The Daimler Group, makers of the world-renowned Mercedes Benz automobiles, is one of the biggest multinationals operating around the world. The company, founded in 1886 in Stuttgart, Germany is a pioneer of automotive engineering and technology. The company has renowned automotive brands such as Mercedes-Benz, Smart, Serta, Freightliner, BharatBenz, Western Star, Fuso, and Thomas Built Buses. The company’s major focus is on producing high-end, safe, and superior automobiles that meet the needs of customers.
Daimler has operations in five continents and sells vehicles to nearly all continents. Its luxurious, yet affordable vehicles resonate with world leaders, presidents, middle income families and individuals from all walks of life. As a result of being able to reach nearly all circles of life, Daimler has achieved massive financial gain. In 2012, the company sold more than 2.2 million vehicles worldwide, with revenues totaling more than € 114.3 billion. The company employs more than 275000 employees around the world and supports more than a million families financially. The success of this company over the years is based on a strong, customer-oriented sales strategy.
In the summer of 2013, Mercedes Benz launched its new sales and marketing strategy that is aimed at driving forth the company’s objectives. The sales and marketing strategy has been dubbed Mercedes Benz 2020 and is a short-term projection of how the company intends to achieve its sales objectives. The Mercedes Benz 2020 strategy is heavily customer-oriented and seeks not only to develop new products in relation to emerging customer needs but also adapting the company operations to fit the wishes of customers. The strategy focuses on providing the best customer experience by offering a consistent, premium-brand experiences.
The first step in setting a marketing strategy is to identify the mission of the company and set targets. The Daimler Group has a goal to achieve sustainable, profitable growth and increase the value of the organization. To achieve this, the company has set medium term goals under the flagship of the Mercedes Benz 2020 initiative. The company aims to consolidate its position as the number one vehicle company in the premium segment. It has set to attain a sales growth rate of 9% in order to achieve this position by 2020.
Executive Vice President Sales and Marketing Mercedes-Benz Cars, Dr. Joachim Schmidt asserts that the path to achieving the outcomes stated on the Mercedes Benz 2020 strategy depends on creativity and provision of personalized services to customers. The company has set its eyes on new growth markets such as China, and new demographic boundaries that include younger clientele. The only way to reach the new target groups is by incorporating innovation, technology, and differentiation into the sales and marketing format. This has led to a digitized customer interaction experience for clients of Mercedes Benz.
Mercedes Benz has developed a multichannel marketing plan that relies heavily on technology to raise brand awareness, increase sales, improve brand image and provide information to potential and existing clients. For luxury brands to be particularly successful, they need to spend their resources effectively to ensure that the entire customer experience from research and development, to production and preservation of loyalty earns positive returns.
Mercedes Benz has been able to channel the following technological bits to improve the customer experience and ensure that the 2020 objective is attained:
- Social media: Mercedes Benz is one of the most social savvy global brands. It employs the use of popular social media marketing techniques to reach its wide customer base. Interaction on social media pages such as Facebook, Twitter, and Pinterest allows the company to communicate and get feedback from its loyal customers at a cost-effective price. Mercedes Benz Facebook page currently has more than three million followers. This provides a forum to interact with customers and get feedback.
- Video virtue: Mercedes Benz has gotten to the top of its game by incorporating clients in nearly all parts of its production and promotion process. The company makes use of YouTube videos to interact, inform, and elicit feedback. The company dedicates a lot of time and effort to create high quality videos that resonate with the client’s need for premium products.
- Mercedes App: The Company realizes the potential of mobile phone application in reaching customers. It has collaborated with multiple mobile phone service providers such as AT &T, Verizon, Virgin Wireless, Vodacom and MTN to provide push generated notifications to potential users. The mobile phone applications are used in conjunction with Mercedes Benz connection online shops, which provide the customer with an opportunity to interact with sales reps online from any part of the world. The online shops provide a digital sales channel that can also be used by the company to analyze how customers respond to various models.
- Other marketing gimmicks: Other than the use of highly digitized and technologically advanced marketing techniques, the company still uses the more traditional marketing channels. It uses direct marketing, use of appealing billboards, radio and television advertisements, magazine and newspaper ads.
One of the key facets of the Mercedes Benz 2020 plan is to expand the brand to reach wider demographics. It is a known fact that the world middle class has been rapidly increasing and their disposable incomes have been steadily rising. This creates an opportunity for Mercedes to market its premium products and reach a wider market with a bigger buying power. High on the list of this changing demographics include the number of young people who have joined the burgeoning middle class and have taste for premium and luxury goods. Mercedes has developed and launched the Mercedes Benz A-class, which is meant to serve this growing clientele. The needs and nature of this social class has dictated the wide use of social media and digitized media in marketing and promotion of goods. The new, young, and growing bourgeoisie is highly techno-savvy and they spend a lot of time on the internet. This makes the internet and its related platforms a good channel to reach this market.
The Mercedes Benz 2020 sales and marketing strategy proposes that for the company to move forward, it must create personalized sales and differentiate its market on more specific demographic and economic criteria. The company has deciphered a plan than helps to keep them close to the potential clients by interacting with tem inn their daily environment. For its 125th anniversary, the company has been on a worldwide tour, launching new products, running game shows and competitions, appearing in market fairs and defining new market segments.
During the launch of the Mercedes A-class, the company allowed at least 25000 test drives in Europe alone. This enabled the company to gather feedback about the performance of the vehicle, client opinions and anticipate future problems. The test drives were also a way to market the company to potential clients. Of the 25000 test drives, it was discovered that 70% of the potential customers did not drive a Mercedes but were interested in owning one. The customer sales representatives took the opportunity to introduce these interested drivers to Daimler financial services, which provides loans and financial assistance for purchase of motor vehicles. The use of Mercedes Benz capture outlets to introduce new drivers or drivers from other brands to Mercedes has been largely successful with a return rate of op to seventy per cent.
