Please read the case provided below and answer thefollowing question:

COMPANY Case: Porsche: Guarding the Old While Bringingin the New

Porsche (pronounced Porsh-uh) is a unique company. It has alwaysbeen a niche brand that makes cars for a small and distinctivesegment of automobile buyers. In 2009, Porsche sold only 27,717cars in the five models it sells in the United States. Honda soldabout 10 times that many Accords alone. But Porsche owners are asrare as their vehicles. For that reason, top managers at Porschespend a great deal of time thinking about customers. They want toknow who their customers are, what they think, and how they feel.They want to know why they buy a Porsche rather then a Jaguar, aFerrari, or a big Mercedes coupe. These are challenging questionsto answer; even Porsche owners themselves don’t know exactly whatmotivates their buying. But given Porsche’s low volume and theincreasingly fragmented auto market, it is imperative thatmanagement understands its customers and what gets their motorsrunning.

Since its early days, Porsche has appealed to a very narrowsegment of financially successful people. These are achievers whosee themselves as entrepreneurial, even if they work for acorporation. They set very high goals for themselves and then workdoggedly to meet them. And they expect no less from the clothesthey wear, the restaurants they go to, or the cars they drive.These individuals see themselves not as a part of the regular worldbut as exceptions to it. They buy Porsches because the car mirrorstheir self-image; it stands for the things owners like to see inthemselves and their lives.

Most of us buy what Porsche executives call utility vehicles.That is, we buy cars primarily to go to work, transport children,and run errands. Because we use our cars to accomplish these dailytasks, we base buying decisions on features such as price, size,fuel economy, and other practical considerations. But Porsche ismore than a utility car. Its owners see it as a car to be enjoyed,not just used. Most Porsche buyers are not moved by information butby feelings. A Porsche is like a piece of clothing—something theowner “wears” and is seen in. They develop a personal relationshipwith their cars, one that has more to do with the way the carsounds, vibrates, and feels, rather than the how many cup holdersit has or how much cargo it can hold in the trunk. They admiretheir Porsche because it is a competent performance machine withoutbeing flashy or phony.

People buy Porsches because they enjoy driving. If all theyneeded was something to get them from point A to point B, theycould find something much less expensive. And while many Porscheowners are car enthusiasts, some of them are not. One successfulbusinesswoman and owner of a high-end Porsche said, “When I drivethis car to the high school to pick up my daughter, I end up withfive youngsters in the car. If I drive any other car, I can’t evenfind her; she doesn’t want to come home.”

For its first few decades, Porsche AG lived by the philosophy ofFerry Porsche, Ferdinand’s son. Ferry created the Porsche 356because no one else made a car like he wanted. But as the yearsrolled on, Porsche management became concerned with a significantissue: Were there enough Porsche buyers to keep the company afloat?Granted, the company never had illusions of churning out thenumbers of a Chevrolet or a Toyota. But to fund innovation, even aniche manufacturer has to grow a little. And Porsche began to worrythat the quirky nature of the people who buy Porsches might justrun out on them.

This led Porsche to extend its brand outside the box. In theearly 1970s, Porsche introduced the 914, a square-ish, mid-engine,two-seater that was much cheaper than the 911. This meant that adifferent class of people could afford a Porsche. It was nosurprise that the 914 became Porsche’s top selling model. By thelate 1970s, Porsche replaced the 914 with a hatchback coupe thathad something no other regular Porsche model had ever had: anengine in the front. At less than $20,000, more than $10,000 lessthan the 911, the 924 and later 944 models were once againPorsche’s pitch to affordability. At one point, Porsche increasedits sales goal by nearly 50 percent to 60,000 cars a year.

Although these cars were in many respects sales successes, thePorsche faithful cried foul. They considered these entry-levelmodels to be cheap and underperforming. Most loyalists never reallyaccepted these models as “real” Porsches. In fact, they were not atall happy that they had to share their brand with a customer whodidn’t fit the Porsche owner profile. They were turned off by whatthey saw as a corporate strategy that had focused on mass overclass marketing. This tarnished image was compounded by the factthat Nissan, Toyota, BMW, and other car manufacturers had ramped uphigh-end sports car offerings, creating some fierce competition. Infact, both the Datsun 280-ZX and the Toyota Supra were not onlycheaper than Porsche’s 944 but also faster. A struggling economythrew more sand in Porsche’s tank. By 1990, Porsche sales hadplummeted, and the company flirted with bankruptcy.

But Porsche wasn’t going down without a fight. It quicklyrecognized the error of its ways and halted production of theentry-level models. It rebuilt its damaged image by revamping itshigher-end model lines with more race-bred technology. In an effortto regain rapport with customers, Porsche once again targeted thehigh end of the market in both price and performance. It set modestsales goals and decided that moderate growth with higher marginswould be more profitable in the long term. Thus, the company setout to make one less Porsche than the public demanded. According toone executive, “We’re not looking for volume; we’re searching forexclusivity.”

