Marketing mix
Mercedes Benz
Faced with competition in the automobile industry, Mercedes has worked hard to ensure that it maintains its place in the automobile industry. Mercedes Benz has been said to be the most recognized automobile brand globally. Such a high profile success is not by an accident but by the hard work, patience and also the excellent use of effective marketing strategies by the management.
Mercedes Benz is recognized as the world’s oldest producer of luxury cars and chances are this reputation will remain for a long time. In this marketing mix we will look at the Mercedes Benz’s marketing and advertising that has made it a leader in the very competitive industry.
Product
Mercedes Benz is a name that is widely known globally. You need not to introduce the name even to a child. Even with such a big name, most people do not know the story behind Mercedes and it products. Mercedes Benz has been linked to the world-class cars, buses, and tracks which acknowledged for the luxurious nature. The company started in 1890 as Daimler AG. Before that Karl Benz had a company which was founded in 1871, and later came and joined Daimler AG. Its headquarters are at Baden-Wurttemberg and Stuttgart in Germany.
As we have mentioned, Mercedes Benz produces advanced luxury trucks, cars, coaches and buses in the various manufacturing plants around the world. The first car was marketed in 1902 and ever since then, the company has maintained its place in the automobile industry by manufacturing luxury cars.
Promotion
Mercedes Benz has worked hard to ensure that its products are recognized worldwide. To get a huge global recognition, you have to ensure that you promote your products using the best available options. The management in Mercedes Benz Company has taken time to ensure that there is proper promotion of its products. That is the reason why almost everyone in the world has an idea of what Mercedes Benz is
So as to increase the communication with its market, it has maintained its accessibility to consumers using the following methods
• Television advertising
• Social media
• Online advertising
• excellent customer service
• warranty with excellent conditions
• Print media
It has ensured that it has a good reputation when it comes to quality and exclusivity in all of its products, thus remaining as one the recognizable brands worldwide.
Place
Mercedes Benz has brought up many technological innovations. However many companies have copied these innovations threatening the place of Mercedes Benz in the automobile industry. This has not been a great challenge to Mercedes since many of its consumers understand the quality in their products. Those who want a quality car will go for a Mercedes however much there are copies all over.
Their cars are known to be long lasting and this has ensured that they keep a wide variety of customers who always come back for their new brands.
This is the reason why Mercedes has maintained its position in the manufacture of luxury and quality cars.
Pricing
For a company to succeed in the ever competitive automobile industry, it has to ensure that it prices its products in the best possible way. This comes with strategy. You have to make sure that you have a strategy that will work for your product.
Strategy Identification
Good Marketing strategies aid an organization to be successful. This is a creative field which drives the revenue of any company. Strategic marketing organizes numerous subjects into fewer categories that include creating tools and processes developing the strategy, managing and generating customers. In a given market, the chances of offers outweighing the price are high. It is easier to convince customers to by sing offers than it is by lowering prices. If you give customers offers, you will stand a higher chance of winning the customers than lowering the prices of your products. (Jeannet & Hennessey 242)
A major step is providing an organization with a competitive position, to define how to distinguish the offer and get value in the market. This creates a spot which is competitive and provides specific strategies on which to focus, based on factors such as market profile, competitive analysis, positioning strategy and value positioning. Marketing strategy fully focuses on attaining competitive advantages on a maintainable basis created through the availability of capabilities and resources.
Marketing strategies are operational in all the activities of marketing and are impossible to get achieved in isolation. The marketing strategy must support the corporate strategy/strategic plan. Furthermore, a business is made up of numerous functional areas which have to aid each other succeed in the general business. In the realization of a marketing strategy, several key concepts have to be considered. Firstly, product differentiation and product positioning influence how customers perceive or view a brand’s feature compared to those of the competitors. It purposes of gaining demand through generating a product on precise qualities and a clear image which distinguish it from the competing product and therefore getting brand equity.
The competitive strategy is basically how a company management plans to compete successfully. It usually focuses on move to please its customers, ways in which to counter the moves of its rivals, ways of responding to changes in the market conditions. Managers in every company have to think of various strategies that will enable them to stay ahead of the competition.
There are five different strategies, namely:
Low-cost Provider Strategy
This is the kind of strategy that calls for a company to be a low cost producer of products which are at a given quality level. Here the company has the option of selling the products at the average cost at the market or selling the products at a price lower than the average cost so as to acquire market share. This is the kind of strategy that targets a broad market setting.
Broad differentiation strategy
This type of strategy calls for a company to develop products which have unique qualities which the customers value and which they perceive as better as compared to the competitors’. This kind of value may allow the company to charge higher prices for the products than its competitors. This higher cost is a way of covering the costs which the company incurred to produce the highest quality of products
Focused-low-cost strategy
This strategy concentrates in a narrow segment and it tries to sell the product at a lower price than that of their competitors. This strategy wins the buyers’ loyalty in in a particular small market.
Focused differentiation strategy
This kind of strategy focuses on a particular market niche and offers better quality products to its consumers.
Best-cost provider strategy
Best-cost strategy occurs in case where a company makes a high quality product and sets its cost lower than that of the competitors which gives more value in exchange of money. The strategy focuses on value-conscious customers who are willing to pay for a good which has upscale features.
