As for sure, Mercedes-Benz is a well-known vehicle business throughout the world. It is a global leader in premium cars and has a strong brand value. Hence, the strengths would be a lot than I expected. The brand reputation is the obvious strength for this company. Mercedes Benz is a famous German brand of premier automobile manufacturers in the world which is good in producing automobiles, buses, coaches and truck. It is also the world’s oldest company, which offers these type of vehicles and they are comfortable and safety.
On the other hand, Mercedes Car Group has increased 2006 sales to record 1,260,600 passengers vehicle all around the world, hence the market knowledge and market share are also one of the strength of the company. Furthermore, the financial muscle of Mercedes is strong it is because the sales have increased in 2006 by 8 percent compare to the same period of the past year. (January-November 2005:961,600).
As Mercedes Benz having impressive history with production over 37 countries is being financially strong company. Moreover, the distribution channels are also as tough compare to its direct competitors, BMW. Mercedes Benz has factory in 37 countries. Therefore, ease to reach of customers is beneficial to the company. In addition, Mercedes Benz has built a fine position in customers’ mind.
The company has cautiously shown an image of advanced engineering, quality, product and service. The rich and famous are often choose Mercedes Benz as their choice of vehicle. Lastly, it is the significant investments in marketing. They do quite a big amount of investment on marketing and sales so as to compete and maximize profits and sales.
It is very common that every company has its own weaknesses. As Mercedes Benz is a big company, therefore it's quite obvious the business has barrier in communication within the organizations. Although the costs of Mercedes Benz vehicles are quite expensive but the advantages have overweighed the disadvantages, therefore there is the attractivity which leading the people willing to buy.
However, high-end products have high cost of maintenance. Moreover, when it comes to online marketing, Mercedes Benz is weaker against some of other competitors, as BMW performs a better online marketing than Mercedes Benz does. Besides, Mercedes has high factors of production cost. Europe’s leading car makers are facing pressure on their profit-margin as the raw material costs are raising and also in first world countries labor costs are high. Apparently, Mercedes Benz faces many difficulties as well although it is a global brand company but they still can handle them properly.
Although the labor and productivity cost are high, but there are still many growing markets such as China, India, Brazil and Russia. Thus, the mentioned emerging economies provide an opportunity for Mercedes Benz to set up their factories in these countries. Furthermore, China will soon be the second largest car market in the world after the United States by 2013, with 8-10 percent of Global sales. The other opportunity is the change of social attitudes. The environment is heavily polluted and people are getting more concern of earth.
People are aware of global warming and demand for more “green” product. Mercedes can make use of this factor and come out with hybrid cars in order to win over the buyers’ heart. Mercedes can also generate more funds by takeovers or merger. The takeover of Chrysler Corporation by Daimler-Benz in $38 billion stock deals made annual output of over £130 billion. More advertisement under marketing and sales can affect positively the organization’s performance.
The main threat of Mercedes Company is the tax problem. Many countries increase the tax for imported vehicles. This may result a decrease in sales globally. However, the latest worldwide economic is maintaining in good condition therefore it doesn’t affect the sales much but nobody will know what will happen in future.
On the other hand, labor cost in Europe is very expensive. In order to win the confidence of their potential consumers towards Mercedes, they have to manufacture their car in Europe. They can cut down the labor cost if they set up their factory in China but usually the Chinese is less educated in the knowledge of building quality and luxury cars.
Mercedes Benz uses three steps for targeting, which are market segmentation, target choice and product positioning. When using segmentation, Mercedes Benz finds information by looking at four segments, they are demographic segmentation, income segmentation, benefit segmentation and psychographic segmentation of society, which helps them to target the market more efficiently. The demographics of people who are able to purchase a Mercedes Benz are mainly male aged 28-50 years old.
Behaviorally, these people have a successful image in their mind before buying a car and their annual income level are $150,000 above. Geographically, the main markets for Mercedes Benz where they are doing more than 65% of sales are Europe and North America because these areas are both heavily industrialized locations which means that residents are financially positioned to by their cars. For Income segmentation, it is to divide a market into income level groups.
In the case of Mercedes Benz products, the price range spans from $30,000, which is the cheapest model of the Mercedes Benz A Class, to the most expensive model of the Mercedes Benz SLS AMG, which is $196,100. From this case, we can observe that the market segment of Mercedes Benz is aiming at the high-income segment. Now we narrow down the scope by adding further target to its segmentation process as to be able to identify the targeted customer better.
Mercedes Benz has brought in the psychographic segmentation and benefit segmentation to better identify the market. For the psychographic segmentation, what Mercedes Benz is trying to do now is determine how the targeted Mercedes Benz customer wants to be perceived, what he looks like and what his lifestyle and values are.
However, Mercedes Benz’s target market is the premium car market, therefore the Mercedes Benz serves a certain segment within the premium car market. By looking at the different product ‘Class’ individually, it can be perceived from the way how Mercedes Benz presents itself, that it basically targets at the educated, rich, high-end, open minded and sportive individual, who knows how to enjoy life. We now proceed with the benefit segmentation approach.
Mercedes Benz targets at people who enjoy driving well accomplishment cars, people who search for the “ultimate driving experience” and love feeling the blowing wind in their hair. Thus, the benefit of driving a Mercedes Benz, along with being owner of a stylish car, is the smoothness and peace, the pleasure of driving. Mercedes Benz is trying to compete itself with other premium car brands, they want to create its own distinct image and stresses on the ‘gourmet’ qualities of the Mercedes Benz driver.
After all these years of evolution and development, Mercedes has got outstanding accomplishment with high-end and luxury quality on each design and product. In fact, all the customers will only be attracted with product which so called ‘almost perfect’, therefore Mercedes Benz always come out with vehicles that meet all the expectation of the customers. In order to satisfy it’s customers, Mercedes Benz has many models a.k.a classes for its cars. They are large variety of models, from the past to present and, suitable for both young and middle aged people. Its comfortability will assuredly double up the confident when driving in a Mercedes.
In addition, the speed of Mercedes Benz car is astonished. Its horsepower is up to 510hp therefore it attracts the customer who loves to speeding. On the other hand, the reason makes Mercedes Benz a well-known car is its facilities. Every car is equipped with many high-tech parts, such as system compressed air suspension, anti-vibration, many diverse types of lights, automatic gearbox, warning system, systems sign road and hit from behind, vision and suitable lighting, radio, TV, air condition etc.
All these part are invented to meet with customers’ expectation. Furthermore, Mercedes Benz continuously launches new products and modified the old products all the time in order to give their customers hopes and innovations.
As we know, price is the key of the 4P’s of marketing since it is the one that generates revenue for a company. Price simply implements the amount of money that is paid for a product or service. When establishing a price for a product or service, Mercedes Benz must first concerns about several factors regarding on its potential impact.
Mercedes Benz car is quite expensive, however, the durability of this car is far longer than any other ‘normal’ car, so by calculating the value in long run, Mercedes Benz’s price is more valuably than those others. Customers purchase products from Mercedes Benz probably knowing they paid too much.
But, this company has good reputation of high quality cars and excellent customer service. That is how it maintains its market share. Mercedes Benz Company is trying to advertise, uphold, and improve the position of its product through the use of pricing strategy, which is pricing the product in high price so as to limit its affordability to the rich consumer. This limited affordability improves the product's image, making it to be seen as luxury car.
Whereas a company that uses this pricing strategy will not be able to generate high sales as compare to Toyota or Honda but this is not a deal due to the higher markup on the product.