Location via proxy:   [ UP ]  
[Report a bug]   [Manage cookies]                
Scribd Logo
Upload

Welcome to Scribd!

  • 60 views

    IBS Center For Management Research: Mercedes-Benz: Exploring Non-Premium Segments

    Uploaded by

    Prabhu Srijan Budhwar
    Mercedes-Benz was known for producing luxury cars for rich consumers. In the 1990s, declining sales due to economic recession prompted Mercedes-Benz to explore non-premium market segments. The company launched cheaper versions of its cars and entered new segments like compact cars and SUVs. It also adopted new marketing and pricing strategies to make its cars more affordable and assess demand. While some analysts were skeptical of targeting all segments, others felt it could help compensate for declining luxury sales.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd

    IBS Center For Management Research: Mercedes-Benz: Exploring Non-Premium Segments

    Uploaded by

    Prabhu Srijan Budhwar
    60 views4 pages
    Mercedes-Benz was known for producing luxury cars for rich consumers. In the 1990s, declining sales due to economic recession prompted Mercedes-Benz to explore non-premium market segments. The company launched cheaper versions of its cars and entered new segments like compact cars and SUVs. It also adopted new marketing and pricing strategies to make its cars more affordable and assess demand. While some analysts were skeptical of targeting all segments, others felt it could help compensate for declining luxury sales.

    Original Description:

    ok

    Original Title

    CLIM011 mercedes

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Mercedes-Benz was known for producing luxury cars for rich consumers. In the 1990s, declining sales due to economic recession prompted Mercedes-Benz to explore non-premium market segments. The company launched cheaper versions of its cars and entered new segments like compact cars and SUVs. It also adopted new marketing and pricing strategies to make its cars more affordable and assess demand. While some analysts were skeptical of targeting all segments, others felt it could help compensate for declining luxury sales.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    60 views4 pages

    IBS Center For Management Research: Mercedes-Benz: Exploring Non-Premium Segments

    Uploaded by

    Prabhu Srijan Budhwar
    Mercedes-Benz was known for producing luxury cars for rich consumers. In the 1990s, declining sales due to economic recession prompted Mercedes-Benz to explore non-premium market segments. The company launched cheaper versions of its cars and entered new segments like compact cars and SUVs. It also adopted new marketing and pricing strategies to make its cars more affordable and assess demand. While some analysts were skeptical of targeting all segments, others felt it could help compensate for declining luxury sales.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 4

    CLIM/011

    IBS Center for Management Research

    Mercedes-Benz: Exploring Non-premium Segments


    This caselet was written by Smitha Moganty, under the direction of D.G. Prasad, IBS
    Center for Management Research. Caselets are intended to be used as a basis for class
    discussion rather than to illustrate either effective or ineffective handling of a management
    situation.

    Prof. Sunil Pillai


    License to use for IBS Bengaluru
    Mid-Semester: I&III (2021)
    Course: Services Management

     2005, IBS Center for Management Research. All rights reserved.

    To order copies, call +91-9640901313 or write to IBS Center for Management Research (ICMR), IFHE Campus,
    Donthanapally, Sankarapally Road, Hyderabad 501 203, Telangana, India or email: info@icmrindia.org

    www.icmrindia.org
    CLIM/011

    Mercedes-Benz: Exploring Non-premium Segments

    Daimler-Benz AG popularly known as Mercedes-Benz was a company known for


    producing world class luxury cars. The company came into existence in 1926 after the
    merger of two German competitors, Daimler-Motoren-Gesellschat (DMG) and Benz
    & Cie (Benz). Gottlieb Daimler and Karl Benz were the founders of DMG and Benz
    respectively. Both were recognized for their huge contributions to the development of
    automobile technology. Mercedes-Benz, a major player in the executive car market,
    launched one of its most popular and prestigious cars in 1930 known as the 770
    Grosser. Since then, the company produced many models that were not only
    successful at car races like the Grand Prix but also became hugely popular among
    the elitists.
    For a long time, Mercedes-Benz targeted and catered only to rich and elitist
    consumers. The company had no offering for other segments of the car market. The
    company started entering other segments in the early 1990s, when it faced declining
    sales as a result of the economic recession in Europe at that time. Further, the
    company also found that considering the price of the luxury cars there were only few
    takers for its products.
    Thus, the 100-year-old luxury car company finally began shifting its focus from only
    the premium segment to newer segments in the car market. In fact, the efforts to
    change the brand image began in 1993 when it introduced a cheaper version of its C-
    Class Mercedes. In 1997-98, the company launched the ‘Smart’ version of its A-Class

