The competitive environment is the activities that a business operates to compete in an external system (Mithas, Tafti, and Mitchell, 2013, 511). An increase in the number of sellers of specific products or services leads to a rise in competition. There are two types of competitive environment. They include direct competitors (businesses that deal with the same products) and indirect competitors (these are businesses that deal with different products, but they still compete in the market). The most current competitive environment includes a smartphone, automobile, and food industries. The market competitive strategy initiative used by the Audi Company is segmentation. The mentioned marketing strategy has enabled the company to be among the most successful automotive company in the world despite the challenging automotive market (Bhasin, H. 2018, para 3 ). To gain a competitive market advantage, the Audi Company tries to manufacture the latest best-selling car models. It helps the company to produce various models hence making its customers have a variety of options to choose from before deciding on the model they want to buy.
There are different ways in which the company manages its compactors, such as BMW and Mercedes-Benz. The company segments luxurious and cozy cars targeting customers from the upper class in the social group and young drivers who love driving comfortable cars (Bhasin, H. 2018, paragraph 5). The vehicles produced by the company are advanced in technology, and the cars` products are innovative, resulting in an attractive design, high-caliber materials, and build quality. This strategy has made the company to create a strong brand image. The segmentation strategy used by Audi has enabled the company to utilize the Psychographics and Behavioral factors (Bhasin, H. 2018, para 8). The psychographic factor allows a company to target professionals and executives from wealthy families. The behavioral factor is where the company only focuses more on the design and style but not speed. Market segmentation is a strategy used by Audi helps the company to produce affordable and more advanced automotive brands that the company ship to the external markets such as in China, South Africa, among other countries.
Ways in Which Financial and Other Data Are Used For Segmentation Strategy
The main competitors of Audit Company, such as BMW and Mercedes Benz, find it challenging to target the total automotive market for a specific car brand. It is because each part of the market requires a marketing mix that is the market that requires a wide range of car brands. It has forced the three companies to manufacture segments of car brands to suit customers' needs.
Using data census, the Audi Company marketing managers understood their customers` behaviors and the reasons why people prefer cozy cars. Market managers used market segmentation to separate, evaluate, and identify the market target of the company. For instance, the Audi company segment targets the upper-class social group. Because those in the upper class mainly consist of professional and other working-class who tend to buy luxurious cars. A business market for Audit Company is segmented by geographical area. Through the use of data, the marketing managers classified the different consumer segmentation into five groups. They include demographic, geographic, psychographic, benefit, and volume segmentation.
Market managers also used the financial capacity of the company to manufacture different car models. A financial report of 2014 stated that the company produced 1.8 million cars in with sales up 12.3%. Through the report, the managers rated the Q5 and A6 Sedan as the most popular models in terms of sales. In the same year, the company sold almost 500,000 cars in the two models. Audi company core brand deliveries increased by 10.5% to the new record of 1,741,129 in 2014 compared to 2013 where the company sold 1,575,480 cars (Bhasin, H.2018,para1) The financial report given enabled the company to produce the most popular models in larger volumes to increase the company`s profit. Some of the elements used by Audi Company to successfully use segmentation strategy include the financial and competitive position of the firm, detailed information on the external environment of the company, data collected before the company could use segmentation strategy, reliability of the manufacturing, production, advertising and selling team of the company and risk factors that the company faces when using segmentation.
The Financial and Competitive Position of the Audi Company
According to the market insider report on the financial position of Audit Company covered the financial statement of the company from 2013 to 2019. The number of sales in Euros ranged from share earnings data, fundamental data, income statement, balance, and other data. For example, in the share earnings data, the company`s underlying earnings and diluted earnings per share were 89.53 Euros in 2019(Market Insider (n.d). 1).
Audit Company has a significant competitive position over its rivals. The company has a global buying power of the parent Volkswagen group as its main competitive advantage. Volkswagen group comprises of six new brands, including a partnership with FAW Motors in China and the Volkswagen`s regional procurement organizations in the external markets in various countries such as Brazil, China, among others. The company also has over seventy thousand dedicated and passionate employees around the world. These employees continuously work to make the company achieve its goal of becoming a premium automobile worldwide.
