INTRODUCTION This coursework entitled ³Marketing´ is about creating a marketing strategy for a new orexisting product. The product I have chosen here for this assignment is the new Audi A6. Audi A6 is the latest model of the company to hit the road of the UK in April 2004. History The badge of Audi which reflects the 'Four Rings¶ is the emblem of one of the oldest carmanufacturers of Ger many. This Four Rings embl em tells about the merge r which t ook place in 1932 among the four car manufacturer. They were Audi, DKW, Horch and Wanderer and can be said as the root of present day AUDI AG. The Audi Company current hold the reputation of producing high quality and long lasting cars. Technologyis the Audi Slogan. Their quality resulted with the net profit of ¼816 million in 2003, which was ¼5.4 million more than as compared to 2002. Audi UK is the most efficient and successful importer of Europe which has its increasing sales ratio each year since 1999 as in 2003 the sales boomed to the figure of 70,107 and made a 2.7% of market share. Audi UK is an independent company in UK since 10 years after it separated from Volkswagen Group in 1993.About 131 Audi centres are proudly serving in UK presently. The new Audi A6Let¶s see What Company say about the ne w A6:µThe creation of a class-leading executive saloon calls for a broad range of abilities. Supple ride comfort, but with precise and clear feedback; power, but with fuel efficiency; an exhilarating driving experience, but with luxurious accommodation for four. The new A6 triumphantly reconciles these apparent opposites through advancedtechnology and design.
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From t f irst gl you know t t t A6 marks a signif i ant st forward for t class. A
bl nd of opposing qualiti s; but a compromise in none¶
The car made its f irst appearance at the 2004 Geneva Motor Show on the 2nd of March. It
has been announced that pr ices of this car will range from £24,175 to £42,775 which is only a
1% pr ice increase on the old model. The car has many new features both aesthetic and
functional such as leather seats and upholstery, V6 and V8 petrol units, si speed gear box
and improved dynamic suspension.
INFORMATION GAT ERING
To f ind out about the new Audi A6 I must gather information about it and also marketing
theory to enable me to come up with a suitable marketing strategy for the car. The ways that I
have gathered information about the new A6 are:
Product brochures ± I collected a product brochure and pr ice list from an Audi showroom.
These contain information about the car ; the var ious types, specif ication, possi ble colours,
extras, pr ices, etc.
Audi website ± the Audi UK website is www.audi.co.uk. This contains information about
Audi cars including the new A6. It contains a lot of the same information about the car, but
also tells you about the company in general and has regular ly updated information.
Audi annual report 2003 ± this has background information about the company and
f inancial, marketing and product information from the past year. I downloaded this from the
Audi website.
The sources of information I used to f ind out about more developing process are:
Text books ± the text books I used most is Intermediate Business byCarysfor th, R awlinson
and Neild and The Complete A-Z Business Studies Handbook by Lines, Marcouse andMar tin. These both contain information about all aspects of business theory including
marketing.
Websites ± there are numerous websites, such as www.bized.co.uk , that contain information
about business theory. I mainly used these for information not found in other sources as it is
2. Conversion ± this involves creating strategies that turn the company¶s weaknesses into
strengths and threats into oppor tunities.
As well as producing a SWOT analysis a f irm will have to examine market conditions before
producing a marketing strategy. The main things which examined are:
* Market size ± the total size of the market the f irm is work ing in. it is measured in terms of
volume or value (volume x pr ice). The car market is currently a large one.
* Market share ± the percentage of sales one brand has compared to the total market. In
2003 Audi had 2.7% market share in the UK which seems small, but it must be taken into
account how many car companies there are and Audi¶s market share in Germany, the home
country of Audi, is three times this.
*Market growth ± the rate at which the size of the market is increasing. From 2002 to 2003,
Audi UK had increased sales of 6.9%, but only increased market share of 0.6% so the market
must be expanding and at quite a fast rate.
* Segmentation ± appealing to different sections of the market in different ways by changing
the marketing mix. For example, changing features of the product so it appeals to different
people more luxur ies for those better off, different size engines, etc.
The next stage is to set the marketing objectives consider ing the corporate objectives. This
provides targets for the depar tment. I have not been able to f ind out the marketing objectives
of Audi, but they are likely to be increase market share and revenue (both with quantitative
values). My marketing objectives for Audi would be these things and also to enhance the
brand reputation which I believe is a vital par t of Audi¶s success; it provides them with a
unique selling point and so is impor tant to differentiate the product from those of
competitors.
