Marketing Strategy of Mercedez Benz - Essay Example

This paper will examine Mercedes-Benz as a company, its marketing strategy and the effect it would have on individual consumers were it to temporary withdraw all its advertising. Theories or conceptual frameworks such as Waterson, Adstock, Broadbent, Jones and Ehrenberg, Advertising Elasticity and Shareholder Value Analysis will be employed to try and explain how advertising works at both macro and micro levels with regards to Mercedes Benz (Bass, 2007). A conclusion basing on the arguments obtained from the above discussion will be drawn. This will assist in determining what the assignment has taught one with regards to advertising and what it means for a big company such as Mercedes-Benz. To increase its sales, and penetrate the international market, Mercedes Benz has a target market (Adler, 2008). However unlike other car manufacturers, the company targets middle aged people of between 25 to 44 years. In addition, this people must be high income earners (Zikmund & Babin, 2007). Therefore it can be said that the company targets rich individuals. It also targets both male and female users as its designs are applicable to both sexes. With regards to branding, the company targets individuals who are fond of driving. Their cars put into emphasis how it is designed and its style instead of speed like other car manufacturers. Mercedes Benz vehicles are high end vehicles meaning that they are expensive. The company’s newest brand, the Sedan S550 goes for $93, 825 and other more luxurious models attract close to $130, 00 (Bass, 2007). Mercedes Benz does a lot to remain the car of choice among the rich in society. This is done by incorporating into its structure a very comprehensive promotional strategy. For example the S class came up with a Fashion Festival in the city of Brisbane (Bass, 2007). The company intended to highlight and promote not only fashion but style and to also familiarize the locals with its range of products on offer. All these were meant to make profits through an increase in sales volume. With relation to the above, the company in a bid to making known it’s luxurious and durability nature has incorporated the ‘Mercedes –AMG’ which is associated with efficient and high performing engines for high end cars. This way of advertising is highly effective as portrayed by Waterson theory of advertising (Zikmund & Babin, 2007). This is because people tend to have an emotional attraction to products that they used in the past and which served them well. The ‘Mercedes-AMG’ known to produce high performing engines are associated with rich people, therefore knowing that the company is selling cars with this reputation is bound to positively influence customers (Ellwood, 2013). In addition to this, the company is pursuing social network advertising and promoting its S class model to the youth who are fond of using sites such as Facebook (Zikmund & Babin, 2007). Here the Mercedes has set a forum to advertise its product to the youth whereby it is sending the message that stars, who happened to be youths, are bright and the same stars happen to be the customer’s client. Also it has launched interactive web films and videos that really exciting and appealing to internet users (Bass, 2007). Here people who visit these sites have a memorable moment as they will get entertained by what Mercedes has to offer and like in Waterson’s theory, people’s attitudes towards products are influenced by impressions such as those found in company’s websites and which in turn affect their marketability (Zikmund & Babin, 2007). However, this framework is not always right as nowadays people tend to choose products through emotions but a proven track record. Also companies have been known to lower quality levels of their products while still relying on earlier reputation (Brookes & Palmer, 2004). Therefore not all people attach emotions to things just because their predecessors used to command respect among competitors. Also use of social media is biased in a way as it only addresses the needs of the enlightened be it youths or old. Mercedes Benz does use television to advertise its cars. It is with the hope that customers will be made aware of its products and therefore buys them (Tybout & Calder, 2010). This is in line Adstock’s theory of advertising which states that customer exposure to products through advertisement on television will most likely make awareness to them and lead them into making a purchase. Mercedes Benz is a multinational company and continues to make sales to all corners of the world. It has advertisements on television that gives not only information of its latest products, their prices and locality but also on latest technological advances that have bettered their products. Here the company makes continuous advertisement as it is assumed that any level of awareness will be higher if it was preceded by an earlier one. The company knows that increase of the advertisements will increase the percentage of people reached and hence demand for its products (Bass, 2007). However, each increment as stipulated by Adstock’s theory, demand for Mercedes Benz’s car does not increase significantly with every increase. This is because there is saturation. Thus the company spends