Market Analysis of Porsche - Case Study Example

It also wants to absorb the technology and innovation of Porsche and apply them to other automobile brands owned by VW. However, these plans represent a potential risk for the brand image of Porsche since these can negatively affect the perception of quality and loyalty among Porsche customers. Thus, Matthias Mueller, the new CEO of Porsche, needs to make a significant strategic decision. Muller has to decide effectively whether Porsche should diversify its production or focus on delivering its core competency which is the production of sports cars. In addition, Muller also needs to create a strategy that will prevent the potential brand dilution of Porsche.

The economic environment where the automobile industry operates is volatile. This is a result of the financial crisis and economic recession emerging in different countries. This situation can greatly affect the purchasing decision of customers.

Sports cars are a specialized segment in the automobile industry with a very specific target market which is the affluent race car enthusiasts. Even though there is a small market for this segment, each purchase constitutes a very high-profit margin. For this reason, a lot of automobile companies are also designing and manufacturing sports cars. This led to increased competition for this segment in the industry. Porsche is the leading brand of sports cars in the world. On the other hand, Sedan and SUVs are also generating increased demand from the global market. This represents an opportunity that differentiated car manufacturers can take advantage of. However, this segment already has numerous competitors. In general, there is increased competition in the automobile industry since buyers incur low switching costs as a result of the high availability of various automobiles.

Volkswagen Auto Group is facing intense competition from Toyota and General Motors in terms of market share and revenues. These companies also have their own high-end sports cars and luxury cars which directly compete with Porsche and other sports cars owned by VW. This requires VW to design effectively and market its products in a superior way compared to its competitors.

Strengths. Porsche is the world’s strongest sports car brand which denotes high loyalty and high-quality perception among its customers. It also has a strong culture for technology and innovation which makes its cars highly reliable. In effect, Porsche consistently experiences very high sales from all its models of sports and race cars.

Weakness. Although Porsche has proven itself in the market for sports cars, the company has not yet gained a strong reputation for manufacturing other segments such as sedans and SUVs. This makes it difficult for Porsche to position itself effectively in the new market segments.

Opportunity. There is an increased demand for SUVs and Sedans in the global market. This is an opportunity for Porsche to increase its revenues by diversifying its product lines for a broader market segment.

Threat. The plan of Volkswagen to let Porsche manufacture a new product line aside from sports cars can lead to a risk of brand dilution for Porsche. There is a possibility that the perceived quality and high differentiation that Porsche was able to position to the market will be reduced. There is also a risk that the loyal customers of Porsche will shift to other automobile companies which are solely committed to the manufacturing of high-quality and unique sports cars.