Implantation of a premium automotive brand in the saturated German market

Thèmes abordés

Premium automotive brand, implantation, German market, Germany, EU market, automobile industry, biggest automotive groups, foreign automotive manufacturer, luxury segment, saturated market, globalization strategies, international differentiation, multinational globalization, market penetration, multidomestic strategy, Toyota, Audi, BMW, Mercedes-Benz, Porsche, Volkswagen

Résumé du document

The German premium automotive market belongs to one of the most saturated market in Europe due to its large population and its strong economy, the most powerful within the European Union, which results a high standard of living. Added with the presence of local premium manufacturers, these factors assure a very strong competition for foreign automotive manufacturer which want to increase their market shares and moreover to establish their brands in this market.

Nowadays are established premium automotive brands the most rentable within their companies and bring high profits assuring a financial support. The biggest automotive groups are concentrating at least one or several premium brands in order to have access to their own share of the segment. Occidental premium brands are historically well implanted in the German market but with the increase of cooperation and acquisition within the automotive industry, new players also want to bring new premium brands on the market to establish their worldwide reputation. In 1989, Toyota created its premium brand Lexus and vehicles were directly available in Germany the next year. On the contrary, Nissan's premium brand Infiniti, founded the same year, only began on the German market in 2008. Recent brands from Asia or other emerging countries also could soon come to Germany to complete their ambitions for rapid growth.

On the German market is it possible to differentiate two kinds of premium brands: brands locally manufactured like Audi, BMW, Mercedes-Benz and Porsche, and the imported brands like Lexus, Infiniti, Jaguar, Land Rover and Volvo. Each has its advantages and disadvantages in term of production and distribution but doesn't especially enable the same strategies.

Extraits

[...] The price elasticity during the product's life cycle will be playing an important role for the company, because it will set the possible prices variations without affecting the sales. Moreover the competitors should be observed (Diez 2006). If the competition is increasing, with more aggressive pricing and a strong development, the company using this progression's pricing may have to adjust its prices regarding the market's situation. Within the introduction of a product on the market, two different strategies are possible: the skimming and the penetration strategy (Koppelmann 2001). [...]

[...] The correlation is very high for the medium, large, executive and luxury cars' segments. On these segments a penetration's strategy with prices lower than the competitors would have positive results. Nevertheless the prices set on the SUVs segment don't have a important impact on sales, because the competition is strong and each manufacturer can offer different vehicles and setting as it were its own segments. And the SUVs as well as the sports cars are also influenced by the brand's image, where customers will more be tempted to by something they know and have irrational choice's criteria's. [...]

[...] It mostly defines a product which has a high quality and finds itself in a higher price segment than other average products (Marketing Lexikon). Kapferer speaks about a rationalized mass production with higher prices justified by a better qualitative completion (Kapferer 2000). For Prof. Diez the premium brands announce a higher price than other with the same tangible functions. He deals with a premium price, which results of a positive price difference with the average price within the overall market or specific segment (Diez 2001). [...]

[...] The Product development strategy's (Ansoff 1957) aim is to win new customers due to the enlargement of the company's offers. Similar as the market development strategy in terms of risks, the product development strategy brings a new product on an existing market. The company cannot be certain that the market will positively react to this new offer and how the competitors will answer. It also requires new product development and innovation to have a competitive or better offer than the competition. [...]

[...] The expansion of sales will be done in foreign countries through export businesses. Most of the firm's support activities will be internationally unified and prevail for all markets, so do the marketing vision. The aim of an international standardization is to secure the national market due to foreign or overseas activities. Indeed when the homeland market is saturated, doesn't offer the possibility to a further growth or is in risk due to low activity, then the other markets can support and balance the results Diez, Reindl p As it deals with a classic export business model, using this strategy only enables to be active on open markets or markets with no/low import legislation and taxes. [...]