In the automobile industry, there are several manufacturers of the different brands, makes and models of the vehicles used by almost anyone globally. Different people require different vehicles that suit their needs. These vehicles are brought for a purpose; depending on the consumer needs. This consumer needs vary geographically, demographically, psycho-graphically and in terms of customer behavior . Each of these factors can be broken down further into smaller segments. This is a diverse market with different needs and qualities. Marketing using the same strategy would be detrimental. A form of marketing therefore has to be devised to take advantage of the various segments. According to Charles et al, market segmentation means that marketers market according to consumers’ differences in needs, purchasing behaviors, purchasing habits and characteristics and so on, to put the market into smaller groups. Every group of consumers is a segment that was formed by consumers who have same or analogous demand. George (1942) enforced the theory of market segmentation, claiming that revenues can be maximized when provide different prices to different segments . This research paper aims to discover how Audi, an automobile company defines its market segment. Which are its market segments? What strategies does it employs to exploit the market segments? What are some of its research findings based on each market segment? What strategies does it employ to exploit these market segments?
Audi as a company exists today because of a merger of four different automobile industries in 1932. These motor vehicle companies were previously operating in different locations independent of one another. These companies, Horch, Audi, Wanderer and Dkw are the parents of Audi. August Horch worked with Carl Benz for three years as an administrator before breaking of and starting his own automobile company in Germany at the end of the 19th century. He would later relocate his company at the beginning of the 20th century and name it Audi, a word that denotes listen the Latin language. Other companies, Wanderer and DKW were specialized in different aspects of the automobile business which they also started at the beginning of the 20th century. These companies would later merge as one of the largest automobile industries in Germany known at the time as Auto Union AG. By the end of the Second World War they were producing two-cylinder engines which were quickly improved by 1965: at which point the company was branded Audi. The company later merged with another and permanently adopted the name Audi. The company has over 50,000 employees and operates in Europe, America, Asia, Middle East and Africa. The four emblems trade mark represents the merger with the four entities over time . Audi is one of the most preferred vehicle manufactures on the planet. They are heavily invested in sports cars, executive cars among other prominent models .
There are basically four market segmentation out of which Audi utilizes only 3: geographic, psychographic and demographic (McBurnie, & Clutterbuck, 1988).
Geographic Market Segment
Audi utilizes the geographic segmentation of the market to analyze which of its products best suit the market in that particular geography. For instance, according to research, Canadians drive bigger vehicles compared to Europeans generally. As such, the brands of vehicles advertised in Canada will be bigger and more spacious compared to those unveiled in Europe. Americans on the other hand love two kinds of vehicle, one that can go very fast and the other that embodies the spirit of the classic muscle vehicles as popularly known in their culture (Dibb, Stern, & Wensley, 2002).. Indian are an emerging market: buying more vehicle annually at an increasing rate. Audi made plans in 2007 to exploit the growing market in India. The Indian market has suddenly shot up since 2008, with automobile companies rushing in to enjoy the benefits of the growing market.
Psycho-graphic Segmentation
This entails dividing the social classes based on the personality, lifestyle or social classes (Michel, & Wagner, 2000). In Asian countries like Chinese and Japan, the issue of social classes and personality adopted in each social class is stressed in their culture (Charles, Joseph, & Carl, 2003). Therefore an executive must behave like one as per the social conformity of their culture. Among the changes adopted by executives in these countries is the incorporation of chauffeurs into their everyday lives. They vehicle must also be a high end product that compliments one’s stature in the society. The Audi has therefore segmented this common market in the Asian countries among the higher affluent social classes. Audi unveiled comfortable automobiles that are formal and sleekly designed but not too flashy. These vehicles were quickly adopted by several buyers who found it appealing. The vehicle also incorporated an entertainment console for the executive back seat in the event of traffic jams that are a norm in these cities. Language barrier have been successfully overcome with the adoption and integration of Asian languages into the vehicle consoles and equipment (Dibb, & Simkin, 2001).
Demographic Segmentation
Demographic segmentation categorizes the buyers into age group (including the marital status), occupation or level of income, gender, ethnicity and level of education (Johan, S. 2005). Taking the example of India for instance, the company has adopted and aspires to lead a life akin to the American way of life. As such, they assign a lavish lifestyle as a sign of success. Most of the students from well to do families here send their kids abroad for studies. The kids come back and have to show for their education, therefore they venture into purchase of high end vehicle designs to reflect their economic stature. Well to do families prefer to get high end transportation means. The difference between these two groups is fundamentally in their preference, which is why audi advertises both the sports models and sleek executive models to the young men and senior citizens in that order. In India, the bride price is paid by the girl’s family. Some of these families are well to do families that are looking to make an impression. They therefore procure high end vehicles for the family of the groom as a token of their appreciation. This falls in the demographics of marriage. Families that also want to adopt stylish but bigger vehicles for their young expanding families get to enjoy the choice of getting a high end product from Audi that embodies the speed of a race car while at the same time consuming negligible diesel. India is also facing taxation issues on vehicles with extensive emissions of petrol and diesel products. This, given the lucrative market has been mitigated by Audi’s brand that consumes negligible diesel and hence very low emissions. That is excellent use of market intelligence to improve the future outcome (Dibb, 1998).
Audi therefore carries out research based on the three segments in a bid to efficiently use available resources. The ideas expressed in the sub topics on the strategies used by Audi to exploit the market are quite efficient and thorough in their assessment of the various cultures across the board (Strydom, Cant, & Jooste, 2009). It is because of these strategies that the projected sale volume last year was estimated to be positively increased globally. Previously unexploited areas such as India and South Africa are now among the regions of major focus by the company. The theory of market segmentation has therefore proven it feasible and of a number of advantages such as increased profit margins from increase significantly from 2014 to the projected results in 2015 (Daly, 2002)..
The company has therefore successfully utilized the theory realize record sales (McDonald, & Dunbar, 2004).
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