Mercedes Benz strategy
After looking and analyzing the five generic competitive strategies, I conclude that the strategy used by Mercedes Benz. Is Broad differentiation strategy
Having identified the strategy used by Mercedes Benz as Broad differentiation strategy, I will therefore go on to analyze why they choose that strategy, and how are they using it (or how well are they implementing it.)
Why Mercedes Benz chose the broad differentiation strategy
There are many reasons for a company to decide to use broad differentiation strategy. The Mercedes Benz also chose this strategy as it has a lot of benefits in comparison to the other strategies.
Differentiation creates value for the company. When a firm uses this strategy which concentrates on the value of a product against the other same products in the market, a perceived value is created amongst the buyers and future customers. Mercedes Benz creates a perception to the consumers and its potential consumers that their products are of a higher quality, hence creating a value for their goods. Such perceptions create value for the Mercedes Benz Company and its products are sold at a higher price than the competitors’ similar products.
Broad differentiation Strategy brings about non-price competition. The differentiation strategy allows a business to bring competition in other areas away from price competition. It also focuses on cost saving since the products are seen as long lasting as compared to competitors’ products.
Brand differentiation creates brand loyalty. Customers believe in that product and will always go for products created by that company. Mercedes Benz customers have the tendency of getting a new car whenever it is released by the company since they believe in the quality of the products. This makes the company have the confidence to invest in new products since they have loyal customers who will be ready to buy and try the products once they are released into the market. This brand loyalty also ensures that there are returning customers’ hence security when investing in new products. These loyal customers are the ones who bring their friends to try the products, hence increasing the company’s market share.
When a company has fully incorporated the differentiation strategy, the customers have the perception that there is no substitute for the company’s products. For instance, Mercedes Benz users believe that the Mercedes Benz is a whole different product from the other products, hence believing that there can be no car that can take the place of the Mercedes Benz. Differentiation focuses on quality and design that cannot be found in other products in the market. This makes the product gain advantage in the market against the similar products in the market. This therefore translates to more sales for the product.
The Mercedes Benz Company has used the differentiation strategy since it comes with the above mentioned advantages
Mercedes Benz and the five forces model
• Substitute products. This occurs in the case whereby there are products that are similar to the product and can end up substituting the products. Customers may switch to these other products which may be cheaper. In our case, Mercedes Benz’s products have created a perception that there cannot be any product that can substitute them. Although there exists products in the market which are almost similar to the Mercedes Benz’s products, the chances of totally being replaced are slim since there is that perception that the products are of a higher quality and last longer hence cost effective.
• Customers. The Mercedes Benz Company does not have a problem with buyers since it has a large number of customers. It boasts of millions of customers so this does not pose a problem to them. The products that they offer are unique, hence making them retain loyal customers. The use of the differentiation strategy has helped a lot in the creating a large base of loyal customers. These customers always attract other customers to try the Mercedes Benz’s products.
• Suppliers. The Mercedes Benz Company does not face a big problem when it comes to suppliers. Being a monster company with a good reputation, there are many suppliers ready to work with them. If one supplier was to increase the price, the company can easily get other suppliers. However, we should note that the company focuses on high quality products, hence suppliers who supply high quality materials have a higher bargaining power
• The threat of new entrants is low, because Mercedes Benz has a way continuously differentiating its products from those of its rivals. It also has a production that is wide-spread and it can make products at a lower cost.
• Threat of rivalry- It should not worry about the rivalry in the markets since it has set the standard for its products. They are highly differentiated from those of the rivals.
Implementation
But before a company uses this strategy, it has to have the following.
Access to an advanced scientific research-To engage in broad differentiation strategy, the products that are being sold to the customers must be of a high quality. The product must unique qualities that will appease the customers. They must be of a very unique quality that is unrivaled by the competitors. To be able to products, the company must have access to advanced scientific research. Mercedes Benz has advanced scientific research and this allows it to produce goods that are of a high quality in comparison to the ones produced by its competitors.
Creative and high skilled team for product development-This is a crucial element in the broad differentiation strategy. As we have noted above, the products must have unique qualities, and to achieve this, the company must have a team of product development who are highly skilled and very creative. The aim here is to have a product that has better qualities in comparison to the competitors’ products. To come up with such a product, there has to be a team which is up to the task. Over the years, Mercedes Benz has invested a lot in the employment of product development team and this has ensured that they have high quality products which always please their customers.
The company must have a strong sales team that has the ability of selling the products to the customers. Such a sales team must be in a position to show the high qualities of the products to the customers. Such a sales must be able to show the customers that they are getting high value goods for their money. This is a very important factor to consider as it will determine the number of sales that a company will make and hence the profits to be made. The Mercedes Benz has taken this very seriously and it has ensured that there is a huge number of sales personnel qualified enough to present the products’ strength to the customers.
The corporate name for quality and innovation- to use the broad differentiation strategy, the company must have a good reputation in quality and innovation. This helps in marketing the products as the customers will have confidence in the products. Mercedes Benz has a corporate reputation in the industry and the customers are confident in their products.
Its products have been designed to stay ahead of its peers. Although there is high competition, it has done well in generating a high demand for the products, this has given it power to control its prices and it has ensured that there is customer loyalty. It has focused on customers willing to pay more for the products and they have maintained a premium pricing of units. It has set up some kind of artificial barrier for entry by its competitors.
The company has properly made use of the differentiation strategy and it has worked well for them so far.
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