East with China coming into action in 2009 with a numerous increase to 108000 vehicles.
“Audi is a manufacturer of exquisite cars – beautiful, sophisticated machines that embody technological perfection. Our success is built on our core values of creativity, commitment and enthusiasm, and keeping our customers’ desires at the heart of everything we do. We strive to lead the way through constant innovation, setting new standards that define Vorsprung durch Technik.”(Anon, 2008)
Mission: “To delight customers worldwide”
This is company’s core strategy for the year 2020 and therefore mission statement:
“We delight customers worldwide.”
Audi defines the delight in terms of not only its customer’s innovativeness but also its emotional products which turn out to be highly efficient models providing an unmistakable experience that are particularly noted for the familiar attributes of sophistication and reliability.
Investor Relations Corporate strategy
Audi: the number one premium brand
Keeping in mind the future availability of the natural resources, Audi has kept in mind its future mission and vision of being a premium brand by actually reinforcing the emotional pull and continuing to delight the customers in long term. (Investor Relations 2010)
Present Financials Performance
Audi starts New Year with big results surge
Audi achieves a new sales record of 360,760 deliveries in the January to April period
First-quarter operating profit up more than 30 percent to â‚¬478 million
Audi has made a successful start to the 2010 fiscal year. The Ingolstadt-based carmaker sold 360,760 units in the first four months of the year – a new record for the Company making very good progress with full throttle. Audi also achieved a double digit growth in all of its sales regions all over the world in the first quarter of the year with unit sales up by 23.7% on comparative period last year. (Quarterly Report, 2010)
Future Plans for 2010
After being interrupted by the global crisis in recent years Audi is trying to get back to increase their deliveries by double along with the aim to increase to the operating profit more than that of the revenue and continuing to pursue its goal of becoming the most successful premium brand.
In addition to the efforts made to achieve the long-term goals Audi has planned 12 launchings which are very interesting for the customers which includes a mix of performance, luxury, environment friendly and hybrids
PESTEL framework for Audi
Scrappage scheme for cars 10 years older (United Kingdom)
A government funded voluntary scheme in which the cars older than 10 years could be traded for a new vehicle and a discount of £2000 is given on the new vehicle purchased.
Emissions target of 130gm/km CO2
All car manufacturers are required to meet an average of CO2 emissions of 130gm/km by 2015 across all their products as a standard.( Alan 2009)
Cost of oil likely to go up, which may in turn have an effect on consumer buying behaviour.
UK still trying to come out of recession, July- September 09 Economic Report shows a fall of 0.4% in GDP. (BBC News)
Lowest interest rates in years, 0.5% set by Bank of England, affects consumer savings since March 2009.(Bank of England)
Estimated UK population of 70 million by 2029.
Population shift to an increasing older generation.
People have a more active lifestyle, related to improved life expectancy.
Constantly Changing Environment
Turbo Technology – This impressive technology marks a departure from the noisy, thirsty diesel engines of the past. The TDI diesel engine delivers power, performance, low fuel consumption and reduced CO2 emissions. (Audi 2010)
Recuperation – While decelerating, the energy created is lost. Brake energy recuperation recycles this energy to lighten the load on your engine. It can reduce fuel consumption by up to 3% and CO2 emissions. (Audi 2010)
Aerodynamics – Aerodynamic performance plays a vital role in reducing fuel consumption. Streamlined for efficiency, the cars produce less air resistance, improved handling, better stability and lower CO2 emissions. (Audi 2010)
S-tronic – The revolutionary S-tronic transmission combines the agility and responsiveness of a manual gearbox with the convenience and smooth, uninterrupted power of an automatic. Fewer revs per minute and shorter gear changes mean greater fuel efficiency and lower CO2 emissions. (Audi 2010)
Strong Research and Development culture and facilities with high expenditure.
Lack of natural resources hence moved to hybrid cars.
Global shift to cut CO2 emissions, Kyoto Agreement to work towards reduce green House gases.
More Greener lifestyle now.
Health and safety, Euro NCAP safety test on all cars.
