8/10/2019 Bentley Company CaseDocument Transcript

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Bentley company caseDocument Transcript

1. Company Case Bentley Motors: Differentiation and Positioning in International Market Themission of Bentley Motors, the definitive British luxury car company, to produce best cars in theirclass, has remained unchanged since it was expressed eloquently by its founder Walter OwenBentley in London in 1919. Located in Crewe, England, since 1946 and owned since 1998 byVolkswagen AG, Bentley Motors is an international company developing and crafting one of theworlds most desirable luxury cars. There are many unmistakable characteristics that define aBentleydistinctive design, handcrafted luxury, supreme comfort, ultimate performance, and arefined and exhilarating driving experience. Yet it is the companys brand imaging throughdifferentiation and positioning that makes the quintessentially British brand unique today. Tomany, owning a Bentley is not about getting from A to B but about getting there with flair infusedwith advanced technology and classic hand craftsmanship at the pinnacle of British luxury

motoring. Based around the concept of Britishness in image and design. Bentley hassucceeded in differentiating its position in the global luxury car market through a market- drivestrategy based on responsive cross-market segmentation. Cross-Market Segmentation Thetraditional markets of Bentley Motors are the United States, the United Kingdom, and Europe,which were identified by the company using two of the traditional market segmentation variables:the level of a nations economic development and per capital gross domestic product (GDP).Bentley had enjoyed high sales in these economically developed markets, especially in the boomof the 1980s. In the 1990s, it struggled to reach similar level of sales, which led to a majorinvestment in the facility, new- product development, and brand re-positioning in 1999. The brandreached the height of its heyday in the 1920s and 1930s, and the Bentley Boys winning the 24-hour race in Le Mans in 2003 seemed to emulate victories of the past. Its new Amage T luxurysports sedan won critical acclaim by the motoring press worldwide soon after, and the

Continental GT, launched in 2004, was seen as one of the most successful launches of any carin Bentleys history.

2.However, sales in its traditional markets slumped in 2008 due to the global financial crisistriggered by the collapse of Lehman Brothers in September 2008. Some orders for its cars werecancelled immediately, and sales dropped by 24 percent that year compared to 2007. When thecompany was forced to stage a seven-week production shutdown in the spring of 2009 due tothe slump, it started to search for new markets to increase sales. It realized that the use of themore traditional market segmentation variables such as age, gender, education and level ofeconomic development does not seem to reflect the real aspect of market behavior, especiallythe burgeoning purchasing power of the well-to-do in the big emerging markets such as Brazil,Russia, India and China. The result of the search was the identification of a thriving consumer

segment that transcends the national boundaries of these nations. Despite being located innations featuring low per capita income, this segment of consumers has the greatest globalconsumption growth and represents rapidly growing buying power for luxury goods ranging fromultra- luxury cars to designer handbags. Targeting Operating in markets of both developed andemerging economies presents challenges for Bentley. It was clear from day one that it targetedhigh-income groups who want to buy into the symbolism and history of the Bentley brand, seenthough the prospect customers would inherently know that they could purchase a vehicle withsimilar performance and specification for less than half the price. Bentley is aware that the needsand preferences of its target groups in the emerging economies may differ from those of itsprospects in developed economies, who are typically older or retired males, highly educated andhigh earners. In comparison, Bentleys target consumers in emerging markets are often theyoung, less educated entrepreneurs who share a number of important commonalties. They havea strong appetite for Western-branded luxury goods, from which they expect superior quality as a

fundamental attribute associated with these goodsquality may mean design, materials,technology, performance and craftsmanship, but also attributes such as the tradition and the

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heritage of country of origin, uniqueness traits and perceived superiority and exclusivity.Recognizing the differences and the opportunity to be had from differentiating its targeting efforts,Bentley launched its value proposition based on Britishness in its newly found markets whilerefreshing its original value proposition of luxury, performance and exclusivity in its traditionalmarkets. Differentiation and Positioning The Bentley brand concept is based on the premise thata consumer who regards luxury car brand characteristics as important or desirable, and is in the

market for such a luxury product, should be attracted to the brand. Bentley is aware that for itsbrand to be unique, it must have imagery and symbolic meaning to its consumer. In other words,it must stand for a lifestyle or an attitude and communicate this to its cross-market consumersomething something.

3.Although owned by the German Volkswagen AG group, which employs a perception ofcreditability and originality, Bentley brands itself as a quintessentially distinctive luxury brandoriginating in Crewe, England, with a fusion of heritage and cutting-edge technology. It defines itscars by the important attributes of tradition and hand craftsmanship, relative to those of speedand performance used by its competitors. It focuses on the emotional benefits of its cars and hasstayed true to this proposition through an integrated, high-touch differentiation and positioningprogram tailored to the carefully defined well-to-do groups in each of its markets. Bentley offersan exclusive collection of limited no-motoring products produced under license from its equally

exclusive partners. Entinger and Bentley offers luxury leather travel products in vibrant colorsfrom the Bentley color palette, hand-stitched in England from Bentleys own hides. ThroughEstede, Bentley offers a limited edition, high-end range of sunglasses and ophthalmic framesfeaturing the famous winged B emblem and presented in a Bentley leather presentation box.Through Zai, a Swiss maker of luxury ski equipment known for its craft end exclusivity, Bentleyoffers innovative ski products handmade in Switzerland with support from Bentley Styling studioin England. Bentley has also teamed up with luxury hospitality brands to enforce its valueproposition through Bentley Places that embody the values and the spirit of Bentley around theworld. The Bentley Room at Londons Mosimanns is an inimitably British blend of style andtradition with a dash of Bentley decor and detailing. The dining room was designed by CaulderMoore, who also designed the Bentley Living Room at the companys headquarters in Crewe.The Bentley Suite at the exclusive St. Regis Hotel in New Yorkbuilt by John Jacob Astor IV in

