Customer Acquisition and Retention NMIMS, Mumbai

Mercedes Benz ± C Class

Company Background

Mercedes Benz comes from the house of Daimler AG, a German manufacturer of automobiles, motor vehicles, and engines. Mercedes Benz cars are an important part of the history of the car with many "firsts." They were the first to build a diesel-powered car in the 1930s, the first to build a car with fuel injection in the 1950s and the first to offer antilock brakes in the 1970s.

The parent company was born when an agreement of Mutual Interest was signed on May 1, 1924 between Karl Benz of Benz & Cie (founded 1883) and Gottlieb Daimler and Wilhelm Maybach of Daimler Motoren Gesellschaft (founded 1890). Both companies continued to manufacture their separate automobile and internal combustion engine brands until, on June 28, 1926, when Benz & Cie and Daimler Motoren Gesellschaft AG formally merged becoming Daimler-Benz AG and agreed that thereafter, all of the factories would use the brand name of Mercedes-Benz on their automobiles.

In 1998 Daimler-Benz AG "merged" with the American automobile manufacturer Chrysler Corporation, and formed Daimler Chrysler AG. In 2007, when the Chrysler group was sold off to Cerberus Capital Management, the name of the parent company was changed to Daimler AG.

Daimler produces cars and trucks under the brands of Mercedes-Benz, Maybach, Smart, Freightliner and many others.

Company Timeline

Benz & Company, 1883±1926 Daimler Motoren Gesellschaft AG, 1890±1926 Daimler-Benz AG, 1926±1998 DaimlerChrysler AG, 1998±2007 Daimler AG, 2007±present

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Product Line

Daimler sells automobiles under the following marques worldwide:

y Mercedes-Benz Cars o Maybach o Mercedes-Benz o Smart o Mercedes-AMG

y Daimler Trucks o Commercial vehicles  Freightliner  Mercedes-Benz (truck group)  Mitsubishi Fuso  Thomas Built Buses  Sterling Trucks - operations wind down in 2010  Western Star o Components  Detroit Diesel  Mercedes-Benz  Mitsubishi Fuso

y Daimler Buses o Mercedes-Benz buses o Orion Bus Industries o Setra

y Mercedes-Benz Vans o Mercedes-Benz (vans group)

y Daimler Financial Services o Mercedes-Benz Bank o Mercedes-Benz Financial o Daimler Truck Financial

Target Market

Geographic

City & Urban and Rural Areas The Target Market for Mercedes Benz cars is Metros and Class I cities i.e. urban areas. Though with increase in income of people in Class II, Class III cities and Rural areas they have a Target market in these areas as well.

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Demographic

Age The Target Market for Mercedes is people above 25 years old. It is only after this age that people can afford a Mercedes Benz car.

Income Mercedes Benz targets people with a very high income.

Occupation The Target Market of Mercedes is Businessmen, Industrialists, Corporates and very senior Executives.

Socio Economic SEC A1, A2

Education The Target Market of Mercedes is generally well educated and their communication takes into account this fact.

Psychographic

According to VALS Model Innovators and Achievers will be the Target Market for Mercedes Benz.

Behavioural

The Target market is the Elite Class who seeks Luxury, Style and Class.

Positioning Strategy

Mercedes Benz positions itself as an Engineering Marvel - ³Engineered like no other car in the world´. The three-pointed star inside of a circle symbol of Mercedes-Benz designed by Gottlieb Daimler stand for land, air and sea because Daimler's engines were used not only in cars and trucks but in airplanes and boats. It stands for safety, luxury, and precision engineering. Mercedes Benz positioning was once centred on the safety, luxury, and precision engineering of its cars, but due to increasing competition in the luxury car industry and changing consumer attitudes about the Mercedes Benz brand that strategy has changed. Now their positioning is more life style oriented and is focused more on presenting the more fun loving, approachable, and energetic side of Mercedes Benz. The evolution of Mercedes Benz¶s positioning can be directly connected to the expansion of its target market, which now includes persons twenty five to thirty five years old as well as its initial targets the baby boomers.

