Mercedes- Benz Case Study 3
Question 1 What is the decision facing Mercedes? The Mercedes car is a benchmark of safety, luxury, and precision engineering of its cars. They are well known for producing a luxury vehicle. However due to the increase competition on the luxury car industry and changing consumer attitude about the Mercedes brand, the marketing strategies of this well-known luxury car brand eventually has to be change.

First and foremost, the decisions facing by Mercedes now is to change their target market. For years, Mercedes car mean luxury and status to the worldwide. Thus, the target customers are for those whom are affordable or rich level society. Now, this well-known luxury car marker are attempt to entering hybrid car market which is more real life style oriented and is focused more on moderate price, gasoline savings and corresponding reduced

. The goal or

objectives are very different from the previous goal that they had when producing a luxury car. This change may expand their consumer range however it also may lead to losing out their customer that they have now. This is because the luxury car consumer may not be interested to hybrid car as the petrol price is not an issue to them.

Moreover, they are also facing a hard decision as to select which market strategic to be implemented when entering into the market. There are already existing competitions in the hybrid car market. Thus, to be success in the hybrid car market, Mercedes has to compete with other well-known hybrid car maker such as Honda and Toyota. It is rather a hard challenge for the luxury car maker to overtake them as they already have existing market or consumer to support for their hybrid car over year. The table below shown are the Hybrid car sales f in US for 2009. The sales of Toyota and Lexus brand hybrid cars alone passed the two million mark in 2009. Ford is beginning a hybrid sales surge, and will soon be closing in on 50,000 units sold.

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UNIVERSITI MALAYSIA SARAWAK EBM 1063 INTRODUCTION TO BUSINESS MANAGEMENT (Hybrid car sales figures in US for 2009) Other than that. Page 2 . it is needed for them to positioning Mercedes in the hybrid market without damaging its luxury image. Therefore. the main concern of the Mercedes is to maintain the luxury image that they have for years. It is an image or benchmarked for the Mercedes and need to superior.

One of it is Mercedes must know the consumers demand and needs. By improving the design that already existed. Mercedes had focuses on innovation of the design of the vehicles. Therefore. which is upgraded the design to be more efficient and power will meet the needs of the consumers. Concerning on environmental effect. Consumers usually interested to not only a high efficiency and reliable cars but also a comfortable and affordable cars. Consumers nowadays are pretty smart in selecting cars for their own. Mercedes is stressing on new models. This attitude of customers will increases the sales volume of Mercedes because Mercedes-Benz Company is not just provide hybrid automobile it¶s also provide a cars with a status symbol. To make Mercedes more success and reliable product in the market. the consumers will look for the best options that are available in the market. Mercedes-Benz Company is also developing new and modified products to appeal the present markets. This is the most important factors in order to make their product can be sell in the market. Mercedes have to make their design of the cars more efficient and reliable. What is the most important thing is the cars must have style and sporty. affordable cost. Since buyers these days are more interested in purchasing cars of latest technology and models. Due to the awareness of the consumer about global issue especially responsibility to the environment. Nowadays. Mercedes have to come out with a high quality design of a vehicle. Mercedes have to come out with a product which suits the needs of the consumers. hybrid car will drag consumers attention. Mercedes is well known as luxury cars therefore the performance and the quality of the cars should worth the price. reliable. better quality and other minor innovations to attract the new customers as well as to Page 3 . many consumers are looking for a famous brand name product which can give them symbol of status. They have a very high demand in terms of high efficiency. Not only the body of the cars but also the engines because consumers are very concerned about the performance of the cars. Other factor is the quality of the vehicles. stylish and comfortable car.UNIVERSITI MALAYSIA SARAWAK EBM 1063 INTRODUCTION TO BUSINESS MANAGEMENT Question 2 What factors are important in understanding this decision situation? There are some factors that are important in understanding the decision situation that facing Mercedes. Mercedes come out with superior hybrid car.

