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Chelsey DeBalsi
Professor Markos
Cayenne Case Study
6 October 2011
Porshe: The Cayenne Launch
Current Situation
Porsche is a brand known for its high performance sports cars. Since the launch of the
Porsche 356 in June 1948, the brand has remained loyal to this ideal and continues to produce
vehicles known for their speed and maneuverability. Porsche is a luxury brand marketed towards
affluent consumers, primarily males, looking for a fun car that makes a statement of youth,
prosperity, and confidence (19). Therefore, it is easy to see why Porsche brand loyalists might
have had a problem with the introduction of the Cayenne- an SUV built using traditional Porsche
styling and performance but combined with components promoting family, outdoor, and
transport activities. In other words, the Cayenne represents a brand extension that, according to
many enthusiasts, may have pushed the edges of the traditional Porsche image a little too far.
Porsche quickly became aware of several other problems associated with the preparation
and introduction of their first SUV. Online brand communities, such as Rennlist, suddenly
became combat zones for Cayenne supporters to contest the many complaints made by
disappointed Porsche owners who thought the SUV’s introduction marked the end of Porsche as
they knew it. Rivalries emerged between Cayenne drivers and traditional Porsche drivers that
went so far as to exclude Cayenne drivers from the Porsche “family” and fraternal greetings on
the road. Porsche loyalists complained about the authenticity of the brand after it became
apparent that the Cayenne was a product of many different countries and only the final assembly
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took place at the Porsche site in Leipzig, Germany. Reporters from publications as big as the
New York Times and the Los Angeles Times negatively publicized the new direction of the brand.
And finally, the Porsche Cayenne began getting compared to SUVs made by companies such as
Hyundai and Volkswagen rather than their usual niche of BMW and Maserati.
SWOT Analysis:
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Strengths
Strong brand/image will lead to
Cayenne acceptance
Targets a new market (6)
Powerful appearance, increased
carrying capacity, versatility (4)
Built to be a sports car in an SUV’s
body- offers comfort and space but will
go from zero to sixty in 5.4 seconds (4)
Meets Porsche’s high technical and
visual standards (4)
Opportunities
Entering new market segmentsfamilies, sports utilities, outdoors
Increase in total profits
Increase in market share
Brand extension
Publicity
Paves the way for future growth
Gives a new dimension in both profit
and revenue
Opens the door to Porsche for future
diversification à Porsche sedan
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Weaknesses
Stereotypical driver of an SUV does
not fit with the stereotypical driver of a
Porsche (19)
Only the final assembly takes place at
the Porsche site in Germany (8)
Difficult to position the Cayenne while
protecting the Porsche parent brand
Generally not accepted by brand
loyalists or current Porsche owners (6)
Made in collaboration with VW (7)
Threats
Strong competitors (4)
Crowded market (4)
Association of Porsche brand with VW
Negative publicity
Loss of brand loyal consumers
Harmful impact on Porsche’s brand
image
Unhappy consumers and negative
feedback
Loss of market share or decrease in
profit
Problem Recognition:
Porsche quickly became aware of the problem they were facing due primarily to the
sudden increase in negative activity in their online brand communities. The number of posts on
Rennlist in March 2003, the same month that the Cayenne was released, increased to
approximately 450, which was 250 more than the prior month’s total and also the most posts in
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one month that Rennlist had ever received (20). While this sort of interaction among consumers
is exactly what the implementation of an online forum such as Rennlist is for, the nature of these
posts is what caused the problem. So many Porsche enthusiasts were unhappy and disappointed
in the decision of the Cayenne that Porsche was forced to take notice.
Problem statement:
Should Porsche continue to push the limits of their brand by introducing cars such as
SUVs regardless of negative feedback from consumers?
Evaluative criteria:
Several criteria can be used to determine whether brand extensions such as the Porsche Cayenne
are beneficial additions to the company’s collection.
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The introduction of the Porsche Cayenne should eventually lead to an increase in total
sales of 50% (3). (Remember that the Cayenne was launched in December 2002 in
Europe and March 2003 in the US)
o As shown in Table 1 (found in the Appendix), sales increased by 14% from the
previous year, or €724.70, during the first year that the Cayenne was on the
market (2002-2003).
