INTRODUCTION This coursework entitled Marketing is about creating a marketing strategy for a new or existing product.

The product I have chosen here for this assignment is the newAudi A6. Audi A6 is the latest model of the company to hit the road of the UK in April 2004.

History
The badge of Audi which reflects the 'Four Rings is the emblem of one of the oldest car manufacturers of Germany. This Four Rings emblem tells about the merge which took place r in 1932 among the four car manufacturer. They were Audi, DKW, Horch and Wanderer and can be said as the root of present day AUDI AG. The Audi Company current hold the reputation of producing high quality and long lasting cars. Technologyis the Audi Slogan. Their quality resulted with the net profit of 816 million in 2003, which was 5.4 million more than as compared to 2002. Audi UK is the most efficient and successful importer of Europe which has its increasing sales ratio each year since 1999 as in 2003 the sales boomed to the figure of 70,107 and made a 2.7% of market share. Audi UK is an independent company in UK since 10 years after it separated from Volkswagen Group in 1993.About 131 Audi centres are proudly serving in UK presently.

The new Audi A6

Lets see What Company say about the new A6: The creation of a class-leading executive saloon calls for a broad range of abilities. Supple ride comfort, but with precise and clear feedback; power, but with fuel efficiency; an exhilarating driving experience, but with luxurious accommodation for four. The new A6 triumphantly reconciles these apparent opposites through advanced technology and design.

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bl nd of opposing qualiti s; but a compromise in none The car made its first appearance at the 2004 Geneva Motor Show on the 2nd of March. It has been announced that prices of this car will range from 24,175 to 42,775 which is only a 1% price increase on the old model. The car has many new features both aesthetic and functional such as leather seats and upholstery, V6 and V8 petrol units, si speed gear box and improved dynamic suspension.

INFORMATION GAT ERING

To find out about the new Audi A6 I must gather information about it and also marketing theory to enable me to come up with a suitable marketing strategy for the car. The ways that I have gathered information about the new A6 are: Product brochures I collected a product brochure and price list from an Audi showroom. These contain information about the car; the various types, specification, possible colours, extras, prices, etc. Audi website the Audi UK website is www.audi.co.uk. This contains information about Audi cars including the new A6. It contains a lot of the same information about the car, but also tells you about the company in general and has regularly updated information. Audi annual report 2003 this has background information about the company and financial, marketing and product information from the past year. I downloaded this from the Audi website. The sources of information I used to find out about more developing process are: Text books the text books I used most is Intermediate Business byCarysforth, Rawlinson and Neild and The Complete A-Z Business Studies Handbook by Lines, Marcouse and Martin. These both contain information about all aspects of business theory including marketing. Websites there are numerous websites, such as www.bized.co.uk, that contain information about business theory. I mainly used these for information not found in other sources as it is more time consuming.

Handouts the three handouts given to me are Marketing, Marketing Mix and Marketing Objectives, Strategy and tactics. Notes class work notes provide background information about the topic of marketing. I will also carry out primary research to find out more about what the consumer wants from the A6. Developing Marketing identifying, anticipating and fulfilling the customer needs and wants in a mutually beneficial process. It must be beneficial for both sides; it involves meeting the organizations objectives as well as the customers. Identifying customer needs is done through market research. Anticipating customer needs is done through forecasting. Fulfilling customer needs is done through the four Ps: Price selling at the psychologically right price. Production selling a range of products with appropriate features and branding. Promotion may involve adverts, sales promotion, PR, etc. Place making sure the product is sold in the correct outlets.

Market Research
Market research gathering, recording, analysing and presenting information relevant to the marketing process. It is part of marketing planning at the gathering information stage. The purpose of market research is to: * Identify opportunities and threats (such as changes in the market) *Analyse alternative approaches (such as changing the price) * Review progress (such as monitoring changes in sales after a promotion) Before a firm start their market research they will first identify a problem; in Audis case what people want from a car. As I have already said, they are a market orientated firm so will take great notice of this. They then decide a method of gathering data primary or secondary.

