This project aims at understanding and comprehending the marketing strategies of one of the leading luxury car makers in the world. It outlines its penetration in the Indian car market and its advertising, branding, sales from thereon. The prime focus is on the decade between the years 2004-2014. The project highlights Audi’s impressive and rapid growth over the past decade. The rationale underlying in the adoption of non-traditional selling methods and how they have turned out a major game changer in the fiercely competitive luxury segment of the automobile industry. Also enlisted are the brand’s market share, target group, range of industry innovations and its future plans. Let us now have a glimpse at how it all began with a brief historical overview that throws light on its origin and Foundation. A description of how Audi attained Growth and Progress. History:
Audi designs, engineers, manufactures and distributes automobiles. Audi oversees worldwide operations from its headquarters in Ingolstadt, Bavaria Germany. Audi-branded vehicles are produced in nine production facilities worldwide. Audi has been a majority owned (99.55%) subsidiary of Volkswagen Group since 1966, following a phased purchase of AUDI AG’s predecessor, Auto Union from Daimler-Benz Volkswagen re-launched the Audi brand with the 1965 introduction of the Audi F103 series. Mr August Horch (founder)
The company name is based on the surname of the founder, August Horch. “Horch”, meaning “listen”, becomes “Audi” when translated into Latin. Audi’s slogan is ‘Vorsprung durch Technik’ meaning “Advancement through Technology”. Recently in the United States, Audi has updated the slogan to “Truth in Engineering”. Audi is part of the “German Big 3” luxury automakers, along with BMW and Mercedes-Benz, which are the three best-selling luxury automakers in the world. This is basically a German Based company. Audi traces its origin in August 1899. Horch was forced out of his company and he ultimately formed his own company which was named ‘Audi ‘in 1909 which was a Latin Translation of Horch (in Germany). The owner of this car brand upon whom the company has been named, Audi had got great success and reputation. He had no competitors to compete with him in those days. He had dominated the world auto vehicle market to a very great extent for a very long time. Audi supplied a wide range of passengers during 1930’s. It provided vehicles from motor cars o luxury saloon cars. In the year 1932 the Audi emblem has been changed to four rings after it was merged with three other big automobile companies like DKW, Horch and Wanderer. Later in the year 1980 it dominated the world rally. It introduced its Audi Quattro which had achieved huge success. In 2004 it entered the Indian market and from thereon has seen a uphill climb in its sales displacing the world leader BMW to claim the numero uno position in India. The brand “AUDI”:
Audi is a car brand which has shown its remarkable progress in the field of technological innovations and sophistication. Audi cars are famous not only for its impeccable sophistication design and style but also for its hard found creative and innovative ideas. This car brand produces cars with its unique capability to display style, luxury and comfort all together. The Audi car company comes out with a new model or reviewed model from time to time to keep track with the latest technologies and trends. It keeps tracks with the needs of the people and then designs the vehicle keeping in mind the different requirements of the people. The company put in lot of diligence and endeavour to get success in the field of automotives. The Audi car company was merely started with a single plant in some part of the Germany. Later with the contribution of hard work and perseverance it formed many units in other parts of the world. The Audi Company in the early days of its production employed hard working and dedicated workers who really formed the business superbly with their creative, innovative and class-apart designs. The four overlapping rings of the Audi logo each represent the four marques of auto unions. The Audi emblem symbolizes the amalgamation of the four car companies Audi, DKW, Horch and Wanderer that banded together to create the company. It striking resemblance to the Olympic rings cause the ‘International Olympic Committee’ to sue Audi in international trademark court in 1995. Audi India:
Audi has been selling Luxury cars in India since 2004. It is represented in 110 countries worldwide. The project discusses the marketing strategies adopted by Germany-based automobile manufacturer Audi in India. Audi entered India in 2004 by selling imported vehicles through three dealers. It established a subsidiary, Audi India, in March 2007, Audi set up its own sales company for India, as a Division of Volkswagen Group Sales India Private Limited in Mumbai. The company maintained an aggressive stance and launched several vehicles at different price points. Audi was positioned as an aspirational brand for young entrepreneurs and executives and adopted innovative strategies to reach the segment. It also developed exclusive dealerships, which were used as touch points to interact with the customers. Audi is making a clear long-term statement in the country with ambitious growths plans. Audi’s goal is to become the leading automobile luxury brand in the Indian market in the next few years. The Audi India strategy encompasses significant investments in branding, marketing, exclusive dealerships and after sales service for the upcoming years. Within five years, Audi surpassed Mercedes Benz and BMW which had been present in the country for more than a decade, and positioned itself as the leading luxury brand in terms of sales. This project lists the strategies adopted by Audi on its journey to reach this position and also discusses the challenges it is likely to face from competitors, the changes in the macroeconomic environment of India and the rise of the increasing upper middle class in urban areas. Marketing Strategies: Being the game changer
Brand endorsement, but not the traditional way!