Honda. All of the above efforts make Mercedes product are much more reliable in the market. Toyota. Mercedes do promotion of its product by advertisement. In other hand they can keep the brand name fresh in the public¶s mind. As a result. this can convince the consumers about the product and create a good reputation of the company. Furthermore. Consequently.UNIVERSITI MALAYSIA SARAWAK EBM 1063 INTRODUCTION TO BUSINESS MANAGEMENT maintain the old customers. it will achieve several consumers¶ goals in purchasing car. Mercedes also has service stations at approachable locations. As there are many competitors in the market such as Ferrari. Since. Mercedes has introduced the concept of hybrid cars that greatly reduce fuel consumption. BMW and the others. Customers can easily go to show rooms and have a look on various products and models of company. Mercedes can provide product information continuously and increase awareness of company product to target market. Seeing that these day customers do not wish to spend much money for luxury car the company has introduced low priced cars. By these huge promotions. aggressive promotion and competitive pricing. Mercedes-Benz has show-rooms at easily approachable locations. public relation and personal selling which are more intense distribution. Page 4 . Therefore middle and low income level customers can also buy these cars and can feel rich. Mercedes-Benz company come out with promotion mix strategies in order to drag attention of the consumers in the target market as well as compete with their competitors. the products of the company are available at almost everywhere in the world.

it is the dual type Page 5 . The higher fuel efficiency of the hybrid function may become the real choice of many corporations because nowadays environmental issues are highly reviewed. quality. the Mercedes-Benz brand will be able to enhance and retain the corporation¶s status. A weakness of the company and sales strategy is the characteristic that contributes disadvantages to the company. luxurious. Before they promote the model to customers. What make Mercedes hybrid car different compared to other hybrid models like Toyota and Honda. It has become the major factor of deteriorating company sales and decreasing the profits. On the other hand.UNIVERSITI MALAYSIA SARAWAK EBM 1063 INTRODUCTION TO BUSINESS MANAGEMENT Question 3 What are the alternatives? Owning luxurious car like Mercedes-Benz is one of the psychological needs of most people in the competitive market and living environment nowadays. Renting service is one of the methods to boost the profit. are the brand. Besides sales. Promotion has to be carried out in order to convince people to buy Mercedes-Benz. The battery aided function of these hybrid models has significantly reduced the emulsion of hazardous gases to the environment. Hence. The company itself has to develop a sales strategy which is associated to worldwide market because the Mercedes-Benz models are well known and distributed to numerous countries. the company can develop a hybrid models renting to the market. the Mercedes-Benz company has to identify and eliminate it by means of good strategy planning and management. it creates higher status than those afford normal passenger or hybrid car. With the model luxury and environmental friendly. With the name of Mercedes-Benz hybrid car. the term ³hybrid´ is innovated from the concept of environmental friendly and fuel consumption. Car shows and advertisements should be done periodically to acknowledge customers about the benefits of owning Mercedes-Benz hybrid car. and comfort. The Mercedes-Benz company has to search for opportunities or external chances to make greater sales or profits. they have to clarify the products strength in term of quality. Moreover. and luxury. especially the hybrid models. This is why those affordable people are recommended to buy MercedesBenz hybrid cars due to its unique and luxury. Low interest loan can be provided by the company to attract more customers. By renting the hybrid models to customers and corporations. it can be the ³mobile advertisements´ where the cars are driven everywhere and witnessed by the people around.

The common factors that become the treat of the business are the competitors. Since the environmental issues are highly reviewed. and employees. like Mercedes-Benz models. Hence. the company should arrange the work organization where the job designs. span of management. Many people prefer Toyota and Honda hybrid models because those companies offer lower purchasing price compared to Mercedes-Benz. departmentalization. Page 6 . delegation. On the other hand. MercedesBenz should come out with a quality assurance strategy and luxury status to overcome its competitors. which means the external factors that could cause trouble in the business. Moreover.UNIVERSITI MALAYSIA SARAWAK EBM 1063 INTRODUCTION TO BUSINESS MANAGEMENT model that comprises of luxury and environmental friendly. the research and development of new types of model. for better quality and more environmental friendly. Besides understanding its own product and sales strategy. High technology could be invested into the research and development of MercedesBenz hybrid cars. In this case. With the proper management of organization. employees are motivated in specific job which is the essential of producing quality product. the worldwide advertisements should be invented and enhanced to let people in the world the witness the luxury and quality of the Mercedes-Benz hybrid cars. low demands. the company has to identify the threats. Promotion and loans can be given to attract more customers to purchase the models. the dual type Mercedes-Benz model has to potential to be priority demanded in the market in long term perspective. and chain of command are implemented in order to make the organization run smoothly and efficiently. in order to meet long term perspective and market demands. The greatest competitors of Mercedes-Benz for the hybrid model are Toyota and Honda which belonged to Japanese. like Mercedes-Benz truck and lorry.