Road Tax brackets
Diverse ranges of Products – Audi and Lamborghini
Great Cash Flow Position
Increase turnover and trading profits
Sound Balance Sheet
Leading quality manufacturers
Abilities to turn resources into advantages
Audi boosted quality more than any other carmaker in the past five years, cutting defects by 60%
Perception of High Prices
Frequency of the interest of the customer may deteriorate
Pollution: A major issue for the environment
Knowledge of the purchaser with sophistication
Alternate products and technology
New products with better technology
Innovation & Alliances
Change of customers’ preference to cheap and comfortable cars
New horizons in Technologies
Old and New competition
Fluctuations in Price of Fuel
New rules and laws
Result of the oil crisis
Market shift to globalisation
Extremely high competition for customers and resources
Porter Five Forces Model
Porter explains that there are five forces inherent in a market, which will jointly determine the intensity of competition and profitability of Audi and the automobile industry.
The five forces analysis gives an improved understanding of the frequency of competition within the business area. The analysis shows that the industry is highly competitive, with buyers having a very powerful influence to the massive number of alternate brands available to them.
Bargaining Power of Customers
Looking at the current situation when UK is trying to get out of the recession and the economy is also becoming stable, the buying power of the individuals will also increase and thereof the consumers will also look upon the various alternatives available in the market along with good bargains. Therefore the buying power force is gradually getting stronger.
Bargaining Power of Suppliers
This force is strong for both Audi and the entire automobile industry which possess a massive amount of substitute suppliers therefore use the aggressive pricing strategy. This results in a very strong competition in the industry. This is a result of very lesser degree of differentiation in the product offered. Finally the threats from the suppliers power to bargain which is fairly very low in the automobile industry because of multiple sourcing strategies and use of alternative supply sources for the spares and parts.
Degree of Rivalry
The degree of rivalry is the main point of concern for the company now as all the major competitors (BMW, Mercedes) are doing all their possible bits in terms of new product development, advanced technology, better services and providing wider choices etc. to bring customers under their umbrella.
Threat of Substitutes
There are a number of models of many brands like Mercedes Benz, Jaguar and BMW which can result in a little threat but they don’t possess a great degree of threat as such because it depends on the relation of price-performance of the product. And an AUDI is a name for the people who love technology with luxury. Also changing to a substitute is possible if the substitution cost is low and that is not a valid factor here. Therefore a frequency of threats from the substitutes is low.
Threat of New Entrants
For the new entrants, the customer loyalty is a very important factor to be considered because it is very difficult to convince the customers in this era even if you possess a better than the best people’s product. But also the entry of the one who manufactures cheap cars does pose a significant threat. So, the frequency of the threat from new entrants is on a very lower scale.
Audi’s competitive advantage is in their engineering of building their engines. They are able to fetch maximum power out of the minimum resources along with great fuel efficiency.
“A V6 engine is available, but 9 out of 10 buyers choose the 211 horsepower turbocharged 2.0 liter 4-cylinder, and that’s the A4’s competitive advantage. The Audi is the only German luxury sedan available with a 4-pot motor. While a smaller engine may not be a traditional selling point for a sports sedan, the A4 pulls off the inconceivable combination of being the most fuel efficient and quickest entry-level model of the bunch.”(Anon, 2009)
Benchmarking is the process of comparing one’s business processes and performance metrics to industry bests and/or best practices from other industries. Dimensions typically measured are quality, time, and cost. Improvements from learning mean doing things better, faster, and cheaper.
Benchmarking involves management identifying the best firms in their industry, or any other industry where similar processes exist, and comparing the results and processes of those studied (the “targets”) to one’s own results and processes to learn how well the targets perform and, more importantly, how they do it.
Benchmarking allows organizations to develop plans on how to make improvements or adapt specific best practices, usually with the aim of increasing some aspect of performance. Benchmarking may be a one-off event, but is often treated as a continuous process in which organizations continually seek to improve their practices.(Anon 2008)
Sales between Audi, Mercedes and BMW in U.S markets
BMW sold 109,043 vehicle in North America may which was better than that of the previous but still lagged a 27% when compared to the last year.
The sales decrease of a -18.3% gave them a fair chance to stand better in the second half of the year.
Top Seller Position of Luxury Vehicles
May 2008 Numbers
BMW as a brand was down by 18.1% in May by selling 90,643 vehicles which further decreased to 20.9% to 408,370 vehicles.