Audi has novel marketing initiatives to spearhead its presence in India. It is eyeing the possibility of endorsing its brand through national teams in sports or bollywood celebrities though none of them would be brand ambassadors for the automobile major. The company intends endorsing its brand through such collaborations in conjunction with leading celebrities and teams. Globally, it has been endorsing two football teams (Manchester United – UK and a Munich – Germany-based). Understanding the Indian consumers
Besides brand endorsements, the company has plans to offer Audi merchandise for its elite list of Audi aficionados. The whole range would not be available; only certain products that would suit the Indian buyer will be available with the dealer. The products would be carefully scrutinised and picked up based on the lifestyle of the Indian consumer. The price range starts from 29 lakhs and goes upto 1.5 crores. The company has understood the relevance of the strong customer base of the salaried upper middle class Indian, thus it has come up with various EMI schemes, free insurance offers, extended after sales services and most of all have effectively maintained a competitive pricing. Aggressive branding through print ads
When BMW came up with the tagline “The joy of driving”, Audi immediate countered it with the following print ad emphasizing that joy finally has a meaning with their all new coupe Audi R8 GT
Audi has taken its competitors head on with a range of aggressive, non-traditional, innovative, pun intending print ads and outdoor branding. Since 1982 Audi has set the standard for great car advertising. It has used communications as a potent tool to create a distinctive identity for the brand. Audi’s witty, intelligent but understated tone of voice has earned it a place in the consumers hearts and minds, and its advertisements get more than their fair share of attention. Few other examples of aggressive branding, Audi has always had a tough fight with BMW hence the brand on multiple occasions has established its superiority over its counterpart. Marketing firms often await BMW and Audi counter ads which has now become a battle ground for market share and greater visibility.
Audi has been successful in penetrating the Indian market, with establishing showrooms in every important tier 1 and tier 2 city. It has also established a manufacturing plant in Aurangabad district of Maharashtra. Audi has reported highest sales in the cities of Ahmedabad, Chandigarh and Kochi.
