Brand extension
Porsche –True to Brand?
1. Issues on Porsche’s brand equity in related to entering Sport-Utility Vehicle(SUV) market
a. Concerns on brand equity with SUV category
There are two main concerns related to Porsche’s expansion to SUV category. First is whether entering in to SUV market would be a smart move in brand equity’s point of view. And the other concern how a choice of production location might affect Porsche brand. The case identifies three uncertainty which would be elaborated in the following.
i. SUV line might mitigate Porsche’s premium image
Porsche enthusiasts worry that SUV line might depreciate the Porsche image, resulting in losing customers and brand loyalty. Even though Luxury SUV market is growing, there is a risk that Porsche dilutes its image of producing high-end luxury sports car. Even though managements in the company believe that new SUV model is in line with Porsche’s high technical and visual standard, shareholders fear that the company might lower in general esteem of Porsche brand. ii. “Made in Germany” brand for SUV in line with lack of production capacity
With lack of capacity and increasing labor cost in Germany, SUV might need to be produced outside of Germany. A decision of new production facility might seriously affect brand image of Porsche. The company is evaluating how the different location other than Germany could affect brand equity. iii. Competition in luxury SUV might affect brand equity
Competitors like BMW and Mercedes could threat Porsche by relatively easily entering luxury SUV market. Entering to luxury SUV could invite its rivals to enter this market and threat Porsche’s growth in this new segment. Porsche needs time and cost to build brand image in competitive SUV market and Porsche needs to close perceptual gap of customers between Porsche brand associations and SUV market attributes.
2. Pros and cons of decision on production location
a. Stay Home?
i. Pros
1. Porsche will be able to maintain its image of
1. Issues on Porsche’s brand equity in related to entering Sport-Utility Vehicle(SUV) market
a. Concerns on brand equity with SUV category
There are two main concerns related to Porsche’s expansion to SUV category. First is whether entering in to SUV market would be a smart move in brand equity’s point of view. And the other concern how a choice of production location might affect Porsche brand. The case identifies three uncertainty which would be elaborated in the following.
i. SUV line might mitigate Porsche’s premium image
Porsche enthusiasts worry that SUV line might depreciate the Porsche image, resulting in losing customers and brand loyalty. Even though Luxury SUV market is growing, there is a risk that Porsche dilutes its image of producing high-end luxury sports car. Even though managements in the company believe that new SUV model is in line with Porsche’s high technical and visual standard, shareholders fear that the company might lower in general esteem of Porsche brand. ii. “Made in Germany” brand for SUV in line with lack of production capacity
With lack of capacity and increasing labor cost in Germany, SUV might need to be produced outside of Germany. A decision of new production facility might seriously affect brand image of Porsche. The company is evaluating how the different location other than Germany could affect brand equity. iii. Competition in luxury SUV might affect brand equity
Competitors like BMW and Mercedes could threat Porsche by relatively easily entering luxury SUV market. Entering to luxury SUV could invite its rivals to enter this market and threat Porsche’s growth in this new segment. Porsche needs time and cost to build brand image in competitive SUV market and Porsche needs to close perceptual gap of customers between Porsche brand associations and SUV market attributes.
2. Pros and cons of decision on production location
a. Stay Home?
i. Pros
1. Porsche will be able to maintain its image of