They will then gather the data and analyse it. The findings will be used to try and make the final product, in this case the A6, as profitable as possible. They may also carry out further market research after this to find out how popular it is. Types of market research There are two types of market research: 1. Primary research that is gathered first hand. It is expensive, but more likely to meet the precise needs of the company. It is gathered by field research. 2. Secondary research which uses existing data. It is cheaper, but may be in the wrong format and available to competitors so it does not give you an edge. It is gathered by desk research.

My market research For this project I have undergone my own market research which will allow me to evaluate Audis current marketing strategy and make suggestions. As I have already said in the information gathering section (page 4), I have collected product brochures and price lists of the Audi A6 and looked on the company website to gather information about the car. I also downloaded a copy of the annual report 2003. This is secondary research as it is from a preexisting source. I have also carried out primary research in the form of a questionnaire. I asked a sample of forty people eleven questions. A sample is a small group which is thought to represent the market as a whole. My sample of forty obviously will not be an accurate representation of the whole market at it is so small and all those questioned are from the same area. However, it was the largest sample that I could practically do. The possibilities to make the results more reliable are to do a census which involves surveying everyone in the country, but this would be very costly and unpractical even for a large firm such as Audi. My sampling method was convenience which means I simply questioned people who were available for interviewing, including my family and friends. This is the easiest sampling method which is why I chose it, but can be unreliable as a sample representing the whole market is not likely to be found. After a SWOT analysis has been produced, the firm can take one of two paths: 1. Matching this involves building on the firms strengths and taking advantages of opportunities.

2. Conversion this involves creating strategies that turn the companys weaknesses into strengths and threats into opportunities. As well as producing a SWOT analysis a firm will have to examine market conditions before producing a marketing strategy. The main things which examined are: * Market size the total size of the market the firm is working in. it is measured in terms of volume or value (volume x price). The car market is currently a large one. * Market share the percentage of sales one brand has compared to the total market. In 2003 Audi had 2.7% market share in the UK which seems small, but it must be taken into account how many car companies there are and Audis market share in Germany, the home country of Audi, is three times this. *Market growth the rate at which the size of the market is increasing. From 2002 to 2003, Audi UK had increased sales of 6.9%, but only increased market share of 0.6% so the market must be expanding and at quite a fast rate. * Segmentation appealing to different sections of the market in different ways by changing the marketing mix. For example, changing features of the product so it appeals to different people more luxuries for those better off, different size engines, etc. The next stage is to set the marketing objectives considering the corporate objectives. This provides targets for the department. I have not been able to find out the marketing objectives of Audi, but they are likely to be increase market share and revenue (both with quantitative values). My marketing objectives for Audi would be these things and also to enhance the brand reputation which I believe is a vital part of Audis success; it provides them with a unique selling point and so is important to differentiate the product from those of competitors. After this, a marketing strategy is selected taking into account the marketing objectives, findings of the SWOT analysis and market conditions. This will then be implemented through marketing tactics/ the marketing mix. So to achieve the marketing objectives all aspect of the marketing mix must be right the car must be sold at the right price, in the right places, promoted well appealing to the target audience and designed and produced well. My SWOT analysis of the A6 shows that one of Audis main strengths is the companys reputation. This should be built on through producing a high quality car and using premium

pricing. They also have a very large spending power as they are a large multinational company who have been very profitable in the past. This means that they can spend a lot on promotion of the A6 to give it a competitive advantage. This would give them an advantage, but all of their main competitors can boast equal or greater spending power making it a necessity to spend highly on promotion and making the product as good as is possible by adding additional luxury features. Audi also have strength in the success of their previous cars, including the old A6. This enhances the company image and makes it easier to launch a new product, like the A6, as people know it will be good quality. A high price will have to charged for the A6, but this is likely to be less important as to the target audience this is not the most important factor. A high must be charged to cover production, transport and promotional costs. The final part of the process is reviewing the marketing plan after it has been implemented. This is something to be done at a later date after the product has been on sale for a suitable length of time. It can be done through further market research into customers opinions of the car and how well it has sold. To properly evaluate the marketing plan, there must have been clear targets with time restrictions. This shows the importance of having set good objectives. The information from this is then used to set new corporate objectives and the companys position must also be reassessed. The value of having a good marketing plan, created through the method shown above, is: * Ensures continual evaluation of objectives and strategies * Ensures efficient use of resources