Thus Audi India has the highest market share and sales in the luxury car segment. A Simple Product Line Denomination
There are millions of products in the world and thousands of new products are launched every day. It’s tough to stand out. Trying to be original does not work for everyone. Usually product names become more complicated when one company has more than one product and when it introduces new product lines. Labels, product lines, names, sub-brands, banners, it can become very complex. It becomes even harder when a company’s products have a relation with one another, like a premium line for example. No one knows what is the name of GM’s biggest car. In Audi’s case, it is very simple. Simple alphanumerical progression, they did not reinvent the wheel, they perfected it. BMW also has the same type of incremental numeric system. The numbers also mean something about the engine specifications that only experts or owner might know. In any case the system is effective, the bigger the number, the deeper your pocket. BMW, by the way, also has an outstanding branding strategy. Product names should be simple and associated with their value. In case of Audi it’s the R8 that is supreme Imagery That Speaks to the Target Customer
When describing the Audi’s front design, Dany Garand compares it to a human face. Headlights (the eyes) can frown, look aggressive or have a profound look. Anything that might associate to the image of the owners or the image they want to project. Market segments are based on profiles. The habits and preferences of the targeted customer have to be studies carefully. Again, Audi projects an image of luxury mixed with power and class. Consistency and Redundancy
Marketers all agree on one thing. A message needs to be hammered endlessly to obtain stickiness. Audi’s logo, image, colors and designs are consistent. Most people would recognize and unmarked Audi even if they are not car connoisseurs. This is the trademark of great carmakers and of great companies in other industries as well. Diversification, in markets or product lines can create confusion and confusion is the brand’s worst enemy. Aesthetics
Luxury brands typically have superior aesthetics. Think of the packaging for the Apple products. High quality products command a premium. The brand in all of its expressions (logo, colors, tag-lines, advertising, packaging, experience, feel, design, offices/stores and more) should reflect the image that the company wants to carry. Audi’s North American marketing communications display the same clever luxury that their cars are promising to their owners. People say that if you want a promotion you have to dress for the job you want, that is also true for products and brands. Two words: World Class. Originality
When walking in any trade show, it is astounding to see how much most companies look alike. Most displays are the same, with the same colours, same configuration, and same literature. Cars are no different. Car models are different from one another but rarely a single feature aside from the logo speaks for the brand. Audi made that happen with a great design feature in their daytime running lights on all their models. The “s” shape lights have made the car identifiable from a distance and also added aesthetic appeal. Dare to be different and put your money where your mouth is. Pioneer in social media marketing
Audi leads the automotive industry not only in terms of market shares, sales but also the best in class social media presence. In comparison to its peers, Audi has a goodwill and capture over the gen next which is of an unmatchable magnitude. Be it in the number of likes, comments, shares per page or the brand visibility online, Audi takes away the cake as well as the the icing.
The competitive lanscape:
BMW: joy forever
The luxury car brand targets younger customers. Often self-driven, it lays thrust on speed and emphasises on driving as pleasure. Its advertising campaigns often show the car being driven around. BMW is aggressive and fast, and its Indian journey proves that. Within four years of its launch, the company unseated Mercedes to become the top-selling luxury car in India, its market share has moved up from 9% in 2006 to 42% in 2011. Appealing to the younger buyers (average age of a BMW buyer is 40 years), it has introduced a varying product range at different price levels, starting with its cheapest model X1 available at Rs 23.7 lakh. It will further strengthen its portfolio by bringing in its MINI range, a new 3 Series and the new M5 sometime soon. On the back of all this, the country head Andreas Schaff is hoping to make India among the top 10 countries for BMW globally in the next 10 years. At its Chennai plant, BMW assembles 3, 5 series and X1 while others like X3, X5 are imported as a fully built unit. But with growing sales, it may set up its second plant by 2015.
It might also scale up its manufacturing facility from just complete knock-down (CKD) kits. Their local component sourcing, currently low, will rise. Already, they have a global sourcing team here to cater to their global needs and have identified 20 vendors so far. This number should go up in future. Its marketing strategy has largely been to create touch points like professional golf tournaments, wine tasting sessions and events with fashion designers. Last year they organised an Xperience Drive in Gurgaon which brought in international trainers with a live performance by the Australian Raw BANG. A test course, with 10 obstacles, was especially designed to bring out X range’s special features. BMW is growing its dealer network and hopes to touch the 60 mark by 2015. With 80% of its cars being financed by its own financial services arm, BMW financing is a brisk business. Its recently launched used-car business BMW Premium Selection will soon be available across all its dealerships. Mercedes-Benz: The best or nothing
A symbol of power. The ultimate car for those who have arrived and is almost always chauffeur driven. The brand symbolises social status with the tagline “The best or nothing”. This is the oldest and the best luxury car India has known. It set up India operations in 1994 and has the best infrastructure among the three in terms of dealer reach and domestic component sourcing which stands at around 34%. But the leader has been on the backfoot ever since younger and peppier BMW unseated it in 2009.