Af ter this, a marketing strategy is selected tak ing into account the marketing objectives,
f indings of the SWOT analysis and market conditions. This will then be implemented throughmarketing tactics/ the marketing mix. So to achieve the marketing objectives all aspect of the
marketing mix must be r ight ± the car must be sold at the r ight pr ice, in the r ight places,
promoted well appealing to the target audience and designed and produced well.
My SWOT analysis of the A6 shows that one of Audi¶s main strengths is the company¶s
reputation. This should be built on through producing a high quality car and using premium
nationally. Another inf luence on the marketing strategy employed is the type of market the
product is competing in. There are two main types of market:
1. Niche market ± a small market in which major producers are not concerned.
2. Mass market ± market with a large volume or value of sales.
The main advantages of a niche market are it f its with limited resources, avoids competition
with major f irms, returns are relatively high and f its with a unique selling point (USP). The
advantages of mass marketing are higher returns, can exploit a brand name, economies of
scale and less vulnerable to changes in market. The car market is clear ly a mass market as the
value of sales is high. However, there is a wide range of quality and pr ice available and Audi
is in the upper range so this market is a highly differentiated mass market. The main
competitors to the A6 in this market are BMW and Mercedes, who also produce high value
cars.
As Audi are competing in a mass market, it is vital for them to undergo extensive promotion.
This will attempt to give the A6 a competitive advantage over its r ivals as consumers become
aware of the advantages the A6 offers. They should promote using the brand name as it is
currently has a good reputation and so will hel p improve sales. If the brand name is enhanced
through the A6, it will hel p Audi in the future.
There are also a number of business models and diagrams that can be used to hel p determinethe marketing strategy chosen by the company. Two such models are the Product life cycle
model and the Boston Matr ix.
Boston Matrix
The Boston Matr ix is a method of product por tfolio analysis. This is used to examine the
existing position of the organisations products in their markets to enable better decision
mak ing on aspects including marketing strategy. The value of it is that it examines all the
f irm¶s products together, provides an overview and hel ps with marketing planning. TheBoston Matr ix shows what percentage of the market each product has and the rate at which
the market is growing. The car market is a fast growing one and the A6 is a new product, so
would currently be considered a question mark. However, it is likely that it would soon
become a star if it sells well. The Boston Matr ix shows us that the A6 will need investment
(much will already have been spent on design and production) in promotion and other areas.
* Government ± government adds tax to products mak ing them more expensive which must
be considered. VAT is charged on cars.
* Other external factors ± PESTE (political, economic, social, technological and
environmental factors).
* Rest of marketing mix ± the pr ice must compliment other elements of the mix.
The pr icing method chosen will also be affected by the pr ice elasticity of demand of the
product. This measures the responsiveness of demand for a product to change in pr ice. (Both
measured as percentage of total.) It is calculated using the formula:
Pr ice elasticity = % change in demand / % change in pr ice
If percentage change in demand is greater that percentage change in pr ice then the product is
pr ice elastic. R aising the pr ice will result in a loss of revenue. If the percentage change in
demand is less than the percentage change in pr ice then the product is pr ice inelastic. R aising
the pr ice will result in a gain of revenue .The A6 will be pr ice inelastic because it is a highly
differentiated product. This means that people will be willing to pay more for the benef its it
provides ± reputable brand name, added luxury feature, good performance, etc. Also, they are
regular ly purchased as company cars so if someone else (i.e. the company) is paying for it
pr ice will not be so impor tant. Selling pr ice inelastic is generally considered a good thing by
a f irm as it allows them to increase the pr ice and gain revenue. If a product is pr ice elasticlower ing the pr ice should result in an increase in revenue, but this is a r isk as it relies on
demand increasing. If this does not happen as a result of external factors, the f irm could lose
a lot of money. As a result of being pr ice inelastic, Audi have increased pr ices by 1% on
average from the old A6 which should result in increased revenue. Also, this pr ice increase is
only small so people will not feel like they are being overcharged, so it is psychologically the
r ight pr ice. Audi will charge a high pr ice which seems a good idea. High pr ice is usually
associated with:
* Heavy branding ± Audi is a reputable brand.
* Few competitors ± no new cars in the A6¶s class.
* Unique selling point ± brand reputation, no new competitors, quality design features such