Audi: Ready For The Big Time
Audi has gone from the seventh-most considered luxury auto brand a few years ago to second, according to company data. What that means, says the company's U.S. head of marketing Scott Keogh, is that Audi can now legitimately focus on building sales and share in the high end of the market -- where Audi's larger A6, flagship A8 and brand new A7 vehicles live.
"If you look at Audi right now, 13% of our total mix is in those [higher-end] segments. By 2015 we want to double that to 25% of sales," says Keogh. The company also happens to be revamping its lineup in those rarefied regions of the premium market. In addition to the hot A5 coupe, Audi introduced the latest A8 sedan in November, is in the process of rolling out the totally new A7 now, and will bow the latest A6 car in the fall.
"These areas are important to us because the center of gravity for a luxury brand should be upmarket, and because there is lots of volume in those segments -- about 250,000 units," he says, adding that the high end is also very profitable and owners of such vehicles are very loyal. "We have historically had anywhere from 3% to 6% of share in that area, versus 23% share for A4 and A5."
The new A7 is unusual because while the $50,000 A6 competes against vehicles like the BMW 5-Series and Mercedes E-Class, and the $84,000 A8 against the 7-Series and S-Class respectively, the A7 is between them. But there's decent bandwidth between the A6 and A8, for a $60,000 car. "We think there is room," he says.
And because it resides between formal segments, the A7 is also bringing in a diversity of buyers who might own Mercedes CLS, BMW 5-Series cars -- even the occasional Aston Martin and Porsche, per Keogh. "We are finding that A7 pre-orders are not coming from one particular car. So I think it's limiting to think about it that way; it's a beautiful car that will act as a lighthouse -- a magnet. The theoretical segments will straighten themselves out when consumers come into [the] dealership."
The advertising program for the A7, still getting finishing touches, follows the theme that "a boldly designed car deserves a bodily designed world," with the overarching idea that other aspects should be as beautiful and boldly designed. "What we are doing here is challenging design," says Keogh. Print ads say things like "The world has some catching up to do," and "Let this be a warning to eyesores everywhere."
One print ad shows the A7 next to a striking design for a street lamp. "We issued a challenge. It's a call to arms," says Keogh. The company is promoting the vehicle with a grassroots program rolling out consecutively in seven cities. The New York program is launching with a four-story-tall digital, interactive billboard in Times Square; consumers can text to it their ideas for beautifully designed spaces. Audi has also been touting seven beautifully designed places in New York City -- including the New York Auto Show, Frank Gehry-designed IAC building and Murray Moss design store -- via a smartphone app at A7BoldDesign.com.
A TV spot that will air primarily on news programming and sports, particularly on Sundays when affluent people actually watch TV, carries a "Ready the Road" theme and the "Luxury has Progressed" tag that Audi is using for its rollout of upmarket vehicles. It shows people hand painting a yellow stripe down the center of a road, shooing pigeons off a lamp post, and sweeping the asphalt in preparation for the A7's arrival. "We feel we have such stunning vehicle that road needs to be made ready for it; that's the idea," says Keogh. "It's like preparing for the arrival of the king."
The company has also gotten involved in the actual redesign of urban spaces as part of its focus on upmarket vehicles. In San Francisco, for example, it is involved in a two-block-long redesign of Powell Street near Union Square. The effort, in conjunction with the city government, has included a design competition and the incorporation of Audi elements into some of the elements used to beautify the area. The company plans similar programs in other cities.