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While this was not the 50% that was hoped for, sales would be expected to
increase in future years and a 14% increase is an impressive amount for
the Cayenne’s first year.
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Porsche should produce approximately 20,000 SUVs per year (3) whose sales should
make up at least 20% of total sales in its first year on the market.
o As shown in Table 2, the Cayenne accounted for 30.84% of total sales in its first
year and 34.01% of total production with 24,925 units.
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The Porsche Cayenne, which is directed towards a “hot, new market” that is not targeted
by any other Porsche vehicle, should capture incremental growth (3) and have
comparable sales numbers to other Porsche vehicles in its first year.
o As shown in Chart 1, the Cayenne had more sales in its first year than the Porsche
Boxster and only €7,186 less than the Porsche 911, a car that has been on the
market since 1964.
Although these numbers seem promising, alternative options should also be considered in the
chance that the Cayenne failed to meet these criteria or stopped meeting these criteria in later
years.
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The vehicle could be pulled completely from the market.
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The vehicle could be pulled from the market temporarily to make changes to its design
and features based on consumer suggestions or observations taken from studies executed
by Porsche.
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Additional promotional elements could be employed in order to spread knowledge about
the Cayenne and to encourage consumers to purchase the vehicle.
Recommendations:
Based on data included in the case, Porsche’s SUV met most of the criteria discussed
above during its first year on the market. Although Porsche’s sales did not increase dramatically
compared to previous years, they did increase nonetheless. This shows that the addition of the
Cayenne to the Porsche line up did not, in fact, hurt the brand as so many consumers expected.
Instead, it accounted for a considerable percentage of sales and total production during the year
of 2002-2003. However, this success does not negate the large percentage of Porsche enthusiasts
who still felt like the Cayenne was a negative addition to the brand.
If this negative feedback were to continue, Porsche could fall back on one of the
alternatives listed above. However, since data shows the success of the Cayenne in its first year
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on the market, there is a reasonable basis to expect that this success would continue or even
increase in the following years. Therefore, it would not be beneficial to pull the brand completely
from the market unless sales began to drastically decline. Instead, Porsche might benefit from
increasing their advertising budget to create brand awareness in addition to implementing
extensive qualitative research in order to better understand what was causing hostility among
their customers. However, because Porsche’s sales kept increasing and SUV sales worldwide
consistently increased, it seems as though the Cayenne was a success regardless of negative
feedback online. Perhaps Porsche should begin to focus their efforts instead on accessing the
dependability of opinions expressed on Rennlist.
While online brand communities associated with Porsche do not reflect the same success
as sales and revenue data, this may be because individuals who interact in these forums are not a
good representation of traditional Porsche consumers. Based on the hostility represented in some
of these online posts, these individuals have very strong, irrational opinions that may take the
issue too far. While they are considered Porsche brand loyalists, the fact that some of them
would exclude Cayenne drivers from the Porsche “family” and the fraternal traditions associated
with the brand show that maybe their opinions do not represent those of the typical consumer. In
situations such as this, Porsche should wait for the excitement to die down and rely primarily on
data, at least in the beginning of the product’s life. Porsche should continue to release innovative
products like the Cayenne in order to maintain their competitive edge regardless of the initial
reactions of consumers. Without continuous modernization, their target market will become
saturated and their popularity will begin to decline. The idea of a Porsche sedan is an innovative
step and the quick success of the Cayenne proves that the Panamera will have plenty of room to
grow and extend the brand in a new and positive direction.
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Implementation:
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Complete focus groups or interviews to study typical consumers’ reactions to the
Cayenne
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Increase promotion and advertising of the Cayenne to expand brand awareness
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Move ahead with the plans for the Porsche Panamera
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Pull attention away from online brand communities such as Rennlist
Additional Questions:
How much and in what ways has the launch of the Porsche Cayenne changed the meaning
of the Porsche brand?
According to consumers partial to the traditional, high performance, Porsche sports car,
the Cayenne drastically changed the brand in a negative way. However, according to the Porsche
CEO and Cayenne supporters, the brand was not changed at all but simply extended. Based
simply on the style of the car, the Cayenne is a “real Porsche in terms of chassis, performance,
and design” (3). It also corresponds with Porsche’s high technical and visual standards in
addition to being fun to drive, similar to the rest of Porsche’s line up. Therefore, it was clearly
not the vehicle’s design or style that caused the problem; instead, consumers were worried about
the portrait of an SUV driver and how that stereotype in no way corresponded with the standard
owner of a Porsche.
