Mercedes Benz in the United Kingdom market

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Coursework

MERCEDES BENZ IN THE UNITED KINGDOM MARKET

The table of contents

Introduction

1. PEST Analysis

2. Driving Forces affecting global marketing

3. Hofstede model of the UK

4. Marketing plan of Mercedes-Benz in GB

4.1 Segmentation, marketing, positioning

4.2 Marketing mix strategy

Conclusion

References

Introduction

The history of Mercedes-Benz went back to the 1880s and its founders Karl Benz and Gottfried Daimler, whose separate companies became a single one in 1926. At present company is a division of Daimler AG. Besides the two Germans, an important figure was Austrian banker Emile Jellinek, who in 1897 became a Daimler board member. Jellinek offered a variety of useful marketing advice and suggested a car with an engine to the front. Origins of the Mercedes - Benz are creation of the car powered by petrol and conversion of a stagecoach conducted by Karl Benz. Mercedes-Benz is one of the largest producers of commercial vehicles worldwide producing more than half of a million of trucks, vans and buses every year. The company has 93 locations worldwide and production facilities in 17 countries on 5 continents. Furthermore, many pioneering technical innovations that are standard automotive features today were first seen in a Mercedes-Benz car, including the crumple zone (1959), ABS (1978), airbags (1980), belt pretensioners (1980), ESP (1995), PRE-SAFEВ® (2002) and many other milestones in passenger vehicle technology. Today Mercedes-Benz is the most successful premium brand. Its technical perfection, quality standards, innovative impact and numerous car legends such as the 300 SL Gulling are unique. The Mercedes star became the most famous symbol of a car brand and is one the world's best known trademarks today. Three-pointed star symbol, which symbolized air, land, and sea arenas in which Mercedes-Benz engines dominated. Today in the UK Mercedes-Benz is one of the leading and famous automobile companies. The company sold various automobile products there such as vans, trucks, cars, buses and coaches.

Mercedes-Benz is a global corporation with a geocentric orientation and views the entire world as a potential market and strives to develop integrated global strategies. The most important markets for Mercedes-Benz Cars in 2012 were Germany with 20% of unit sales, the other markets of Western Europe (24%), the United States (21%) and China (14%). (Picture 1)

Picture 1

Furthermore, Mercedes-Benz brand name associated with a particular headquarters country, with Germany. Nonetheless, the company management uses a combination of standardized and localized elements in the marketing program in case of legal, economic and cultural aspects and the management decisions are made on the basis of ongoing research of market needs and wants.

Mission statement: Mercedes-Benz invented the automobile- now it's passionately shaping the future. As of pioneer of automotive engineering, the company feels inspired and obliged to continue this proud tradition with ground breaking technologies and high-quality products.

Vision Statement: The goal of the company is to successfully meet the demand of future mobility.

mercedes marketing united kingdom

1. PEST Analysis

Political: The UK is a country of a stable political situation being good environment for the business development. The UK government recognizes significance of the automotive industry and while supporting free market and competition also recognizes the areas in which government's intervention may be required (House of Commons 2010, p. 26). The present government has ambitions to be the greenest government ever (Politics 2012). That approach already resulted in enactment of the increased fees for carbon emission (The Independent 2012).

Economic: The financial crisis has inflicted all countries and all industry sectors including automotive sector within the UK. It has resulted in closing of some high profile factories in 2009 and decrease of the cars sale volume (PMG Report 2009, p. 14, 59). Governments of all countries including the UK recognise the need of some measures of intervention in order to re-build the economy after the crises (HM Treasury 2011). The UK Governments recognized that some problems of the automotive industry were caused by not being member of Euro currency (House of Commons 2010, p. 32). Due to the exchange rate cars in the UK are more expensive. High fees for carbon emission increase production costs in the car industry. Fees for carbon emission have been increased in Europe at all. The rise of petrol price and steel has increased the production costs resulting with higher car prices. Additionally it enforced usage of more economical technologies and production of more economical cars.

