Porsche Cars North America Inc.

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Porsche Cars North America Inc.

980 Hammond Dr. NE, Ste. 1000
Atlanta, Georgia 30328-5313
USA
Telephone: (770) 290-3500
Fax: (770) 290-3700
Web site: www.porsche.com

CAYENNE LAUNCH CAMPAIGN

OVERVIEW

Well known for its pricey sports cars, German automaker Porsche AG and its American subsidiary, Porsche Cars North America Inc., began to change directions following a sales slump in the early 1990s. It successfully launched a less expensive two-seater, the Boxster, and in 1998 announced that it would enter the luxury SUV market early in the next century. To many it seemed a questionable decision, one that threatened the exclusive nature of the Porsche brand. But the company correctly surmised that the luxury market was moving toward SUVs and the timing for the launch of its SUV entry, the Cayenne, proved fortuitous. In 1999 the company hired a new advertising agency, Minneapolis-based Carmichael Lynch, well known for its work on Harley-Davidson motorcycles, to begin the spadework necessary to promote the new vehicle.

For three consecutive autumns Porsche launched advertising campaigns that attempted to expand on the brand's audience. The TV spots and print ads emphasized the fun and thrill of a Porsche and showed a wide variety of people enjoying Porsche cars. In the background the company also began conducting a direct-mail program to build a database of potential customers, which was also augmented by Web elements and a dedicated website. By the time actual spots for the Cayenne ran on television and ads appeared in magazines, three months before the vehicle went on sale, Cayenne was already enjoying a brisk pace of orders.

When the $15 million main campaign came to a close in the fall of 2003, it had been clearly successful. Porsche enjoyed record sales and profits despite a significant drop in the sale of its sports cars. Also of importance was that only one in five Cayenne buyers were already Porsche owners, meaning that the campaign had succeeded in creating a wider audience for Porsche.

HISTORICAL CONTEXT

Long dependent on the U.S. market to buy its expensive sports cars, Porsche was severely wounded by the recession of the early 1990s. Car sales bottomed out around 14,000 cars in 1993, a far cry from the 50,000 cars Porsche had sold seven years earlier, of which two-thirds were sold in the United States. New leadership was installed, Japanese manufacturing techniques were introduced to improve efficiency and cut costs, and in 1996 Porsche introduced a new sports car, the Boxster, which found a receptive market for its $40,000 price tag. It was a move that made the brand available to a wider number of potential customers, especially younger buyers. Two years later the German automaker decided to venture even more mainstream, announcing that it would join forces with Volkswagen to jointly develop a new sports utility vehicle, which would be called the Cayenne, scheduled to go on sale by the year 2002. Although research indicated that 45 percent of Porsche owners also owned an SUV, it was a risky decision. According to Gail Edmondson, writing for BusinessWeek, "Porsche aficionados cringed. Even the Porsche family shareholders balked, fearing the company's sports-car tradition and exclusive brand name didn't befit bulky off-roaders." Because the SUV market was most mature in the United States, the marketing effort to launch the Cayenne would primarily fall on the shoulders of Atlanta-based Porsche Cars North America.

In years just preceding the Cayenne's launch, Porsche had spent most of its advertising budget on print ads in car-enthusiast magazines, while television was mostly limited to spots run on regional TV in the top eight markets for the brand. In order to prepare the ground for the Cayenne launch, Porsche hired a new advertising agency in 1999, turning over the $15 million account to Minneapolis-based Carmichael Lynch, which had earned a solid reputation for the work it did for Harley-Davidson motorcycles over the previous 20 years. The agency would develop a pair of interim campaigns to promote Porsche while broadening the brand's appeal in advance of the Cayenne launch. In particular the company wanted to expand its advertising in lifestyle magazines and also increase its direct-mail efforts. Porsche's chief operating officer Richard Ford explained the greater challenge to Jean Halliday of Automotive News: "The key is maintaining our core business and expand without disrupting our core buyers and without losing our brand image."

TARGET MARKET

Porsche, because of its price tag and emphasis on performance, had always appealed to an older, monied male market. That changed somewhat with the introduction of the Boxster, but the target driver, aged 34 to 54, still had an annual income of at least $150,000. And about 80 percent of Boxster buyers were men. The interim campaigns did little to change these sales numbers, but the marketing brought the brand to a wider audience and made it more appealing to them. For the campaign that directly promoted the Cayenne launch, the target market was 42- to 47-year-olds, and because the price range was $52,000 to $75,000, the income of the target market was again high, at least $225,000 a year. Because the SUV was more utilitarian than a two-seat sports car, it was expected to appeal to more women, who could accept it as a family vehicle. Nevertheless Porsche expected that about 70 percent of Cayenne owners would be men.

COMPETITION

The Cayenne competed in the luxury SUV category, which boasted a deep and varied field. The first luxury SUV, the Acura SLX, was introduced by Honda Motor Company in late 1995 and was soon emulated by other automakers, and the concept was embraced by car buyers. Many of the luxury models were simply upgrades of an existing SUV platform: the Cadillac Escalade was a luxury version of the Chevrolet Tahoe; the GMC Yukon Denali depended on the GMC Yukon; the Lincoln Navigator was beholden to the Ford Expedition, as was the Lexus GX 470 to the Toyota 4Runner and the Infiniti QX56 to the Nissan Pathfinder Armada. A pair of vehicles with military roots, the Hummer H1 and the Mercedes-Benz G-Class, also entered the already crowded field. The Cayenne was one of a group of vehicles designed from the start as luxury SUVs, including the Mercedes-Benz M-Class, the Lexus RX 330, and the BMW X5.

