MARK7045: Audi Smartphone Product Extension Marketing Plan Analysis

This report provides a detailed strategic marketing plan for Audi, focusing on a product extension into the smartphone market. It begins with an executive summary and table of contents, followed by an introduction explaining brand extension and its relevance. The report then conducts an environmental analysis, examining both the external (PEST, competitor analysis, and industry analysis) and internal environments (resources, competitive advantages, and competencies). It identifies Audi's strengths and weaknesses, as well as opportunities and threats. The report proposes market segmentation strategies, including demographic, geographic, psychographic, and behavioral segmentation. It also outlines positioning and targeting strategies for the new product. Finally, the report recommends a comprehensive marketing mix, including product design, pricing, distribution, and promotional strategies tailored for the luxury smartphone market. The conclusion summarizes the key findings and recommendations.

RUNNING HEAD: CATEGORY EXTENSION
Name of Student:
Name of University:
Author Note:

Executive Summary:
The following report discusses a strategic marketing plan for Audi if they undertake a
product extension project. The chosen product was smartphones. with the reputation of Audi for
its technology t has been identified that Smartphone will be a good choice. The report examines
the internal as well as external condition for the proposed market and recommends a
segmentation and marketing mix strategy.

Table of Contents
Introduction......................................................................................................................................4
Environment analysis.......................................................................................................................5
External environment analysis.....................................................................................................5
Pest Analysis............................................................................................................................6
Internal environment analysis......................................................................................................7
Segmentation...................................................................................................................................7
Positioning...................................................................................................................................8
Targeting......................................................................................................................................9
Marketing mix:................................................................................................................................9
Product:........................................................................................................................................9
Price:..........................................................................................................................................10
Place:..............................................................................................................................................10
Promotion:.................................................................................................................................11
Conclusion:....................................................................................................................................11

Introduction
The category extension or brand extension is the term that refers to the use of an established
name of brand for a new product or a new product category. The extension of brand generally
leverages the reputation as well as the popularity of a well know product for launching a new
product. However, the success of this extension depends on the logical association between the
original product as well as the new item to be launched. An association that is non-existent or
weak can result in brand dilution that will not only harm the new product but will also harm the
parent brand (McDONALD 2016). The successful brand extension will allow a company to
diversify the offerings, boost up profit and increase the market share. The most suitable example
of brand extension that has totally extended in a different product category is the Google, which
is basically a search engine but has extended itself in products like Google Wallets, Tap to pay
etc.
This report will seek to identify a marketing plan for category extension of Audi. Audi
AG is a German Automobile manufacturer who is the designers of luxury vehicles.
Headquartered in Baveria this company has a broad range of luxury vehicles and their owner is
the Volks Wagon group. It has been currently found that this iconic car manufacturer along with
other luxury car companies is facing saturation in their target market since their capacity of range
extension has also been saturated. The iconic sports car manufacturer Zegna has extended its
category in lining up with Polos T- shirts, jerseys etc. A reputable and fashionable brand like
Audi may extend its product category by launching Smartphones. The design and technology
chops used by Audi are recognised as the core elements of the brand, which can also make a

pretty decent phone. Moreover, the smart phone industry is an ever-evolving one and is steadily
gaining mainstream popularity.
The following report will seek to analyse the environment that will be supporting the
opportunities for the product development and will specify the segmentation and targeting
strategy. It will conclude by recommending a marketing mix plan for the new product.
Environment analysis
The environmental analysis is a strategic tool that is used in order to identify all the
external as well as the internal forces, which can affect the performance of an organization. This
analysis helps in analysis the level of opportunities or threats that will help the company to
analyse their future decision making process. Businesses are greatly influenced by the
environment. All the situational factors that determine the day-to-day circumstances make a huge
effect on the firms. Thus, the analysis of external environment is always necessary. Since Audi is
a luxury Company, it will be obviously, facing internal as well as external issues.
External environment analysis
The external environment analysis basically refers to the analysis of macro environmental forces,
competitor analysis and industry analysis. The external environment analysis of the proposed
Audi smart phone will be as follows
Reputation of Audi- Audi is one of the leading brands of the premium cars belonging to the
Volks wagon group of automobiles. The company has earned its popularity because of its luxury,
technology and its attractive look. It is a brand operating worldwide and it has a loyal customer
base and very high sales (.Kisman 2016). The company also enhances brand equity by creating