Porsche’s efforts had the desired effect. By the late 1990s, thebrand was once again favored by the same type of achiever who hadso deeply loved the car for decades. The cars were once againexclusive. And the company was once again profitable. But by theearly 2000s, Porsche management was again asking itself a familiarquestion: To have a sustainable future, could Porsche rely on onlythe Porsche faithful? According to then CEO Wendelin Wiedeking,“For Porsche to remain independent, it can’t be dependent on themost fickle segment in the market. We don’t want to become just amarketing department of some giant. We have to make sure we’reprofitable enough to pay for future development ourselves.”

So in 2002, Porsche did the unthinkable. It became one of thelast car companies to jump into the insatiable sport utilityvehicle (SUV) market. At roughly 5,000 pounds, the new PorscheCayenne was heavier than anything that Porsche had ever made, withthe exception of some prototype tanks it made during WWII. Onceagain, the new model featured an engine up front. And it was thefirst Porsche to ever be equipped with seatbelts for five. As newsspread about the car’s development, howls could be heard fromPorsche’s customer base.

But this time, Porsche did not seem too concerned that theloyalists would be put off. Could it be that the company hadalready forgotten what happened the last time it deviated from themold? After driving one of the first Cayenne’s off the assemblyline, one journalist stated, “A day at the wheel of the 444horsepower Cayenne Turbo leaves two overwhelming impressions.First, the Cayenne doesn’t behave or feel like an SUV, and second,it drives like a Porsche.” This was no entry-level car. Porsche hadcreated a two-and-a-half ton beast that could accelerate to 60miles per hour in just over five seconds, corner like it was onrails, and hit 165 miles per hour, all while coddling five adultsin sumptuous leather seats with almost no wind noise from theoutside world. On top of that, it could keep up with a Land Roverwhen the pavement ended. Indeed, Porsche had created the Porsche ofSUVs.

Last year, Porsche upped the ante one more time. It unveiledanother large vehicle. But this time, it was a low-slung, five-doorluxury sedan. The Porsche faithful and the automotive press againgasped in disbelief. But by the time the Panamera hit the pavement,Porsche had proven once again that Porsche customers could havetheir cake and eat it to. The Panamera is almost as big as theCayenne but can move four adults down the road at speeds of up to188 miles per hour and accelerate from a standstill to 60 miles perhour in four seconds flat.

Although some Porsche traditionalists would never be caught deaddriving a front engine Porsche that has more than two doors,Porsche insists that two trends will sustain these new models.First, a category of Porsche buyers has moved into life stages thathave them facing inescapable needs; they need to haul more peopleand stuff. This not only applies to certain regular Porsche buyers,but Porsche is again seeing buyers enter its dealerships thatotherwise wouldn’t have. Only this time, the price points of thenew vehicles are drawing only the well heeled, allowing Porsche tomaintain its exclusivity. These buyers also seem to fit theachiever profile of regular Porsche buyers.

The second trend is the growth of emerging economies. Whereasthe United States has long been the world’s biggest consumer ofPorsches, the company expects China to become its biggest customerbefore too long. Twenty years ago, the United States accounted forabout 50 percent of Porsche’s worldwide sales. Now, it accounts foronly about 26 percent. In China, many people who can afford to buya car as expensive as a Porsche also hire a chauffeur. The Cayenneand the Panamera are perfect for those who want to be driven aroundin style but who may also want to make a quick getaway ifnecessary.

The most recent economic downturn has brought down the sales ofjust about every maker of premium automobiles. When times aretough, buying a car like a Porsche is the ultimate deferrablepurchase. But as this downturn turns back up, Porsche is betterpoised than it has ever been to meet the needs of its customerbase. It is also in better shape than ever to maintain its brandimage with the Porsche faithful and with others as well. Sure,understanding Porsche buyers is still a difficult task. But aformer CEO of Porsche summed it up this way: “If you really want tounderstand our customers, you have to understand the phrase, ‘If Iwere going to be a car, I’d be a Porsche.’

4 Questions – Answer

1. Distinguish between the concepts of Needs, Wants and Demands,out of the three concepts which one you can relate it to Porschecustomers . Briefly explain the concept of core competency , inyour opinion what are the core competencies of Porsche.

1. Define and explain the concept of brand personality, describethe brand personality of Porsche brand in general, please justifyyour answers

1. Using relevant theory Analyze the buyer decision process of thePorsche Cayenne customer.

1. Identify, explain and justify the main consumer behaviourcharacteristics that influences the Porchebuyers.