Work, People and Productivity - Mercedes-Benz - Case Study Example

Work, People and Productivity Work, People and Productivity Introduction Mercedes-Benz is a German car manufacturer that was created to cater for the tastes of well heeled client. Established in Germany, in 1886, Mercedes-Benz has been one of the most successful automobile makers in the world. The car-maker has been successful because it produces exciting products and cultivates quality networks in all the nations that it establishes branches in. In recent times, Mercedes-Benz has sought to increase productivity by entering new markets in developing nations, whose populations are beginning to benefit from more disposable income, like India and China. This has resulted, in some circumstances, in significantly increased proceeds. In May 2011 the company realized 108,766 sales all over the globe, as a result of the rapid development in nations like Russia, Brazil, China and India. However, the company has also experienced many challenges in nations such as China. The Expansion into China Mercedes-Benz launched the Beijing Mercedes-Benz branch in 1984, as a joint-venture. The company established this branch in order to take advantage of favorable conditions that existed in the Chinese market and still do. SWOT Analysis of Mercedes-Benz into Expansion into China A SWOT analysis can assist in depicting the position of Mercedes-Benz in its initial investment in the Beijing plan. Strengths As a well established international car-maker, Mercedes-Benz was and still is, in the position to be able to invest in different parts of the world. Its high quality products are well known in nations all over the world due to their popularity with celebrities of different eras. The company also enjoys a good reputation due to good branding. The prestige associated with a good name earns a lot of respect from people who may not even be acquainted with the product. The reputation of being a producer of up market goods is something that attracts attention from the well heeled classes in nations all over the world (Taylor, 2009). Mercedes-Benz is also quite market savvy and has access to different forms of global distribution due to established alliances with contractors from other nations. Weaknesses Mercedes-Benz is recognized as a car-maker that caters to the upper classes. Its products are presumed to be quite expensive and thus unaffordable for ordinary person in the street. In addition, the car-makers promotional are still not successful in attracting the attention of ordinary people. The promotional campaigns are also rare and the vehicles usually take long to manufacture. This, in many cases, results in impatient customers. The car-makers’ competitors have recognized this weakness and are seeking to attract the attention of the market bases that shun Mercedes-Benz due to cost issues (Taylor, 2009). In China, Mercedes-Benz also has to deal with marketing to a population effectively in spite of the language and culture barriers. Opportunities China is a developing nation whose economy has been one of the most rapidly expanding for more than ten years. Even with the incidence of the global recession, there is a definite middle-class with more disposable income that has materialized. This means that Mercedes-Benz has the opportunity to reach out to these individuals with its products. Concern with the effects of globalization has also spurred the interest in clean energy cars. This is another opportunity for the car-maker to create products which will immediately be bought by environmentally-conscious individuals. Threats Mercedes-Benz today faces a lot more competition from business rivals that have also established plants in China in order to benefit from the rising middle-class. Business rivals are not just those from other Western nations, such as Ford, but also include Asian competitors such as Hyundai. Asian competitors are, many times, a more significant threat because they are more attuned to Chinese culture and thus could reach Chinese customers with products from a more informed understanding. There are numerous subtle cultural as well as social factors which could affect future profitability (Junsong, Bang and Phil, 2013). Challenges experienced by Beijing Mercedes-Benz In the recent past, Beijing Mercedes-Benz has been criticized because of its inability to strive effectively against rivals such as Audi and BMW. Even though, the luxury car market in China is expanding, Beijing Mercedes-Benz has been striving to hold the interest of the developing middle and upper classes. According to Junsong, Bang and Phil (2013), there are different reasons why this is so. In the first place, Mercedes-Benz’s products are thought to be affordable only for the rich. Many young adults also feel that a Mercedes-Benz product is more popular among the elderly. Most young adults want to be identified with products that emphasize their youthfulness. It would also be more cost effective for the corporation to build additional plants in China in order to save on overseas manufacturers costs as well as transport costs. Beijing Mercedes-Benz has also suffered due to complaints from assorted customers about the quality of its