Marketing strategies of BMW and Mercedes-Benz Essays

Marketing strategies of BMW and Mercedes-Benz Essays Marketing strategies of BMW and Mercedes-Benz Paper Marketing strategies of BMW and Mercedes-Benz Paper These people have high incomes, and have usually completed higher education. The family life cycle that the brands market themselves to differs, depending on the particular model of the car. (See above. ) 3- Psychographic Segmentation: BMW markets itself to the upper middle, as well as both the lower and upper upper class. Mercedes-Benz markets itself mostly to the upper class. 4- Behavioural Segmentation: People usually buy cars on special, as opposed to regular, occasions. The buyers of BMWs and Mercedes expect extremely high quality and service. MARKET POSITIONING. BMW and Mercedes both put much effort into making sure that their respective products leave enthusiastic impressions in the hearts and minds of their customers. They both developed slogans that they hoped would stick in customers minds; Mercedes-Benz is known for its quality engineering, while BMW markets itself as the ultimate driving machine. BMW and Mercedes-Benz also have to differentiate themselves from each other in order to draw customers to their respective brands. One example of how Mercedes tried to do this was when it developed the CLS model. 1This model was positioned against the BMW 645Ci,2 while at the same time being positioned between the E- and S-Class sedans. The CLS was close enough in price to the BMW 645Ci so as to appeal to the same group of consumers, so in this way, Mercedes-Benz was directly challenging one of their major competitors. When tested by drivers, some concluded that the 645Ci was a better drive, but the CLS was more comfortable. From this, it is clear that Mercedes-Benz succeeded in positioning itself in customers minds as separate from BMW. MARKETING MIX Product Both BMW and Mercedes-Benz offer customers a wide range of products. Mercedes-Benz has twelve separate classes 3 of automobiles just within the passenger car sector. BMW, meanwhile, has nine series. 4 The way in which both brands try to differentiate themselves from each other is evident even in the dissimilar names they have given their line of products. Price Mercedes-Benz does not place much emphasis on keeping prices down. Indeed consumers expect both Mercedes-Benz and BMW, being in the luxury automobile market, to be priced higher than the average car. Therefore, Mercedes has to concentrate more on how its prices compare with its competitors rather than on how high its prices are in absolute terms. BMW, as part of its premium brand strategy, (see Promotion) wants to maximize its revenues per vehicle; they think that their strong brand recognition and the excellent quality of their products will help them achieve this goal. This means that they do not focus their efforts on keeping prices down; instead they want to sell exactly the right number of well-produced cars so as to attain a targeted profit. 5 Both Mercedes-Benz and BMW have relatively low price elasticity. This is because the consumer who can afford to buy the car in the first place will most likely not be deterred from making the purchase simply because the price went up by a few thousand dollars. However, since BMW markets itself to the upper-middle class, which is more price conscious than the upper class that Mercedes-Benz focuses on, it has higher price elasticity. People in the upper-middle class might change their minds about the purchase of a car if the price went up by a few thousand dollars. Promotion BMW promotes itself using a highly selective strategy. It has chosen certain segments in the automobile market, and it does not involve itself in the mass market, otherwise known as the volume segments of the automobile market. BMW calls this selectivity premium brand strategy. This means that BMW does not promote itself to all segments of car buyers; instead, it concentrates on targeting those consumers who it thinks will be interested in automobiles from their specifically chosen markets. Mercedes-Benz promotes itself as the worlds leading luxury brand. Within its target market of upper class middle-aged people, it is not as selective about who exactly to promote itself to as BMW is. It wants to attract and keep as many customers as it can. It promotes itself as innovating products rather than simply designing new versions of the same old product. For example, in promoting the Compact Sports Tourer, Mercedes-Benz said it: is the astounding response to a new zest for life: athletic, distinctive and versatile. For people who wish to live out their individuality. 6 It is promoting itself as a company that makes cars for people who are not afraid to stand out from the crowd; in much the same way, Mercedes- Benz Brand wants to stand out among its competitors. Place Most sales for both BMW and Mercedes-Benz take place at car dealerships. However, oftentimes consumers research the vehicles on the Internet before coming to the dealership, so the companies websites are also an important place where they can connect with consumers. It is therefore in the best interests of both brands to foster a strong presence online. To this end, Mercedes-Benz worked with iProspect, a search engine marketing firm, in order to increase its websites visibility within the major search engines. 