Mercedes is now reorienting its India strategy to target the youth. The company is working on its model line-ups, marketing and brand positioning to keep them aligned. For example, the luxury brand is now increasingly emphasising on performance and sportiness of its brand in India. It is now closely associated with F1 in India. Further, the company has brought in performance cars from its AMG stable to appeal to young Indian buyers. It is planning to invest Rs 350 crore as part of its strategy to introduce new small and compact cars in India by 2015. The company is expected to bring in its B-class, front-wheel-drive small family car sometime around the festival season (October-November) this year. Currently Mercedes’ cheapest car is the C-Class. With B-Class hatchbacks, it will lower the entry threshold. The B-Class hatch, owing to its styling and agile contours will be positioned as sports tourer. During the next few years, Mercedes-Benz has planned the introduction of most of its 10 new global cars in India, and for this it is considering assembly of its SUVs ML, GL and GLC-Class here. The company has recognised the need for more compact cars in countries like India and China and assembling them in local markets is considered beneficial. With better localisation of content, they will have a pricing edge over others. On the back of all this, as Indian luxury car market expands, the company is hoping to sell around 55,000-60,000 cars (from current 7,430) by 2020. This is part of the bigger plan for Mercedes to regain its top slot in India. However in 2013 it isAudi that has emerged as the leader in the India luxury car market.Let us now have a look at the sales of these leading brands from 2008-2013
Audi has pushed two significant platforms so far this year. The first continued its tongue-in-cheek series of comparative ads. One commercial, for example, portrays Audi as a better alternative to a Lexus, Mercedes and even a Ferrari. A second spot directly targeting BMW, titled “BMW Can Relate to the Runners Up,” shows several competitive scenarios after which the winners boast and the “runners-up” have to sit there and watch. Audi takes its marketing very seriously, thus the four-ring brand spends quite a dough on big budget super bowl commercial to innovative national billboards. However its marketing budgets are not as huge as its rivals Mercedes and BMW. Thus, it can be analysed that it is Audi intelligent, innovative and unconevtional marketing abililties in addidition to its excellence in engineering and technology at competitive pricing
The automotive industry is one of the toughest businesses. It has become a global battlefield since the first Toyotas were introduced in the North American market. Today major makes are sold everywhere. Brands have always played a crucial role in this industry. Models come and go in some cases, but staple names like Ford, GM, Toyota, Volkswagen, Mercedes and even (relatively) new comers like Hyundai are recognized throughout the world. It might be the one and only industry were name awareness of so many brands is common at such a large scale. Brand associations for performance, quality, design or other features are also very strong and consistent, the result of decades of intense advertising, design strategy and reputation. In the last ten years Audi’s image and reputation have made a dramatic comeback. Founded in the late 19th century, the company had gone through some tough times in the late 1980’s and 90’s following some large scale recalls and a reputation for high priced repair-prone vehicles. With its new line up of sedans, including the A4, A6, A8 and now A3, A1, the Q7 SUV, the S line and the Lamborghini look-alike R8, Audi has gained back its reputation for high performance cars with great German engineering and design. Sales are growing, including in new markets, notably in highly targeted India market. Cars use to be all about engine power and torque. Then size became a key factor with the 1970’s oil crisis. Today, the equation is far more complicated. When looking at Audi’s success, it does not come from superior engineering or flawless quality. Of course, this is a luxury car and it has the necessary features to stand in that category. But it does not outperform its competition on that level.
After all, everyone knows it shares most of its platform with its big sister Volkswagen, making some people say that the A4 for example is just an expensive Jetta. The main differentiator is the image. Audi is now synonymous with luxury, performance, fun and image. The same pleasure and prestige one gets from a BMW or a Mercedes, two of Audi’s declared targets for a more affordable price. It’s the brands great segmentation work powered
by outstanding branding.