Product: More than just a means of transport
Marketing a product is highly entwined with the production process. For marketing and sales to be successful, the company must first produce a vehicle that captures the needs of its customers. This is achieved by getting customer feedback on their needs through market research and consequent development process. Mercedes Benz has perfected the art of market research to ensure that it meets all the needs of its customer segment.
Mercedes Benz aims at distinguishing itself in the automobile sector by producing cars that provide a dignified customer experience. This is the foundation of the Mercedes Benz 2020 sales and marketing strategy, which aims at providing the best customer experience. Mercedes has put itself ahead of the competition by manufacturing vehicles that provide more than a simple driving experience. The company was one of the pioneers of the networked vehicle trends. The vehicles produced feature high quality, unique multimedia systems that provide entertainment and information services. The vehicles are fitted with global positioning systems and navigation guides that are interactive with drivers. The driver assist program launched in early 2010 creates a highly personalized experience by intelligently evaluating the driver’s mood and adjusting the vehicle and driving modes with the mood. The new vehicles are fitted with office capabilities that allow passengers to work on the go. For instance, the new Mercedes Benz S-class is fitted with a W-LAN hotspot that provides internet connection via satellite thus allowing the clients to access internet connections from any part of the world.
Mercedes Benz recognizes the importance of safety in automobiles vis a vis sophistication and price. In the United States market, the company focuses on distinguishing its vehicles as safe, rather than high-end luxury motors. After the recent economic downturn, demographics have shifted and it is now more fashionable for customers to brag about how little they spent on their vehicles. The United States market is composed of highly conscious clientele that is cautious about the safety standards of vehicles.
In response to the rising demands for safe vehicles, Mercedes Benz has launched a new line of E-class vehicles that boast numerous features that were only accessible in the high end S-class. The Blind spot feature, lane assisting, night view, and attention assist are some of the safety features fitted in the new Mercedes models. The groundbreaking automatic breaking system (ABS) is a feature of most Mercedes vehicles and has been an acclaim of its high safety standards. This technology allows the vehicle to predict high impact situations and automatically prepare the driver and passengers by tightening seatbelts, reducing speed automatically and extracting airbags among other safety features. The protector feature on Mercedes trucks allows the vehicle to engage automatic brakes in case of emergencies. The company is also working on an infrared feature that scans the environment around the vehicle in a bid to prevent collision.
PricingSetting prices is a highly collaborative function that is coordinated by the marketing, manufacturing, and top management. Companies have to set prices for their products carefully in order to strike a balance between earning maximum revenue and meeting the costs incurred in production. The main approaches to pricing are; cost-based pricing, customer-based pricing and competitor-based pricing. This provides a clear distinction of the most important factors to consider when setting prices for products; cost of production, customers and the actions of competitors.
Mercedes Benz, operating in a specific market and targeting high end, upper class clientele uses a premium based pricing model. This refers to a pricing strategy where firms keep the prices of products artificially higher than the benchmark market price in order to create an aura of quality, distinction and luxury. The use of premium pricing fall well with the definition that price is the value of a product placed on a product at a given time. Premium pricing is used to maximize the profits of the firm (explaining the insane profits of Daimler Group) since customers are willing to purchase goods at a premium in order to achieve the status associated with luxury goods.
Pricing decisions have a lot of impact on the company, the market, the competitors and the customers. To potential clients, high prices may be used to emphasize or create an aura of superior quality, extra features or simply luxury and distinction. The premium pricing model is used to lock of the market to other lower price competitors by creating a new segment that is only accessible to rich clients who pay a premium to also be in this category.
Mercedes Benz is able to execute its premium pricing model by virtue of its highly segmented market. The company has identified specific market segments that can purchase the automobiles at the premium prices. For instance, traditionally Mercedes vehicles were targeted at individuals above the forty year bracket with high disposable incomes and can afford to purchase luxury brands. However, after the company noted the changing demographics and increasing number of younger adults with high disposable incomes it developed new models that fit their criteria. It is expected that in the future, Mercedes Benz will continue producing high quality, premium vehicles that satisfy the specific needs of high income clients.
Place/ Distribution channels
This element of the marketing mix refers to the channel through which goods move from suppliers to final consumers. The chain of distribution is usually filled with intermediaries who move the goods from the producer to the ultimate consumer. The choice of distribution channel is influenced by a couple of factors. These include; customer characteristics e.g size of the market, dispersion of clients, buying habits and preferences; characteristics of the product e.g whether perishable of not, bulky products, fragile or strong; objectives of the company, nature of the middlemen and PEST factors.
The channel of distribution serves other purposes other than closing the gap between producers and clients. The channel could be used to get information about the product, the needs of the clients, the market situation and other actors in the market. The channel also acts as a platform for promoting the product, its attributes and inducing customer loyalty. Communication between the members of the chain ultimately ends up with the producer, thus creating new opportunities to improve the customer and intermediary experience.
Mercedes Benz uses a narrow distribution that consists of very few intermediaries. This is attributed to the high end, pricy nature of the product. The company markets and sells most of its products from its own outlets. This means that the communication chain is short and direct between the company and the clients. This narrow chain of distribution is necessary for luxury goods that require keen attention and personalized customer experience. The narrow chain of distribution is also functional in the luxury car market where there are low switching costs. Customers are highly loyal and unlikely to purchase from a competitor. The narrow chain of distribution accords the company a higher degree of control on the entire process. The producer can assess the final price paid for the product and react quickly to complaints.
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