Brand dilution
There is the imminent problem of a high possibility of brand dilution. There are some steps that could lead to brand dilution like when we examine the expansion strategy utilized by the other automobile manufacturers. One would notice that they are manufacturing variants for specific market regions; for example, there would be models for the European, African, Asian and other markets (Meredith, 2000). When this approach is adopted the customers in some regions would feel short changed because there is no uniformity. They are likely not to take pride in these models since they have a feeling that some features are missing. Especially when there are differences in prices they are likely to question the reason for this. In addition, they would feel cheated when they the production plants are distributed in such a manner that they only receive from specific ‘sub-standard’ plants. Suppose the Porche Company follows in the footsteps of other automobiles then they would automatically dilute their brand.
The company continues to offer the same model to all the market regions spread out in other parts of the world as a competitive advantage. The customers take pride in the fact that the models are the same. A customer in Asia, another one in Africa and any part of the world know that there is none of them who is being offered a superior or inferior model to the other one. While companies like VW and GM have been producing models for different regions thereby diluting their brands, Porsche has been maintaining the same brand all along (Boatcallie, Chase, Salehi, Skrisovsky, & Volio, n.d.).
As a solution to the brand dilution problem, the company ensures that the models offered for sale to all the parts of the world are similar or the same. They do not have specific factories for specific regions and therefore the customers have got no reason to doubt the uniformity of the brands. It prevents the brand from international dilution by ensuring that the company remains the same in one of its selling strategies by having the same prices in its approach that was formulated in Germany its country of origin. The firm has been expanding to other markets by specifically exporting which comes out as an inexpensive option compared to the establishment of whole new plants. The company, therefore, has some immunity to the economic and political risks associated with setting up a manufacturing plant in a foreign country. In addition, the company does not have to face problems such as acquisition and licensing requirements that come up with setting up base in another region.
Upcoming CAFÉ regulations
According to Boatcallie et al. (n.d.) the upcoming CAFÉ regulations for the year 2020 created a problem for Porsche. The US government decided to come up with restrictions to increase the mile per gallon (mpg) rating requirement for all vehicles operating in the country. It was to be effected through an emissions strategy commonly called the Corporate Average Fuel Economy (CAFÉ). This policy levied fines for manufacturers whose vehicles did not meet the set limits for the mpg ratings. Due to the ever rising fuel costs the administration felt that the only way to lower the amount of fuel consumed in relation to the distance travelled. It, in essence, was going to reduce the perceived waste by the fuel guzzlers and any other vehicles consuming more than their stipulated limit. The CAFÉ policy came up with strict requirements to be adhered to by the year 2020. The automobile producers and the ones dealing with vehicles importation will be expected to adhere to mpg rating of 39 for cars and 30 for trucks or pay a higher fine of $35,700 (Boatville et al., n.d.). The Porche Company finds it difficult to continue selling vehicles in the US once these new regulations get enforced.
As a competitive advantage, the firm deals with a niche market segment that is dealing with sports cars that have a unique selection of enthusiasts. The firm produces quality high-performance race vehicles to meet the need and tastes of middle-aged college graduates who value innovation and independence. Such a market has some loyalty to this kind of market and would not want to go any other kind of vehicles, and they are within this line. Meredith (2000) notes that, the other manufacturers producing vehicles that have the characteristics to compete along this same line are Lamborghini, Ferrari and Aston Martin among others. The Porche brands outdo these others because they are cheap, and they appear to have scooped the highest number of awards in the industry. In addition to this, the engineering expertise invested in them is among the leading in the automobile industry.
Diversity is one way that offers a solution to the upcoming CAFÉ regulations. Since the Porsche Company does not foresee a good future in the United States which is its leading market then, it has got no option other than to diversify into other markets. Porsche has been targeting China among other countries as a possible replacement to the US market. As a matter of fact, it is has started taking steps to start wooing the Chinese market by building race tracks in that country for the upcoming drivers to start testing their hands on the Porsche brands (Meredith, 2000).
Reference
Boatcallie, B., Chase, A., Salehi, B., Skrisovsky, I., & Volio, A. (n.d.). Porsche. Texas A&M University.
Meredith, L. (2000). Porsche: The road cars. Osceola, Wis: MBI.