hydrocarbon CxHy and etc) which produce by the combustion of fuel (patrol). it is unnecessary for Mercedes to produce economy car. government also should have take action to support eco-friendly products automatically as well. Hence Mercedes intention to make a fuel efficiency car is highly recommended. In the other hand. As they quoted. Beside. Honda and Toyota have the much lower price compare to Mercedes. if a person can afford the car. But bear in mind that how many consumers afford to purchase Ferrari compare to Mercedes? On the other hand. but maybe lower a bit the price to certain class of Mercedes car which it¶s still elective which can broaden their market in many countries. Which mean the consumer might unable to Page 7 . Producer of hybrid car or eco-friendly car can apply from government to have some special preferential by launching eco-friendly car. As responsible living on the Earth. which may indirectly leads to the lower quality. Meanwhile. fuel prices not a problem anymore. the price is not meet with the requirement. I believe that more consumers (doesn¶t care the status) are more worry about the resources which is decreasing significantly. as a responsible living on earth. Or in other word. But. as the resources are become fewer nowadays. the efficiency and the quality is not fully explored yet since hybrid car only been introduced few years ago. But Mercedes shouldn¶t have the intention to make economic car because the cost will be lowered in order to so. Although there is the quantity of Honda and Toyota that in market. most consumers still don¶t think that Honda or Toyota able to represent their status if they able to have one Mercedes. government also play an important role in saving the earth.UNIVERSITI MALAYSIA SARAWAK EBM 1063 INTRODUCTION TO BUSINESS MANAGEMENT Question 4 What decision(s) do you recommend? The Ferrari buyer will feel is the honour to have it which is Ferrari can represent their status. The problem with a hybrid car or known as eco-friendly car is. Hence. carbon dioxide CO2. As well as the exhaust gas (such as carbon monoxide CO. all of us should care about the earth compare to the fuel prices. will contributes to green house effect and global warming which become the main issue nowadays. the target customers of Mercedes are on those with prestigious or wealthy customer.

Mercedes should have more campaign. explanation and promotion toward it in order to create an atmosphere with favourable reception of the eco-friendly car. For example. Page 8 .UNIVERSITI MALAYSIA SARAWAK EBM 1063 INTRODUCTION TO BUSINESS MANAGEMENT satisfy their needs by purchase a hybrid car for high price. Hence. these eco-friendly cars thingy are still too new fangled and it¶s in preliminary state where consumers still doubt the reliability and performance of the hybrid car. This issue not only bump into Mercedes. either hybrid car or electric car before they try to launch it. In order to positioning Mercedes for the hybrid market without damaging its luxury image. Another problem is most of the consumers not yet fully geared up to accept a hybrid car. and yet the function and the system is favourably than the hybrid car. In other words. if a consumer can have a luxury car which run fully base on fuel which the quality is much better than hybrid car with alike price. Mercedes should put more efforts on research and development (R&D) toward the eco-friendly car. which choice will consumer basically make? Of course the answer mostly lies on the luxury car which run fully base on petrol. but every brand of car maker in the market which try to produce hybrid car.

Mercedes should anticipate on the green technologies like hybrid that will lead to dramatic growth. several supporting measures for the hybrid market to be fully implemented into are government¶s support and marketing techniques. This has increased chances for the new technologies like hybrid to be the substitution of the alternative fuels which will provide a better environment. Californian Zero Emission Vehicle Programme. but the amount or quantity is significantly decreasing while the price is increasing in contrast. At the present time where the gasoline and diesel are overwhelmingly predominates the transportation energy market. Tax reductions in Green Vehicle Taxation can be one of the measures which should be bound to a certain degree of market penetration of corresponding clean vehicles and fuels. For examples. government support is very advantageous to be successful with its hybrids. Moreover. Hence. Those measures are like financial incentives which can play an important but only complementary role. national governments should not only facilitate networking inside their countries. measures. CNG-Liverpool in Australia and US Clean Cities Programme have offered a package of support measures for the Clean Transport Fuels market which has been included into the legislation for new taxation system.UNIVERSITI MALAYSIA SARAWAK EBM 1063 INTRODUCTION TO BUSINESS MANAGEMENT Question 5 What are some ways to implement your recommendations? There are several ways to implement the recommendations in the marketing strategies in the Mercedes Hybrid market. How much you can save while petrol price increasing? Higher gas prices are acting as a catalyst for automakers and consumers to find alternatives to the traditional gasoline internal combustions engine. particularly with lower consumption of diesels. but also on a transnational level which actually already happened. First. Since the vehicle and fuel market is a global market. countries like The Powershift Programme in UK. for examples Kyoto Protocol in Japan and European Commission Directives in Europe where these countries are concernedly green. regulations and incentives are recommended in promoting the hybrids to the country. the modern trend for voluntary agreements between the public authorities or government which try to forge alliances with manufacturers can help in to set the technical Page 9 . over the next several years. Government¶s role.