*Establishes criteria for success; this helps motivate and makes it easier to monitor progress. * Improves decision making. * Involves people in discussion so helps improve their commitment. * Involves analysis so makes organisation better prepared for change. * Coordinates activities. * Avoids wasteful or conflicting activities.

*Involves rational decision making based on quantifiable data. The marketing plan will affect other functions within the business. One example is the marketing plan determines what is produced, how it is produced and when it is produced which affects the production department. It determines the number and skills of employees required which affects human resource management. Also, it determines the design of the product, the cost to make the product (through choice of material, production methods, etc) and the price of the product which affect the finance department.

DEVELOPING A MARKETING STRATEGY There are many different marketing strategies that may be adopted by the company and often many are used at the same time for different products. For example the marketing strategy of the new A6 will be different for that of the A3 which is a cheaper car and is already well established in its market. The marketing strategy greatly depends on what type of product it is for. This can be assessed using the Ansoffs Matrix. Ansoffs Matrix this it can be used to analyse marketing strategies 1. Market penetration attempt to gain a greater market share of an existing market. Involves changing marketing mix. 2. New product development developing a new product for an existing market. 3. Market development launching an existing product into a new market. 4. Diversification entering a new market (one which that firm is not yet in) with a new product. This is can be very risky. The Audi A6 falls into the category of new product development as it is a new product that has been developed, but is in a market where Audi already compete. The new product development process begins with idea generation both internally from research and development and externally from investors, competitors or consumers. They then analyse the ideas to assess their feasibility and develop them through prototypes. These are then tested for safety and quality. In the case of cars there are vigorous safety checks as the car must meet certain requirements. There is then test marketing in selected outlets before the launch

nationally. Another influence on the marketing strategy employed is the type of market the product is competing in. There are two main types of market: 1. Niche market a small market in which major producers are not concerned. 2. Mass market market with a large volume or value of sales. The main advantages of a niche market are it fits with limited resources, avoids competition with major firms, returns are relatively high and fits with a unique selling point (USP). The advantages of mass marketing are higher returns, can exploit a brand name, economies of scale and less vulnerable to changes in market. The car market is clearly a mass market as the value of sales is high. However, there is a wide range of quality and price available and Audi is in the upper range so this market is a highly differentiated mass market. The main competitors to the A6 in this market are BMW and Mercedes, who also produce high value cars. As Audi are competing in a mass market, it is vital for them to undergo extensive promotion. This will attempt to give the A6 a competitive advantage over its rivals as consumers become aware of the advantages the A6 offers. They should promote using the brand name as it is currently has a good reputation and so will help improve sales. If the brand name is enhanced through the A6, it will help Audi in the future. There are also a number of business models and diagrams that can be used to help determine the marketing strategy chosen by the company. Two such models are the Product life cycle model and the Boston Matrix. Boston Matrix The Boston Matrix is a method of product portfolio analysis. This is used to examine the existing position of the organisations products in their markets to enable better decision making on aspects including marketing strategy. The value of it is that it examines all the firms products together, provides an overview and helps with marketing planning. The Boston Matrix shows what percentage of the market each product has and the rate at which the market is growing. The car market is a fast growing one and the A6 is a new product, so would currently be considered a question mark. However, it is likely that it would soon become a star if it sells well. The Boston Matrix shows us that the A6 will need investment (much will already have been spent on design and production) in promotion and other areas.

