Audi Brand Strategy Evaluation

FROM
LUXURY
TO
PRESTIGE
A BRAND
INVENTORY OF

T E A M
1 1 :
C H R Y S T A L
C A I N
S H I A R L A
&
M Y U R A N
K A N G A

U N I V E R S I T Y
O F
F L O R I D A ,
I M B A F 1 4 I 2

The Brand Heritage of Audi
Audi’s
brand
was
founded
in
1932
as
a
result
of
a
merger
between
Audi,
Horch,
and
DKW

initiated
by
the
State
Bank
of
Saxony
to
form
Auto
Union
AG.
During
this
time,
a
purchase

and
leasing
agreement
was
completed
to
take
over
Wanderer’s
Automobile
Division.

Today’s
Audi
emblem
consists
of
four
rings.
These
rings
represent
the
inseparable
unity
of

the
founding
companies:
Horch
founded
in
1899,
Audi
founded
in
1909,
Wanderer
founded

in
1885,
and
DKW
in
1904.

Following
World
War
II,
Auto
Union
AG
was
expropriated
by
occupying
Soviet
forces.
A

new
company
was
founded
in
Ingolstadt
in
1949
under
the
name
Auto
Union
GmbH,

upholding
the
four-‐ring
emblem
tradition.
The
new
company
soon
moved
to
discontinue
all

two-‐stroke
engines,
essentially
ridding
Auto
Union
GmbH
of
all
DKW’s.
Post-‐World
War
II,

Auto
Union
AG
introduced
its
new
model
with
a
four-‐stroke
engine
in
1965.
With
the

demise
of
DKW
and
a
new
model
being
born,
Auto
Union
GmbH
felt
the
need
to
give
the

company
a
new
name.
Thus,
“Audi”,
Latin
for
“Hark!”
or
“Listen!,”
was
resurrected.

In
1969,
Audi
merged
with
NSU,
a
company
that
focused
on
knitting
machines
in
its
early

years
and
later
bicycles.
The
new
company
was
named
Audi
NSU
Auto
Union
AG.
Audi
only

manufactured
NSU
products
for
8
years
before
moving
to
manufacture
solely
Audi
vehicles.

With
a
shift
in
their
manufacturing,
the
company
sought
to
simplify
its
name.
The

company’s
name
changed
to
Audi
AG,
although
Audi
maintains
Auto
Union
GmbH
and
NSU

GmbH
as
subsidiaries
to
uphold
their
rich
tradition
and
history.1

1

Daniels,
Matt,
“A
Brief
History
of
the
Four
Rings,”
Audi
AG,
Accessed:
May
22,
2014,

http://www.audiworld.com/news/00/audihistory/content.shtml.

The Brand Positioning & Competition of Audi
Audi
is
ranked
3rd
in
overall
luxury
car
market
share.
Audi
is
3rd
to
BMW
and
Mercedes

Benz.
Audi
targets
the
market
segment
of
luxury-‐car
buyers
in
their
20s,
30s,
and
40s,

making
up
nearly
48%
of
Audi's
U.S.
customer
base.
This
segment
also
makes
up
45.8%,

34%,
and
18%
for
BMW,
Mercedes,
and
Toyota’s
Lexus
luxury
brand,
respectively.
BMW

and
Mercedes
also
seek
to
capture
a
younger
demographic,
and
have
sought
to
do
so
by

releasing
more
affordable
options,
maintaining
their
positions
as
1st
and
2nd,
respectively,

in
luxury
car
market
share.23

Audi
positions
itself
touting
its
technology
(through
slogans
such
as
“Innovation
through

Technology”),
strong
engineering
(through
slogans
such
as
“Truth
in
Engineering”),
speed,

and
most
recently,
bravery.
Audi
released
a
Super
Bowl
commercial
in
which
it
shows
a

young
teenager
attending
prom
with
permission
to
drive
his
father’s
Audi.
He
speeds
off
to

prom,
and
with
the
Audi,
now
has
the
confidence
to
approach
and
kiss
a
girl
dancing
in
the

crowd.
He
proceeds
to
be
punched
by
her
boyfriend.
The
teenager
is
seen
speeding
home

with
a
black
eye,
but
smiling.
The
commercial
is
completed
with
the
tagline
of,
“Bravery.
It’s

what
defines
us.”4

The Market Offering of Audi
Product:

Audi
is
a
brand
under
The
Volkswagen
Group.
The
Volkswagen
Group
also

manages
other
strong
vehicle
brands
such
as
Bugatti,
Bentley,
Ducati,
Lamborghini,

2

Vanderborg,
Carey,
“Audi
Looks
to
Top
BMW
and
Mercedes
in
2013
with
A3
Sedan,”
International
Business
Times,
Accessed:
May
22,
2014,

http://www.ibtimes.com/audi-‐looks-‐top-‐bmw-‐mercedes-‐2013-‐a3-‐sedan-‐photo-‐1123549.

3

Cain,
Timothy,
“Top
15
Best-‐Selling
Luxury
Vehicles
in
America
–
April
2013,”
Good
Car
Bad
Car.net,
Accessed:
May
22,
2014,

http://www.goodcarbadcar.net/2013/05/usa-‐april-‐2013-‐best-‐selling-‐luxury-‐vehicles.html.

4

Frey767,
“Audi
2013
Super
Bowl
Commercial
Prom
Ad,”
Audi
AG,
Accessed:
May
22,
2014,

https://www.youtube.com/watch?v=Ky7ic1Ro9yw&feature=kp.

Porsche,
Skoda,
Suzuki,
Auto,
Seat,
Scania,
Volkswagen,
and
Volkswagen
Commercial.
Audi

touts
strong
German
engineering,
innovation,
and
technology.
The
company
leverages
its

affiliation
with
Rally
and
Le
Mans
races
and
seeks
to
implement
these
concepts
in
their
four

over-‐arching
premium
car
offerings:
Sedans,
Convertibles,
Coupes,
and
SUVs
&
Crossovers

as
shown
in
Exhibit
3.

Audi’s
model
offerings
target
multiple
consumer
segments
while
seeking
to
provide

customers
with
the
world’s
leading
premium
vehicles.
Audi
prides
itself
as
the
progressive

line
within
The
Volkswagen
Group.
Further,
Audi
seeks
to
produce
models
that
anticipate

clients’
visions
and
desires.
Proving
their
commitment,
Audi
listened
to
customers
by

executing
the
first
crash
test
in
1938
–
setting
the
standard
for
safety
in
the
automotive

industry.
5

Price:
Audi’s
product
offerings
are
particularly
focused
on
reaching
all
customer
segments

in
the
vehicle
industry
by
implementing
a
comprehensive
pricing
structure.
The
company

offers
a
range
in
each
body
style
with
a
tiered
pricing
scheme
to
capture
varied
spending

levels.
Prices
are
dictated
by
the
vehicle
size,
engine
capacity,
fuel
consumption,
and
sports

variants
as
shown
in
Exhibit
4.

Audi
employs
a
skim-‐pricing
model
by
positioning
the
brand
to
provide
unique
value
for

customers
and
taking
advantage
of
relatively
high
demand
within
the
luxury
vehicle

market.
In
fact,
the
company
elected
to
raise
prices
on
all
models
at
the
beginning
of
2013

by
1-‐5%
as
their
market
penetration
and
luxury
image
had
produced
better
than
expected

5

Interbrand,
“The
First
Crash
Test,”
Interbrand,
Accessed:
May
24,
2014,
http://www.interbrand.com/en/best-‐global-‐brands/2013/Audi.

sales
and
recognition.6
Model
pricing
is
set
to
appeal
to
competitors’
customers,
and

consequently
based
on
comparable
vehicles
in
the
BMW
and
Mercedes-‐Benz
lines.

