Temple University Aston Martin Lagonda Luxury Car Manufacturing Case Study

Temple University

Question Description

I’m trying to learn for my Marketing class and I’m stuck. Can you help?

please read the case , then write a case analysis.

should incloud:



3.SWOT Analysis


5.3 C’s Analysis



make sure choose 2 questions decide to answe and within the analysis section

  1. What is Aston Martin's product positioning among the luxury automotive market? What are its points of differentiation?
  2. If you were Palmer, would you expand into new product categories? Why? Why not? Regardless, what concerns would you have?
  3. By participating in segments other than the company's traditional "heart & soul," as a maker of high-performance luxury sports cars, the right approach? Would it dilute the exclusive brand image of Aston Martin?
  4. How should a high-end premium provider in any business grow without losing its exclusive reputation?

here is the case and sample( how to write)

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For the exclusive use of X. Zhang, 2020. 9-617-033 FEBRUARY 3, 2017 VISH V. KRISHNAN KARIM R. LAKHANI AMRAM MIGDAL Aston Martin: A Second Century of Performance and Luxury In March 2016, Aston Martin Lagonda Ltd. (Aston Martin) premiered its DB11 sports car at the Geneva Motor Show. The DB11—the first new Aston Martin platform in over a decade—was the first milestone in Aston Martin’s seven-year Second Century Plan, CEO Andy Palmer’s strategy to revitalize the company as it embarked on its second hundred years of operation. Since its founding in 1913, the English automaker had maintained a legacy of crafting bespoke, high-performance luxury and racing cars (founded in 1906, the Lagonda car company was even older). “Owning an Aston Martin is about expressing one’s personality and appreciation for power and refinement,” Palmer said. “DB11 continues that tradition. It reinvents and resurrects what a contemporary Aston Martin is.” The automotive industry was in the midst of a digital tornado with the arrival of autonomous, internetworked, clean energy-propelled vehicles. Recent entrants such as Tesla were capturing the mind share of customers and automotive industry analysts. Palmer’s Second Century Plan called for Aston Martin to diversify into new vehicle categories and increase overall production volume in an effort to boost earnings without compromising Aston Martin’s reputation for exclusivity, style, and engineering. As one of the few luxury car companies not backed by a larger automaker, Palmer and Aston Martin faced the challenge of funding development of new vehicles and maintaining a position of leadership in automotive design. “The big question is whether the Second Century Plan has us departing from our traditional role as a sports car and luxury manufacturer and moving into new segments, new businesses,” said Palmer in late 2016. “Is that a wise choice? How does a high-end premium provider in any business grow without losing its exclusive reputation? That is the eternal business question.” The Global Auto Industry In 2016, the automotive manufacturing industry was global and highly concentrated. For years, larger automakers had acquired smaller brands in an effort to diversify their respective product portfolios. They offered makes and vehicle models across the entry, mass-market, premium, and luxury segments. (See Exhibit 1 for leading automakers.) Cars, trucks, and sport utility vehicles (SUVs) in the entry and mass-market segments were generally available at less than $30,000 and included the bestknown and bestselling brands. At a higher price point were premium brands, such as BMW, Audi, and Professor Vish V. Krishnan (Rady School of Management, University of California, San Diego), HBS Professor Karim R. Lakhani, and Case Researcher Amram Migdal (Case Research & Writing Group) prepared this case. Professors Krishnan and Lakhani contributed equally to the development of this case and are listed in alphabetical order. It was reviewed and approved before publication by a company designate. Funding for the development of this case was provided by Harvard Business School and not by the company. HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management. Copyright © 2017 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to www.hbsp.harvard.edu. This publication may not be digitized, photocopied, or otherwise reproduced, posted, or transmitted, without the permission of Harvard Business School. This document is authorized for use only by Xi Zhang in Mktg 4501 Sections 002 and 004 2020 taught by Sara Honovich, Temple University from Jan 2020 to May 2020. For the exclusive use of X. Zhang, 2020. 