brand awareness and brand association through their idea of luxury and thus creating a niche
market. This reputation establishes Audi as a positive brand. The main target audiences of Audi
cars are the young buyers and thus, it puts great emphasis on style and luxury. This positioning
of their car as high price and high quality will attract the present customer base as well as help in
forming new customers.
Pest Analysis
Political factors
The role of the political factors for the growth of any industry is becoming important since the
governments are playing crucial and active roles in the context of international business. Audi is
a brand operating worldwide and the new smart phone they will be producing will also have
international extent. Thus, while making the new category a global brand the company must
analyse the political stability and trade relations with the government. Audi being a German
brand may remain ineffective to the US china political tension.
Economic factors
Audi generally targets customers from high economic background since they are the marketers
of luxury vehicle thus while launching their smartphones it has to be kept in mind that the
company will see through the economic stability of their targeted nations. Promoting their
smartphones to a declining economic environment will have a adverse affect on the sales and
profitability.
Social factors:

The demand for luxurious smart phones among the young generation has increased to a
great extent. The changing social trends and the cultural factors all over the world may positively
impact the sale of new product. The acute rise of consumerism is witnessed not only in the
developed countries, but the emerging economies are also showing such trends.
Technological Factors:
For a Smartphone industry, technology is the main driver of growth. Investments in
technological factors will help Audi to have and upper hand to their product development.
Competitions in the Smartphone industry is growing intensely that has lead to higher focus on
the quality and user experience. Audi has been identified as a brand that is globally reputed for
their technological advancements. This may be the new product and added strength.
Internal environment analysis
The internal environment analysis focuses on examining the resources, competitive
advantage and competencies of an organization. Conducting an internal analysis will allow Audi
to identify their opportunities and threats, which will aid them in strategic decision-making and
formulation of new execution processes.
For the internal environment analysis, it is important for the company to analyse the growth
strategy to be taken. The proposed category segment is completely a new one and thus it can aim
at targeting a diversification growth strategy whereby it can have a new market for the new
product (Hussain, Khattak, Rizwan and Latif 2013). The automobile sector of Audi has
particularly targeted the upper section of the society with a potential economic strength. The
budget of Smartphone is relatively lower than automobiles. Thus it can spread out for a new
market for their luxury Smartphone.

Strengths and weakness Analysis of the proposed product:
Strength:
1. Audi has a great brand image and brand
name. Any product of the company will
be an instant hit.
2. Technologically it will be advanced
since any product of Audi is known for
its technology.
3. It has a great brand loyalty.
4. The Smartphone industry is an ever
evolving one.
Weakness:
1. Price will not be wallet friendly. Thus
will not be able to capture a large
market.
2. New in the market of Smartphone.
3. The market it is targeting is a brand
conscious one and they may not shift
overnight from their preferred brand.
Opportunities:
1. Exploring a worldwide market
2. Evolving as a leading Smartphone
producer.
3. Lowering transportation cost by setting
up bases in respective countries.
4. A large sector may not be able to buy
the car but can afford a luxury phone.
Thus they can have a larger
segmentation.
Threats:
1. Already existing Smartphone giants
like Apple, Samsung etc.
2. May not find a good customer base.

Segmentation
The segmentation for the products can be of three types
The development of the marketing strategy for the new Smartphone by the Audi company will
require segment identification. The company needs to analyse the psychographic as well as
demographic segmentation.
Demographic Gender- Male as well as female
Age- young adults to adults
Income- High
Occupation- Business, professionals
Family size, religion or race do not affect the target segmentation.
Geographic Global
Urban
Medium or large metro cities
Highly dense market with young population
Psychographic Modern in approach
Technologically advance
Leading a more or less luxurious life
Values- varies
Behavioural Benefit expectation- high
Brand loyalty- high
End use- dependent on the values of customers

Positioning
The positioning of the proposed new category of the company is as follows
The Smartphone will position itself as the premium smartphones in global market with high
technological benefits and luxurious appearance that will render a sense of esteem to the
customers (Harmeling Moff,ett, Arnold and Carlson 2017). It will also position itself as a
complete rehashing of Smartphone usage experience, which will be a combination off user
friendliness as well as high-end fashion.
Targeting
The target audience of the luxury Smartphones can be those people who have financial stability
and have ascended a career ladder. The generation Z is also a suitable target for the proposed
category. The company can segment their target group in two categories as follows.
1. The existing customer- These are the consumers who are already customers of the Audi group
of vehicles. They are already the loyal customer base who trust in the brand and equates the
social status with the possession of any product by this brand.
2. The new customer- The new customer segment for who does not possess or have prior
experience of having an Audi product a Smartphone will be easier for them to buy since the
budget will be lower than an automobile.

