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Audi's Marketing Strategies in India

Abstract:This case study discusses the marketing strategies adopted by Germany-based


automobile manufacturer Audi in India. Audi entered India in 2004 by selling
imported vehicles through three dealers. It established a subsidiary, Audi India,
in 2007. The company maintained an aggressive stance and launched several
vehicles at different price points. Audi was positioned as an aspirational brand for
young entrepreneurs and executives and adopted innovative strategies to reach
the segment. It also developed exclusive dealerships, which were used as touch
points to interact with the customers.

Within five years, Audi surpassed Mercedes Benz, which had been present in the country for
more than a decade, and positioned itself as second leading luxury brand in terms of sales.
This case study lists the strategies adopted by Audi on its journey to reach this
position and also discusses the challenges it is likely to face from competitors. It also
discusses how the changes in the macroeconomic environment could affect its fortunes.
Ours is a dynamic brand and we have set the pace for our next level of growth in India. Our
product portfolio, innovative marketing initiatives and focus on dealer expansion are some of the
prime drivers in this competitive scenario."
-Michael Perschke, Head, Audi India, in 2012.

Most Awarded Luxury car in India:Germany-based luxury automobile manufacturer's Audi AG's Indian arm Audi
India bagged almost 15 prestigious automobile awards in India in 2011 under
various categories. Michael Perschke (Perschke), Head Audi India, said, 2011
has been Audi's most successful year in terms of sales which surpassed our
expectations. The Audi A8 L, R8 Spyder, Audi A7 Sportback, and the business
luxury limousine - Audi A6, contributed greatly to making 2011 the strongest
year in terms of sales in India.
And now the awards won by these models not only impressively demonstrate
their success in India but also reiterate our philosophy of thinking ahead of the
curve as well as our ability to bring innovative and progressive products to
India." Continuing its successful journey the Audi RS5 won the Performance Car
of the Year award in 2012 presented by Top Gear Magazine, while the Audi Q5
won the coveted Import SUV of the Year 2012" award given by CNBC TV18
Overdrive.
Audi had been present in India since 2004. It sold imported luxury cars through
three independent dealers in Delhi, Mumbai, and Bangalore. Later, in March
2007, Audi officially entered the Indian premium car segment as a division of
Volkswagen Group Sales India Pvt. Ltd in Mumbai and started assembling a few
of its models in the plant of koda Auto India Private Limited (SAIPL) at
Aurangabad. Initially, the Audi A6 was assembled at the plant, followed by the
Audi A4 series from 2008. Starting our own production there is the best way to
adequately serve such a promising growth market like India," said Rupert Stadler

(Stadler), Chairman of the Board of Management, Audi AG.


The company followed an aggressive marketing strategy to gain a foothold in the
Indian luxury automobile market. It bought in several new products, launched
premium dealerships across the country, and ventured into Tier II and Tier III
cities. Audi positioned itself as an aspirational and inspirational brand among
youngsters. In 2011, it sold 5,511units. The following year it sold 9,003 units as
against the target of 8000 units. It surpassed Mercedes Benz in 2012 to become
the second largest selling luxury automobile brand in India next only to BMW ,
whose sales were 9,375 units in 2012.
Its market share in the luxury car segment grew from 25% in mid-2011 to 34% in
November 2012. , On Audi's strengths in India, Perschke said, Audi's brand
network, varied product portfolio, exclusive marketing activities, and after sales
services add to its strong performance in India." Encouraged by its success, Audi
aimed to become the top luxury automobile in the country by 2015.
But analysts cautioned that though Audi had become a name to reckon with in
the premier segment in the Indian Automobile industry, it could face fierce
competition from other luxury car makers which were already present in the
country as also others which were planning to enter the market. They added that
the higher taxes imposed on luxury cars and SUVs and the hike in import duty on
completely built units imposed in the Union budget of 2013, could deter Audi's
plans to sell around 10,500 cars in 2013. According to Perschke, 2012 was a
stellar year for Audi, but we are confident of surpassing that and making 2013
more rewarding. However, the recent announcements in budget may dampen
the spirit of customers."
Background Note:The history of Audi dates back to November 1899, when August Horch
established A Horch & Cie. Motorwagen Werke (Horch & Cie) in Cologne,
Germany. The company released its first car in 1901. Later in 1909, Horch left
the company following differences between the Board of Management and the
Supervisory Board. After leaving Horch & Cie, he immediately established a car
company named Audi at Zwickau, Germany, on July 16, 1909. The company
began its operations as Audi Automobilwerke GmbH from April 25, 1910. In late
1914, it became a listed company.
Audi in India:The luxury car segment in India witnessed consistent growth from the turn of the
century thanks to an improved economy which resulted in increasing the
purchasing power of people. The growing demand for luxury vehicles attracted
automobile manufacturers like Mercedes Benz and BMW to the country. Though
Audi ventured formally into India only in 2004, the name and the brand had been
familiar to Indians right from the 1980s, when one of the top cricketers of those
days, Ravi Shastri, won an Audi in the Benson & Hedges World Championship
cricket in Australia.
The Vehicle Range

