November 9, 2016
It’s Price Before Product. Period. – First Round
Over the second half of the 1990s, Porsche hatched plans for a new car. Annual sales were a third of what they’d been the decade prior, so the company badly needed a turnaround. The car hit the market in 2003. A decade later, Porsche sold 100,000 of the model in one year — nearly five times as many as it did in its launch year — which accounted for half the company’s total profit. This enabled Porsche to eventually pay down its debt, increase its cash reserves and generate the highest profit per car in the automobile industry. What was this impactful, new product?
It wasn’t a sports car, for which Porsche is famed – not, for example, the sexy Porsche 911 that can effortlessly hit 200mph. Instead, it was the Cayenne: Porsche’s family-friendly SUV. How did the carmaker find this degree of impact with a vehicle so counterintuitive to its brand? In this case, it wasn’t Porsche’s engineering prowess or manufacturing efficiency, but how it designed the car around what customers needed, valued and were willing to pay for – in short, around its price.
Read the full article at First Round.