7 Recommendations for futures strategies Both BMW and Mercedes-Benz want to build up a good relationship with female buyers, car buyers especially, and then the overall objective is to keep these buyers buying their products. Female buyers may feel nervous or even scared when going to look far a new car, especially if they are alone and do not have much knowledge or any confidence in their knowledge about cars, and with this nervousness they probably will be approached by an aggressive salesman, who may feel has got an easy target to sell a car to that they may not necessarily want or need, the salesman would just be trying to get a sale and get their commission. This may mean that many potential female customers to these two companys may feel overwhelmed and put off going to the dealer, which may result in a loss of a customer. Female buyers may feel a lot more comfortable when approached by a female sales representative at the dealership. BMW and Mercedes-Benz may want to look into employing more female sales representatives, especially in areas where they feel or know there are numerous prospective female buyers of their products. After sales customer service is a major area in which a customer will buy or re-buy their products. If for whatever reason, the customer, is not completely satisfied with the service they have received or they feel or have heard by word of mouth that they can get better service from another company, they may buy from that company, even if they feel the car is not as good as one from BMW or Mercedes-Benz. In a survey carried out by the BBC television show Topgear, where the general public with cars no older than three years where asked to write in or vote for how satisfied they where with the after sales service from the dealer and overall reliability of their car. In this vote there were a total of a hundred and forty two different cars included written in about or voted for. From these 142 cars the Mercedes-Benz M-Class was voted one of the most unreliable cars, and was also one of the cars that would be least recommended to someone else, or bought again. Also, from this list of 142 cars there were a total of six Mercedes-Benz models in the bottom third of the list, showing a general dissatisfaction of the service received after the initial sale of the car, and more worryingly for Mercedes-Benz none of their models made the top ten of the list. Even though none of BMWs models made the top ten list for the overall after sales service, BMW did have two cars in the buy again top ten with the BMW Z3 and 5-Series. The rest of BMWs models may not have made any other of the top ten lists; none of their models made the bottom ten lists, therefore according to the survey, the general public prefer the service offered by BMW than Mercedes-Benz. Although both companies may provide a friendly, professional looking service, they may want to look at the structure of their service, as the consumer that have purchased their products clearly are not greatly satisfied with the service they have received, according to the survey carried out by Topgear, shown on the next page. One reason why the Mercedes-Benz range of cars and especially the M-Class may have done so badly in the Topgear survey is because the consumers who purchased these cars are likely to have had experiences with other companies and there dealers and may have thought that Mercedes being classed as a luxury brand expected more than the other brands offer, which may have not been the case and therefore, the customers may feel that even though they spent more money on the car, they did not receive a better service, and may have been disappointed by this. 2004 Top Gear Survey the Last 10 (Ranking: Model Score out of 100) 133: Fiat Stilo 73. 7 134: Renault Megane 73. 6 135: Citroen Xsara 73. 5 136: Peugeot 206 73. 5 137: Citroen Saxo 73. 4 138: Fiat Bravo 70. 7 139: Renault Espace 70. 6 140: Renault Laguna 70. 3 141: Peugeot 307 69. 8 142: Mercedes M-Class 69. 8 The 10 most unreliable cars There were 142 cars listed in the final survey, of which the following 10 were ranked as the most unreliable. Citroen C3 (133rd) VW Polo (New) (134th) Citroen Xsara (135th) Citroen C5 (136th) Fiat Stilo (137th) Renault Megane (New) (138th) Mercedes M-Class (139th) Peugeot 307 (140th) Renault Laguna (141st) Renault Espace (142nd) Would you buy this car again? Top 10 who said Yes, Id buy this car again! Jaguar XJ (100%) Honda S2000 (99%) Subaru Forester (99%) Honda Jazz (98%) Skoda Fabia (98%) Skoda Octavia (97%) Seat Toledo (97%) Honda CR-V (96%) BMW 5-Series (96%) BMW Z3 (96%) Taken from www. bbc. co. uk/topgear website under the car survey link Another area which both companies may want to look is the cost of maintaining their cars. Many customers that can afford to buy a BMW or Mercedes-Benz, be it brand new or second hand, may not necessarily be able to afford to maintain the car. The labour charge that is incurred by both these companies is around the i 90 per hour, which is about three times more than if you were to go to a private mechanic. The labour charge does not include parts which are added on top. Some parts have to be specially ordered from Germany as authorised dealers do not carry all the parts, this means that the customer will have to wait until the part is shipped over to have their vehicle repaired. Therefore both companies may want to look at maybe reducing their labour charges, as this may attract less wealthy customers to the range. In the Topgear survey (shown above), the Mercedes-Benz M-class may have done so poorly in the reliability section because it did not have a proper target audience, it was not targeted at the wealthy customers nor the poorer customers, and therefore the wealthier customer may have expected more from the car than it delivered, and the poorer customers may not have been able to afford to maintain the car as Mercedes-Benz cars ought to be maintained. The two companies should also look into carrying all the parts, even if its one or two of the less popular parts that are required, this would mean that customers would have their vehicles repaired back to them sooner. BIBLIOGRAPHY 1- onemotoring. com 23/11/04 2- autointell. net 22/11/04 3- mbusa. com 19/11/04 4- bmwusa. com 18/11/04 5- irishtrucker. com 23/11/04 6- criticalmass. com 23/11/04 7- bmw. com 18/11/04 8- unb. ca 17/11/04 9- johnkay. com 19/11/04 10- bmw. com 17/11/04 11- iprospect. com 22/11/04 12- mercedes-benz. com 18/11/04 13- mercedes-benz. com 18/11/04 14- bmw. com 22/11/04 15- bbc. co. uk/topgear 22/11/04 16- whatcar. com 22/11/04 1 onemotoring. com 2 bmw. com 3 mercedes-benz. com 4 bmw. com 5 unb. ca 6 mercedes-benz. com 7 iprospect. com.