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Porsche Design in China

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Johnny De La Cruz

on 25 September 2014

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Transcript of Porsche Design in China

in China
Presented by:
Bougie Consulting Group
Johnny De La Cruz
David Oberman
Tucker Homan
Jonathan Torres
Ethan Stumpf

Rodeo Drive
Expansion is planned to reach tier 3 cities once their consumer preferences mature, so we need to begin building brand awareness before that expansion
Tier 3 cities have less exposure to western culture and luxury brands, so increasing brand recognition is necessary for future success in these cities
So, we want to buy billboards along busy roads in growing tier 3 cities

Promotion: Chinese Billboard Campaign
Promotion Campaigns
Chinese Billboard Campaign
(Print)
Airport Billboard Campaign
(Print)
Brand Identity Campaign
(TV Advertisement)
Gift Campaign
(TV Advertisement)
Social Media Campaign
(Social)
Luxury brand awareness among middle and upper class in China is growing
Brand
history
and
prestige
are becoming more influential in driving consumer purchase decisions
Porsche Design would greatly benefit from positioning itself as a
historically prestigious
brand, even though it is fairly new as a prominent competitor in the luxury goods market.

Promotion: Brand Identity Campaign
Promotion: Brand Identity Campaign (Cont.)
Porsche, the luxury car manufacturer, has a long
history
of producing top tier performance cars, with equally satisfying aesthetics that have earned the brand a high level of prestige in the car industry
Porsche Design has the opportunity to leverage the car brand of Porsche to support it’s own brand identity in the luxury goods market

Promotion: Brand Identity Campaign (Cont.)
We want to produce a television commercial campaign that compares Porsche Design products to the legendary Porsche 911, among other Porsche car models
Classic look
High Performance
Porsche


Classic Look
High Performance
Porsche
Promotion: Gift Campaign
Gift giving is a very important aspect of Chinese culture, especially corporate gifts.
Bain & Co. estimated that in 2012, corporate gifts made up 25% of luxury goods consumption in China
In 2012, the Chinese government banned government agencies from purchasing luxury goods in an attempt to curb corruption
However, many critics believe that this law will not permanently affect gifting as a deeply rooted aspect of Chinese culture (Fung Group Report)

Promotion: Gift Campaign (Cont.)
Television commercial campaign centered on giving Porsche Design products as gifts, specifically the unique value that they represent as gifts
We will also offer free gift customization and engraving, with designer wrapping and presentation

Social media branding is important in China:
A PricewaterhouseCoopers survey in 2013 found that 57% of Chinese consumers follow brands on social media compared to 38% globally
So, Porsche Design needs to have a strong presence on established social media platforms:
Renren (like Facebook): Present and describe brand identity
Sina Weibo (like Twitter): Voice brand positioning and present promotions

Promotion: Social Media Campaign
Customer Service Strategy
Luxury brands rely heavily on repeat purchasers, so customer loyalty is key
VIP gifts, discounts and perks for repeat customers will encourage brand loyalty and repeat purchases
A Mckinsey report from 2012 explained the importance of VIP programs to Chinese luxury goods consumers

Promotion: Airport Billboard Campaign
The process of obtaining travel visas in China is becoming quicker, and a huge increase in travel by Chinese tourists has been seen over the recent years. This has had two effects on the luxury goods industry:
Many Chinese tourists shop while overseas, explaining why 60% of Chinese luxury goods consumption is purchased overseas
A drastic rise in luxury brand awareness among the middle and upper class of China due to exposure to western media and culture
Promotion: Airport Billboard Campaign (Cont.)
Chinese tourists develop their brand awareness while traveling abroad
Popular luxury shopping destinations for Chinese tourists exist in fashion hubs like New York, Los Angeles, and Paris
We want to launch a billboard campaign in LAX, JFK, and Paris Intl. Airport
The campaign will aim to increase brand prestige and awareness in the eyes of Chinese tourists, as well as other tourists.
one of the leading luxury brands in the high-end men’s accessories segment
functional
,
timeless
, and
purisitic
design
accessories, timepieces, eyewear, luggage, sports/fashion collection, electronics, and home accessories
Porsche Design Studio (Zell am See, Austria) is one of Europe’s best-known and most reputable design houses
more than 170 awards for its unique and purist design philosophy
Research Plan: Consumer Preference Surveys
In order to better understand the preferences of our Chinese consumers, we need to send out consumer preference surveys that ask how the following aspects affect their purchase decision:
Brand history
Brand prestige
Price
Proximity of store
Online shopping
Quality of product
Aesthetics
Customer service
VIP programs
Porsche Design
Porsche Design: Background
founded by Professor Ferdinand Alexander Porsche in 1972
designer of Porsche 911
believed that design must come from functionality
left Porsche as head of design and founded his own luxury brand - Porsche Design
inaugural product - first-ever all-black watch
revolution in the watch industry
at the same time, designed a large number of industrial products (e.g. household appliances)
brand flourished due to its unique take on functionality and design along with its high prestige
Porsche Design: Today
products sold worldwide in flagship stores, franchise stores, shop-in-shops, high-end department stores, upscale specialist retailers, and on the official online shop
a high end, luxury brand with a particular focus on technically inspired products delivered in a timeless and simple design
“If you analyze the function of an object, its form often becomes obvious” - Ferdinand Alexander Porsche
Research Plan: Customer Preference Survey (Cont.)
We will distribute these surveys on our Renren and Sina Weibo platforms, so that our followers and subscribers will have the option of responding
In order to get consumers to fill out these surveys, we will enter those that complete the survey into a lottery. The winner will receive a special edition Porsche Design watch
“Porsche drivers are the perfect target group, but not every driver will be interested in Porsche Design”
target all people interested in design, innovation, and luxury products
began rapid global expansion in 2004
Consumer preference surveys are useful for determining the customization strategy in each location
Consumer preference surveys also help marketers understand the market preferences as a whole, and what drives sales for each product or brand
Product: Standardization vs. Customization
Standardization
Pros:
Cheaper
Consistent brand I.D.
Easier to manage
Cons:
Products may not be optimal or popular in China
Why China?
- By 2020, China is set to become the largest luxury goods market in the world with a revenue over $100 Billion.