products. According to Lehbrink and von Osterroth (2010) an angry customer even smashed what he termed as his ‘shoddily built Benz’ some years ago after the manufacturer refused to respond to his request for another vehicle. He then turned to social media forums to decry the sorry state of most of Mercedes- Benz products. This is something that resulted in many people associating the company with intransigence and rigidity. Moreover, it would seem that the car-maker has also lost potential customers because of the lack of national policies that that seek to ensure that only the best quality cars are marketed to the population. China has few, if any, laws that deal with proving car quality and ensuring that there are orderly market sales. This naturally means that the nation’s citizens will be in a weak position when contending with low quality products from any car manufacturer. Problems encountered in China There are other reasons why Mercedes-Benz’s fortunes have taken a downfall in China. The global recession that occurred some years ago resulted in less spending money for populations all over the world. In China, it resulted in a reduction in the demand for luxury cars, as well as other luxury products. In addition, Mercedes-Benz suffered from other international car-makers in the Chinese market because it had not come up with new ideas for re-designed models. According to Taylor (2009) in 2003, the sales of Mercedes-Benz cars rose by 4% while those of Audi rose by 32%. Car-makers like Audi and BMW, though, openly offered heavy discounts in order to promote sales. Marketing Plans that can be used to Promote Sales There are different options that Beijing Mercedes-Benz can implement in order to improve sales. For example, it can market its B-Class car to individuals who are just leaving home for the first time and will be looking to acquire cost effective cars. To market this vehicle, Beijing Mercedes-Benz can use exhibitions in cities such as Chengdu and Guangzhou. This will slowly build up the car’s brand in local circles. Mercedes-Benz could also use methods that are often used in Western nations, such as using celebrities who are well recognized in China and known to have high incomes and good standing, to endorse products. Marketing Strategy of Mercedes –Benz Mercedes-Benz’s reputation as a luxury vehicle manufacturer is not likely to change. The car maker has generated a reputation of exclusivity as well as high quality in all stages of its product lines. According to Hayes, Pisano, Upton and Wheelwright (2005) Mercedes-Benz s today one of the most familiar brands that are associated with prestige in the world. The car-maker still mainly markets its goods to the upper classes in nations all over the world. According to Taylor (2009) most of Mercedes-Benz’s clients are usually more than 40 years old. Today, the car-maker typically competes with luxury car-makers like BMW. In China, Beijing Mercedes-Benz has also had to deal with commercial car’s luxury brands like Honda’s Acura, Toyota’s Lexus and Nissan’s Infinity (Junsong, Bang and Phil, 2013). Mercedes-Benz typically markets its products through dealers who are located in different nations all over the world. The car-maker has launched efforts to reach the ordinary consumers with their products. Beijing Mercedes-Benz has also made efforts to improve the reputation of its cars in terms of durability and luxury. The ‘Mercedes-AMG’, for example, is a branch that manufactures high-performance engines for Mercedes-Benz’s luxury cars. According to Junsong, Bang and Phil (2013) the AMG models have better stability, more aggressive body, higher performances and the more extensive use of carbon fiber than ordinary Mercedes models. Moreover, AMG models are more costly than ordinary Mercedes vehicles. The success of this product in the Chinese, as well as other markets, shows that the upper classes have not been unduly affected by the recent global recession (Tan and Tan, 2009). To market this product, Mercedes-Benz essentially concentrated on convincing the upper class population that its products would afford stability, comfort, the right ambiance and security. Today, Beijing Mercedes-Benz has effectively enlarged its targeted market to include younger adults who are just starting off on their own after completing university and securing their first jobs (Junsong, Bang and Phil, 2013). The car-maker has achieved this by means of advertisements through the television, radio, as well as the internet- which is the most popular mass media channel for young adults of all stations. Beijing Mercedes-Benz has also transformed its customer service operations in ways that make potential customers, as well as regular customers feel more comfortable with considering a purchase. In the company’s websites, this includes improvements that take into account the latest communication methods as well as technological discoveries. The young male adult population, which the company is trying to target, is greatly enamored of matter concerning telecommunications advancements- and so is likely to be drawn to car-makers who spot these changes. To reach the young adult population, Beijing Mercedes-Benz also has also come up with marketing