Chapter 14 Marketing Channels and Retailing

Over the weekend I visited the Best Buy in my neighborhood. The store was in a shopping mall and surrounded by other retailers. The first thing I noticed was the sign on the store. It was illuminated in bright yellow. Best Buy is a retail chain that specializes in electronics. Recently the company's CEO Hubert Joly said that Best Buy is now an online retailer first, but the brick and mortar stores are still important. Best Buy has been seeing a steady double digit increases in its online sales, but a steady decrease in the brick and mortar store sales. Joly said that they wanted to be the go to electronics retailer for the millennial generation the same way they had been for the baby boomers.

When I entered the store I was surprised by how many different sections there were.
For example the audio section was broken up into different subsections, categorizing each so that products would be easier to find. There were also sections for items from a specific manufacture like Beats By Dre, Apple and Samsung. The portable audio subsection was then broken down further to two categories, small form factor speakers and headphones. And even to the headphone section had signs on the shelves showing where the over ear, on ear, in ear and mobile device compatible headphones were. Best Buy did a very good job figuring out the layout of the store. It helped customers find exactly where the products they were looking for would be. What was not good was the fact that they were out of stock on the headphone I wanted and as I looked around the show case I saw that they were out of stock on a lot of the items that were listed. This might have something to do with the fact that half of Best Buy's in store sales are ordered by customers online and shipped to that specific store for pick up. 


Best Buy has recently started to develop a new data mining software called Athena that will give you suggestions based on what your browser history shows you have been searching for. They also switched out their search engine on the website to one that offers better results for customer searches. If you follow the money, it is clear where Best Buy is focusing their efforts. But the pivot to online retailing might be hurting the quality of shopping at the physical location. As a customer I didn't feel that the service was what it should be. Not once was I approached an asked if I needed help. When I asked a sales associated about the out of stock product I was directed to a computer where I could order it from the website and ship it to my house or the store.

Chapter 6 Consumer Decision Making

A Porsche 911 is one of the iconic car brands from the sixties that is still on sale today. For some customers the purchase of the car is very sentimental, maybe a childhood dream car. For others it can be bought solely for status, to impress friends at the country club. The Porsche has the ability to be a jack of all trades when it comes to satisfying what a customer expects what the car to do for them.

Firstly any customer looking to buy a 911 that searches the non marketing controlled sources like EVO or Car and Driver, will be berated with car of the year awards and accolades. And they will all echo what Ferry Porsche said, “The 911 is the only car you could drive on an African safari or at Le Mans, to the theater or through New York City traffic.”

Buying a sports car is not something most people do lightly. It will require extensive decision making and a lot of involvement on their part. A perspective buyer will think about what the car says about him. Buying a rosso corsa (racing red) Ferrari might come off as a bit outlandish to others, but a white 911 gives you the brand recognition and head turning looks without putting people off. Its an unassuming cool. That is the type of social visibility the Porsche offers.

The 911 permeates cultures all over the world. It crosses languages barriers, and reaches through to all social classes. The car is usually restricted because of the cost to the middle and upper class. A test was conducted using a 911 where it was concluded that driving the car can actually increase the amount of testosterone that the driver produces. It goes to show that driving the car can actually make you feel better.

There are many reasons for buying a 911. It could be the status symbol, or the performance. The way it makes you feel or the fulfillment of a childhood dream. But something buyers will over look is the way a 911 makes others feel. The emotion it evokes in people young and old. Inspiring a young child to dream or making someone remember their dreams as a young child. Ultimately the sports car is an emotional purchase and the 911 is one of the most emotional
sports cars on sale today.

Chapter 5 Developing a Global Vision

Porsche's first production car was entirely hand built but they found this process to be inefficient, too expensive and time consuming for what they wanted to be, a volume production car company. Since then Porsche has used a capital intensive method of production. choosing to focus on technologically advanced methods of production rather than a Labor intensive model. Porsche was one of the early iterators of technologies like the double clutch transmission and carbon ceramic brakes. They were also one of the first to use materials like silicon carbide in their cars. Porsche has been building the 911 at their factory in Stuttgart, Germany since 1964.

Porsche is a multinational company that sells the 911 all over the world. Even though the 911 is sold in different countries with different cultures, it is marketed and sold the same way. This means the marketing and promotional strategies you would see in America would be the same thing you would see in the United Arab Emirates. Porsche has shown substantial interests in China as a new market for their cars. They have been spending a lot in promotion and on setting up dealerships to make the car more available. They are currently working on entering the markets in 15 different countries, mostly in Africa as part of their growth strategy.

Porsche uses the one product one message strategy for the Porsche 911. It is marketed as the practical sports car and attention is drawn to the heritage and the racing prestige, with their 16 wins at the 24 Hours of Le Mans race in France. The most for any car manufacture in history. Porsche built about 30,000 911s in 2013 most of which will be exported to other countries.

