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Executive Summary

In the carrying out of a company’s operations, it is always important for managers to measure the level of performance in the market so that they can clearly get a proper picture of the company’s true position in the market. The metrics used to carry out this performance enable managers to see the areas that they need to improve in performance. The indicators or metrics used in measuring market effectiveness are divided into six categories: Financial indicators, consumer behavior indicators, metrics of consumer intermediate, indicators of competitive market, measures of customer direct and measures of innovativeness (Milichovsky, 2015, pg 207). This report looks into the market performance of Porsche and gives recommendations on ways to improve this performance.












The Porsche Company was founded in 1931 by Ferdinand Porsche in Germany. The company is the one of the largest producer of automotive in the Europe. The company offers services such as engineering services, Automotive Financial Services and Investment Services. It has a large employee base of workers. The organization carries out its operations in the whole world. As a multinational, Porsche has had to cope with changing socio-economic factors that influence consumer behavior.

There are many companies in the world that deal in the production of automotive. For this reason, Porsche has many competitors in Europe such BMW, Nissan and Tesla Motors. However, the company has a competitive edge over them since it has majored on the production of executive vehicles for a particular class in the society. Again the company has highly invested in research for development and understanding the needs of its customers well. In the technological field, the company faces competition from technology giants such as Google (Strategy&,par 3-4 ) and Face book that are seeking to create their own vehicle  models that embrace the use of Artificial Intelligence.

In the external environment, there are new trends in the market where Porsche carries out its operations. For instance, the whole industry is going through a transformation due to the use of new technologies to produce executive models that are intended for future use. The automation of vehicles resulting in intelligent cars and connected cars poses a challenge to the company (Strategy&,par 2). If it does not change its management approach to adopt to the changing market, then it will eventually run out of business. On the same note, some countries have brought in new regulations that give guidelines that are stricter than the existing ones. Cars that do not meet the new regulations will not be let into the EU market and the US market. On top of this, the global Economic conditions have worsened from two years ago. This poses a challenge to any company that deals with investment since it will be difficult to achieve projected returns. Porsche has to plan very carefully on how to navigate in the market to avoid a drop in the sales revenue (Strategy&,par 4-9).

The company has been performing very well in the market in the past few years .for instance the sales of motor vehicles has increased in all the parts of the world where the company trades in such as Canada, US, and  Germany. On the same note, it has been ranked as the number one company in taking good care of its customers worldwide to yield the highest level of consumer satisfaction in relation to other companies. Further, the company has produced new vehicle models such as the Cayenne that ranked among the best car models in the whole world.



Metrics for Measuring Market Effectiveness of Porsche

Each metric has a significant role when it comes to sound decision-making. The increasing competitiveness in contemporary business world compels firms to undertake in-depth performance analysis. Porsche is a player in the automobile industry and has the challenge of a dynamic market that necessitates constant performance measurement. Market effectiveness help the firm to gauge its competitiveness advantage. Porsche has shown consistent performance over the years, a reflection of accurate market effectiveness metric application. Various metrics used by Porsche are discussed at lengths below

Margin (%)

This is a financial metric that measures the profitability level in a company. It is the net profit margin for any given company. This is the result got once a company’s incurred unit costs are compared to unit selling prices of its products.

Margin (%) = (net profit before tax/ Sales) x100%

Market Share

Managers of Porsche can use the market share index to assess how well their company is performing when compared to its competitors. This index is used to monitor the competitiveness of a company in the market. However, the metric does not give a true picture of the company’s competitiveness. A decrease in market share is not always an indicator of reduced competitiveness since there are times when companies sacrifice profitability in an attempt to gain greater dominance in the market. The index can be used to predict the future trends in consumer behaviors (Farris ET all,2016,pg 40-45).

Unit Market Share= (unit sales/total market unit sales)

Revenue Market Share=sales revenue/total Market revenue.

Customer Satisfaction

Customer satisfaction is one of the main Goals that Porsche has. With highly satisfied customers, a company can be able to build affirm customer base and increase their loyalty level. Through the use of a survey, the company can be able to determine the level of customer satisfaction it has is important to understand that the survey is not a perfect tool since it is subject to biasness. In most cases, it is the customers that have had a bad experience that take part in such surveys and only give negative response.

Net Promoter Score

When a company achieves high customer satisfaction levels, it can in turn depend on these customers to recommend its services to other potential customers. The net promoter score measures the level of this recommendation .A company with a score has been able to achieve high levels of customer satisfaction and customer loyalty. Increase in the degree of customer loyalty shows that a company is effective in its marketing strategy and can therefore attain sustainable development.

Out Of Stock

This metric measure is used to determine the level of effectiveness in the management of the supply chain process to ensure that the products are always available.

Out of stock (%) =     outlets where brand or product is listed but unavailable

Total outlets where brand or product is listed.



Return on Investment (ROI) is a measure of the profit that is gained from investment. There are two ways of increasing this index: increase revenue allocation or decrease spending in a company. In some occasions negative index for this measure is acceptable ( Bendel Etall,2016,pg 37) . This happens when a company allocates a large amount of revenue to investment in order to get a bigger market share. Notably ROI is not a representative of absolute profit. Therefore it is prudent to incorporate other similar measures to get a more reliable analysis.