Marketing mix:
Product:
The new proposed product will be an innovative one for the Audi Company. It can project the
product well at its technological benefits like its camera system, android efficiency, battery life
etc. It can project how Audi’s legacy of high-developed technologies can make a Smartphone
equally efficient and luxurious. The equipment of technologies like smarter chips will compete
the monopoly of IOS as an efficient and luxury product. The emphasis on the display camera
telephoto and night mode will attract the younger generations. Like its cars they can also project
their smartphones to be unique, slick and stylish. Faster performance is one of the majpr criteria
that the android user looks for in their smart phones. Audi Company with its advanced
technology can come up with a better solution. The company can project their new product in the
following pattern:
1. Core product- the Smartphone which is of high technology for the tech savvy generation.
2. Actual product- Smartphone with new features, sleek in style with luxurious design to fit
the choice of present age.
3. Augmented Product- proper user manual is given and the set will be made user friendly
as well. the high definition camera and audio systems and the advanced features about
safety and protections will attract the customers.
The company also needs to specify the market they are focusing in for their new product. Since
the product will be targeting a niche market, it will be beneficial to launch the product primarily
at the domestic market and then at the international market.

Price:
Audi is well known for their premium as well as luxurious automobiles that have particularly a
niche market and premium pricing strategy. The smartphones that is proposed here will also
follow the premium pricing policies. The large price tag of the product will call for the
manifestation of advanced technologies, efficiencies, luxury and sense of esteem for the
customers who will be buying it. Making a product for the mass with a low price tag will be
diluting the brand image of the company. This may also end up in losing the loyal customers
who had a sense of esteem of having anything by the brand. It can also make use of
psychological pricing strategy since the value added with the name of Audi itself is of great
importance and privilege.
Place:
The company of Audi has a strong global presence by means of their research development
facilities as well as their local production facilities. Their global sales and distribution network
also spans throughout the world. Headquartered in Baviria the supply chain network of Audi has
a vast presence all over the world (Valvi and West 2013). A significant part of their production
has been concentrated among a small section of skilled manufacturers who carry out the
production. The company can apply this place strategy even for the production of their smart
phones. The extension of their categories in the Smartphone business will be effective for the
company in expanding themselves in the Asian markets, particularly India. They can sell their
product trough dealership as tey does in case of their automobile.

Promotion:
The company will have to try hard for giving the new product a reception that it deserves.
Considering the value of the product- both economical and perceived value and the nature of the
target customer, the company can fix a digital method of promotional strategy. In the
advertisement, it can make use of the official website promotion, social media presence and
business magazine advertisements (Fan, Lau and Zhao 2015). In promoting the highly developed
technologies, the company can make advertisements of the important and unique features like the
glass screen, the camera etc. it can also make a brand endorsement for each region by promoting
the product by any celebrity. By the application of this promotion strategy, they will be able to
implement successfully, the AIDA model:
Awareness- by promoting the features of the phones and the technologies used it can create
awareness among the target group. The advertisements will be able to focus what these phones
have which others do not.+-
Interest- the company can create interest among the consumers effectively. Audi is already a well
known brand which requires no introduction. Generally, any product released by them wi stir the
interest.
Desire- the promotional mix of the product will generate a sense of desire by its promotion of
luxury Audi itself is a brand that promotes a sense of prestige. However, the cars can be afforded
by a handful. Thus, the desire for smart phones will definitely be more.
Action- as soon as the desired is aroused, the company can take actions like encouraging he
customers to buy the product through their constant promotional stunts.

Conclusion:
An effective category extension can be of huge importance for any company. specially,
for the luxury company like Audi, which has a great amount of loyal customer base as well as
craze in the market any kind of brand extension or product extension can be profitable to a large
extent. If the newly extended product is related to technology, it has higher chances to be
successful since Audi is particularly known for their style and technology. The above discussion
briefs a marketing strategy that the company can undertake.
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