Vorsprung durch Technik is german for advancement through technology and Advancement is exactly what I want to discuss today.
In this post I would like to consider two possible growth strategies that I think Audi can use to grow its brand equity. These strategies will also go along way in positioning the Audi brand a a full brand offering. As per the market expansion grid I feel Audi could look at the product development quadrant, that of selling a new product to existing customers.
Currently Audi’s two biggest competitors BMW & Mercedes-Benz both have unique offerings for their (luxury) brands, BMW offers the Enduro & Road motorbike and Mercedes is soon to launch the X class which is a double cab bakkie. These are examples of brand and line extension strategies.
Mercedes-Benz also has a very successful Cargo division that Audi can look into in the future (this could possibly be done as a co-brand with a successful cargo group like Freightliner), but for the sake of not making this post to long and boring I will not consider this in detail.
So why do I feel this full brand offering is necessary? Simply put, many consumers own more than one vehicle or form of transport. Imagine if you were, if you aren’t already, a massive fan of Audi but you need to buy a motorbike to beat the morning traffic. What would you do? Buy a Honda, Triumph or possibly BMW R1200gs?
Or what if you needed the functionality of a bakkie or really just needed that extra space it provides, or even more just wanted the tax benefits you can get with a single to cab and a half bakkie. What would you do? Buy a Ford Ranger, VW Amarok or the new stunning Mercedes-Benz X Class that is due to lunch this year.
But you are a loyal Audi driver?
So clearly these brand extensions would not only add value but will also help customers become true brand ambassadors of the brand. The risk though with any brand extension is that it confuses the consumer, which I don’t think would be the case in this brand extension. Another risk is that the new extensions do not align with the core vision and values of the core brand. This would have to be a focal point as training of staff of a motorbike division would have to be given high priority to make sure they represent the brand with the same Values Audi’s vehicle division does.
So what strategies would Audi have to employ?
So a example of line extension would be if Audi created a bakkie in a Single , Cab1/2 & Double cab version. The benefits of Line extension is that it gives the customer more options and the new product is given a competitive edge as it uses the parent brand to leverage consumer interest. This is in fact also true of the other type of product extension we will discuss (Brand extension). Other advantages are obviously profit increase & further brand interest. A risk of this extension is that if the line fails or encounters serious issues it could potentially harm the parent brands, brand equity.
Thee are two types of line extension according to Riezebos et al. (2003:187) and with this Audi bakkie the Horizontal type line extension should be used, where there is little if any difference in prices between the product variant. After all its still a Audi.
Audi creating a Road & Off-road/Enduro bike would be a example of Brand extension as motorbikes are categorized as being in a different category to motor vehicles (motorcycles). Once again the benefit of a extension like brand extension is that it leverages the positive reputation of the parent brand. This gives the opportunity to consumers of engaging with a favored brand and the quality associated with this brand in a new product category.
According to Keller & Aaker (1998:356) there are two types of brand extension and this would fall under Corporate brand extension, that is a extension that relies heavily on the corporate name when launching a new product. This is in hopes of leveraging the strong name of Audi as a german engineering giant to the consumer.
I must be honest that I’m surprised that these types of extension have not been explored by Audi, but then again, maybe it has and we will soon see a concept at the famous Geneva Motor Show
The market expansion grid (https://youtube.com/watch?v=vyJLde4edR4)
Klopper & North, 2011:225
Riezebos et al. (2003:187)
Keller & Aaker (1998:356)