By the time of the Cayenne launch, the luxury SUV category was a key to the growth of all luxury brands, with only Rolls Royce and Jaguar electing to remain on the sidelines. According to Chris Isidore, CNN/Money senior writer, "Luxury car executives say that their SUVs are a choice for both traditional SUV buyers moving up in brand and traditional luxury car buyers looking for more room. But data from CarsDirect.com shows that most luxury SUV buyers are comparing those vehicles to other SUVs, including the lower-priced models. Most are not shopping among luxury cars. Thus the SUV is becoming the key to bringing new customers to the luxury dealerships." The decision by Porsche to develop its own entrant, therefore, proved prescient.

Porsche touted Cayenne's superior performance as a point of difference. Able to reach a top speed of 165 miles per hour, it became the fastest luxury SUV on the market. The vehicle also boasted a suspension with six settings for driving on and off roads and was capable of towing as much as 7,700 pounds. Porsche considered its primary competition to be the BMW X5, the Mercedes-Benz M-Class, and Ford Motor Company's new Land Rover SUVs.

MARKETING STRATEGY

In the fall of 1999 Carmichael Lynch unveiled its first campaign for Porsche, which continued to appeal to sports-car enthusiasts and essentially positioned Porsche as a brand to covet. In one TV spot, for example, a suspicious woman learned that a phone number in a man's pocket was actually for a Porsche dealer. While Porsche owners, research indicated, were quick to grasp the brand message, others were not. A year later the agency crafted a campaign that was less cerebral, extended to a broader market, and better suited to the task of setting the stage for the Cayenne launch. The television spots took more of a storytelling approach, featuring characters who did not look like fashion models. The premise of the two spots, fleshing out the theme "It's a thrill like no other," was the length that people would go in order to drive or ride in a Porsche. In one spot set in Ireland two older men argued in a pub about which one of them should be the designated driver that night, while in the other spot a girl intentionally missed the school bus in order to catch a ride in her father's Porsche. The campaign also included five new print ads that attempted to associate fun with the brand. In one ad, for example, a yellow Boxster was shown driving through a field of sunflowers. The headline read, "What a dog feels like when the leash breaks."

The fall 2001 TV and print campaign continued to build on the "It's a thrill like no other" theme. In one of the two new spots, three traffic controllers caused a Porsche driver to stop at three straight traffic lights just so they could check out the car from every angle using their surveillance cameras. In addition to this brand-building work, Porsche also began to directly promote the Cayenne. In 2001 the company made a direct-mail pitch for the vehicle to approximately 70,000 owners of luxury SUVs and sedans. The response rate was in the 8 to 9 percent range, significantly better than the response Porsche had received in previous direct-mail efforts. Part of the success was due to the vehicle, but a great deal of credit was due to improved targeting techniques, model econometrics, which allowed Porsche to better target people similar to its existing buyers. All told, half a dozen mailings would be made before the Cayenne went on the market. Porsche also made use of its website to build up its database of prospects, as Web banner ads and print ads drove people to the site. People were also added to the database by calling a toll-free telephone number.

More groundwork was done in the Cayenne launch in the fall of 2002, again emphasizing the fun and thrill of driving a Porsche. In one TV spot a man at a business lunch and a woman at a meeting took cell-phone calls that apparently brought bad news and forced them to leave. The man, behind the wheel of a Boxster, was then seen waiting for the woman as they sped off and a voice-over suggested that Porsche was "perhaps the perfect getaway car."

A PAST NOT BY DESIGN

Porsche AG was founded in 1931 as an engineering and design consulting firm by Dr. Ferdinand Porsche, who had previously served as technical director for German automaker Daimler. Porsche's work in designing high-quality cars soon caught the attention of a rising politician: Adolf Hitler. When he came to power Hitler enlisted Porsche to develop the Volkswagen and fulfill his vision of an inexpensive car that the average German could own. Later in the 1930s, with Hitler's blessing, Porsche designed a sports car to compete in Grand Prix races. Because of his ties to Hitler and the Nazi party, Dr. Porsche was briefly incarcerated following World War II.

The Cayenne promotion began in earnest in January 2003 when TV spots and print ads were run for three weeks and then returned in March when the vehicle went on sale. The advertising introduced the line "Pure Porsche in an unexpected form." Two TV spots, which premiered during NFL football telecasts, anchored this phase of the Cayenne launch. In one a man had a cab follow a Cayenne off the highway and into rough terrain. By the end of the journey the cab was all but wrecked while the Cayenne was unscratched. In the second spot a man driving a motor home passed a Cayenne waiting to enter the highway. He left the wheel and ran to the back of the motor home while his wife slept in order to get a better look at the Porsche. He then watched it through the side windows as he worked his way to the front, took up the wheel again, and longed for the Cayenne, now out of sight. A second pair of 30-second spots began running in August 2003. In one a man revved the engine of his Cayenne in his driveway to the confusion of his neighbors, then stepped out of the car, picked up a cell phone on the ground, and said to a listener, "Is that cool or what?" In the second spot a young boy pretended he was driving a car with his green beans and mashed potatoes, only to have his father explain how to accelerate through a corner. A representative print ad showed a Cayenne at night. The text read, "Do you really need 450 HP to pick up diapers? You ever run out of diapers?"

OUTCOME

The buildup to the Cayenne launch was so successful that the vehicle was selling well through orders before the direct advertising even began. In a year that saw Boxster sales fall off 40 percent and the more expensive 911 model dip 14 percent, Porsche was able to post record sales in fiscal 2003 and a 22 percent increase in net profits to $684 million, all due to sales of Cayenne. Moreover, only about a fifth of Cayenne buyers were already Porsche owners, reflecting the campaign's success in broadening the automaker's customer base. Sales of the luxury SUV continued to grow in 2004, when Porsche introduced a less expensive V6 version of the Cayenne (capable of exceeding 130 miles per hour), a move that opened up the brand to an even wider audience.