Introduction
Mercedes Benz is a leading automobile manufacturer and marketer in the globe. The firm has established a powerful brand image that supports its position in the industry. The company’s brand image is associated with “perfection, fascination, and responsibility” (“Mercedes Benz: The Best or Nothing” par. 3). The company positions itself in the luxury car segment of the automobile industry. Mercedes Benz produces superior products that can address the needs of the targeted consumer.
The firm’s brand image explains why it is impossible to produce cheap and low-quality products for its customers (“Mercedes Benz: The Best or Nothing” par. 2). The cars delivered to different consumers are of the highest quality. This image is something that will continue to support the firm’s future goals. However, the marketers in the firm should do more in an attempt to complete the positioning strategy for these products. This discussion offers powerful ideas to explain why a repositioning strategy is appropriate for maximizing the sales and profitability of the firm’s luxury cars.
Background and Problems
Situation Analysis
Mercedes Benz is one of the celebrated and recognized automotive names in the globe. The automobile manufacturer has its headquarters in Stuttgart, Germany (“Mercedes Benz: The Best or Nothing” par. 1). The current name first appeared in the year 1926 (“Mercedes Benz: The Best or Nothing” par. 1). However, the brand emerged in 1901 after the establishment of Daimler-Motoren-Gesellschaft. The German-based manufacturer is owned by the Daimler AG Group.
Mercedes Benz is known for producing luxury automobiles such as coaches, sedans, buses, and trucks (Biebrach 17). Mercedes Benz’s focus on quality and comfort is something that supports the worth of its brand. The value of the brand has strengthened within the past four decades. Despite such aspects, some challenges such as competition, changing consumer expectations, and fuel prices will affect Mercedes Benz’s performance in the future.
Current Brand Challenge
The firm has been embracing the best strategies to remain a global leader in the industry. The car manufacturer is also “a leader in innovation” (“Mercedes Benz: The Best or Nothing” par. 2). Mercedes Benz was the first company to introduce anti-locking brakes, fuel injection systems, and diesel engines (Biebrach 14). Research and development (R&D) is also taken seriously to produce superior products. The company’s brand has remained strong within the past few years. However, some problems affect the firm’s competitiveness and performance in the luxury car segment.
The first problem affecting the firm arises from the increasing level of competition. Different automobile brands such as Volkswagen and Volvo are producing superior cars (“Mercedes Benz at a Glance” par. 7). As well, consumer behaviors and preferences have changed significantly within the past decade thus affecting the company’s profitability. The company has always focused on a small market segment. These issues are currently affecting the company’s business gains.
Key Insights
Mercedes Benz originally targeted wealthy individuals who were after comfort and luxury. The manufacturer used modern technologies and ideas to produce competitive cars. This practice has been embraced to achieve the best goals. Towards the end of the 20th century, Mercedes Benz realized that different manufacturers of luxury cars were embracing new business practices.
The company decided to use “a powerful marketing segmentation in order to attract the younger less-affluent consumer” (Wheeler 23). Mercedes Benz has been targeting a younger customer base while at the same time retaining its brand image and prestige. However, the implementation of these strategies has failed to deliver the best results.
New purchasing trends have been recorded in different parts of the globe. For instance, the younger consumer appears to have higher income levels. Such potential consumers have been focusing on specific car brands such as Toyota, Chrysler, Ford, and Nissan. These automotive brands have also been associated with comfort and performance (Biegas and Neto 419). The brands are also cheaper thus making them affordable to more customers.
Solutions
New solutions are needed in order to continue supporting Mercedes Benz’s business model. Most of the aspects associated with the firm have been critical towards producing the best results. Innovation, customer support, research and development, and marketing ideas have been embraced in order to produce quality results (Wheeler 44). However, some competitors such as Volkswagen (VW) have dominated the luxury car segment. The major VW sub-brands such as Audi continue to offer similar promises to more customers (Wheeler 45). Companies such as Ford and Toyota are also attracting more customers in Mercedes Benz’s niche.
