Aim of the marketing strategy is to fulfill the marketing objectives, which are achieved through the use of the 4P’s; Product, Price, Place & Promotion.
2 Product
2.1.1 Specification
“Markets do not stand still. Companies must adapt their current offerings or create new ones in response to changing customer needs, or take advantage of new ones in response to changing customer needs”
The X-Class has two tanks one which holds fuel and the other gas, and there is a switch that the driver can press to activate the required source of power.
The new Mercedes X-Class is set to revolutionize the way in which we drive. The 2.2 liter 276bhp engine will be to run on both LNG (Liquefied Natural Gas) and standard unleaded petrol. The consumer will have the advantage of reducing fuel costs between 30 and 45% compared with petrol, however the consumer still has the ability to use unleaded petrol should the need arise. It can also be said that those estimated costs in reduction in fuel could yet be greater, as the current economic trend is for fuel taxes to increase in the forthcoming future.
The Mercedes X-Class will also have low harmful emissions. In comparison to petrol the emissions of LNG contains up to 75% less CO2 emissions, hence being friendly to the ozone as well as complying with the set government targets. Poor air qualities in the UK’s cities are attributed to rising CO2 emissions from petrol driven cars.
2.1.2 Product Experience
We at Mercedes believe that customers have certain expectations. The Mercedes driving experience will not be inhibited by the X-Class running on LNG. There will be absolutely no reduction in Mercedes world-renowned performance. An important ergonomic design of the new X-Class is its streamline bodywork. The LNG tank will not compromise the shape of the car.
The X-Class will have the large fuel volume capacity for driving equally long distances as petrol cars hence resulting in a range to cover most travel needs. The X-Class is aimed at A & B social classes. Corporate customers can benefit from lower fuel costs and an enhancement of ergonomic executive features that Mercedes prides itself on. The X-Class as always will be a worthy competitor in terms of prestige to rivals BMW and Lexus.
Table.1, below shows the strategic plan of Mercedes and where the X-Class will be placed into its product/market expansion grid:
Existing Products
The X-Class is will compete as a new product in an existing market.
New Products
Existing Markets
Market
Penetration
Product
Development
New Markets
Market
Development
Diversification
Table.1
2.1.3 Brand Name & Image
At DaimlerChrysler the name “Mercedes-Benz” is considered a synonym for the production of high-quality and innovative vehicles. In the year 2000, Mercedes-Benz celebrated its hundredth birthday. To date 19 million cars carrying the distinctive Mercedes-Benz badge have been produced, and some of the earliest vehicles are now worth about a few hundred-thousandth pounds.
Mercedes-Benz has been long known for safety, luxury and precision engineering. By introducing the first LNG car to the market, Mercedes will further excel its status as an innovator of cutting-edge technology.
We at Mercedes-Benz believe that we have one of the 10 most recognizable brands in the world; hence we are willing to play with that a little. There is consistency in the name X-Class as Mercedes use the term Class to name other categories of products; this is a useful tool in that it is a trademark associated with Mercedes. Other classes include the A, C, E, ML and S class.
Because of increased threats from other luxury car makers such as BMW and Lexus and Jaguar it is important that the brands equity is maintained in that this will provide the X-Class with a competitive advantage in the market place.
Mercedes suggest attributes such as ‘well engineered’, ‘well built’, ‘durable’, ‘high prestige’, ‘fast’, ‘expensive’ and ‘high resale value’. Hence any of these attributes can be used in advertising the car, and consumers will translate these attributes into benefits. A brand also says something about the buyers’ value thus Mercedes buyers’ value high performance, safety and prestige. Brand will also project personality. Mercedes consumers can visualize as being wealthy, middle-aged business executive. It will hence attract those people whose actual or desired self-images match the brands image.
Makes heads turn and hearts race.
2.1.4 Additional Services
The Mercedes X-Class will be sold with the same service & benefit attributes as all other models. A three-year warranty on production defects will be offered and a 10-year anti-corrosion guarantee.
The cars will be delivered to the dealer, for an additional fee the cars can be delivered to the consumer’s door.
2.1.5 Product Life Cycle
During the introduction stage of the life cycle the X-Class is not expected to see profits, all revenue will be targeted to increase the awareness of the car. If the X-Class meets market needs or ‘stimulates previously untapped needs, it will enter in which sales will start climbing quickly. The early adopters will continue to buy, and later buyers will start following their lead’. Once Mercedes has gained a share of the market for the X-Class, it will start to generate profits and a new brand can be established. At this stage we expect to attract our competitors to the market for this segment.
As the X-Class enters the maturity stage the growth of sales will begin to decline, price wars will become fierce. Sales will slow down depending on the number of competitors who have adopted this idea as they are likely to introduce models which are much cheaper than the X class one of their main traits is they will not only bring out new products but they will improve on the idea and expand the market as a result. At this stage it is vital the Mercedes has a strong position in the market. The slow down in sales growth results in many producers with many products to sell. This overcapacity leads to stronger competition. Because of this competitors will cut prices, increase in advertising and sales promotion. A ‘good offensive is the best defensive’, the managers of the X class will need to keep a step ahead continually improving the product and innovating.