In general, after a firm have evaluated a product in the Boston Matrix they can do one of four things: 1. Hold attempt to maintain the existing market position (with strong cash cows). 2. Build invest to develop position in market (with question marks). Involves sacrifice of short term profit. 3. Harvest aims for short term profit to get the most out of the product (possible with cash cows). 4. Divest get rid of the product (with dogs). It is likely that and advisable for Audi to build for the A6. This will help increase market share and result in long term profit and targets being met. This will involve major short term investment so reduce short term profit. One way to develop market position would be through heavy promotion. Making the consumer aware of the product and persuading them to buy it. They must also set a price which is competitive and right for the products market. MARKETING MIX FOR THE AUDI A6 Price - The factors that influence the price of a product are: * Costs the firm will want to cover costs to make a profit. The costs for making and testing a car such as the A6 are very high; therefore the price is likely to be high. *Price elasticity of demand how sensitive the product is to change in price. If it is sensitive then lowering the price will result in an increase in turnover. It is probable that products of a highly reputable company, such as Audi, will be price inelastic as the market they appeal to price is not the most important factor. This means price should be quite high. * Competition are there any similar products currently available? There are no new direct competitors to the new A6, but there are existing competitors. This means they should try and set the price similar to or lower than those. * Stage of product life cycle it is likely a product in the growth phase will have a higher price than one in the decline phase. The A6 is a new product so the price can be high as it has cutting edge design features.

* Government government adds tax to products making them more expensive which must be considered. VAT is charged on cars. * Other external factors PESTE (political, economic, social, technological and environmental factors). * Rest of marketing mix the price must compliment other elements of the mix. The pricing method chosen will also be affected by the price elasticity of demand of the product. This measures the responsiveness of demand for a product to change in price. (Both measured as percentage of total.) It is calculated using the formula: Price elasticity = % change in demand / % change in price If percentage change in demand is greater that percentage change in price then the product is price elastic. Raising the price will result in a loss of revenue. If the percentage change in demand is less than the percentage change in price then the product is price inelastic. Raising the price will result in a gain of revenue .The A6 will be price inelastic because it is a highly differentiated product. This means that people will be willing to pay more for the benefits it provides reputable brand name, added luxury feature, good performance, etc. Also, they are regularly purchased as company cars so if someone else (i.e. the company) is paying for it price will not be so important. Selling price inelastic is generally considered a good thing by a firm as it allows them to increase the price and gain revenue. If a product is price elastic lowering the price should result in an increase in revenue, but this is a risk as it relies on demand increasing. If this does not happen as a result of external factors, the firm could lose a lot of money. As a result of being price inelastic, Audi have increased prices by 1% on average from the old A6 which should result in increased revenue. Also, this price increase is only small so people will not feel like they are being overcharged, so it is psychologically the right price. Audi will charge a high price which seems a good idea. High price is usually associated with: * Heavy branding Audi is a reputable brand. * Few competitors no new cars in the A6s class. * Unique selling point brand reputation, no new competitors, quality design features such as the latest in-car technology and new engines.

* High unit cost building prototypes, testing and production are all expensive. * Limited distribution only sold in Audi showrooms and on website. The A6 should aim for product differentiation. This means Audi should try to distinguish the car from its competitors in the eyes of the consumer. This will be an attempt to get customers from the competition. It will be done by adding features to the car which add value. Something which adds value will increase the price of the product by more than it costs to produce. Examples of this are alloy wheels, C player, sixth gear. If a feature costs more to