There is no doubt that the introduction of the Cayenne moved Porsche to target a new
group of consumers, but whether or not that should be classified as a negative depends on the
individual. The Cayenne’s target market was essentially “soccer moms” who were family
oriented and wanted an expensive, high performance vehicle with enough space for sports
equipment plus her kids. While traditional Porsche sports car owners were reluctant to be
associated with these individuals, it is nearly impossible to see how the brand would maintain
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their competitive edge without expanding and targeting new markets. Although it is human
nature to resist change, at some point these Porsche enthusiasts need to step back and realize that
an SUV starting at $60,000 is not going to bring their image down that much.
What is the value of Rennlist online brand community to Porsche? How does it help and/or
hurt the brand?
An online brand community such as Rennlist has tremendous value to Porsche as far as
providing a space for consumers to post opinions in a comfortable and uncontrolled environment.
Consumers in this setting can share un-biased and honest views in a place where the only
commonality is owning a Porsche. Unlike a focus group or an interview, there is no pressure or
factors that will influence individuals’ opinions and members can even begin discussions by
initiating seed posts that will then turn into a conversation with other anonymous affiliates. Used
in the right way, information taken from such a site could give Porsche valuable feedback at no
cost or inconvenience. However, as in the case of Cayenne, there are also downfalls to such a
forum.
In some situations, information taken from a site like Rennlist can actually harm the
brand rather than help it. So much negative publicity, such as throughout the introduction of the
Cayenne, can lead to the spread of disappointment among customers and loss of brand loyalty.
Because the members of the site are interconnected as Porsche enthusiasts, there is a sense of
togetherness that may influence consumers to change their mind simply to fit in. In addition, the
strong opinions expressed may not be an accurate representation of the Porsche community as a
whole which may lead to the company overreacting to a situation that is not as detrimental as it
may seem.
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Should Wiedeking listen to the Rennlist brand community? How does the Rennlist brand
community affect Porsche ownership experience?
Wiedeking should listen to the Rennlist brand community only to an extent. As stated
before, it is an important tool for the consumer- it provides a place to vent without consequence,
offers anonymousness, gives access to other owners’ views and opinions, and presents a place to
ask questions without going to an expert or dealer. In addition, it provides Porsche owners with a
sense of belonging and kinship with other owners. That being said, Rennlist also offers a place
where there is no filter, anything can be said, and arguments do arise. Knowing this, Wiedeking
should give some credibility to the opinions posted on this site but should realize that they are
not an accurate representation of Porsche consumers as a whole.
What learning should Wiedeking bring to the launch of the Panamera? How does the
Cayenne launch make the Panamera launch easier? More difficult?
The launch of the Cayenne will make the introduction of the Panamera much easier.
Firstly, a theme of innovation has already been introduced. After recovering from the initial
shock of a Porsche that is not a sports car, consumers will expect similar cars to emerge
following the same path. The brand extension into new target markets will already have been
started, and consumers will hopefully be more accepting. At the same time however, the launch
of the Panamera may be more difficult due to such a negative reaction to the Cayenne. The
introduction of a second non-sports car may push consumers away even further, and Porsche
may lose more loyalty. However, the success and profit they will retain out of the introduction of
a Porsche sedan is far greater than the loss of a few consumers.
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Appendix
Table 1
Year
1998-1999
1999-2000
2000-2001
2001-2002
2002-2003
Sales (€ million)
Increase in Sales
from the Previous
Year
% Increase in
Sales from the
Previous Year
3161.30
641.90
3647.70
486.40
4441.50
793.80
4857.30
415.80
5582.00
724.70
25.5%
15.4%
21.8%
9.4%
14.9%
Table 2
Year
2002-2003
Cayenne Production (in units
Total Production (in units)
24,925
73,284
% of Total Production by
Cayenne
Cayenne Sales
Total Sales
% of Sales by Cayenne
34.01%
20,603
66,803
30.84%
Chart 1
Vehicle Sales in 2002-­‐2003 (in € million) Porsche 911 Porsche Boxster Porsche Cayenne