- America was the last 100 years, China is the next 100

- Middle class expected to double by 2030

- High influence from western culture
Customization
Pros:
Products can be well tailored to Chinese preferences
Cons:
Costly
Could have conflicting brand I.D.

Product Strategy: Standardization
Product Standardization is the optimal strategy
60% of Chinese luxury goods consumption is done overseas due to a price gap (Fung Group Report)
Therefore, product customization is not necessary if they are already purchasing luxury goods in other countries
Luxury brand awareness is growing every year in China among the middle and upper classes (Fung Group Report)
Chinese consumers know luxury brands, so our brand identity in the Chinese market should be consistent with our brand identity worldwide

Porsche Design: Competition
Chanel is above all a style. Fashion passes, style remains.
Why not Japan, Europe, or the US?
- According to a Mckinsey report,
80%
of Chinese luxury goods buyers are under 45, compared with 30% in the U.S. & 19% in Japan.

- Chinese luxury goods consumers are also
younger
than their European counterparts - who are generally in the over 40 age group.

- Porsche - The Car Brand - already has
higher brand awareness
than that of other luxury cars such as Ferrari & Lamborghini

- An expansion with Porsche Design will only make for
better
results.

Research Plan: CMR Case Studies
China Market Research Group (CMR) is a market research and consulting group that works in a variety of industries. They offer marketing data, case studies, and consulting
We want to work with CMR by requesting relevant case studies in the Chinese luxury goods markets, specifically foreign luxury goods companies that have expanded to China
This will help us understand past mistakes so that we do not make similar ones
Expansion Plan: Stage 1
Expansion Plan: Stage 2
Guangzhou
Tianjin
Chongqing
Macau
Qingdao
Guangzhou
Suzhou
Hangzhon
Chinese Market Growth
Online Distribution
Research Plan: Reuters Report
Reuters is a data packaging firm that produces industry reports and forecasts
We would like to purchase the data report named
Research and Forecast of China Luxury Goods Industry, 2013-2017
. This report outlines:
Where the target consumers are located geographically
An overview of the Chinese economy, as well as forecasts
Development of the Chinese luxury goods industry
Brands
Consumers
Consumer Segmentation
Market Economic Development
Industry Trends
- For past 4 years, consumption of luxury goods growth rates 16%-20% domestic
- Projected 12%-16% domestic in 2015, faster than most countries
- Share of global market projected growth to 34% in next 3 years

Research Plan: Primary Research
Porsche Motors Ltd.
59 appointed Porsche Centres throughout China
9th most-searched for luxury brand in China
Consumer profile survey sent to Porsche drivers:
Demographic information (i.e. who are they?)
Age, gender, SES, education, etc.
Where do they live?
Where do they shop?
How much do they spend?
Who do they buy for?
- Expand scope & product offerings in current stores
All Types of Luxury Goods
Existing Stores
Fung Group Report
"In China, 53% of our
respondents shopped
online weekly via a PC,
the highest percentage
seen in any of our
surveyed territories." - PWC :
Placement: Online Distribution
Seebo
Source: Porsche Press Release Website
Louis Vuitton: a world of elegance, inspiration and innovation.
Source: Deloitte Report, Securing the next level for growth Second Tier Emerging Markets
Source: PWC, Achieving Total Retail Consumer expectations driving the next retail business model, FEB 2014
Achieving Total Retail Consumer expectations driving the next retail business model, FEB 2014
"Seventy percent of 10,200 luxury consumers in over 90 cities aged between 18 and 50 said they use desktop computers every day for luxury purchases or to search for information on luxury goods, while 60 percent said they use smartphones every day for this, showed a survey by auditor KPMG" - China Daily
Stage 2 Reasoning
Source: KPMG, Luxury Brands in China, 2007
Why we choose this expansion strategy?