617-033 Aston Martin: A Second Century of Performance and Luxury Mercedes-Benz, which could retail for up to $100,000. At the top of the market were luxury brands, which were generally only affordable to wealthy individuals. Consolidation and diverse product portfolios allowed the big manufacturers to save on development by sharing modular components across product lines. Often, outwardly distinct makes and models in different market segments were, in fact, based on the same underlying design platforma and shared parts from engines to electrical systems, body elements, and infotainment features (built-in information and entertainment technologies). For instance, the Volkswagen (VW) Touareg shared the same 3.6 liter 6-cylinder (V6) engine and other elements of its platform with the Audi Q7 and had components developed both independently and collaboratively by VW, Audi, and Porsche. Likewise, the Audi Q7 shared much of its structure with the Bentley Bentayga, an SUV from VW’s luxury marque. (See Appendix A.) Luxury Market Together, premium and luxury cars and trucks amounted to 14% of global sales volume (out of 68.6 million passenger cars worldwide)1 and 60% of industry profits.2 Prices for luxury vehicles could start at well over $100,000. Production volumes were in the tens of thousands annually, a fraction of the millions of units that bestselling mass-market brands produced each year. Most luxury auto brands were backed by a larger manufacturer, including Fiat’s Maserati, BMW’s Roll Royce, and VW’s Lamborghini and Bentley (see Appendix B for luxury brands). Other notable marques included Ferrari, McLaren, and Aston Martin. Sales of high-end vehicles were increasing especially in Asia and the Middle East.3 From 2001 to 2014, China saw premium and luxury car sales grow by 50%.4 Luxury brands catered to the small but growing global population of high net worth (HNW) and ultra-high net worth (UHNW) consumers, commonly defined as those whose investable assets totaled over $1 million or $30 million, respectively. In 2015, 172,850 individuals with total wealth of $20.8 trillion made up the UHNW group worldwide.5 By 2024, the group was expected to increase by another 34%.6 This group spent their fortunes in part on luxury goods ranging from watches to diamonds, jewelry, wine, art, and fine cars.7 According to research analysts, “personal pleasure is the main reason most [UHNW individuals] like to collect beautiful and pleasurable things, [although] one suspects that even the most epicurean collectors would prefer that their treasures grow in value.”8 Luxury brands often produced items of cutting-edge design that expressed the owner’s identity rather than focusing on utilitarian or functional qualities. Such brands often had fabled histories and reputations for fine craftsmanship. For example, luxury auto brands such as Aston Martin and Ferrari not only produced high-performance consumer cars but also developed concept cars that pushed the boundaries of design and technology, as well as racing platforms that competed in Formula 1 races and other competitions. Technology Trends In 2016, three technology trends were having a profound impact on the auto industry more broadly: hybrid and electric engines and progress toward zero-emissions vehicles (0EV); autonomous driving capabilities; and network-connected features. One observer noted, “Connectivity, and later autonomous technology, will increasingly allow the car to become a platform for drivers and passengers to use their time in transit to consume novel forms of media and services or dedicate the freed-up time to other personal activities. The increasing speed of innovation, especially in softwarebased systems, will require cars to be upgradable.”9 Vehicle launch cycles typically were three to four years, while software updates operated on a timescale of months or days. Since 2005, the cost of a Auto manufacturers typically developed different vehicle makes and models based on common design platforms. Platforms consisted of modular components, shared engineering, and standardized production processes used across variants of a particular model or even for distinct makes and models. 2 This document is authorized for use only by Xi Zhang in Mktg 4501 Sections 002 and 004 2020 taught by Sara Honovich, Temple University from Jan 2020 to May 2020. For the exclusive use of X. Zhang, 2020. Aston Martin: A Second Century of Performance and Luxury 617-033 electronics and software had dropped by more than 80%, and in 2015 electronics innovations accounted for 90% of new features in the auto industry.10 Meanwhile, stricter emissions standards and technological advances were spurring innovation in hybrid and electric engines. In 2016, U.S. federal regulations, called the Corporate Average Fuel Economy (CAFE) standards, began going into effect. CAFE standards required that by 2025, manufacturers’ fleets’ average fuel economies be 54.5 miles per gallon (mpg), up from 27.5 mpg in 2012.11 Europe, China, and India all heavily taxed fuel and had put in place strict emissions standards.12 Palmer believed electrified vehicles would make up 25% of the overall market by 2025. New entrants whose strategies focused on 0EV, automation, and connected features included the electric car maker Tesla and Google’s self-driving car. Tesla’s and Google’s offerings were aimed specifically at disrupting the entry and mass-market segments of the market by developing vehicles that could sell for $35,000 or under. “One could argue that Google’s car is actually a set of technologies that will go