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Mr.August Hoch originated a company named Horch and Co in 1899 and then he developed his first automobile in 1901. As he encountered management problem, he left his company in 1909 and created a new company called Audi afterward. The brand of Audi Automobile in 1910 was GmbH and Audi continue to produce cars until the First World War. In 1931, Auto Union was formed. Before Second World War, this union among manufacturers had prodigious success. Manufacturers had a new start in Ingolstadt, Germany after the war as a lot of military vehicles maintenance and spare parts were needed. Since Auto Union unable to generate massive profit, the company was closed in 1960 and coincidently permitted the rediscovery of Audi.
The vision of Audi Company is “Audi- the premium brand”. Audi Company emphasized its core brand Audi on the challenges of the future when adopting its strategy 2020. This strategy became firmer contour since Year 2011 because the mission of Audi Company “We delight customers worldwide” was explored deeper. Audi products are convincing in its brand values, sportiness, permissiveness and also superiority. The mission statement also plays an important role on the path to lead Audi to become the leading premium brand. Audi defined its customer delight in four areas of action which are, we define innovation, we live responsibility, we create experience, and we shape Audi. There are also four objectives of Audi Company which are continuous growth, superior financial growth, global image leader and attractive employer worldwide.
Generally, target market is defined by gender, age, social-economic grouping, geography or any other combination of demographics. Audi Company targets on upper middle class consumers which comprises of professional employees at the upper level of company ladder, celebrities and businessman. Besides that, most of the Audi products are designed to be high in velocity therefore Audi targets male rather than female as according to surveys, majority of the female will not purchase a automobile because of its high velocity but they are only focusing on the artistic design and comfort level that a vehicle can offer whereas for men, high velocity will be the main criteria. Moreover, male which have age ranging from 30 to 65 years old are more preferred because Audi, for now, are non-economical product, it is impossible for young men who are still fresh in the society to afford a luxury car.
Marketing Mix Strategies
Promotion is one of the key elements of marketing mix strategies that informing, persuading and influencing a consumer decision. The components of the promotion mix are personal selling, advertising, sales promotion, publicity and direct marketing.
Audi implemented a strong marketing strategy consisting of digital and television advertising in order to hit their target sales. According to the journal ‘Audi all-time sales record driven by strong digital advertising’, it stated that Audi’s TV advertising helping it top 100,000 vehicles sold in United States for the first time in 2010(Rachel Lamb, 2010). Besides that, another Audi strong initiative is its social media and digital strategy. For instance, Audi consistently updates its company news or products new feature through social networking sites such as Facebook and its own Web to make sure consumer can get the latest news instantly.
Direct marketing is a channel that allows business to communicate straight to the customer. As a major car manufacturer, Audi does not only focus on innovation but also tried to attract new customer. Audi targeted prospective buyers with a mailer which using Royal Mail’s Mailsort® 1400 service to deliver it. This mailer would deliver the new technological features that the new vehicle model had.
Sales promotion is one of the key elements in promotion strategy that offer incentives for buyer to purchase the selected items. However, Audi doesn’t do much sales promotion compare to other car companies such as Toyota, Nissan and Honda. The sales promotion of Audi company deals offered only happen at dealership level. They usually don’t rely on these kinds of promotions because Audi has already established their brand in the automobiles world.
Moreover, Audi utilizes personal selling techniques in their entire retail store. The salesperson in Audi retail stores are knowledgeable of the brand and should be trained to understand what their customers are looking for. Personal selling can be considered as an important source of marketing information. The salesperson should act as problem solvers and advisor for customer rather than using hard-selling strategy, it might help Audi to build a long-term relationship with customers. Besides that, Audi also sends representatives to retail
stores to keep sale associate up to date on their merchandise and the technology behind to give the consumer better feel of the product.
Marketers are concern on the pricing strategy with the objectives to be competitive and to raise profit as well as return on investment. Setting the right price is vital to trigger the company’s impressions towards the potential customers.
Audi as a luxurious brand with prestige brand image hires premium pricing as one of its pricing strategies. The price of a product will affect customers’ perceptions towards its quality. Customers often associate prestige with high prices because it is common that high quality raw materials and components are never cheap. Therefore it is reasonable for Audi to position its brand through premium pricing. According to Bojan IliÄ‡ and Vesna MiliÄ‡eviÄ‡, the business history of a number of enterprises proved that reducing in price for certain prestige products brought negative effect on sales. In fact, Audi automobiles, the quality leader, are always for society of at least upper-middle class. Below is a diagram regarding price-quality strategies.