ROI= (Revenue-Total Cost) x 100

Total Cost




Evaluation of Marketing Effectiveness of Porsche.

Market Share

In the year 2016, Porsche (also known as VW Group)Sales in Europe exceeded those of the previous year by 5% (Porsche News, 2017).In Germany their sales increased by 1%. In addition, their market share in Europe has been increasing steadily from 2009 to 2016 (Car Base Sales, 2017).This growth in market share has been associated with increased sales as illustrated in the chart below.

Table 2:source porsche (2016)




From the chart below, the company made a return of 4.99%



Profitability 2008-07 2009-07 2010-07 2010-12 2011-12 2012-12 2013-12 2014-12 2015-12 2016-12 TTM
Tax Rate % 25.41 1.95 0.41 7.06 7.88 0.58 0.58
Net Margin % 84.25 -4.42
Asset Turnover (Average) 0.22 0.44
Return on Assets % 18.26 -1.95 -0.31 4.30 0.12 24.36 7.71 9.81 -0.94 4.91 4.91
Financial Leverage (Average) 3.03 13.92 1.90 1.76 1.55 1.04 1.03 1.03 1.01 1.02 1.02
Return on Equity % 53.00 -16.60 -2.51 7.56 0.19 30.39 7.94 10.10 -0.96 5.00 5.00
Return on Invested Capital % 53.93 -5.63 1.86 7.56 0.19 30.39 7.87 10.00 -0.90 4.99 4.99
Interest Coverage 16.63 -1.14 8.32 61.09 61.09


Table 3: Source: Porsche Automobil Holding SC HOAF

Customer Satisfaction

Globally, Porsche has had the best customer Satisfaction level second year in a row (Porsche, 2016).the customer satisfaction was based on four elements which are: working out a deal, the delivery process, salesmen and the facility in which it is situated. The company emerged among the top five companies in each category. Again, it was also ranked the best overall. On the other hand, the people who gave a negative response gave those responses based on the salesman that they did business with, lack of inventory, bad negotiating experience and lack of variety in their choices.

Net Promoter Score (NPS)

The company had a n NPS OF 84.This figure was got from the subtraction of its 434 detractors from its 125 thousand  promoters (Prosche,2016).How ever there are many other companies that had a higher score. Therefore, the company has room to improve on the proper treatment of customers to yield a higher NPS that will help the company plan for sustainable development in the future.

Margin (%)

The company had a profit before tax of approximately 1.38 billion euros (Prosche, 2016).From the formula of calculating the margin and the statistics on the sales, the company’s index was as follows

(1.38/21.5) x 100%=6.418605%

This shows that the company did not incur losses it made in the year. It was able to get a profit margin  of 6%.

From the analysis above, the company is doing well in its marketing since it has scores for all the metrics that were used to measure its level of market effectiveness.



Despite the fact that the company has an effective marketing strategy, there are some measures that can be put in place so that its performance becomes better. First, the company should strive to take its customer satisfaction level to an even higher level. By increasing the level of customer care, the company can gain a further advantage over its rivals. For instance, the use of every sale opportunity as a means to promote customer care though offering of high quality service and carrying out follow up in occasions where the customer needs some more assistance can help increase the degree of customer loyalty. Further, there are many unutilized sale opportunities that the company can take advantage of. Each newly acquired customer should be assigned to a sales agent who will guide them through the process of selecting a new car (Clark, 2013, par 3-5).

The application of market segmentation can help the company reach more people in Europe. The company should produce cars that meet the specific needs of a given market segment. This strategy helps companies to gain a competitive advantage over its rivals by producing unique products that meet specific needs of a given class in the society.

Further, it is always very important to come up with innovations so as to stay ahead of competitors (Milichovsky,2015,pg 205).Since we are living in the age of great technological advancements, embracing this technology will be highly advantageous for the company. The company should invest in the use of technology to add features to their products that will enhance the performance of the vehicles. In addition, the exploitation of online markets (Pawar, 2014, pg.153) will help the company reach more people in different countries.



In any marketing environment, a single market cannot be used to effectively analyze the marketing performance. Therefore, it is necessary for Porsche to use a combination of many metrics to have the best analysis possible of their marketing position (Bendel Et all, 2016,pg 4). These metrics in the portfolio should be reviewed monthly to ensure that the management keeps itself updated on the most current trends. This gives the manager a direct view of the company’s market performance. A recommended portfolio will contain the following metrics to give a comprehensive view of the market: NPS, MARGIN (%), and market share, customer satisfaction, cannibalization, EBDITA, ROI and Annual Growth rate. The company should also add   an online metric to monitor its online marketing activities.


Porsche is a multinational company that deals in production of motor vehicles and investment. This company has had an exemplary performance in the last decade and is still striving to become better. A measurement of the market performance of this company using metrics of finance, innovativeness and customer care shows that the company has an excellent performance that is above that of its major order to propel itself further, it should take advantage of the latest technological advancements so that it can have an upper hand in the evolution of automobiles into technologically modified vehicles that do not need a human driver.


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