onto other cars. They may be changing course and not producing their own car,” said Aston Martin Chief Marketing Officer (CMO) Simon Sproule. The same segments were under threat of disruption from other technology, as well, including car-sharing services such as Uber. One report predicted that “car sharing will cost OEMs [original equipment manufacturers] approximately 550,000 units in worldwide vehicle sales. In revenue terms, that works out to €7.4 billion in net lost revenues, once the impact of forgone purchases, increased car sharing, and car-sharing fleet sales is taken into account.”13 The report stated that by 2021, car-sharing fleet sales would replace only about one third of the reduction in private purchases due to the availability of car sharing.14 Aston Martin: An English Automotive Classic Since its founding, Aston Martin had been owned and run primarily by auto enthusiasts who were passionate about creating high-performance luxury driving machines. It was a low-volume manufacturer that catered to a small but profitable market of wealthy collectors and hobbyists. “An Aston Martin is a collector’s item, often the third or fourth car in an owner’s garage,” Palmer said. “Owning one expresses something individual about society and good taste.” Aston Martin was known for the quality of its engineering and design, particularly its bonded-aluminum bodies and bespoke, handcrafted assembly. Its cars displayed meticulous attention to style, from a model’s silhouette to its manually-stitched Scottish leather interiors. In its 103-year history, Aston Martin had produced a total of 80,000 units, 95% of which were still in running condition (see Exhibit 2 for historical production volume). Despite its history and storied reputation, the company never achieved consistent profitability and underwent a variety of ownership transitions and organizational re-configurations. History of Aston Martin Founding In 1913, racing driver Lionel Martin partnered with engineer Robert Bamford to produce and race their own cars out of a small London workshop. In 1914, they began manufacturing sports cars commercially and named the company Aston Martin after Martin competed on a hill climb course—a set of timed auto racing events—near the town of Aston Clinton, England. In 1920, Bamford departed, and in 1926, after several bankruptcies, Martin sold the company. In its first 13 years, Aston Martin had built about 60 cars, along with a reputation for blending power and style. Over the next 20 years, Aston Martin remained formidable on the race track, excelling in competitions such as Le Mans. It produced a number of well-regarded luxury models, including sports cars and luxury sedans, called saloons. Nevertheless, the company was forced to refinance several more times. 3 This document is authorized for use only by Xi Zhang in Mktg 4501 Sections 002 and 004 2020 taught by Sara Honovich, Temple University from Jan 2020 to May 2020. For the exclusive use of X. Zhang, 2020. 617-033 Aston Martin: A Second Century of Performance and Luxury Acceleration in the “DB” era In 1947, Sir David Brown, a prominent British businessman who loved cars and ran a large engineering firm founded by his grandfather, was seeking to create an English sports car company to rival Italy’s Ferrari.15 Seeing an advertisement for the sale of an unnamed sports car company in The Times of London, he soon discovered it was for the famous but troubled Aston Martin. He immediately purchased the company.16 He then promptly bought a second venerable British luxury marque, Lagonda, which was known for its saloons and engines designed by the famous W.O. Bentley. Soon, Aston Martin was producing a new line of cars named for Brown’s initials, DB, the first of which debuted in 1948, followed by the DB2 in 1950. Under Brown, Aston Martin’s reputation for superb driving quality, refined style, and top-notch engineering grew. In 1963, the DB5 premiered—the first Aston Martin car to feature an all-aluminum engine and to display Aston Martin’s budding expertise at using the lightweight material in place of steel. A total of 1,059 DB5s were built, and it came to be considered an iconic model. It was also the first Aston Martin to appear in a James Bond film—1964’s Goldfinger. Despite the acclaim of its cars, Aston Martin consistently failed to break even, and Brown sold the company in 1972.17 Ford From 1967 to 1987, the company changed hands several times. Although it continued to put out well-respected cars during that span—for example, the DBS and the V8 Vantage—it launched no major new platforms and produced just 5,000 total vehicles. At times, production dropped to as low as three units per week. In 1987, the Ford Motor Company (Ford) took a partial stake in Aston Martin, and in 1988 the company released its first major new sports car platform in 20 years, the Virage. In 1993, Ford consolidated control of the company and revived the DB moniker with the debut of the DB7 platform. In 1995, Aston Martin set a company record by manufacturing 700 vehicles in a single year. In 2000, Dr. Ulrich Bez was appointed CEO and chairman. Acquiring Aston