Eventually, the costs to keep the product in production will exceed the revenue and the product will be withdrawn. The timescale of the product lifecycle is estimated to be approximately 20 years, however Mercedes R & D department will hopefully have developed a new generation of LNG cars, which will takeover when the LNG’s lifecycle comes to an end
2.2 Pricing
Initially a price skimming strategy will be implemented. This will be possible in that there is a competitive advantage due to the scarcity in competition. This involves charging at a high price because there is a substantial competitive advantage. This price will eventually fall due to increased supply within the market. When economies of scale are achieved the cars will be produced at a lower unit cost and new marketing and pricing strategies will be undertaken.
The recommended retail price of the car is to be £60,000 for a basic model. This is a premium price to maintain Mercedes pricing image. The company will be promoting trade-ins for the customer’s old cars depending on working condition and age. This promotional offer will initially be for the first three months only.
The high price helps recover as much gross profit per unit as possible, while the low promotion spending keeps marketing spending down. Such a strategy makes sense when the market size is limited in size, when most consumers in the market know about the product and are willing to pay a high price (these consumers are called the innovators), and when there is little immediate potential competition]. Hence, the X-Class will adopt a more for more approach for its value positioning, as its providing the most upscale product and charging a higher price to cover the higher costs.
However the price will need to gradually go down as choice and supply begin to grow. Also when economies of scale are achieved the cars will be produced at a lower unit cost and new marketing and pricing strategies will be undertaken.
If the target market of 5,000 vehicles is not achieved Mercedes will alter its pricing strategies accordingly.
2.3 Placing
The logistics department will handle the distribution of the Mercedes X-Class. This will involve delivery of the vehicles to various dealerships throughout the UK, both through direct and indirect channels.
2.3.1 Dealers & Direct Selling
Mercedes sales representatives will be trained to deliver presentations to other independent dealerships in an attempt to increase sales of the vehicle through non-Mercedes agents. The dealers will be made aware of our market segment, in this case families and corporate customers and provided with active training and support to address customer issues.
2.3.2 Internet
The Internet will play a big part in the distribution of the vehicle. Customers will be able to book a test-drive of the car as well as being able to take advantage of a 2% discount on the price should they purchase on-line. Customers will be able to locate there nearest dealership from the Internet. This will eventually attract international customers as it has a geographically disperse market. The car will also be displayed at all major car shows i.e. London, Munich, Paris, Geneva. This is seen as a major intermediary for the sale of the car.
2.4 Promotion
2.4.1 Launch
The X-Class will be unveiled at the forthcoming and world-renowned Earls Court Motor Show on 15th March 2003. This will coincide with “Greenpeace Day” which is aimed to make people aware of the damage that is occurring to the ozone layer and the earth’s natural resources. The seasonal peak in car sales is March and September this gives the added bonus of launching the X-Class within this time period. The X-Class will also receive extensive reviews in the select car magazines and be put to the test on the BBC’s Top Gear program during late March.
2.4.2 Promotional Mix
The DaimlerChrysler Group will also be displaying the car on the company’s webpage so that it can be readily viewed. With the specifications of the car, this will take place as soon as the car has been launched.
Various forms of promotion will be undertaken in the form of broadsheet national newspapers, television programs???, billboards, sponsoring sporting events and principally motor shows. This will all be utilized via a teaser campaign running from the beginning of February until the launch of the X-Class in mid March 2004. (Top Gear(show & magazine), Road Show, Economist, Miss World, Mayfair showrooms, FT, Which Car, )….
In addition to this Mercedes Benz and its dealers around the UK will initiate an action program to attract the customers to the dealers. The cost of this campaign will be divided between Mercedes and its dealers. This will be done during the periods of May – June.
The commercial companies will be targeted through their fleet managers. These managers will be invited to trade fairs and car shows around Europe where Mercedes Benz sales representatives will meet the managers. Fleet managers will also be targeted through direct e-mail where Mercedes sales representatives offer to visit the company and present the X-Class.
The car will be sold through Mercedes authorized dealers at first and this will be extended to other dealers as car sales increase. Sales representatives will be offered additional commission incentives to actively promote the car. Using the electoral register and census details families within the major cities will be directly mailed with details for the new X-Class. They will also be offered a minimum of £1500 trade in for their current Mercedes, limited for the first three months of the launch. Customers will also be given the credit options being subject to status. Thus, allowing customers to spread the cost of purchasing a new car.
2.4.3 Sponsorships
Mercedes Benz will also be emphasizing the X-Class into its existing sponsorships these includes a star fashion event, known as the Mercedes-Benz Australian Fashion Week, for which the product will be on show for public viewing.
There are also close ties with Mercedes-Benz and the sports world.
2.4.4 Word of Mouth
Mercedes should not only educate its sales force on the benefits of the X-Class, the employees should be well informed as well. Departmental managers should be offered a X-Class as a company car and free test drives will be offered to all personnel. Thus encouraging employees to promote the car to their family and friends and in turn creating a favorable image. Employees are a vital promotional tool and should not be overlooked.
Topic: co2 emissions, current offerings, driven cars, government targets, harmful emissions, liquefied natural gas, new mercedes, renowned performance, two tanks, unleaded petrol