much on advertising but gets little. Mercedes Benz is involved with constant advertising be it through social, print or electronic media (Brookes & Palmer, 2004). This is to ensure that people are aware of its products. Broadbent’s theory states that the system is in a continuous state of looking out for data for novelty or simply for change. As such, people are constantly looking out for advertisement and if they fail to come across one for a considerable amount of time, they get used to the situation and may not even see one while it is right in front of them (Ireland, Hoskisson, & Hitt, 2007). It is for this reason that Mercedes Benz has among other advertising techniques opened TV stations dedicated purposely to its advertisement. People look out for latest models with a view of buying them (Ellwood, 2013). The continuous refreshment of adverts ensures that consumers do not forget available and future brands. Since there are numerous advertisements related to automobiles, Mercedes Benz makes unique advertisements that have a long lasting impact on customers, ones that will remain intact in their memories. One of the advertising techniques used by Mercedes Benz is semiotics. The company uses this method to depict power and wealth, through its advertisements. A good example on how semiotics has been used to depict the adverts by Mercedes Benz touches on the 2010 Mercedes Benz concert hall advert (Mercedes Advertising, 2011). In this advertisement, a concert hall is inside a luxury sedan Mercedes Benz. The target market of this vehicle is the older generation of car lovers, and this advert associates the car with classic music, that is the concert hall. There is a combination of texture and picture in this advertisement, and this helps in bringing out the values of the target customers (Mercedes Advertising, 2011). For instance, the color of the background is made up of black, red and yellow. This choice of color reflects an elevated status, which is the target market of the company’s vehicles. Yellow is a representation of imagination and intelligence, black is an aspect of elegance, while red is a representation of energy. This symbolically means that being a owner of a Mercedes Benz, is an example that an individual has class, and status, hence achieving the objectives of the advertisements, or the promotional programs. An example is the Roadster advertisement of the Mercedes-Benz 2010 which depicts a bright car at the center of a road, with many dull cars at the background. This was an indication that Mercedes Benz is a luxurious cars, and far much better than its competitors. Another semiotic advertisement of Mercedes Benz is based on its adverts of Mercedes AMG GT. This advertisement depicts a sleeping child, who is dreaming of a race between Mercedes and his dream car (Mercedes Benz, n.d). The Mercedes vehicle manages to overtake the dream car of the child, which is a symbol of other vehicles. The use of color and texture is very prominent in these adverts. There is a black sports car that is speeding on the road. Black is a symbol of other cars that cannot match the quality of Mercedes Benz (Mercedes Benz, n.d). A yellow car appears which symbolically means that it is Mercedes. At the appearance of the yellow car, the child is nervous, and there is a shaking of the cabinet. This is an indication that the yellow car is superior to the black car, and this is further proved by the ability of the yellow car to overtake the black car (Mercedes Benz, n.d). Through this advert, we are able to know that Mercedes is a superior brand, when compared to other car brands. However, not all people may be persuaded to buy this luxury and expensive car as proposed by the weak theory, a counter argument by Jones. People may still have the belief that this model, just like other Mercedes Benz’s models is meant for rich people and a waste of resources (Adler, 2008). They would rather go for other car makers such as Toyota, Tata, Mazda or Peugeot. In addition, using the same framework, competitors may dig in Mercedes Benz’s market base and persuade their customers to shift to products such as Hyundai, Ford, General Motors all of which have high end car models (Plunkett, 2006). Mercedes Benz thus at times uses this technique not to woo new customers but to retain existing ones. Here the notion is that the target audience is not foolish but one that is bright and cannot be manipulated into dubious deals (Brookes & Palmer, 2004). As such Mercedes Benz customers used to other models cannot shift to the sports car being advertised just because it is portrayed as being classy and expensive but can look into other models that are pocket friendly or more spacious and comfortable (Ellwood, 2013). This is in line with Ehrenberg’s weak theory which explains that demand cannot be altered due to advertising but can simply be reinforced to customers. Advertising for Mercedes Benz using this technique has brought in more sales especially for car enthusiast and those who love to attach products to memorable vents (Amann, Maznevski & Steger, 2007). Also choosing of the Super Bowl as a platform for advertisement is crucial as it is expected among consumers that Super Bowl adverts are usually entertaining and loved by many as they are equated