Martin was part of Ford’s strategy to expand its presence in the premium and luxury segments. Ford had acquired Jaguar in 1989 and Volvo in 1999, placing both brands in its Premier Automotive Group (PAG). In 2000, the PAG added Land Rover, maker of premium SUVs including the Range Rover, and combined it with Jaguar. PAG represented Ford’s attempt to capitalize on shared knowledge, common production components, and joint facilities between brands. In 2003, Aston Martin moved to a purpose-built facility in Gaydon—directly across the road from the facilities of Jaguar Land Rover (JLR). In 2004, Aston Martin moved its V8 and V12 engine production to Ford’s plant in Cologne, Germany, helping to boost capacity to 5,000 engines per year and achieve economies of scale that freed the Gaydon factory to focus on specialty models with smaller production runs. Private Ownership In March 2007, as part of a series of divestments following its use of financing arranged by the U.S. government, Ford sold all but 15% of its stake in Aston Martin. (Ford also sold off JLR, which was bought by the Indian automaker Tata Motors for $2.3 billion.)18 A consortium led by Middle Eastern firms Investment Dar and Adeem Investment and organized by David Richards, a wealthy racing enthusiast and chief executive of Prodrive, an English automotive technology company, paid $925 million for a controlling interest. Richards became chairman and Bez remained as CEO.19 Then, in December 2012, European private equity shop Investindustrial purchased 37.5% of Aston Martin for $246 million.20 In 2012, ownership budgeted $785 million toward developing a new sports car platform and revamping existing sports car models. A year later, auto-giant Daimler AG, parent of Mercedes-AMG, took a 5%, non-voting ownership stake and agreed to collaborate on development of V8 engines for upcoming Aston Martin models.21 “The deal will help Aston Martin, the only global luxury car maker not attached to a larger manufacturer, spread the cost of developing new fuel-efficient vehicles. The two car makers also plan to cooperate on the supply of electronic components,” stated one report.22 4 This document is authorized for use only by Xi Zhang in Mktg 4501 Sections 002 and 004 2020 taught by Sara Honovich, Temple University from Jan 2020 to May 2020. For the exclusive use of X. Zhang, 2020. Aston Martin: A Second Century of Performance and Luxury 617-033 Under the leadership of auto sports enthusiasts Richards and Bez, Aston Martin built on its legacy of cutting-edge design by focusing on racing and concept cars. Executive Vice President (VP) and Chief Creative Officer (CCO) Marek Reichman had contributed to the designs of the Rolls Royce Phantom, the Lincoln MKX, and other concept cars considered to be among the best recent auto designs in the world. He aimed to design vehicles that represented the height of luxury style, “Collectible cars with enormous longevity,” as he put it.23 The brand’s prestige was perhaps best captured in the company’s long-running association with the James Bond movie franchise. By 2015, the super spy had been depicted behind the wheel of an Aston Martin in 12 feature films (see Exhibit 3). Notwithstanding its image as a leader in luxury auto manufacturing, Aston Martin continued to struggle financially. In May 2013, Bez announced that he would retire the following year. His departure created further turmoil for a company that seemed to lack direction and had already seen 2012 production fall to 3,574 units from a 2007 peak of 7,281. (See Exhibit 4.) Andy Palmer at Aston Martin In October 2014, Palmer stepped into the role of CEO. It was a homecoming for Palmer, who had grown up in nearby Stratford-upon-Avon and attended the University of Warwick and the University of Coventry, just miles from Aston Martin’s current Gaydon headquarters. “Owning an Aston Martin was a childhood dream,” he said. Palmer channeled his passion for cars into his career, earning graduate degrees in both product engineering and engineering management. He built a 23-year career at Nissan—including most recently a 13-year stint working and living with his family in Japan—where he rose to become chief planning officer (co-chief operating officer). But he always kept an eye on Aston Martin and, when offered, leapt at the opportunity to return to his native region and lead the iconic automaker. “All the stars aligned,” he said. “I felt a sense of duty to see if I could help turn the company around. Aston Martin is one of the only classic British car companies left.” By 2016, Aston Martin’s lineup of consumer models consisted mostly of two-door coupes and roadsters, including the street-friendly DB11 sports car grand tourer (GT), the V8 and V12 Vantage variants, the sportier Vanquish, and the Rapide four-door luxury sedan. Aston Martin also marketed some models under the Lagonda marque that had been revived in 2015 with the introduction of the Lagonda Taraf sedan, the first new Lagonda since the brand had been discontinued 1989. Aston Martin was one of the world’s mos ...
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Final Answer