Besides, like other automobile companies, Audi also uses optional product pricing. All companies will not hesitate to increase the amount customers spend once they start purchasing, so do Audi. There are optional or ‘extra’ products or equipment for customers to add on to their automobiles. For instance, customers can choose to equip their vehicles with pearl colour effect with an additional charge of RM4,000 or the normal one. Other
optional equipments that Audi offers are Bang & Olufsen sound system, electronically opening & closing tailgate, panaromic glass roof and MMI navigation system with reverse camera.
Another pricing strategy that Audi employs is geographical pricing strategy. This pricing strategy is quite useful as there are variations in prices in different parts of the world. A very good example is that Audi vehicles are cheaper in Langkawi Island than in Peninsular Malaysia. This strategy may not seem fair for areas which pay higher price but Audi makes professional pricing decision based on the distance and economic situation of the those areas to avoid negative impact on the demand of its products.
Product strategy includes tangible and intangible elements. Tangible products are things that we can see, touch, and feel whereas intangible products comprise things such as the image of the offering and the psychological aspects of pricing. For instance, customer will form a perception that expensive goods are usually high quality products.
As known worldwide, Audi produces different types and classes of luxury cars to suit the taste and preference of the demanding customers. Automobile that Audi offer ranges from normal family suite sedan car to throttling speed sports cars. However, the technology use in building each automobile is similar which fulfill two of the product strategy criteria- product features and product quality. The body frames of the cars that Audi produces are fully galvanized to prevent corrosion and rusting. Additionally, the full-body zinc coating has proved to be very effective in preventing rust.
Moreover, the body’s resulting durability even surpassed Audi’s own expectations, causing the manufacturer to extend its original 10-year warranty against corrosion perforation to currently 12 years and this factor has form a perception for the customer that Audi automobiles are superior in quality and cars made to last. Besides body frame, even the space frame and engine, all are building using high quality materials. Furthermore, the design and layout of the automobile are attractive and unique. Audi refused to adopt the traditional rear-wheel drive layout favored by its two arch rivals Mercedes-Benz and BMW, preferring either front-wheel drive or all-wheel drive.
Besides, Audi also have a deep length of product line. Audi Company target both upper class and middle class customers by producing normal sedan cars to sports cars and even MPV cars. The models are classified into normal Audi cars, Audi coupés and SUVs, S (Sport) and RS (RennSport/Racing) models. With each of these category lines, Audi came out various models with different design and specification so that it can further penetrate the market of automobiles. Additionally, Audi also apply branding strategy where the brand of Audi symbolizes the four overlapping rings. The four rings represent the four labels of Auto Union: Audi, DKW, Horch, and Wanderer.
Under marketing mix strategy, place actually is refer to distribution of the product. This means that all aspects which related to how goods and services are “transfer” from the producer to the end consumer. This also indicates that how is the coordination of wholesalers or retailers involved in moving those products from head office, factory or warehouse, to the end consumer.
Audi sites comprise the two German plants in the worldwide network, which are in Ingolstadt and Neckarsulm. There are seven production facilities which are in China, Hungary, India, Indonesia, Slovakia, Spain and Belgium. The channels using by Audi is from producer to distributor to wholesaler to dealer and to customer.
Euromobil Sdn Bhd is one of the distributors for Audi who buys large quantities of Audi cars from manufacturer and then creates smaller units and delivers the cars to their customer. It opened a state-of-the-art Audi Hangar which cost around RM30 million to provide as a one-stop centre for Audi customers. With well-equipped work bays, Euromobil intend to provide a complete services support and convenience to Audi customers. Audi also expanded its distribution network by opening a brand new showroom in the financial capital which located in Mumbai.
Car dealers are important in promoting and selling their products. A dealer network and team understand what a brand, product, enterprise, competition and consumers really mean is the key to Audi’s success in marketing. Audi City London is an innovative dealership experience delivered by one of the most advanced technology retail environment.