    1
    Mercedes-Benz: Exploring Non-premium Segments

    car and also entered the small car (i.e. two-seater cars) segment. Later, the company
    entered the sports utility segment by introducing the M-Class car. However, some
    analysts were skeptical about its move to target all segments in the car market.
    In 1997, Mercedes-Benz set up a manufacturing facility in the US realizing the
    potential for sports utility vehicles (SUV) in the US market. In 1998, the company
    merged with Chrysler Corp. of the USA, an automobile manufacturer, and thus
    became Daimler-Chrysler. In 2002, Daimler-Chrysler also took a 43 percent stake in
    the Commercial Vehicles business of Mitsubishi Motors of Japan, to widen its
    market. In 1997, the company produced a new model known as ‘Smart’ car in a joint
    venture with Swatch, a Swiss watch company. The joint venture was known as Micro
    Compact Car AG (MCC).
    The company also adopted a new pricing strategy. Until then, the company had been
    following a ‘cost plus’ pricing strategy. But with a view to making the price range
    more affordable, it shifted to a ‘market price’ policy. The company designed and
    manufactured cars after fixing the price of the product. It was thus able to incur costs
    accordingly.
    The company adopted a different marketing strategy to know whether the product
    would be acceptable in the market. For example, the company’s US subsidiary
    Mercedes-Benz USA conducted a marketing survey before launching its new car M-
    class SUV. Mercedes-Benz USA (MBUSA) was previously known as Mercedes-
    Benz of North America. Mercedes-Benz of North America was established in 1965.
    The company initially undertook sales and servicing of Mercedes-Benz cars. It also
    set up a manufacturing facility for the M-class SUV in early 1997. Later in April
    1999, it was renamed MBUSA to ensure it accurately reflected the scope of the
    company’s activities and responsibilities. Before the introduction of M-Class SUV,
    the company conducted market research to know the market. As a part of this
    exercise, the company tracked down all sports utility vehicle owners as well as
    existing Mercedes-Benz car owners in the country. The head of the company sent
    everyone (people who owned sports utility vehicles) a personally addressed letter
    with a questionnaire enclosed requesting the addressees to express their opinion on
    the design of the car. To the surprise of the management, the company received
    overwhelming responses and surprisingly it also received advance orders. The
    company’s advance sales of M-Class SUVs were a whopping 35,000 vehicles. This
    had a positive effect on the overall sales of the company.

    2
    Mercedes-Benz: Exploring Non-premium Segments

    Interestingly, the total share of the sales of the flagship super luxury S – class and the
    E – class during the period 1990-95 was 71 percent. But during the period 1995-2000,
    their share of total sales declined to 32 percent. While some analysts were of the
    opinion that the company could make up for the decline in sales in the premium
    segment with the help of its sales from the other segments, others were of the opinion
    that entering the other segments of car market could dilute its premier brand image.

    Questions for Discussion:


    1. Do you think the 100-year-old luxury car company is right in shifting its target
    audience from the upper-class segment to all segments in the car market? Justify
    your stand.
    2. What are the various marketing strategies followed by Mercedes-Benz to increase
    its sales?

    Additional Readings / Reference Material:


    1. “Mercedes Benz USA - Design and Launch of the new 'M' Class Off-roader”,
    Case Archive, Brandingasia.com,
    2. Ashish Aggarwal, “Benz it like Merc”, Corporate Jungle, iimcal.ac.in/imz,
    February 08, 2004. < http://www.iimcal.ac.in/imz/article.asp?code=febcorp04>
    3. “Mercedes-Benz USA LLC”, Company Search, Careerbuilder.com.
    <http://www.careerbuilder.com/jobseeker/companies/companydetails.aspx?comp
    _did=C30Z567FCQNDPB4K6J&cbRecursionCnt=2&cbsid=50245b1f083343dd
    b7afd217271d413b-175238107-w5-2>
    4. Owens, Mike, “The History of Mercedes-Benz”, Wheels, cyberparent.com,
    5. “Our Company”, Mercedes in Depth, About Us, Our Company, Mbusa.com
    6. “Mercedes-Benz”, En.wikipedia.org. <http://en.wikipedia.org/wiki/Mercedes-
    Benz#History>
    7. “Daimler-Chrysler Heritage”, Heritage, Daimlerchrysler.com

    You might also like