Aston Martin Case Study



Aston Martin Case Study
Executive Summary

Aston Martin Lagonda is a luxury car manufacturing company based in England, United
Kingdom. It was founded in 1913 by Robert Bamford and Lionel Martin. The company is one of
the few independent luxury vehicle manufacturers with over a century of experience in
producing two brands, including Aston Martin and Lagonda. It intends to provide the market
with excellent and stylish automotive art that is unique from the rest of the cars in the world. The
Lagonda brand was the first to be created, in 1904, and was the first car in the world to use the
technology of zero-emission powertrain (Krishnan, Karim & Amram, 2017). The company
consists of three main models, including Sports Car Vantage, Super GT DBS Superleggera, and
Grand Tourer DB11. Since its establishment, the company has taken part in partnerships,
collaborations, and selective extension of brands. It also has corporate partners such as Hackett
London, Bowmore, Juniper Networks, and others. The company appropriated a new strategic
plan in 2015, known as the “Second Century Plan,” consisting of three key stages; stabilization
of the business, core strengthening, and product portfolio expansion. The plan helped the
company to produce quality products, for which it won several awards, such as the Prestigious
Golden Steering Wheel Award and the T3 Design Award in 2017 and 2016, respectively
(Krishnan, Karim & Amram, 2017). In 2018, Aston Martin again received the title of the Luxury
Brand of the year. Generally, it is an iconic brand and a leading luxury carmaker that focuses on
engineering and design.



Although Aston Martin enjoyed massive success over the years since its foundation, it
endured significant losses in 2019, amounting to about £13 million. The company blamed this
slump on the severe conditions of trade in the United Kingdom and Europe, which led to the
poor market performance of its biggest brand, the two-seater luxury car, Vantage. The centuryold British business has experienced a turbulent year since last October, with its stock market
shares price being £ 19, and company value being £4.3 billion (Kollewe, 2019). Since then, its
shares plummeted and, at one point, fell below £4 in August. This was caused by the falling of
the company’s sales and profits in the face of unprecedented macro uncertainties. The valu...

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