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PORSCHE: THE CAYENNE LAUNCH CASE STUDY

September 30, 2012 Word count: 1200

2 Table of Contents Meaning of the Cayenne ................................................................................................................. 3 Rennlist and Its Impact ................................................................................................................... 4 Conclusion ...................................................................................................................................... 6 Bibliography ................................................................................................................................... 8

3 Introduction This paper will focus on two main issues that surround the launch of Porsche Cayenne. The first issue is connected with the meaning of the new Cayenne to Porsche in terms of its image and consumers comprehension of the brand at the market. The second issue is connected with Porsche consumers and their influence on the companys development. Namely, it will be discussed how the brand community relates to the launch of new Porsche products and what are the implications of this for the company. Meaning of the Cayenne The launch of the Cayenne marked a new chapter in the history of Porsche brand. The new SUV was too different from other Porsche cars in many ways and it had completely different concept. The initial idea was that Cayenne will represent a new car, which will be a Porsche car, but will also have other features, which were previously unavailable.1 In reality it turned out that Cayenne became more than simply one more Porsche car with new characteristics. It became a car, which modified the comprehension of Porsche brand in general. Before the Cayenne launch Porsche brand produced and, therefore, was associated with sport racing cars. Porsche cars were traditionally constructed in a way that would make them as much fast and maneuvering as possible.2 Traditional Porsche car would be a speedy two-seater with lots of features that are integral to sport racing car but would not be used by an ordinary driver. The idea of Cayenne was really innovative in comparison with other cars from Porsche family. It was planned to acquire an off-road driving capability, more space to become a family car or a car for active lifestyle generally and keep high performance and design of classic
Kimberly D. Elsbach, Organizational Perception Management (New Jersey: Routledge, 2006), 130. Charles Lamb, Joseph Hair, and Carl McDaniel, Essentials of Marketing (Mason: South Western Cengage Learning, 2009), 473.
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4 Porsche cars at the same time. It should be noticed that new Porsche consumers, who would buy Cayenne when it was introduced, valued all these features. This, however, did not happen to old Porsche consumers. They did not share views of the companys management and considered the new product to be everything but not the true car belonging to Porsche family. This was the point where the meaning of the Porsche brand was changed. From this perspective it can be even concluded that the meaning of the Porsche brand was changed by its consumers, not by a company itself. Rennlist and Its Impact The Rennlist online brand community, like any other consumer community, has its advantages and disadvantages. From the buyer perspective, the existence of strong online community represents an additional value. In fact, after buying the Porsche car you receive the admission to the club of Porsche owners, who can help you with piece of advice, while you can reap the benefits of fraternity. However, if for some reason, the car that you prefer is not to liking of the community members, you will feel the disapproval and even aggression from their side. This means that such communities have the positive impact on new customers only in case if the company is not changing their brand strategy, product line etc.3 Every brand community is conservative in its nature. Simply put, people like the certain brand image, and dislike any change that occur with it. From this perspective, the existence of such communities will hamper companys attempts to slightly broaden the marketing focus by introducing new products. Since any successful company needs to implement changes and innovate in order to remain successful, the conflict is inevitable. The newly introduced product

Frank Gnnemann, The effectiveness of product placement for the automobile industry and its impact on consumer behavior: A cross-cultural perspective (Master thesis, GRIN Verlag, 2008).

5 needs to be successful in order to attract new customers who will form their new communities and silence the disapproval buzz. The majority of Rennlist brand community members represent a typical ultra-loyal group of consumers who are very sensitive to any changes of brand strategy. Certainly, taking into account the opinion of such consumer groups is reasonable. However, the primary concern of the company and the primary concern of these customers are slightly different. Company tries to maximize profit, while these customers are trying to keep receiving the same product with the same image. Therefore, when designing the brand strategy, the company management should acknowledge many other factors that are more important than the desire of ultra-loyal conservative consumers, which even do not constitute the vast majority of the consumer base. Consequently, if Wiedeking listened to the Rennlist brand community, the company would very unlikely increase its revenue with the help of Cayenne. The latter has become one of the main profits generating model in the Porsche family.4 In this situation, the conflict with conservative group of consumers was basically unavoidable. When the brand image changes such dramatically there will be always group of conservative consumers who will be dissatisfied with any changes. This noise will pass only with time, the amount of which depends on the successfulness of the changes introduced. Therefore, Wiedeking has successfully bet on the customer base expanding. Cayenne owners will find Rennlist reaction very aggressive and will probably form their own communication groups. The lack of respect from the Rennlist brand community towards new Cayenne owners shows the unsustainable nature of such consumer communities and their negative influence on new developments. Will such attitude stop people from buying Cayenne?

John Deighton, Jill Avery, and Jeffrey Fear, Porsche: The Cayenne Launch (Case, Harvard Business School, 2011): 8.

6 Very unlikely, it will just make new Cayenne owners avoid communication with this conservative group. When a company considers a launch of a new product or brand, it is important to take into account a range of factors and conduct a thorough research beforehand. As Luan and Sudhir suggest, forecasting responsiveness to various levels of marketing-mix variables is one of the essential tools to determine effectiveness of a new product.5 The challenge accompanying a new product is that the actual sales data that can be analyzed do not exist. This challenge is even more complicated and vivid in case of Cayenne launch. It shows that it is important to consider both the responsiveness from the new customers and old customers in relation to a new product. Another important issue is the choice of strategy, which a company is going to apply at the market. A research conducted by Bryce and Dyer suggest that there are three most successful strategies for entering existing markets with new products. Moreover, they point out that the most effective approach would include the combination of at least two of these strategies.6 One of the described strategies, which is also relevant to the Cayenne case, implies cooperation with a partner in order to reduce entry barriers. At the same time there is one more strategy, which aims at adding new features to a product, so it can attract new customers to its segment and distinguish itself from already existing products at the same time. Thus, stemming from the initial Cayenne launch, i.e. cooperation with Volkswagen and general idea of the CUV, which would combine sport and utility, it can be concluded that Cayenne launch combined both of these strategies. Conclusion Therefore, the launch of Porsche Cayenne has become indeed a contradictory and complicated issue. On the one hand, it opened a new market for the brand and attracted many
5 Jackie Luan and K. Sudhir, Forecasting Marketing-Mix Responsiveness for New Products, Journal of Marketing Research XLVII (2010): 454. 6 David Bryce and Jeffrey Dyer, Strategies to crack well-guarded markets, Harvard Business Review (2007): 87.

7 new consumers. On the other hand, it disappointed already existing Porsche consumers and weakened a brand in front of its traditional competitors.

8 Bibliography Bryce, David, and Jeffrey Dyer, Strategies to crack well-guarded markets, Harvard Business Review (2007): 84-92. Deighton, John, Jill Avery, and Jeffrey Fear, Porsche: The Cayenne Launch. Case, Harvard Business School, 2011. Elsbach, Kimberly. Organizational Perception Management. New Jersey: Routledge, 2006. Gnnemann, Frank, The effectiveness of product placement for the automobile industry and its impact on consumer behavior: A cross-cultural perspective. Master thesis, GRIN Verlag, 2008. Lamb, Charles, Joseph Hair, and Carl McDaniel. Essentials of Marketing. Mason: South Western Cengage Learning, 2009. Luan, Jackie and K. Sudhir, Forecasting Marketing-Mix Responsiveness for New Products, Journal of Marketing Research XLVII (2010): 447-457.