Place:
Audi’s
primary
outlet
to
directly
interface
with
customers
comes
through
over
2,700

strategically
placed
dealerships
and
showrooms
worldwide.
In
the
first
half
of
2007
alone,

Audi
delivered
over
20,000
vehicles
to
7
countries
and
over
3,000
vehicles
in
20
countries.7

Audi
works
to
make
the
buying
experience
as
practical
as
possible
for
customers.
Within

the
last
year,
they
have
added
weekend
and
evening
hours
to
not
only
let
buyers
pick
up

their
vehicles
at
the
most
convenient
time,
but
also
offering
valet
services
to
deliver

vehicles
at
the
closest
dealership
to
the
customer.
Dealership
location
availability
provides

convenient
access
for
service
or
repairs.8

Promotion:
Audi
has
been
able
to
successfully
promote
itself
through
advertising,

communication,
and
promotional
strategies.
The
company
deems
itself
as
a
‘prestige’
or

luxury
brand
while
providing
customers
engineering
excellence
and
consistently

promoting
a
slogan
of
“Vorsprung
durch
Technik”
or
“Truth
in
Engineering.”

Audi
has

surpassed
the
traditional
advertising
means
such
as
logo
promotion
(see
Exhibit
1),

dealership
education,
advertisements,
and
signage,
by
recently
focusing
on
building

awareness
at
signature
events
such
as
the
Super
Bowl
and
Olympics.
The
ultimate
goal
is
to

6

Prithvi,
“Audi
Announces
Price
Increase
Across
Its
Entire
Product
Range,”
Sulekha.com,
Accessed:
May
24,
2014,
http://cars.sulekha.com/audi-‐
announces-‐price-‐increase-‐across-‐its-‐entire-‐product_audi_news_3089.

7

Weyler,
Ralph,
“Audi
–
The
Most
Successful
Premium
Brand,”
Audi
AG/Morgan
Stanley,
Accessed:
May
24,
2014,

http://www.audi.com/content/dam/com/EN/investor-‐relations/for-‐investors/investor-‐presentations/20070628_stanley.pdf.

8

Bloomberg
News,
“Mercedes,
BMW,
Audi
Dealerships
Work
to
Boost
Customer
Service,”
Newsday,
Accessed:
May
30,
2014,

http://www.newsday.com/classifieds/cars/mercedes-‐bmw-‐audi-‐dealerships-‐work-‐to-‐boost-‐customer-‐service-‐1.6391445.

focus
on
brand
awareness
while
distinguishing
itself
from
simple
luxury
to
progressive

luxury.9

Social
media
and
related
digital
media
have
dramatically
changed
customers’
viewpoint
of

the
company.
Staying
active
on
Facebook,
Twitter,
and
Web
site
media
help
foster
the
ideal

that
Audi
is
accessible
and
appealing
to
all
markets.
Further,
these
means
help
to

communicate
how
the
brand
relates
to
real
people
and
how
luxury
vehicle
ownership
is

attainable.
Audi
features
an
iPad
magazine
that
provides
vehicle
information,
diagrams,

images,
performance
specifications,
and
the
latest
news
to
stay
in
touch
with
current
and

perspective
customers.10

Performance:
As
shown
in
Exhibit
2,
Audi’s
market
share
continues
to
grow
and
has

reached
over
10%
in
the
U.S.
From
the
beginning
of
the
year
through
February,
Audi

passed
BMW
and
Mercedes
in
sales
for
the
first
time
with
242,400
vehicles
sold
globally.11

At
Audi’s
last
investor-‐relations
forum,
Ralph
Weyler
–
a
member
of
Audi’s
Marketing
and

Sale
Management
board
-‐
announced
the
company
was
named
one
of
the
top
100
global

brands
and
expected
to
sell
over
1.5
million
units
in
2015.
12

The
annual
financial
statement
for
2013
shows
that
Audi
had
€0
profit
in
both
2012
and

2013
due
to
upfront
investments
in
new
model
production
and
technology
introduction.

These
improvements
are
expected
to
stifle
profits
for
the
next
two
years
but
projected
to

9

Lamb,
Rachel,
“Audi
All-‐Time
Sales
Record
Driven
by
Strong
Digital
Advertising,”
Luxury
Daily
–
Napean
LLC.,
Accessed:
May
30,
2014,

http://www.luxurydaily.com/audi-‐hits-‐all-‐time-‐sales-‐record-‐with-‐strong-‐digital-‐tv-‐ads/.