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The Marketing Mix

In order to provide superior customer value to its target market Mercedes Benz has found it necessary to expand its product line up, provide more competitive prices, increase communications with its target market, maintain accessibility to consumers, and continue its excellent customer service.

The Product Line of Mercedes consists of all types of products at all price points. They have exclusive Mercedes Benz showrooms in major cities that define the Luxury, Class, and Style of a Mercedes Benz. In recent years they have changed their promotional strategy and have spent heavily to communicate their new positioning and product line. A major portion of their Promotions are online as research shows 85% of their customers used the internet in the Buying process and 60% asked for more product information via email.

In 2004 their biggest selling model was the entry-level, near-luxury C-Class model (priced $26,000-$54,000). Sales of near-luxury C Class cars accounts for 31 percent of MBUSA's total volume. Mercedes' next best selling model is its E-Class ($49,000-$80,000), and trailing far behind is the M-Class ($38,000-$47,000). Four of Mercedes' pure luxury models experienced a significant drop in unit sales in 2004: S-Class ($75,000-$125,000) down 11 percent; M-Class, down 14.4 percent; CL-Class ($90,000-$179,000) down 21 percent; and G-Class ($78,000- $100,000), down 25 percent. The super-luxury SL-Class ($90,000-$179,000) was down just a tad from previous year, 3.3 percent.

At first blush, it might look like consumers are trading down from the 'real' luxury Mercedes models to the lower-priced ones. Some people argue that this ultimately degrades the luxury value of the brand. Rather, the net gain of nearly 70,000 new model Mercedes Benz C-Class cars out on American roads is far better for the long term success of the company and the brand. They may be sacrificing some revenues by selling fewer of the more expensive car models, but the company has attracted lots of new consumers to get 'up close and personal' with the brand through the more affordable C-Class model. As a result, MBUSA is building its base of lifelong brand-loyal Mercedes drivers. The brilliance in Mercedes strategy is to position the brand as a

Links between Target Market, Positioning & Market Mix Page 4 of 5 Customer Acquisition and Retention NMIMS, Mumbai player across a more expansive range of potential car buyers, rather than exclude a Mercedes brand car entirely from the consideration of slightly less affluent car buyers. Delivering Mercedes-brand qualities and features at a more moderate price is a luxury marketing strategy conceived with a long range vision. Their goal is to build lifetime brand loyalty by meeting the automobile consumer at nearly every price point throughout their progress through different life stages. So the thirty-something C-class buyer turns into a forty-something E-Class driver, then on to a fifty-something S-Class consumer and then back again to a C-Class model after retirement.

The simple fact is the rich don't become rich overnight. They attain wealth and affluence over time and progress through different income levels at different life stages. Creating a loyalty bond with a less affluent consumer, who tends to be younger, will pay off in the long term as their incomes grow and their affluence rises. Luxury marketers need to open their minds to the tremendous marketing opportunities that exist at the borders of their traditional market. Luxury marketers that firmly target the 'classes' need to seriously study the luxury potential within the 'masses.'

Mercedes Benz understands that its customers are not simply buying a car to get from point A to point B, so before they actually sell a car they must first sell an idea about that car. Mercedes Benz sells their ideas through promotion and advertising. Mercedes Benz wants to change the perception of their brand at the personal level and reposition their brand so that they are more appealing to young professional men of all ethnicities. Secondly, Mercedes Benz is communicating to its target market the idea that they are a more approachable, personal, fun, and energetic brand. This new message was evident in the Janus Joplin advertisement, in the sponsoring of the Elton John concert in New York, and the sponsoring of professional tennis. In the summer of 2003 Mercedes Benz launched a marketing event in 16 cities across the United States to promote the new C- Class to younger buyers. The campaign gave potential buyers a chance to test drive the C-Class product line on courses that simulated real life driving conditions and gain information from current Mercedes Benz owners in attendance.

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