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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
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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EXHIBIT 2 | Luxury Car Market Share
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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
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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.
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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.
