Chapter 11: Developing and Managing Products

The auto industry, like the tech industry is subjected to a increasingly rapid rate of change. From trends like smart phone connectivity to mechanical advancements like dual clutch transmissions. In order for companies like Porsche to stay competitive they have had to introduce a number of new product lines as well as improve their existing products. The Porsche 918 Spyder is one example of a new product by Porsche. The hybrid car is powered by an internal combustion engine and two electric motors. The car is a culmination derived from everything they have learned from the Carrera GT and their RS Spyder Le Mans racer. While Porsche touts the car as an technical showcase for what entry and mid-level Porsche models will
have in the near future, it is also Porsche trying to be competitive since both Ferrari
and McLaren have launched high performance hybrids as well.

Looking at the Product life cycle of the Porsche 911 and specifically the 991 model, Sales have been steadily increasing since its introduction in 2011. The car sold 19,377 in 2011, 25,457 in 2012 and 30,205 in 2013. Based on the 9 year life cycle of the Porsche 997 (previous model) and the increasing sales numbers, the Porsche 991 is still in its growth stages. We can expect to see the sales for this model peak in a few years, followed by some different iterations to extend the maturity and eventually Porsche will stop production of the 991 and introduce their new model. Because of the rate of technology and the fact that some things are obsolete by the time they launch, it is interesting to see how Porsche will handle the life cycle of the 991. They may offer a mid cycle refresh of the car the same way they did the 997, but that might not be enough. Add that to the fact that they will now be competing with Mercedes, Jaguar, McLaren and Tesla, Porsche will have to work harder than ever to develop better cars in order to remain on top.

Chapter 12 Services and Nonprofit Organization Marketing

Porsche offers services to both the general public and to business consumers. These services range from things like maintenance at the dealerships for both current and previous models, all done by certified Porsche technicians. To business orientated services like Porsche Consulting that helps companies develop mechanical, calibration and CAD systems for different applications whether it be automotive or otherwise. 

Porsche uses their dealerships as a way to distribute their services. Through their dealerships they have a chance to find out more about their customer's lifestyle and can offer them additional services and products that would benefit them. Porsche realizes that their dealerships can serve a purpose beyond just selling the car, it can make a one time buyer a repeat customer. They also offer the Porsche Classic service that offers genuine parts for discontinued models. Porsche has invested a lot in emerging markets like China. To ensure their success, they have been focusing on completing over a hundred dealerships by 2016. In hopes that they can satisfy demand and be able to distribute their services efficiently to their customers.

Porsche also offers the Porsche Driving School that focuses on teaching customers how to get the most out of their cars. Porsche employes racing drivers as instructors to attract clients and to have them taught by people who have real racing experience. They hold events at world renown race tracks and drivers can also earn their racing licenses through this service. Porsche offers a few different pricing options for the driving lessons. Depending on what type of training you want the classes can go from $1,800 for a one day precision course to $6,000 for a three day racing licenses (Masters Plus) course.

Chapter 10 Product Concepts

A Porsche 911 would be considered a Specialty Product. It is a sports car that serves a dual purpose; it can be used on a race track as well as a daily car without sacrificing too much utility in either segment. This dual utility is what makes the 911 a great car, and very hard to substitute. 

Porsche has a wide product mix that stretches from the small two seat convertible Boxster, all the way to the full size family SUV, the Cayenne. Porsche is keen to fill in each of their product items with a deep product line. Porsche does this in order to cater to the different types of customers that may be looking into purchasing one of their product items. For example Porsche offers the standard 911 Carrera, a 911 Carrera S, a 911 GTS, a 911 Cabriolet, a 911 Cabriolet S , a 911 Cabriolet GTS. They then proceed to offer a four wheel drive option for each of these cars. After that there is the 911 Targa and Targa S models, the 911 Turbo, Turbo S, Turbo Cabriolet and Turbo Cabriolet S. Finally the last two options for Porsche 911 buyers are the 50th Anniversary Edition and the GT3. Porsche is rumored to be adding two more cars to the 911 product line very soon. The GT3 RS and a 911 that uses Porsche's new E-Hybrid systems. Porsche also is known for having and even more convoluted options list that is notorious for adding an extra thirty thousand dollars to the car's sticker price.

When Porsche launched the Boxster in 1996 it used alot of the components from the 911. Things like the doors, headlights and wing mirrors were parts all borrowed from the 911. This continued up until recently when Porsche redesigned their Product mix, they decided it was time for the Boxster and the Cayman to have more bespoke components.

When Porsche launched the 991 911 GT3, They sold it with a 10,000 mile warranty. This was unheard of for a car of this type. A car that was made to be thrashed on a racetrack. One of the cars best features is its engine. A new engine that Porsche originally designed for their race cars, that revs to 9,000 rpm. Porsche had to make sure that every component was able to withstand the strains of running at 9,000 rpm. When the early engines did fail, Porsche honored their warranty, albeit much soon than they'd hope they would have too. But the fact that a warranty like that was offered by Porsche shows how much faith they have in their engineering teams and how confident they are in the cars that they produce.

Chapter 17 Personal Selling and Sales Management

One of the reasons Porsche has been able to sell the 911 for 50 years is because they know how to keep their customers coming back. Porsche has been committed to not only building a great sports car but building relationships that lasts for generations. A relationship that like a car, can be pasted down from father to son.  One example of this commitment to generational relationships would be the Porsche Classic workshop. It is a special workshop, separate from the production factory, that stores and rebuilds parts for the older models Porsche cars. Even though Porsche is not legally obligated to keep producing parts for cars older than ten years, they realize that some of their customers keep the cars for a long time. Either as a daily car, a collection piece or saving it to pass down to their children or grand children. 911s from the air cooled era have seen the auction prices sky rocket at auctions. This is impart due to the fact that Porsche makes the classic
911s affordable and easy to maintain. You can go to the normal Porsche dealer and order the parts from the Porsche Workshop and have someone at the dealer install it for you. There is no need for a third party mechanic or a classic parts dealer.

Porsche uses a mix of employees for their Classic Workshop. Some of the craftsmen have been working at Porsche since the sixties while others only just finished their apprenticeship. Because Porsche uses original parts for the older cars, the parts are usually made the same way i
t was originally. Meaning that the old techniques like manually pressing the metal for the body panels have to be used to recreate these parts. This makes the Classic workshop very expensive for Porsche to run but they see it as investing in the peace of mind for customers. The current buyer will be comforted by the high resale value and the reliability while the classic owner will be not be afraid to enjoy his car out of fear that parts will be hard and expensive to come by.

Porsche has also been offering the Porsche Sport Driving School for 40 years. This is a way for Porsche to show their customers how to get the most out of their cars on a race track and teaching them techniques to help them be more competitive. Porsche would employ retired Porsche racers to be spokespersons and a driving instructors. Porsche uses every opportunity to get someone like Jeff Purner or Mark Lieb talking about their cars and the driving experience because these people are well respected in the motor racing community and their opinions are respected.

Chapter 16 Advertising Public Relations, and Sales Promotion

Porsche's advertising objective for the 911 has been the same since its introduction 50 years ago. They market the 911 as the practical sports car. While the practicality and the performance are reasons for buying the car, another reason is its exclusivity. The fact that not everyone can afford it puts the car in a category reserved for the most desirable sports cars in the world. Porsche is in a unique position with the 911. They have already developed a name for the car, a successful racing career and a trust with the general public in regards to the performance, safety and reliability. Porsche now spends most of its advertising budget on keeping customers aware of the car.

Porsche has a few mediums both direct and indirectly of advertising to their customers. They regularly sponsor and compete in racing events all over the world. From the 24 Hours of La Mans and the 12 Hours of Sebring to smaller touring car events like the Grand-Am and American Le Mans. Porsche holds special press day meetings when releasing new cars, so that automotive journalists can get a chance to drive the car early and give a review of it. They sometimes even send the magazines one of their cars to use over a period of time and give an impression of what the car is like to live with. These review scores given by the journalist can greatly impact how well the car sells in the region. Porsche also does paid advertising in magazines and on the internet.

Recently Porsche has had an issue with public relations. When they started selling the 991 GT3, they began receiving reports of the engine catching fire and destroying the car. Porsche recalled all of the 785 units they had sold to that point. They were forced to stop production, fix the problem which was caused by a faulty screw in a connecting rod and replace every engine. They were then accused of not being fair by UK GT3 owners since customers in the UK received less compensation than their counter parts in other regions. Even though these problems are not uncommon with new car launches, for example Ferrari had an issue with the 458 Italia were the glue in the wheel arches would catch on fire and destroy the car, Porsche is expected by the public to be better than every other sports car maker. It is an unrealistic expectation but nevertheless it is one that the engineers in Stuttgart will undoubtedly try to live up to.

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.