This digital environment features multi-touch display help configuring Audi vehicle from millions of possible combinations. This will help people place greater emphasis on a direct personal bond of trust with their vehicle brand.
In addition, Audi are very convenience to access, there are sold in specialized outlets, shopping mall and also major department stores. For example, there was an Audi Display zone from 31 August to 2 September 2012 at Orion Mall, Malleswaram. Therefore, people will easily get the latest information about Audi and can easily get them.
Audi was known as one of the top automobile producer in the world for its sports series cars and also normal sedans which are the dream cars of almost all car owners. By just relying on the current market will not be sufficient for the rapidly changing customer preferences but to come up with new innovative ideas to maintain and expand its market opportunities. We discovered a way that Audi Company might find it useful way in grabbing its market opportunity by modifying its cars especially the S (sports) and RS (RennSport/Racing) models to strengthen the image of the company by building fantastic sports series cars that no one ever built.
To be outstanding, Audi must produce car which beyond what everyone is doing which is having a jet powered engine with the complement of rocket building material which are able to withstand intensive heat and even can absorb large impact during collision, and the last one will be the fuelling system will be 100% eco-friendly and economical. The first step is to use a jet engine instead of the normal valve engine to be empowered its car. By applying the jet powered engine inside our sports cars which approximately will reach a speed of 450mph, it will replace Bugatti Veyron to be the fastest sports car in the world and let’s name it as Audi TurBoo. It is a limited edition product.
Although Audi TurBoo is such a high velocity sports car it still can withstand a large impact when collide with object. To complement its high velocity, Audi company should joint venture with one of the rocket building company that supply rocket and rocket spare parts to NASA- Rockwell International company, by having their supply on building material, technology and labor power (expertise) they can build the car chesses using titanium and aluminum to help keep the car weight down which contributes to faster velocity and higher resistance against any impact. Furthermore, the car body will be build using the same material but in the middle of the two pieces of metal it contains the Reinforced carbon-carbon (RCC) and thermal tiles which are the components that provide for the most heat protection for a during breaking through our atmosphere and out to space, these material are used where reentry temperature exceeds 1,260 °C (2,300 °F).
For the last thing that customer ever considers about is the fueling system. The fuel is cheaper than the price of a liter of petrol can cost. First of all, for the fuel part, the cars are going to run on liquid hydrogen and oxygen, Hydrogen, a light and extremely powerful
propellant it has the lowest molecular weight of any known substance and burns with extreme intensity (5,500°F). In combination with an oxidizer such as liquid oxygen, liquid hydrogen yields the highest specific impulse, or efficiency in relation to the amount of propellant consumed, of any known propellant and yet they also are storable, transportable, reliable, less complex and the most important thing is it just 98cents per gallon.
Other than modifying a sports car, Audi should form a subsidiary company to target younger middle market which is the majority population. The subsidiary company adopts operation of the parents company and is under the supervision of Audi. We suggest that the name of the new subsidiary company to be JIMT, this name is created based on the initial of four founders of the new subsidiary company and it is easy to be pronounced and remembered.
JIMT Atom is a mini sized economical car produce under Audi Company which target at young and upper-middle class buyers. The small but perfectly formed JIMT Atom takes the small luxury car spoils for comfortable compare to other mini sized car. On the move, it makes consumer feels as solid and composed as Audi’s bigger and more expensive models vehicle, while the petrol and diesel engine delivers a strong blend of performance and economy. As despite its premium image, Audi would not cost a fortune to run this project. An attractively priced, low tax bills, rock-solid resale values and pre-paid servicing package help Audi keep running costs to a minimum level.
Besides, standard feature of JIMT Atom include LED interior lighting package, Xenon plus headlamps, light and rain sensor as well as automatic air conditioning. The LED interior lighting provides several alternatives of lighting for the interior of JIMT Atom. Furthermore, Xenon plus headlamps use less energy consumption and last longer than standard dipped lights. The light, rain and air condition sensor is an optional feature in which headlights, wiper and air condition function automatically according to the weather.
Among the advantages of owning a small car like JIMT Atom is fuel saving because it consumes lesser fuel and energy without affecting the performance standard. As many people emphasize on maneuverability of vehicles, small cars are easier to control and are much easier to park in crowded parking spaces. Moreover, JIMT Atom is able to pick up speed more quickly than other heavier vehicles.