to cinema (Bass, 2007). Mercedes Benz uses good advertising to maximize on sales. In 2013, it went into partnership with Fairfax media to launch A- Class model, which is a new model, and made several advertisements both on social and electronic media among them the Good Weekend and the Sunday Life Magazines (Adler, 2008). This measure ended up being beneficial for the company as awareness and brand consideration among customers rose up. The aim was to raise awareness of the model among persons interested in purchasing small sized cars with the value of beyond $30,000. Customers targeted were between ages of 25 to 39 years (Bullo, 2014). It was found out that exposure to a single media house drove to four percent the number of persons intending to purchase the A-Class model. The figure was high when overall results were considered. This partnership was cost effective as advertisement is only beneficial to a company when costs are manageable and do not cut into the company’s profit margins. This goes to prove Advertising Elasticity framework that above board advertising will contribute to a positive impact on demand. Demand is going to rise and with it profits. On the same line, advertisement deemed to be negative in nature is bound to have a negative impact on product demanded (Grant, 2010). Mercedes Benz avoids such scenarios by employing a robust advertising criterion that is not only cost effective but also efficient. Among them is sponsorship. It is known to be a sponsor in numerous polo competitions, the McLaren Formula one team which it has sponsored from the year 1995 (Amann, Maznevski & Steger, 2007). Currently the company is sponsoring the German football team and the Stuttgart Football Club. In fact the club’s stadium is known as the Mercedes- Benz Arena. As such, the Mercedes Benz logo is displayed on team uniforms be it T-shirts or shorts and also the McLaren formula one car. Spectators in stadiums get to know about the company sponsoring their teams and in return make orders for available models depending on tastes and fashions (Bass, 2007). Mercedes Benz puts into mind returns with regards to the advertising criteria which it employs. This is in line with what its shareholders will get as just like any other company it is valued by the returns its shareholders get. As of Decmeber 2014, Daimler AG, the company that owns Mercedes Benz had majority of its shareholders coming from Germany (Adler, 2008). These were about 33.7 percent. The United Sates followed with 26.9 percent, rest of Europe with 26.6 percent, Kuwait with 6.8 percent, Asia with 5.6 percent. The rest of the world had a mere 0.4 percent. With regards to shareholder value analysis framework advertising for Mercedes Benz has to put into consideration the needs of these shareholders. It should make sure that they get returns for their investment (Bass, 2007). Advertising costs should be minimal to ensure that profit level is high to reward all the shareholders. This framework has its shortcomings in that needs of the shareholders have to be met first before those of the company can be considered (Bass, 2007). Thus expensive advertising whether it may be of value to Mercedes Benz in the eyes of management may be shot down just because it will eat into the profit margins and later have a negative impact on share returns (Adler, 2008). The value of the shareholders should not be overstated with regards to Mercedes Benz advertising strategy especially in the face of increasing competition from other car manufacturers such as Ford, GM, Toyota and Range Rover. In November 2014 and with regards to sales, Mercedes Benz sold 28, 593 vehicles, its highest sale in a single month. In the same year, the October sales were topped by C, E and M Class models (Bass, 2007). This was later taken over by the newest entry, the 2015 model C Class which sold 7, 412 models which was a 13.2 percent increased when compared to sales of the year 2013. With sales of 3, 936 vehicles, the E Class followed and the company’s best brand of SUV, the M Class finished top three with 3, 797 vehicles sold (Amann, Maznevski & Steger, 2007). Good and efficient advertising is attributed to these sales as consumers world over are getting to know available brands and how adapted they are to their needs. Despite its robust advertising mechanisms, Mercedes Benz still faces completion from rivals. Thus advertisement is very crucial not only for Mercedes Benz but for all companies intending to make an impact in the market and reach customers. There are numerous disadvantages and negative setbacks that the company would face, if it had withdrawn its advertisements. Brand personality is one of the areas that would be greatly affected by the lack of advertisements by Mercedes Benz. This is because the company, through its numerous advertisements, has managed to build a reputable brand that is associated with the affluent, and the rich people within the society. Failing to maintain a constant advertisement would affect this image that has been built by the company (Adler, 2008). This is because other companies will mostly likely take advantage of the absence of the advertisements depicting Mercedes, and thereafter advertise their products, tearing down the image that Mercedes has built through its