190vprovides guests with the luxury, craftsmanship, and style associated with the Bentleybrand. In its traditional markets of the United States, the United Kingdom, and Europe, Bentley,through its dealerships, regularly invites customers to take part in national golf tournaments thatculminate in cross-national event held in differing worldwide locations; the winner is crowned withthe Bentley Continental Cup. These events bring together golfers from different continents withcommon interest in golf and Bentley and help to refresh and reinforce its image of luxury andexclusivity. In its newly found markets in the emerging economies, Bentley increases publicity toraise awareness of its brand through motor shows, exhibitions, openings of grand showrooms,and signing of exclusive dealerships to highlight the craftsmanship, quality and luxury of aBentley car and the authenticity of the Bentley name. All these events take place in the mosteconomically developed and fashionable metropolitan areas, such as Sao Paulo in Brazil,Shanghai, Shenzhen and Beijing in China, and Mumbai in India. Bentley stays true to its Englishheritage and makes sure that the unique Britishness is steeped in its targeted marketing

programmes. In the biggest Bentley brand exhibition ever held outside Crewe, the World ofBentley exhibition held in Shanghai in 2009 featured a myriad of exhibits devoted to telling theBentley story of craftsmanship, style, luxury and heritage originated in England. Bentley has longstood as the worlds premier maker of handcrafted cars, and it did not disappoint in Shanghai.The Bentley Design Studio gave the crowd a rare chance to glance into its celebrated tradition ofdesigning the

4.grand tour automobile; a Bentley stylist at work, sketching its future inspired by its past.

Bentley woodwork and trim experts demonstrated Bentleys unrivaled craftsmanship in aninteractive and fun- filled display of how the company brought the English way of life into dynamicdesigns of luxurious motor cars. In the words of Geoff Dowding, Bentleys Regional Manager forEast Asia, The Chinese just love the Britishness. Bentleys high-touch positioning throughtailored marketing programmes in its new markets played a key role in the companys recovery

since the sale slumps in 2008. China has now replaced the United States as Bentleys largestmarket. In 2011 the company delivered 1,664 cars to Chinese customers; during the first quarter

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of 2012, sales in the region grew by 84 percent compared with the same period in 2011. Theprominent presence of its dealerships, 35 by September 2012, is set to further expand in the next12 months as the latest high-performance coupe and convertible Continental models areintroduced to Chinese customers. In Russia, Bentleys sales increased by 45 percent in 2011.Making it the best-selling luxury car brand in the country, The Road Ahead In summary, Bentleytarget high-income segments, and builds its brand by serving a luxury segment of the car market.

It produces superior-quality products distributed through exclusive dealerships and is never shyabout charging a typically high price. It is strongly positioned as a quintessentially British brandsteeped with tradition and heritage, and it communicates this proposition through consistent andbelievable associations with high-end brands in the luxury consumer goods and hospitalitysectors. In doing so, it draws its existing and prospective customers to style, luxury prestige,heritage and exclusivity. Through these well-tuned competitive advantages, it had sold well in itstraditional markets until the economic downturn in 2008, when buyers became more cautious intheir spending. It has since recovered the following expansion into high-consumption-growthsegments in the emerging economies by carrying out effective cross-market segmentation,targeting and positioning. The pent-up demand for luxury cars in the emerging economies isremaining strong, with Bentley and other European sports car brands all reporting string salesand orders. However, there are already signs of a slowdown in some of Bentleys new markets,

such as China, which reported the slowest economic growth in the past decade. Furthermore,increasing sales aggressively in these new markets may imply less distinctiveness andexclusivity for the Bentley brand. However, as long as Bentley remains true to its pinnaclepositioning of building the best car in its class with heritage, tradition, and cutting-edgetechnology, it can look forward to ample opportunities in the years to come, especially in theexisting emerging economies as well as those in the making, such as Vietnam, Cambodia,Kazakhstan, and the Philippines, where the nouveau rich have just started to appreciate thequintessentially British tradition and heritage that is embroidered in Bentley.

5. Words Im sick of: Bentley, quintessential, heritage, tradition, luxury, emerging economies,

craftsmanship, exclusivity, proposition, car. Questions for Discussion 1. What is Internationalmarket segmentation? What challenges does it pose to Bentley? 2. Using the full spectrum ofsegmentation variables, describe how Bentley segments and targets he international luxury car

market. 3. Has Bentley differentiated and positioned its brand effectively? Explain. 4. Given theeconomic downturn in developed economies and the slowdown in emerging economies such asChina, will Bentley continue to grow? Why or why not? 5. What recommendations would youmake to help ensure Bentleys future growth?