In 2003, Porsche unveiled its new sports utility vehicle (SUV), the Cayenne (ove

Question

In 2003, Porsche unveiled its new sports utility vehicle (SUV), the Cayenne (over $40,000). Porsche's decision to enter the SUV market was in response to the runaway success of other high-priced SUVs such as the Mercedes-Benz M class. Vehicles in this class had generated years of very high profits. The Cayenne certainly spiced up the market, and, in 2006, Porsche introduced the Cayenne Turbo S (almost $105,000)! Some analysts questioned Porsche's entry into the luxury SUV market. The analysts were concerned because not only was Porsche a late entry into the market, but also the introduction of the Cayenne might damage Porsche's reputation as a maker of high- performance automobiles.

In evaluating the Cayenne, would you consider the possible damage to Porsche's reputation as erosion?

Porsche was one of the last manufacturers to enter the sports utility vehicle market. Why would one company decide to proceed with a product when other companies, at least initially, decide not to enter the market?

Explanation / Answer

a) Yes, I would definitely consider the possible damage because the COmpany's reputation is an important factor to be noted. If the reputation has got damaged, then the company would have faced problems by losing the current customers and the loyal customers with the lost sale.

b) Each company may have advantage in producing the product. Suppose one company may be advantageous in having advanced technology, another company ma have brand image and some other company may have good cost controlling capability. What ever it may be, Porsche has entered into a market where many companies have already grabbed the market and launched the same type of product. This Company would have entered the market in the wrong time. It would have decided not to enter the market at this time.

Related Questions

Navigate

• Browse (All)
• Browse I
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.