numerous advertisements. Furthermore, while people are looking at the advertisements of Mercedes, like the logos that it is using, they are able to acquire a sense of enlightenment and wealth. This is an aspect of brand personality that Mercedes would lose, if it stopped advertising its products. Were there to occur a temporal withdrawal of all media advertising, Mercedes Benz would incur heavy losses (Bass, 2007). In addition, loyal customers who have long valued the Mercedes Benz brand would be left in the dark about the company’s lasts products or improvements made in line to previous complaints (Adler, 2008). Adverts appeal to individual customers and for those associated with Mercedes Benz are constant remainders of the company’s presence. This is why Mercedes Benz uses all forms of media to carry out advertising. It does so through television, magazines, festivals, sponsorships and many other media outlets (Amann, Maznevski & Steger, 2007). For example the 2015 Super Bowl advertisement in which a new $100, 000 sports car was portrayed to defeat Mercedes Benz, individual customers were targeted because Super Bowl is associated with memorable events. Those watching the advert were made to know that the new sports car sought entertainment value in addition to being pricy. Advertising has clearly brought to light what Mercedes Benz has to offer to its customers. Were it not for it, customers especially the middle aged considered to be wealthy would not know which car to choose. This is with relation to cars that they would use for family outings or simply driving to the workplace or market place while still maintaining their social status. All this would cease were there to be a temporal withdrawal of all forms of media advertising for the company. It is not only consumers who would be affected by this move but the company, its shareholders and other partners. This is because advertisements are responsible for penetrating new markets and retaining those already in the companies grasp. Good advertising means more customer reach and potential sales (Amann, Maznevski & Steger, 2007). This in return means profit for the company and shareholders as a whole. As a result the company is able to pay its employees and involve itself in activities such as technological research meant to improve on the company’s products (Bass, 2007). As discussed in this essay, good advertising has brought positive results for Mercedes Benz and hence any withdrawal will lead to a drop in sales globally. Despite the above arguments, one is forced to contend that for a company such as Mercedes Benz to excel, it must put in place proper advertising mechanisms. This is to maximize on sales and in the process beat of competitors. For this to be achieved the company needs to not involve itself with costly advertising that will bring few returns as opposed to improving on the customer base. Conceptual frameworks of advertising such as Waterson, Adstock, Broadbent, Johns and Ehrenberg, Advertising Elasticity and Shareholder Value analysis should be incorporated into the company’s advertising strategy. It is by doing this that the company will know about merits and demerits of employing one form of advertising as opposed to another and what it needs to do to employ successful advertising mechanism. This is with realization that not all advertisements bring positive results and that customers pay great attention to advertisements with the aim of acquiring relevant information before making a purchase. Thus Mercedes Benz just like other multinationals cannot afford to do away with all forms of media advertising even if it is just on a temporal basis. Bibliography ADLER, D. (2008). Mercedes-Benz. Minneapolis, MN, Motorbooks. AMANN, W., MAZNEVSKI, M. L., & STEGER, U. (2007). Managing complexity in global organizations. Chichester, England, John Wiley & Sons. Top of Form BASS, C. (2007). Mercedes-Benz Pagoda 230, 250 & 280 SL: W113 series roadsters & coupés, 1963-1971. Dorchester, Veloce. Bottom of Form BROOKES, R., & PALMER, R. (2004). The new global marketing reality. Houndmills, Basingstoke, Hampshire, Palgrave Macmillan. BULLO, S. (2014). Evaluation in advertising reception: a socio-cognitive and linguistic perspective. Top of Form ELLWOOD, I. (2013). Marketing for growth: the role of marketers in driving revenues and profits. Bottom of Form Top of Form GRANT, R. M. (2010). Contemporary strategy analysis and cases: text & cases. Hoboken, N.J., Wiley. Bottom of Form Top of Form IRELAND, R. D., HOSKISSON, R. E., & HITT, M. A. (2007). Understanding business strategy: concpts and cases. [Mason, OH], Thomson South-Western. Mercedes Advertising: Then and Now. (2011, May 2015). Retrieved May 5, 2015, from https://pattykrehbiel.wordpress.com/2011/05/25/mercedes-advertising-then-and-now/ Mercedes Benz, “Mercedes-AMG GT Advertising”. https://www.youtube.com/watch?v=X1rI9W0nOig Top of Form PLUNKETT, JACK W. (2006). Plunketts Advertising & Branding Industry Almanac 2006 The Only Comprehensive Guide to Advertising Companies and Trends. Plunkett Research Ltd. TYBOUT, A. M., & CALDER, B. J. (2010). Kellogg on marketing. Hoboken, N.J., Wiley. Top of Form ZIKMUND, W. G., & BABIN, B. J. (2007). Exploring marketing research. Mason, Ohio, Thomson South-Western. Read More