10

Lamb,
Rachel,
“Audi
All-‐Time
Sales
Record
Driven
by
Strong
Digital
Advertising,”
Luxury
Daily
–
Napean
LLC.,
Accessed:
May
30,
2014,

http://www.luxurydaily.com/audi-‐hits-‐all-‐time-‐sales-‐record-‐with-‐strong-‐digital-‐tv-‐ads/.

11

Bloomberg,
“Audi
Passes
BMW
in
Global
Sales
to
take
Lead
in
Luxury
Race,”
Automotive
News,
Accessed:
May
31,
2014,

http://www.autonews.com/article/20140311/RETAIL01/140319966/audi-‐passes-‐bmw-‐in-‐global-‐sales-‐to-‐take-‐lead-‐in-‐luxury-‐race.

12

Weyler,
Ralph,
“Audi
–
The
Most
Successful
Premium
Brand,”
Audi
AG/Morgan
Stanley,
Accessed:
May
24,
2014,

http://www.audi.com/content/dam/com/EN/investor-‐relations/for-‐investors/investor-‐presentations/20070628_stanley.pdf.

boost
profits
in
the
out
years
as
sales
increase
due
to
new
model
sales.13
Their
total

revenues
for
the
year
were
€41,732,000,000
compared
to
€39,923,000,000.
81%
of
the

revenues
were
generated
from
the
vehicle
business
with
the
A4
car
line
providing
the

greatest
sales.
14

The Current Marketing Strategy & Objectives of Audi15
As
of
January
2014,
Mercedes-‐Benz
was
the
top-‐selling
luxury
auto
brand
in
the
U.S.
with

BMW
slightly
leading
worldwide.1617
Based
on
these
similar
past
results,
Audi
set
a
goal
to

become
the
leading
premium
car
brand
worldwide.

Audi’s
current
marketing
approach,
proposed
in
2010
and
said
to
run
through
2020,
is

based
on
the
three-‐tiered
strategy
house

(see
Exhibit
5),
starting
with
their
vision,
mission,

and
goals:

Vision:

Audi
–
The
#1
Premium
Brand

The
company’s
updated
strategy
anchored
on
the
sustainability
and
improvement
of

products,
processes,
and
innovation
to
provide
customers
with
delightful
experiences
and

signal
economic,
ecological,
and
social
responsibility.
The
new
strategy
resulted
in
the

mission
statement:
“We
delight
customers
worldwide.”
To
achieve
this
mission,
company

leaders
agreed
on
four
areas
of
action
that
must
be
continually
reassessed,
refined,
and

refocused
as
customer
become
aware
of
the
brand:

13

Automotive
News,
“VW
Profit
Jumps
22%
in
Q1,
Boosted
By
Audi,
Porsche,”
Crain
Communications,
Inc.,
Accessed:
May
31,
2014,

http://www.autonews.com/article/20140429/OEM/304299968/vw-‐profit-‐jumps-‐22-‐in-‐q1-‐boosted-‐by-‐audi-‐porsche.

14

Audi,
“Annual
Financial
Statements
of
Audi
AG
at
December
31,
2013,”
Audi
AG,
Accessed:
May
31,
2014,

http://www.audi.com/content/dam/com/EN/investor-‐relations/financial_reports/annual-‐reports/2013_audi_annual_financial_statements.pdf.

15

Audi,
“Corporate
Strategy,”
Audi
AG,
Accessed:
May
31,
2014,
http://www.audi.com/corporate/en/company/corporate-‐strategy.html.

16

Rauwald,
Christoph
and
Dorothee
Tschampa,
“BMW
Fends
Off
Audi,
Mercedes
to
Retain
Luxury-‐Car
Lead,”
Bloomberg,
Accessed:
May
31,

2014,
http://www.bloomberg.com/news/2014-‐01-‐13/bmw-‐fends-‐off-‐audi-‐mercedes-‐to-‐retain-‐luxury-‐car-‐lead.html.

17

Rupinski,
Patrick,
“Mercedes-‐Benz
Top-‐Selling
Luxury
Auto
Brand
in
US,”
Tuscaloosanews.com,
Accessed:
May
31,
2014,

http://www.tuscaloosanews.com/article/20140204/news/140209884.