Audi's portfolio for India included models distributed worldwide with slight
variations to suit the Indian road conditions. This included sedans and Sport
Utility Vehicles (SUVs) in petrol and diesel variants. Audi started selling one of its
most successful models, the A6 sedan (completely built up), in 2006. The Audi
A6 was built in two models the 2.8 FSI V6 and the 2.7 TDI V6 with different
engine capacities. Both models were characterized by fuel efficiency. Audi
started assembling the A6 in India in late 2007. By October 2008, the Audi A4
model was also being assembled at the Aurangabad assembly plant.
Positioning the Luxury Brand
Audi's target group in India was a mix of professionals, businessmen,
entrepreneurs, and celebrities. At the time of its entry, company officials were in
a dilemma about Audi's positioning. They felt that Mercedes had a huge following
among the older generation, while BMW was a hit with the younger generation.
Then Tiers designed a strategy of creating a niche for the company in India.
Audi planned to bring its halo models to the Indian market initially and position
them as the ultimate symbol of aspiration among potential customers. According
to Perschke, "These cars build the dream, while customers started small with
cars such as the A4 or even the Q5 to a certain extent however their target in
terms of achievement would be the higher models and they work their way up
the order."
The Car Showrooms
Audi India strongly believed that a strong dealership network was important to
drive sales in the country. It wanted the showrooms to offer a luxurious
experience that would reflect the brand values of the company sportiness,
progressiveness, and sophistication. The company strongly believed that it had
expertise in designing and manufacturing premium luxury vehicles and for its
marketing and sales, local people with well established connections and network
would be ideal.
Reaching the customer:The growing disposable incomes of Indians and their increasing focus on luxury
brands in spite of soaring costs supported the growth of brands like Audi in India.
The Annual World Wealth Report of 2011 given by Merrill Lynch and Capgemini
reported that India had the worlds 12th largest high net worth population, which
was growing at 20.8% annually. The survey also reported that owning a luxury
car had became the second most important aspiration in the list of this section of
the Indian population next to owning the most sophisticated house. Analysts said
that by 2015, India was likely to become the fourth largest market for cars in the
world
The Result:Audi sold about 5,511 units in 2011 in India. Between January and March 2012,
Audi sold 2269 units to become the second largest luxury car maker in the
country, surpassing Mercedes Benz, which had sold 2130 units.
For the year 2012, Audi set a target of 8000 units. In September 2012, it

recorded the highest monthly sales of 1,011 units. In the process, Audi also
crossed its annual target within nine months. Commenting on its success,
Perschke said, "With the strong numbers in September, we have already crossed
last year's total sales numbers. It is a big achievement for us. We are now fully
confident of crossing our target of selling 8,000 cars in 2012 by a good number."
Which Car will win?
By the time Audi entered the market, Mercedes Benz and BMW had established
themselves as the major players in the luxury car segment in India. So analysts
were skeptical about people accepting the Audi in the country. But within four
years of its entry, Audi gained recognition and was included in the premium car
segment list along with BMW and Mercedes Benz. It stood third after BMW and
Benz till 2011. In 2012, Audi surged ahead of Mercedes Benz in sales to occupy
the second position.

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