Mercedes Benz can use various strategies and business approaches in order to increase its competitive edge. The first recommendation should focus on the best approaches that can make Mercedes Benz a preferable brand. For the past decades, Mercedes Benz has positioned itself as the most relevant brand in the global market. The affluent members of society have been the primary targets of the company.
The concept of brand relevance vs. brand preference should be used to outline the best approaches that can result in better performance (Wheeler 48). A preferred brand has the potential to attract more potential consumers and eventually make Mercedes Benz successful. A powerful marketing strategy targeting more potential customers will ensure the company positions its products in a professional manner (Wheeler 39).
The company has established a powerful brand image in the global market. More people believe that firms market perfect and superior luxury cars. The repositioning strategy should, therefore, identify new geographical locations and attract more customers. In 2010, the team “used a powerful campaign team known as Generation Benz” (“Mercedes Benz: The Best or Nothing” par. 9). The purpose of this team was to sensitize more people about the relevance of the brand. Similar initiatives are critical towards supporting the firm’s business goals.
Experts believe strongly that Mercedes Benz produces uneconomical cars that consume much fuel in comparison with its immediate competitors. The R&D department should work hard to reduce the fuel consumption of the company’s cars. As well, the brand has been associated with high maintenance processes and costs. However, the company does not have an effective distribution of spare parts in different parts of the world. This malpractice makes it impossible for more people to maintain or use their cars (Loewe and Dominiquini 26).
A new business approach focusing on the distribution of different spare parts will, therefore, encourage more people to purchase its cars. Maintenance costs will also reduce significantly because various spare parts will be readily available and cheaper. This transformation will make it possible for the firm to achieve its business potential.
The emergence of new luxury car brands explains why cultural innovation is needed for this product. Many analysts believe that the days when Mercedes Benz used to have an eternal business model are gone (Biebrach 109). The emergence of new cultural expectations and social foundations are things that should be examined carefully. The culturally innovative approach can promote better business practices and strategic directions that have the potential to support the company’s performance. Mercedes Benz should be aware of the emerging middle class to build new marketing strategies and leverage the existing opportunities.
Results
After implementing a powerful cultural strategy, the firm will focus on both regional and international opportunities. Mercedes Benz has been known to market its brands in different regions across North America and Europe. Most of the Mercedes Benz cars driven in other parts of the world are usually marketed by middlemen. More people are willing to purchase luxury cars in different parts of the world. That being the case, Mercedes Benz should diversify its operations and market its luxury cars to more people in different parts of the world.
The issue of competition should also be addressed using a powerful business model. A powerful marketing approach will ensure more people are informed about the superiority of this brand (Loewe and Dominiquini 27). These strategies will make it easier for the company to attract more customers.
Conclusion
Consumer preferences and expectations continue to change due to the availability of diverse products. People have access to information and ideas regarding the effectiveness of different car brands (Biegas and Neto 421). A new positioning strategy will inform more people about the strengths and advantages of the Mercedes-Benz brand. Reduced car prices, effective distribution of spare parts, and the use of innovative strategies to minimize fuel consumption will ensure more people select Mercedes Benz as the luxury car brand of choice.
Works Cited
Biebrach, Carolin. Mercedes Benz: How A Great Campaign Can Almost Kill A Company. Munich: GRIN Verlag, 2009. Print.
Biegas, Sandra and Pedro Neto. “Innovation in marketing strategy process: an integration and empirical examination.” Rebrae 8.3 (2015): 417-433. Print.
Loewe, Pierre and Jennifer Dominiquini. “Overcoming the barriers to effective innovation.” Strategy & Leadership 31.1 (2006): 24-31. Print.
Mercedes Benz at a Glance 2015. Web.
Mercedes Benz: The Best or Nothing 2016. Web.
Wheeler, Jill. Mercedes Benz. Edina: ABDO Publishing Company, 2004. Print.