strategies that present their products as being created to ensure that the user’s lifestyle needs, as well as sense of fun, are taken into account. Mercedes-Benz car models such as S Class, C Class, SLK Mercedes and R Class clearly cater to the sense of a young adult population (Junsong, Bang and Phil, 2013). In addition, Mercedes-Benz has also launched its new products such as the Mercedes Benz G-Class, which is priced below $30,000 (Junsong, Bang and Phil, 2013). These are clearly cars that can be afforded by consumers who have a desire to one a Mercedes-Benz car, but do not want to spend too much on it. The car-maker has even made efforts to reach out to sports aficionados with its M-Class, which is comfortable as well as luxurious. For Beijing Mercedes-Benz, the challenge remains to add to its yearly sales without necessarily losing any of its strengths which emphasize engineering excellence. There are different ways in which Mercedes-Benz can reach out to other sections of the population. For example, it can implement discounts that allow other people from the middle class to be able to purchase cars. This would call for a distinct separation in terms of marketing gimmicks. According to Fernandes and Shengjun (2007) China’s demand for luxury models is likely to keep increasing and could possibly reach up to 2.7 million cars on an annual basis by 2020. After the recession, China’s middle class is once more developing more rapidly than is the case in other nations. According to Fernandes and Shengjun (2007), the Volkswagen AGs Audi is, at present, the most popular luxury car brand in China. The Volkswagen Audi has a branch in China that furnishes the Chinese market with its products and so successfully saves transport costs. Beijing Mercedes-Benz also has to contend with cultural differences. For most international brands, the subject of culture difference can result in reduced productivity if not handled correctly. Different markets have different cultures which perceive advertising gimmicks in different ways. Mercedes-Benz originally benefited from a stalwart reputation in the Chinese market because it had been perceived as a car maker that catered to rulers, as well as other celebrities (Rein, 2012). To some extent, Beijing Mercedes-Benz still benefits from the reputation that was created generations ago. The reputation of the car-maker caused it to be held in high steem in China. Moreover, if the corporation is to attract other clients who feel that it still caters only to the wealthy, it has to implement marketing strategies that target the China’s Middle Class. Conclusion Beijing Mercedes-Benz has to implement different changes in order to remain competitive in the automobile industry. At present, there are many car manufacturers headquartered in different nations. This means that there is increased competition in the vehicle industry. It is also important for the company to find ways of re-inventing itself in order to remain relevant in the present information-based global economy. Car-makers today have to make do with increased requirements from their customer bases. Many customers today wish to purchase products that somehow identify with their own personal qualities. The reality is that generating luxury products no longer automatically means that the corporation will continue experiencing success in sales. Today’s customer puts great emphasis on products that have intangible value and which stimulate positive emotions or fond memories of a positive time in the consumer’s life. This calls for car-makers such as Beijing Mercedes-Benz to carry out initiatives such as surveys and interviews in order to establish the mainland population’s idea or concept of what constitutes true class in the customers’ minds. This may call for the company to use methods of integrated marketing communication in order to reach as many consumers as possible. Upmarket consumers in present-day China believe that they have unique interests and so require distinctive products. These type of customers would respond well to advertising methods such as experiential marketing, which is centered on ensuring that customers experience a given brand. Moreover, Beijing Mercedes-Benz would have to invest considerable capital in order to learn as much as possible about its customer base, before investing in such a strategy. References Fernandes, J. A., & Shengjun, L. (2007). China CEO: A case guide for business leaders in China. New York: Wiley. Hayes, R., Pisano, G., Upton, D., & Wheelwright, S. (2005). Operations, Strategy and Technology: Pursuing the Competitive Edge. New York: John Wiley. Junsong, C., Bang, N., & Phil, K. (2013). Public Affairs in China: Exploring the Role of Brand Fairness Perceptions in the case of Mercedes-Benz. Journal of Public Affairs. Lehbrink, H., & von Osterroth, J. (2010). Mercedes-Rev. Berlin: H.F. Ullmann. Rein, S. (2012). The end of cheap China: Economic and cultural trends that will disrupt the World. New York: Wiley. Tan, J., & Tan, A. (2009). Managing Public Relations in an Emerging Economy: The Case of Mercedes in China. Journal of Business Ethics, 86(2), 257-266. Taylor, J. (2009). Mercedes-Benz: cars of the 1990s. London: Crowood Press Limited. Read More