1) Tier 2 City Preferences
2) Preference for online shopping
3) Preferences for branded stores over large luxury department stores
For over a century, Swarovski has continually grown to become the world leader for sparkling crystal creations.
One Main Type of Consumer
Pricing
Adapting Domestically
Adapting Internationally
Price gap: high import duties and taxes on luxury goods, along with inefficient distribution channels lead to higher prices in China than abroad. (Can range from 11% up to 40% price differential depending on the brand, product, and location) - Fung Group
Source: Kwaiyan Watch Company Website
Agenda
Rodeo Drive
Porsche Design
Chinese Market
Research Plan
Product Strategy
Price Strategy
Placement Strategy
Promotion Strategy
References
"Luxury Goods China Market Study 2012." Bain & Company. Monash University, 2007. Web. 09 Apr. 2014. <http://www.bain.com/publications/articles/luxury-goods-china-market-study-2012.aspx>.
"Luxury Market in China: Huge Growth Potential Ahead." Www.funggroup.com. Fung Business Intelligence Center, Apr. 2013. Web. 8 Apr. 2014. <http://www.funggroup.com/eng/knowledge/research/china_dis_issue109.pdf>.
McCarthy, Joe. "Porsche Design CEO: Brand Substantially Grew Store Footprint in Eight Years." Luxury Daily RSS. N.p., 19 Sept. 2013. Web. 08 Apr. 2014. <http://www.luxurydaily.com/porsche-design-ceo-brand-expands-from-7-stores-to-122-in-8-yrs/>.
IN HK Dollars

"In 2012, 60% of luxury goods shopping by the Chinese was bought overseas. The top three mo/st popular categories were watches, jewelry, and leather goods" - Fung Group
Overseas Travel
Source: KPMG , Global Reach of China Luxury
1) Luxury Goods Sold in mainland China have substantially higher price
2) Chinese Consumers are willing to pay more for valuable good, but want "DEAL" and considerable customer service
3) Pricing in Rolex range shows quality of Porsche Design to consumers
4) VIP program will allow high prices - McKinsey
Pricing: Conclusions
1) Product- STtandardized across regions
2) Price- high end, Burberry
3) Placement- Tier 1 then tier 2, tier 3 in future
4) Promotion- Brand awareness, social media essential
Porsche Design in China
Questions?
Placement
Bougie Consulting Group
- David Oberman

- Tucker Homan

- Johnny De La Cruz

- Ethan Stumpf

- Jonathan Torres
-Bougie Consulting-
References (Cont.)
"Porsche Design: Iconic Style since 1972." Porsche Design. N.p., n.d. Web. 09 Apr. 2014. <http://www.porsche-design.com/en/Company/Porsche-Design/>.
"Research and Markets: Research and Forecast of China Luxury Goods Industry, 2013-2017." Reuters. Thomson Reuters, 14 Jan. 2014. Web. 08 Apr. 2014. <http://www.reuters.com/article/2014/01/14/research-and-markets-idUSnBw145719a%2B100%2BBSW20140114>.
"Securing the Next Level for Growth: Second Tier Emerging Markets." Www.deloitte.com. Deloitte, 2012. Web. 8 Apr. 2014. <http://www.deloitte.com/assets/Dcom-Netherlands/Local%20Assets/Documents/EN/Industries/Consumer%20business/nl_en_cb_second_tier_emerging_markets.pdf>.
References (Cont.)
"Top 50 Most-Searched for Luxury Brands in China." Ranking the Brands. N.p., n.d. Web. 08 Apr. 2014. <http://www.rankingthebrands.com/The-Brand-Rankings.aspx?rankingID=244&nav=category>.
Tsang, Jacqueline. "Porsche Design's CEO Juergen Gessler Keeps Brand at the Forefront of Luxury." Www.scmp.com. South China Morning Post, 10 Jan. 2014. Web. 08 Apr. 2014. <http://www.scmp.com/magazines/style/article/1393868/porsche-designs-ceo-juergen-gessler-keeps-brand-forefront-luxury>.
Xinhua. "Chinese Luxury Shoppers Flocking Online: Survey." China Daily. N.p., 26 Feb. 2014. Web. 09 Apr. 2014. <http://www.chinadaily.com.cn/bizchina/tech/2014-02/26/content_17306277.htm>.
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