For example. the Toyota has employed both demographic and psychographic form of multiplesegmentations and targeted its market on that basis. With these. Additionally. This will definitely help in promoting the Mercedes hybrid and creating awareness on how grave the government urge on to be green. Whereas. for sport people it has sport cars. Mercedes company can forms segmentation with a variety of product attributes it targets differentage group and professional groups of people. it is elective for the Mercedes Company to make smaller. The prices are ranged and the economy class cars aretargeted to lower and middle level income people and the luxury cars are targeted to highermiddle and higher income group people. Mercedes company can get subsidies from the government for customer on the new Mercedes hybrid vehicle purchase or for switching to Mercedes hybrid vehicle. Mercedes Company can hold a competition which offers great prizes to the students or engineers outside where it¶s about how to improve the efficiency on the hybrid energy or more. from a research of marketing strategies. cheaper and environmentally friendly¶s Mercedes five-seat GLK compact SUV which can broaden their market in many countries. Examples are ³Memorandum of Agreement¶ within the Californian ZEV. Besides. For example.UNIVERSITI MALAYSIA SARAWAK EBM 1063 INTRODUCTION TO BUSINESS MANAGEMENT agenda for country future developments like green technologies. The Mercedes Company can also hire or offer a job for the winner which will help the R&D department to boost up. For example. Page 10 . Mercedes Company should improve their hybrids in term of reliability and the maximum distance per gallon petrol can achieve with further research and development (R&D). the marketing technique is playing a vital role here where to positioning the alternative green technology of Mercedes hybrid as modern technology that has much to offer for the individual with the aid of segmentation.For environmentally sensitive people it have Mercedes hybrid S400 or ML450± environmentally green car. Mercedes Company can get unexpected ideas from the others instead of their own organization.programme and voluntary agreement between FLAT and the Italian government. Hence. A programme with public support can be directed to include more radical technologies as well as incremental improvements in conventional technologies which are favoured by manufacturers like Mercedes hybrids. Hence. Thus. it has segmented all thecountries across the globe as its market and focused market such as US as well. There can set a target where the maximum distance can achieve per gallon of petrol by comparing it with other competitors like Lexus HS 250H which can pull downs of 34miles per gallon which is highest record for a hybrid car. Segmentation and target market is guided by its philosophy of µright car in the rightplace¶.

the boosting method here is the operating costs should be visibly stated in the brochures and showrooms in order to have significant potential economic benefits of using Mercedes hybrid vehicles compared to conventional vehicle. Hence. Hence. even though the Mercedes hybrid vehicle technologies that are not able to directly compete with conventional gasoline and diesel vehicles in terms of vehicle performance into the general vehicle market. In principal. vehicle buyers¶ guide with the easy accessible information about the vehicle economies should be provided too. rather than simple vehicle purchase price comparisons. Thus. Page 11 . in order to boost the ability of the Mercedes hybrid car market which competes with the luxury car maker. Satisfied users are most important where they can spread their experiences and the ³word of the mouth´ weights more than any marketing campaign. can held surveys on aiding them to spread their words. Such market niches may be certain areas as mentioned above and certain transport modes. with the full life-cycle cost accounting. vehicles. In addition. Mercedes hybrid vehicle technology may be successfully being accepted into market niches that offer special framework conditions where they can compete with conventional vehicles. There is necessary for the public educational efforts about the advancement in green vehicle are very important. As a conclusion. several steps are being suggested. but higher vehicle purchase costs. purposes and marketing techniques. hybrid vehicle tend to have lower fuel costs and maintenance.UNIVERSITI MALAYSIA SARAWAK EBM 1063 INTRODUCTION TO BUSINESS MANAGEMENT On the other hand. This is essential to assure that local retailers are committed to the programme and their enthusiasm or reluctance about the new technology is crucial. However. would tend to favour hybrid vehicle.

3. 4.Robert.Boston.hybridcars. SouthWestern. http://www.L. Online resources. Portolese. Introduction to business 10E.blogspot.com/2011/03/mercedes-getting-seriousabout-hybrids. J. 5. Cengage Learning.com/news/mercedes-benz-prepares-bigincrease-hybrid-car-production-29592..carsdirect. Title Introduction to business .H.Jack.K.D.UNIVERSITI MALAYSIA SARAWAK EBM 1063 INTRODUCTION TO BUSINESS MANAGEMENT References: 1. http://www.com/hybrid-cars/best-hybrid-luxury-car-on-themarket. Page 12 . 2.William. McGraw-Hill Higher Education. M. http://thegreenmarket.P.(2009).(2008).. R.html.html. Online resources.. Online resources.

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