In Germany, Mercedes-Benz increased sales by 11% and sold 25,600 with furthermore sales boosts on models such as A-class, B-class and C-class which in turn helped Mercedes-Benz in gaining western European Market Share namely Spain, France and UK.
Another sales boost of 59% was seen in China where Mercedes Benz grew fastest than to Brazil where it was 39% and Canada 17%.
Whereas Audi’s sales were down by just 6.1% from the previous results and 12.1 from January to May 2008 which was 426,194.
In Western Europe, the brand further reduced the gap to last year’s record result by giving just a -10.9% which was 52,650 vehicles in May. Also, they sold about 243,250 vehicles with a -14.6% which was 284,656 vehicles.
Despite generally shrinking markets, Audi was able to sell more vehicles Europe namely Italy with a 7.1% increase, Belgium with a 7.3%, Switzerland with a 7.6% which resulted in the brand’s premium market share by 3.9%.
Audi also increased their market share in US by 2% to attain 8.8% share in the High Import Group by posting a small decline of 12.1% to 7,503 vehicles.
In the Asia-Pacific region, Audi achieved strong growth of 24.1% by selling 15,650 vehicles which further went up by 5.4% more.
In China also sales in May rose by 27.8% in the consecutive month which was earlier up by 6.8% resulting in Audi confirming its position in the global market in the Australia and South Korea. (Global Sales 2009)
Audi’s Growth Strategy Outlined – Auto Shows
Intensive hard work in key metropolitan areas
Strong Dealer network – Increasing the number of successful dealers who can sell 2000 cars annually. With a strong dealer network, a capable organization, and with excellent products in the future, AUDI will grow. It has ambitious plans in terms of the product portfolio, and further more interesting launchings.(Stadler 2010)
Additional Capacity Plant Decision in view of US markets
BMW- Have a manufacturing plant in US
Mercedes- Have a manufacturing plant in US
Audi- planning to set up a plant in states but keeping everything in mind, the hedging effect in taking the engine and its parts from Europe to America and on the contrary taking a large number of manufactured parts from America to Europe and then paying a 10% tariff is of no use.
So, AUDI has to think strategically on this issue, not that it is taking its hands out but has to consider a lot many factor than one can image before setting up a plant in America, no wonder American has a large growing market and huge potential.
Identifying potential growth.
Recognising where our strengths lie
Make the best use of every opportunity.
Following a clear strategy
Intensive hard work in key metropolitan areas
Strong Dealer network
Excellent products in the future,
More product portfolio and launchings
premium price to our competitors
To offer customers the best value
To keep the incentives to a minimum,
To reduce incentives further” by focusing on attractive vehicles and customer service
Analysis of Growth Strategies
BMW is following a very straight growth strategy where they work in the direction where they have faith in themselves to do it best, they do the best of whatever they start, utilize all the resources possible which is their strengths without leaving their roots.
Audi follows a growth strategy by increasing their product portfolios, management capabilities, ambitious plans and distribution network so that they can cater to the larger markets as well as groups by increasing their dealer networks.
Mercedes has all the more different perspective on their growth strategy where they aim at being the most premium and luxurious brands out of the three and aim to sell cars at their own premium prices and focus on the consumer by providing incentives in the form of an extra-ordinary customer service which they think is their unique selling proposition.
Audi can do a blend of their competitors’ strategies and give their future an excellent shape because all the three companies have different approaches towards their future which makes them different from one another. By doing this AUDI can improve on a wide perspective be it their production, technology, distribution, management or their human resource or even the customer groups.
Forecasted Sales in 2020(based on CAGR)
Assuming the American market, a large market for the Bimmers and the Mercs remains bad and Audi continues to perform well since. Audi have fairly good chances to overpower Mercedes by 2010. Looking at the CAGR, its pretty sure that Audi will be selling more cars in 3-4 years if everything goes the way it is.
Looking at the previous figures it seems that Audi will pass on BMW as well by 2014, but practically speaking it should be around 2016 if it may happen.
In the year 2008, Audi had a luxury market share of 9 in the world which was achieved without any incentives when the competitors’ cars were resting in the lots.