Mission:
“We
Delight
Customers
Worldwide”

• We
define
innovation

• We
create
experiences

• We
live
responsibility

• We
shape
Audi

Prior
to
the
new
marketing
strategy,
Audi’s
goals
in
executing
their
overall
mission

statement
had
been
to
achieve
financial
strength,
continuously
grow,
become
the
global

luxury
auto
image
leader,
and
be
an
attractive
employer
worldwide.18
Upon
implementing

the
new
corporate
strategy,
they
maintained
existing
goals
and
expanded
their
objectives:

Goals:

• Attain
superior
financial
strength

• Take
the
top
image
position
and
customer
mix

• Become
leaders
in
innovation

• Achieve
sustainability
of
products
and
processes

Though
Audi
lags
in
sales
worldwide
and
in
the
U.S.,
the
company
was
founded
after
BMW

and
Mercedes.
Audi
vehicles
were
introduced
to
the
U.S.
in
1970,
much
later
than
the
1960

and
1952
introduction
of
the
leading
brands,
respectively.192021
The
rapid
growth
and

18

Audi,
“Audi
–
The
Premium
Brand,”
Audi
AG,

Accessed:
May
31,
2014,

http://www.audi.com/etc/medialib/ngw/company/investor_relations1.Par.0007.Image.jpg/strategy.jpg.

19

Jens,
“Big
Ones
–
C1
–
First
Generation,”
Audistory.com,
Accessed:
May
31,
2014,
http://www.audistory.24max.de/old1/ec1.htm.

20

Farfan,
Barbara,
“BMW
Group
Mission
Statement
–
One
Premium
Success
From
Three
Distinct
Visions,”
About.com,
Accessed:
May
31,
2014,

http://retailindustry.about.com/od/retailbestpractices/ig/Company-‐Mission-‐Statements/BMW-‐Group-‐Mission-‐Statement.htm.

worldwide
success
coupled
with
a
new
corporate
marketing
strategy
positions
Audi
and

The
Volkwagen
Group
to
remain
as
a
strong
competitor
in
the
luxury
vehicle
space.

21

Mercedes-‐Benz,
“About
Mercedes-‐Benz,”
Mercedes-‐Benz
USA,
LLC.,
Accessed:
May
31,
2014,

http://www.mbusa.com/mercedes/about_us/companyinfo.

EXHIBIT 1 | Logo Evolution of Audi22

22

Everything
About
All
Logos,
“Audi
Logo
Evolution,”
Alllogos.com,
Accessed:
May
22,
2014,
http://alllogos.blogspot.com/2012/02/audi-‐logo-‐
evolution.html.

EXHIBIT 2 | Luxury Car Market Share

EXHIBIT 3 | Brand Hierarchy

S
Sedans Coupes Convertibles
SUVs &
Crossovers
-A3
-A4
-A6
-A7
-A8
-A8 L
-A8 L W12
-S4
-S6
-S7
-S8
-RS 7
-A5
-S5
-RS 5
-TT
-TTS
-TT RS
-R8
-A5 Cabriolet
-S5 Cabriolet
-RS 5 Cabriolet
-TT Roadster
-TTS Roadster
-R8 Spyder
-Allroad
-Q5
-Q5 Hybrid
-SQ5
-Q7

EXHIBIT 4 | Pricing Structure of Audi23
Sedans

Coupes

Convertibles

SUVs, Crossovers, & Wagons

23

Audi,
“All
Models,”
Audi
AG,
Accessed
May
30,
2014,
http://www.audiusa.com/models?csref=92225155266327486.

EXHIBIT 5 | Current Marketing Strategy & Objectives of Audi24

24

Audi,
“Audi
–
The
Premium
Brand,”
Audi
AG,
Accessed:
May
30,
2014,
http://www.audi-‐cr.de/img/strategie/strategie_verantwortung_en.png.

Audi Brand Strategy Evaluation

More Related Content

What's hot

Viewers also liked

Similar to Audi Brand Strategy Evaluation

Recently uploaded

Audi Brand Strategy Evaluation