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ASSIGNMENT

MARKETING STRATEGY

CASE 1-1

AUDI

BENNY YUMNAM
Roll No. B064
PTMBA
Trim-VI

Questions:
1. Describe and evaluate Audis Brand building initiatives.
2. How important are quality gain in Audi in closing the revenue gap with BMW
and Mercedes.
3. State the role of SUV models in Audis competitive strategy
4. State the strength and weakness of Audis financial performance.
Q1. Describe and evaluate Audis Brand building initiatives.
Ans:
Audi is one of the largest German companies that deals with manufacturing, designing,
marketing & distribution of automobiles. As per the case, Audi has some problems areas and
to overcome these problems certain initiative were taken up. Some of them are listed below:
a) Outdated sales and marketing network
b) Buggy electronic system
c) Sales were not outside Europe
d) New models were required to match the depth of BMW & Mercedes offerings
e) Audi needed to match the revenue and profit horsepower of Mercedes and BMW
f) Less profits due to fewer expensive models in the market compared to BMW &
Mercedes
To counter the above problems,
1. Audi boosted its visibility in U.S. Of Audis 263 dealerships, 127 share floor space
with other brands.
2. To expand the sales and marketing network, it had a premium-car market in China
with 65% share.
3. Winterkorn cancelled a dealership sharing agreement with Toyota and set up a
network of 100 exclusive dealerships.
4. Its also planning to spend $130 million on building a dealer network in Russia over
the next 5 years.
5. New models with 4 wheel drive systems were introduced.
6. The auto makers navigation and information system wins high marks as user friendly
and intuitive. Audi has been considered as the iPod of cars.
7. It even came with a 610 hp engine sports car that can accelerate from 0 to 60 mph in
just 3.7 seconds.
8. It unveiled a bold, more sculptured look for A6 and A8 sedans with deep front grille
giving Audi an edgier look, which hit the market. This was achieved by hiring Italian
designer.
All of this initiatives gave some good results:
1. Audi was ranked 1 by Auto Moto & Sport
2. AutoWeek voted Audis A6 sedan as Car of the Year
3. Audi was ranked 11th out of 37 in quality in J.D power
4. Profit were soaring ( details in next question)

Q2. How important are quality gain in Audi in closing the revenue gap with
BMW and Mercedes.
Ans:
Due to the improvement in quality of the automobiles of Audi, their revenue per
vehicle went up from $25,125 to $41,389 in 1994.
Sales have nearly tripled to more than $32 billion in the same period.
The share price soared to $347 from $79 in 2000.
During the late 90s, Audi had introduced new models in their collection.
From Audi TT sports roadster, which polished Audis image as design leader, to A4s
powerful four-cylinder motor created new generation of popular Audis in those times.
Again the profit rose from 7.4% to hit a record of $1.15 billion in 2004.
It was during this year that new models were launched in Europe. This model includes
A6 sedan, redesigned A4 sedan and the A3 hatchback.
The sales in Europe nearly matched BMWs sales previous year, with 559,428
vehicles to BMWs 579,632.
It even outsold Mercedes and BMW models with comparable engines.
It was in 2004 that Audis ranking improved too. As per J.D Powers in 2004, Audi
moved up three places to rank 11th out of 37 auto brands, one place above BMW and
one notch below Mercedes.

Q3. State the role of SUV models in Audis competitive strategy


Ans:
The no. of models Audi were offering to the customer were less compared to BMW and
Mercedes. In fact, Audi dint have SUV in their collection till 2004. SUV was one the models
which Audi dint have. BMW and Mercedes already had SUV in their collection by then.
It was only in 2006 that Audi launched its first SUV, the Q7, which cost roughly $40,000 hit
European showrooms in early 2006, followed by a baby SUV, the Q5, one year later. This
launch was much awaited by consumers and this gave Audi the momentum to grow.

Q4. State the strength and weakness of Audis financial performance.


Ans:
Financial Performance:
Info Description
Revenue per vehicle $25,125 to $41,389 in 1994.
Sales Tripled from $7,79,000 cars to $32 billion
The sales in Europe nearly matched BMWs sales previous
year, with 559,428 vehicles to BMWs 579,632.
Share price The share price soared to $347 from $79 in 2000.
Profit Profit rose from 7.4% to hit a record of $1.15 billion in 2004.

Some of their strengths are:


Investment of over $15 billion out of 80% will be on new products
Audi to boost its visibility in U.S. and upgrade its dealerships.
Cost cutting by wholesale part sharing between Audi and VW.
Audis valued at $14billion 80% of VW group
Lightweight aluminium frames, drive systems, engine performance to give Audi a
richer interior feel.
More intelligent design my imbedding navigation & information system
Stand out design by Italian designer

Some of their weaknesses are:


Struggling VW shaves capital expenditure, crimping Audis investment.
Heavy investment in marketing & distribution outside Europe
Weak dollar & shaky U.S. dealer network, narrow line up with no sport utility
vehicles
No SUV till 2006
Fear of trend losing by the time delivery of SUV happens
Fear of sudden acceleration

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