It is one thing which the others are not doing or are not being able to do which is Innovation which started from Quattro to FSI to TDI, they have been very smart as to where to spend money intelligently in the racing and then bring them to the live world cars which would mark the growth of technology.
Sales in 2020(in CAGR)
Growing fluently with a CAGR of 4.1 percent for last 4 years.
Audi is even quicker to achieve this at the CAGR of 6.51% in the last 4 years
Its been a stand still for the Mercedes with (combined annual growth rate) of 1.4% in the last 4 years
Night Vision- Infrared Vision at night
Dynamic Stability Control(DSC)
Asymmetric/dynamic torque distribution
Recuperation- charging the batteries with the brake force energy
Audi Space Frame
TFSI engines were the first to combine petrol direct injection and turbo charging to provide greater power with reduced fuel consumption
DIS with Gear Shift technology
International standard ISO 14062 “Design for Environment”
Use of water-based paints with less than 10% solvent and the use of solar energy to heat industrial water
ECO start-stop function
F-Cell Hybrid Technology
Analysis of technology
BMW with a wide variety of technologies namely Efficient Dynamics, Hydrogen-7 work on the performance of the car in view of the environment with many useful cosmetic technologies that work in the interior of the car and its drivability with a very unique safety feature such as Infrared Vision at night.
Audi on the other hand works on its Quattro technology which makes the car the best thing to drive in any road condition with its complete traction, safety features such as an extra-ordinary Space Frame which is Audi trademark and tested in a wind tunnel at their testing research and development centre along with other technologies for making a fuel efficient vehicle keeping environment in mind.
Mercedes has made a little more effort than the AUDI or BMW by reaching the International Standards ISO-14062 for the design of environment by which they take care of all the products used in making their cars till the final disposal of them. Also working towards state of the art F-Cell Hybrid concept technology which can make a vehicle spit zero emissions.
Looking at a wide perspective, all the three major’s are doing their best to cope up to the changes in the environment and also provide more and more innovations whether its performance, safety driveability or joy. Keeping everything in mind they are laying their growth strategies.
Advertising with analysis
Advertising & Marketing
This article is an analysis of BMW’s current global promotional strategy which places huge emphasis on ‘Joy’.
For very many years, BMW branding centred on ‘Drive’, and the manufacturer proudly promoted itself as the ‘Ultimate Driving Machine.’
This tagline became synonymous with BMW, but in 2008 it began to shift its emphasis on to ‘Joy’.
“We are a car company, but we don’t just make cars. We, we make “joy” That’s the story we want to tell the World now.”
This Audi ad from across the pond stops short of dancing around and singing “Audis rule, BMWs drool”, but only just.
The reason for the gloating, so the ad says, is Audi’s run of three straight victories over BMW in comparison tests in American car magazine Car and Driver. We’d love it if there was something similar over here..
But what we really can’t wait for is BMW’s response – will it remain aloof and keep a dignified silence, or take the bait and slag Audi off in response.
Mercedes Benz understands that its customers are not simply buying a car to get from point A to point B, so before they actually sell a car they must first sell an idea about that car. Mercedes Benz sells their ideas through promotion and advertising. Mercedes Benz wants to change the perception of their brand at the personal level and reposition their brand so that they are more appealing to young professional men of all ethnicities. Secondly, Mercedes Benz is communicating to its target market the idea that they are a more approachable, personal, fun, and energetic brand.
Unique selling Proposition or Differentiation
.Unique Selling Proposition or Differentiation
BMW is able to distinguish its self from its competition because it is more then just a luxury car. It has met the demands of customers craving luxury while also offering versatility to customers.
An “Audi feeling” that communicates convenience and comfort to the driver. In view of the high quality claimed for Audi models, everything has to match: the shape of the door handles, the sound of the doors closing, the hand wheel for adjusting the back restraints, the indicator lever or the surface quality of the gear lever knob.
Mercedes Benz differentiation once centred on the safety, luxury, and precision engineering of its cars, but due to increase competition in the luxury car industry and changing consumer attitudes about the Mercedes Benz brand, that strategy has changed. Now their strategy is more life style oriented and is focused more on presenting the more fun loving, approachable, and energetic side of Mercedes Benz.
Cite This Work
To export a reference to this article please select a referencing style below: