Porsche Case Analysis

Part 1: Issues

1. VW wants to diversify Porsche product line and fit into all segmentation (not only the traditional customer). As such, Porsche will face the risk of diluting its brand, alienating its customer base and potentially destroying its competitive advantage.

2. In the other hand, Porsche face the CAFE regulation in the USA, the regulation of average gasoline per mpg (must be at 39 mpg per gallons). If this CAFE regulation passed, Porsche will not be able to sell car in the USA.

Part 2: Current Strategy

Business Strategy

Focus differentiation is where the company targets narrow market and gain advantage through very unique product. In Porsche case, this is done by serving sports car market in which the consumers are inherent to luxury and high-end markets. In this kind of strategy, there are several benefits that Porsche obtained.

First is customer loyalty. This kind of strategy will generate strong loyalty because this strategy caters the needs of very small market and also establish reputation for quality, service, and excellence.

Second is the high margin. Porsche has been able to charge quite premium price (although still lower than the competitors) which resulted in good profit margin. This is because customers perceive Porsche as high value product with strong brand.

Last but not least is customer awareness. Focus differentiation help Porsche to see what customers need and quickly adapt to that needs. Porsche see the changing tastes on its largest market – US market. Because US taste has changed from sports cars to SUVs, Porsche has chosen diversification from only producing sports car to producing sports car, SUVs and sedan. This cause Porsche to change from focus differentiation to differentiation which means, it is still offer product uniqueness but targeted broader market. This move may seem made Porsche to lose its exclusivity or pureness but still, this has proven a good move from Porsche because of the successful sales it had...