produce than it adds to the value of the product it should be removed. Audi have added features to the A6 to improve its performance enjoyment to drive. It uses a new engine design which is renounced for its responsiveness and high speed cruising ability. There are numerous safety features on the A6 including anti-lock brakes, traction control system and automatic tyre pressure monitoring. These features appeal to peoples emotion of fear so gives the car another selling point. Place/distribution The channel of distribution describes how the title of ownership passes from manufacturer to consumer. A firm is likely to set distribution targets such as number of areas and outlets the product is sold in and number or value of sales in each region. The first two will be the same for the A6 as they are for every other Audi car. Audi are a well established company in all of their markets so expansion into new markets or number of outlets in existing areas will not be required. The number or value of sales will be determined by supply (must be equal to demand), other aspects of the marketing mix and external factors (e.g. income). Audi must use both above and below the line promotion to promote the A6. In my opinion the most suitable ways to the A6 are on television, in magazines, in national newspapers and on billboards. I have chosen television as it has a very large potential audience and uses both images and sound so will be more memorable. Audi are a very large company so can afford the high costs associated with it. The most suitable time would be the evening as this is when most people are watching. The main benefit of magazines is the advert will be seen by the target audience. It is also cheaper so can be done more often. More information can be put in adverts as people can spend longer reading them. Newspapers have the same advantages. They still appeal to the target audience as different newspapers appeal to different socio economic groups. Broadsheets such as the Times and the Financial Times would be most

suitable. Billboards are cheap and show the aesthetics of the car. They will be eye catching to people, particularly if they use bright colours. They are not the best way to communicate information about the A6, but will make potential customers aware of it and will get the car in their minds. As you would expect from a company with a large marketing budget and they also promote through product brochures and on their website. The A6 may also get promoted at special car shows such as the Geneva Motor show where it was unveiled to the public. They also ensure they appeal to the target audience and must assess the effectiveness of their promotion.

SUMMARY OF MARKETING STRATEGY The following table shows the choices I have made for the marketing mix for the new Audi A6: Decisions for the marketing mix Reason for decision Should be customer orientated. The product should appeal to the wants and needs of the consumer so they do not chose competitors product over the A6. Primary market research will be done in the form of a questionnaire. This is feasible method of market research for me, an individual, to carry out and I can make it relevant for the task. This can then be analysed to help devise the marketing mix. The price of the A6 should be set high (the company chose 24,175 to 42,775). This is because it is price inelastic, is a high quality product and has a reputable brand. It has been derived using a combination of competitor based pricing (similar price to BMW and Mercedes similar cars), demand based pricing (what they have found people were willing to pay for the old A6) and psychological pricing (this price is neither too much nor too little). Premium pricing is used due to the reputable brand name, particularly in the current good economic climate (higher income, A6 is income elastic). The product should aim for

differentiation through the brand name Audi and features, including new engines and the latest in-car technology, which add value. Audi have always aimed for product differentiation rather than cost management so this should be continued. It can be done through a reputable brand name and a high quality product with many additional features. Differentiation is likely to lead to increased market share and so increased turnover and profit. Distribution of the

product should be limited to exclusive Audi dealerships and website. Exclusive distribution is associated with high quality, high priced speciality goods such as the A6. This maintains this image. The website will provide an extra market for sales and targets for this should be set. Audi should use zero level distribution. Zero level distribution cuts out the middle man so reduces costs and helps exclusive distribution. The A6 should be advertised frequently and in a wide range of places, mostly television, billboards, magazines and radio. The firm has great financial resources at their disposal so can afford a large advertising budget (found from last years spending in annual report). Advertising in this way will ensure people, particularly the target audience, here about and know the benefits of the product. Other forms of promotion, including personal selling, are to be done less. The A6 is a consumer good so advertising to the final consumer is most important. Personal selling is not as important as this is used to sell products to retailers. However, Audi do need to use personal selling in their showrooms to persuade perspective customers. All elements of the marketing strategy and marketing mix compliment each other so they work together effectively to achieve the marketing objectives.

BIBLIOGRAPHY Audi product brochures entitled A6 with subsections: The new A6 saloon, A6 details, A6: Saloon and Avant and A6 and S6 quattro Saloon and Avant price list. Audi website www.audi.com Audi annual report 2003 Business studies websites including www.bized.co.uk Lines, Marcouse, Martin, A-Z Business Studies handbook third edition, 1994 Carysforth, Rawlinson, Neild, Intermediate Business, 1995 Nike website www.nike.com BMW website www.bmw.com