Volkswagen`s leading source of competitive advantage is the ability of the company to maintain its global presence in the US and China through a broad distribution of the latest car models and sales network. Some of the leading sources of competitive advantage of VW are; extensive product portfolio, brand image, customers' loyalty, global presence, supply chain network, research and innovation, the large pool of human resources and robust business model (Pratap, A. 2019, para 2)
The company has an extensive product portfolio with industry-leading brands such as Audi and Ducati. The large product portfolio offers a distinct and unique advantage over its main competitors BMW and Mercedes Benz. It also helps in maintaining demand and sales. An extensive product portfolio allows VW to serve several customer segments, such as the average consumer and the premium segment (Pratap, A. 2019, para 5). With great customer-oriented products, the company caters to the different customers` needs and preferences. The company has twelve brand product portfolio.
VW Company has managed to maintain a strong brand image. It has achieved by focusing on the products` quality and innovation and customer satisfaction. As a result, the company experiences higher popularity and more robust sales in the international business. Brand image has a direct impact on both sales and revenue within the company. To maintain the brand image VW Company is investing in technological innovation, passenger safety, among others. When a company has a strong brand image, the company does not lose its loyal customers to other competitors and also the company`s market share ( Pratap, A. 2019 para8).
Customers' loyalty is another source of VW Company`s competitive advantage. The company focuses on technology and passenger safety as a way of maintaining its customers` loyalty (Pratap, A.2020, para 8). Some of the strategies that the company has used to drive customers` loyalty include an extensive customer-oriented product range and the service focus of its staff. VW Company has maintained its global presence through its manufacturing and distribution network. The company has also formed partnerships with several other companies. Through global networking, the company sells its automotive in 153 countries. The company has an extensive worldwide manufacturing and distribution network.
Another source of competitive advantage for VW Company is the supply chain network (Pratap, A. 2020, para 10). The company has a continuous supply of raw materials to continue producing high-quality vehicles. VW Company has managed its global chain of supply because of the stiff competition in the automobile industry. To maintain the supply chain, the company has sourced from several thousands of suppliers from around the world. Having a well-managed supply chain leads to a steady source of competitive advantage. It has also formed long term relationships with many as a means of maintaining the continuous supply of quality raw material. For the company to have a sustainable supply chain network, it has worked in partnership with its suppliers. The company also optimized the use of technology to reduce operational costs and improve production.
The External Environment of the Audi Company
Audi Company is a leading company with premium cars. The company's primary focus is on safety, technology, and style, together with the changing trends in the market and the ability of the company to satisfy the continuous change of their customers` needs on the model of cars. To maintain a distinctive image on the models the company produces, the company has considered the following environmental factor; political, economic, social, technological ecological, and legal considerations (Hassan, S.S., and Craft, SH 2005, 81).
The company has managed to look at the importance of political factors in the global market. The governments of different countries that Audit companies export their products play a more active role in the international business. The active part is seen where the level of control and oversight of large companies in various countries has grown globally in multiple governments. The political environment of a market affects how well brands perform in a particular nation, and the governments have ensured that there are trade relationships between different nations. Audi Company's cars are global products, hence the political environment of several countries around the world that Audi is exporting their products affects the supply chain, business, and sales of Audi automotive (Hassan, S.S., and Craft, SH, 2005, 82). However, for the company to sign of economic stability there should be political stability. When the governments maintain political stability Audi Company usually registers more robust sales and profits for the brand at the end of every financial year.
Another external environment factor is economic factors. It plays a substantial role in the international business of the Audi Company. The impact of economic factors on sales and profitability of exported bends in the global markets is direct and robust. Audi company`s marketing managers understand that both the economic environment and stability of a country affect how well a brand performs in a particular market. Higher economic activity in a given country means higher employment rates and those employed to have a higher dispensable income to spend on luxury and cozy products from Audi company. The opposite happened when a country that deals with Audi manufactured cars experience declining economic activity.
Economic factors have a direct and adverse impact on Audi product sales and profitability. The role of economic factors also looks at the rate of competition on the market that result in higher expenditure on marketing and sales as well as research and development. Audit Company has to note the economic condition of a given country before exporting their products so the company can monitor the business activities in a particular country and decide t...
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