To implement the market opportunities that mentioned above, Audi Company is suggested to hire world famous celebrity to be the spokesperson of their developed products. Celebrities not only bring enormous impact toward their adorers but also influence the public’s purchasing behaviour. The reason behind this phenomena is because public has the psychological perception that a product is of superior quality with the renowned spokesperson. This also indirectly promotes the new innovated products through the spokesperson’s popularity.
For instance, we suggest Audi Company to hire a young pop star such as Girls Generation, Justin Bieber and Hyuna to advertise JIMT Atom. JIMT Company will sponsor JIMT Atom to the contracted spokesperson for the usage in his/her concert, movie or music video. By this way, the rate of exposure of JIMT Atom will be higher rather than displaying in the traditional showroom. Therefore, the chain effect of hiring young pop star is increase in sales by obtaining support from younger generation as they would like to imitate their idol’s trend. Moreover, increasing rate of exposure leads to strong brand position and preference which caused JIMT Atom to become the first brand choice whenever the public think of buying a vehicle.
As for Audi TurBoo, we would like to recommend Audi Company to hire a famous racer such as Michael Schumacher and sponsor him a brand new Audi TurBoo for racing competition. With his professional skills and techniques, we are pretty sure that this sports car best suited him as he has the capability to bring out the innate qualities of Audi TurBoo. Thus, the strengths of this product are explicitly revealed and intensely impress the public. Hence, public confidence towards Audi Company will be greatly boosted making the reliability of Audi’s product to be increase undoubtedly.
In order to obtain higher profit, we propose Audi Company to organize a tour which permits Audi’s loyal customer to have a visit at Audi’s manufacturing department with the main objective to deliver the information about Audi’s high credibility and guaranteed product quality. Potential customers will have the opportunity to recognize the utmost effort of Audi’s management before a product is being commercialized to the market. Paying a visit to the manufacturing department also allows the visitors to witness the conscientiousness of Audi’s workers in accomplishing their tasks. In return, loyal supporters will definitely
transform as advocators and circulate the good name of Audi to the people whom they associate.
Since buying a vehicle is a high involvement purchasing decision, inviting potential customers for a tour to the manufacturing department, in fact, is helping them to collect as much information as possible which they absolutely need in making a purchasing decision. By comparing the information gathered, customers can easily differentiate the merits of JIMT Atom or Audi TurBoo with other similar products such as Mini Cooper Coupe, Volkswagen Beetle, BMW Z4 coupe and Lamborghini Gallardo. As for the welfare of potential customers, this may assist them in making a right investment decision as well as improve customer satisfaction.
As mentioned, Audi TurBoo is a limited edition product in which its core purpose is to enhance the brand image rather than gain profit because of its high technological product which signifies a logo of success. Although Audi TurBoo is unaffordable for majority, producing Audi TurBoo will not cause a penny loss to the company but instead the up surged brand image boost up the sales of other products of Audi, a few example, JIMT Atom, Audi R8 and Audi A6. Audi TurBoo symbolizes the highest achievement of prestige automobile industry, resulting Audi Company as the quality leader and placing Audi in the most competitive position in continuous motion. In a nutshell, we strongly recommend Audi to set up subsidiary company- GIMT and produce GIMT Atom under the umbrella of Audi and implement the concept of Audi TurBoo into practice to enhance the sales of all ranges of Audi products.
In summary, Audi Company fully utilized the 4Ps marketing mix strategies to produce their products with its luxurious, exclusive capability to display style and comfort together to improve customers’ satisfaction and attract new customers. Audi keep tracks with the needs and wants of the people and designs its cars to meet the requirements of the people to gain sales for its company. Moreover, Audi has shown its significant progress in the field of technological innovations and superiority as it puts a lot of attentiveness and effort to success in automobile industry. The Audi Company also employed workers who are dedicated and hardworking and those workers really formed Audi excellently with their innovative, creative and class-apart design.
From this assignment, we can understand and gain more knowledge about 4Ps marketing mix strategies. Besides that, we also know that how important marketing strategy and marketing mix for a company to success in the market and also the way how company can use marketing mix effectively to sustain competitively in the market. Through this assignment, we also know that creativity and innovative in developing new products is very important to gain competitive advantages among its competitors.
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