Porsche has licensed out the digital versions of their cars to Electronic Arts to be in video games like Need For Speed and a sub licensing agreement to Turn 10 Studios for the Forza Motorsport racing simulator. This is used as a promotional tool for Porsche as it creates fans for the cars and shows them the performance that the car is capable of. It also creates potential future customers for Porsche and gives the fans who are not fortunate enough to buy the car a chance to enjoy them as well.

Chapter 4 The Marketing Enviroment

Porsche exhibited environmental management when they designed the 911. The car is small, it has backseats, it has great visibility and it is known for its reliability. They built the car with a purpose. From the beginning the car was designed to be very practical. It could be used everyday but was sporty enough to compete with a Ferrari. This set the bench mark for competitors in the price range of the Porsche. The Porsche was reliable, the interior felt luxurious while still being ergonomic, and it was practical enough that buyers could use the car everyday. Sports car manufactures did not have an answer for the 911 in 1963 and many of them still don't have an answer today. Porsche fundamentally changed what the market expects a sports car that costs a hundred thousand dollars to do.

In 1998 Porsche switched from air cooled to water cooled engines. One of the reasons they made this change was because the water cooled engines had a lower maintenance cost than the previous air cooled engines. Also the cars gained even more reliability due to better cooling from the new system. Porsche also changed the body shell of the 911 in 1998 to reduce the amount of drag the car had which improved performance and improved fuel efficiency.

The 911 has seen its demographic remain largely unchanged since its introduction. It has always been a desirable car and has found favor among a mostly male audience. It usually goes from the bedroom wall in a tween or teen's bedroom to their garage when they grow up. Because the Porsche has been around for fifty years, it has had a product life cycle that stretched to customers from before the baby boomers all the way to Generation Y.

During the 2008 recession the 911 saw interest from customers who usually, would have been buying more expensive cars from manufactures like Ferrari and Lamborghini. People who wanted the same performance and brand recognition but without the high costs. This prompted them to created special editions like the 997 Sport Classic

and the 997 Speedster that offered a more premium and exclusive feel than the standard 911 for buyers looking to spend a little more. Porsche also stimulated their sales by showing more focus on the Asian and Latin American markets.

Ethics and Social Responsibility

Porsche code of conduct:
 we act responsibly, for the benefit of our customers, owners, and employees;
- we consider compliance with international conventions1), laws, and internal
rules2) to be the basis for sustainable and successful economic activities;
- we act in accordance with our declarations; and
- we accept responsibility for our actions.

Part of the experience in owning a sports car is the thrill of the danger, and Porsche has had to be careful how they market this experience. Porsche had cars like the Spyder that James Dean died in or more recently the Carrera GT, the V10 hyper car that Paul Walker died in, that became known for the accidents that they were associated with.
 The 911 however became known as a widow maker because of its radical design. By having the engine hanging over the rear axle the car acted like a pendulum in corners. Drivers had to be ready when turning the car, to counter the back end swinging out. Porsche was so adamant in those days about keeping the engine where it was that they tried everything to counter the effects the engine position had on the car. They even tried filling the front bumper with lead to counter act the weight bias. Porsche felt that the performance attributes gained with the rear engine positing was too great to lose so they stuck with it and over the years they developed the chassis to handle the car's weight bias. The danger associated with driving the car was one of the things that made it popular. Selling the car knowing that it had what some would call a design flaw could be seen as ethically incorrect.
Popular automotive journalist Jeremy Clarkson said that in the 80s and 90s the 911 had an added x factor that the current models are now missing. He went on to say that the new cars feel clinical in comparison, and the safety features take away from the car's character. This change started in the late 90s when Porsche switched to water cooled engines in order to lower maintenance costs. Porsche started showing concern for fuel efficiency and safety. They started looking into new energy sources like bio fuel, diesel and electric power. We can see this focus reflected in the cars they are now testing, like the hybrid 919 LMP1 Le Mans racer and the 918 hybrid production car.

This technology which is undoubtedly going to seep down into the lower range of cars is Porsche exhibiting Social Responsibility. Building cleaner cars that emit less CO2. And cars with more safety features to help protect the driver. One of the new technologies Porsche is using to make their cars safer is the rear wheel steer. This is where the rear tires are calibrated to move with the front wheels to, at low speeds, make the car more maneuverable and make the car more stable at higher speeds.
Porsche is working on keeping all of their stakeholders happy. They are trying to sell a safer product, that will make the brand look more responsible, and avoid legal battles. They are using technologies that will make the cars cleaner while keeping performance moving forward. They will also benefit from the green marketing in using these new clean technologies.

Chapter 2 Strategic Planning for Competitive Advantage

Porsche worked tirelessly on their new 991 designation 911 to fend off new attacks from Jaguar with the new F Type that offers a more visceral experience for a lower price than the 911. And the new SLS inspired Mercedes AMG GT that is built to compete directly with the Porsche. With the new 911 Porsche decided to change fundamental things about the car, like moving the engine so it now sits in front of the rear axle rather than behind it, and switching from the traditional hydraulic steering systems to a electromechanical unit. They also opted not to offer a manual transmission in their new GT3 which had long been heralded as the last super sports car that offers a manual box. These changes that Porsche has been making can be seen as part of their product development strategy. A strategy that they hope will keep the 911 the most desirable option not only for fans of the 911 but for any prospective customer in the sports car market.



In 2003 Porsche started an RS program for their 996 GT3 to meet the needs of a growing segment of the market that wanted a lighter, track ready version of their sports cars. The cars had to meet circuit regulations, so things like a roll cage, the five point harness and a fire extinguisher was included in the car when it shipped from the manufacturer. These cars had to be able to set fast lap times on Sunday, but still be usable enough to drive to work on Monday. When the 996 GT3 RS launched it was going up against Ferrari's answer to the track day market, the 360 Challenge Stradale. Porsche showed Core Innovation with their RS program and even though the 360 CS went on to become a legendary Ferrari, the GT3 RS was such a commercial success that it became the standard for all track day cars.

The sports car market is rapidly growing. In recent years we see china quickly becoming one of the largest consumer markets for luxury sports cars. In response to this we see manufactures building cars that satisfy the needs of this growing market. Lamborghini has tailored their new Huracan to be more appealing to the Asian market by giving it softer styling cues and making it easier and safer to drive quickly on the road. The Star sports car for Porsche in China is the 911 and they have gone a different route than Lamborghini. Instead of tailoring a car for the market Porsche offers the same package but invested more in distribution by opening more dealerships. As it stands Lamborghini is set to see a 5% increase sales for 2014 while Porsche is expected to see an increase somewhere in the low double digits.

Preforming a SWOT analysis on the Porsche 911 would show that its greatest strength is its heritage. The name 911 is one shrouded in tradition. It has a chassis that has been continuously develop for 50 years and one of the most iconic silhouettes in history. Its weakness would be the changes that they have been making to keep the car relevant and desirable. By making these changes like not offering the manual transmission Porsche is alienating a very core group of Porsche fans in order to be desirable to a wider audience. This results in Porsche building a car that might not enjoy the longevity and deity status among car enthusiasts as the older air cooled 911s do. It is also likely that these newer cars will never be considered classics. 
External Opportunities for Porsche is the emerging Asian market. They can use that 50 years of heritage to create the same following that it enjoys in the United States and Europe. These nations like Korea, Beijing, Singapore, India are changing socially and economically, and the nouveau riche wants something that represents their status without showing how recently it was acquired. Finally their threats, Porsche has long been at the top of the sports car range and after a decade or so of running unchallenged it is facing very strong competition from both Jaguar and Mercedes AMG. How Porsche will respond to their new challengers remains to be seen.

Even though Porsche does not enjoy the competitive cost advantage it does have the Product service advantage over its competitors. One of the ways Porsche continues to maintain a good relationships with its customers is by building parts for their cars long after they are legally obligated too. Porsche is also a well known brand name usually looked upon with respect even by people who are not car enthusiasts.

The product itself is a performance orientated car sports car that has 50 years of history, race wins and engineering advances under its belt. Alot of people grew up with Porsche and Lamborghini on their bedroom walls and when they became adults the Porsche still resembles what they day dreamed about as children. Porsche understands distribution and they spend alot of money on making sure that they can get their cars where people want them. They are currently investing in doubling the number of dealers in China by 2015. And they recently opened the Porsche Centre Chengdu Airport in China which serves as a dealership, showroom, customer service desk and a place for enthusiasts and customers to see a full line up of all the Porsche models. Porsche does not price competitively, the new 991 911 is the most expensive Porsche 911 ever made. In the face of new competition we may see a change in the pricing strategy from Porsche.

Chapter 1 History and Mission Statement

The Porsche 911 is the flagship of the current line up of Porsche. It is a two-door, high performance sports car made by Porsche AG of Stuttgart, Germany. It has a distinctive design, rear-engined and with independent rear suspension, an evolution of the swing axle on the Porsche 356. Since its introduction in 1963,^[1] it has undergone continuous development, though the basic concept has remained little changed.^[2] The engine was air-cooled until the introduction of the Type 996 in 1998.
Throughout its lifetime, the 911 has been modified by private teams and by the factory itself for racing, rallying and other forms of automotive competition. It is among the most successful competition cars ever. In the mid-1970s, naturally aspirated 911 Carrera RSRs won major world championship sports car races such as Targa Florio, Daytona, Sebring and Nürburgring, even against prototypes. The 911-derived 935 turbo also won the coveted 24 Hours of Le Mans in 1979.

 Mission Statement: Tradition Future

911. Three digits. Nothing more than a logo. And yet it represents a legendary Sports Car concept.Today's 911 still has many stories to tell. Of heroic race victories. Of a design that has become iconic. Of countless childhood dreams. And of a timeless idea.
The 911. Tradition Future. Since 1963