Social: More than half of the UK population already lives in cities, and this proportion is rising. Furthermore digital technologies are changing the corporate and working life. At the same time British customers are increasingly demanding individual, needs-oriented and convenient mobility solutions that are easy to use and accessible online at any time. Mercedes-Benz Company is responding to this demand by offering mobility concepts in the private, commercial and public sector. Examples are its car sharing initiative car2go, CharterWay, Bus Rapid Transit (BRT) and the mobility platform “moovel”.

Furthermore, the British society is becoming more environmental friendly and the company's reputation in case of sustainability and responsibility is also the factor which can attract or repel potential customers. In order to respond to this social requirement, Mercedes-Benz regularly tests its locations in accordance with globally uniform standards. Suppliers must fulfill the criteria of its Sustainability Guideline for suppliers, which call for the existence of a certified system of environmental management according to ISO 14001, EMAS or other comparable standards. Moreover, Mercedes-Benz determined the specific criteria for selection of materials and recycling program.

Technological: Mercedes - Benz has introduced many technical inventions in the past and constantly developing technology imposes high pressure on car manufacturers. Furthermore, “Green Technology” is a new demand for car manufacturers. They need use technology more environmental friendly during production and produce more environment friendly cars. Mercedes - Benz faces that demand by Blue Efficiency technology that aims at lower emission of combustion gases and minimization of petrol usage (M&B 2011). It is a necessary requirement in the society oriented on ecological problems. Moreover higher prices of gasoline enforce it as well. Technological progress is fast and requires from Mercedes - Benz both keeping up and going ahead in order to stay competitive. Nevertheless, Internet and e-commerce are the new challenge for Mercedes - Benz traditional strategies and should be researched very carefully in order to create technology answering to the consumers' demands and needs.

2. Driving forces Effecting Global marketing

Regional Economic Agreements: The UK as a democratic country, member of the World Trade Organization supports free trade and competition with minimal interventionism from the government. Especially that any government interventions are under close scrutiny of The European Union that as a rule is against any interventions. The overall trade policy review within the European Union shows the trend toward enhancement of the free trade, unification and decreasing trade barriers by appropriate legislation and fiscal policy (WTO 2011).

Market Needs and Wants: Traditionally Mercedes - Benz was designated for middle age people with high income due to the high price and design. The British society is driven by competition, achievements and success, that is mean that driving luxury car by people indicate their social status and success of life. That's a good point for Mercedes because the company already possesses an excellent reputation and strong brand name on the luxury cars market and can satisfy wants of the UK customers. From the other side, the cultural features of British people, their life style and also economic situation, prices for petrol reveal the needs of small, but still comfortable, safe and prestigious cars. Mercedes-Benz offers the wide range of vehicles of various classes, prices and sizes and can satisfy the needs of British market.

Transportation improvements: The UK ports are amongst the most competitive and efficient in the world, they handle over 95% of UK imports and exports and in 2012, the value of trade through British ports was around Ј340 billion. For Mercedes-Benz is a huge opportunity to reduce costs of shipment its vehicles from Germany to the United Kingdom. Furthermore UK ports can also offer secure containers and equipped hangars for storage of cars.

Product Development costs: The modern business world is driving by Globalization and high competition through all existing market. In order to hold its market share Mercedes-Benz make investments in research and development field. In 2012 the company has spent 3 863 million EUR, for 3% more comparing with 2011. (Picture 2).

Picture 2

Quality is a key factor for Mercedes brand name, but it's associated not just with innovative products, but also with customer service and financial performance. The company focused on what it does best: producing inspiring premium automobiles, first-class trucks, vans and buses with maximum benefit for customers, and providing tailored services all around these products.

3. Hofstede model of the United Kingdom

According to Hofstede Center the power distance in British society is ambiguous. On the one side, it is caused by history and culture, when people had ranks and titles (knights, lords, earls). On the other side, the British society believes that a person should not be discriminated in order to develop himself because of origin or social status. In reality, the power distance between classes is large enough; it is reflected in the life style, different shops, cars, houses, clothes. In accordance with this aspect Mercedes car asserts the status of its owner and affiliation to rich class.

The British are a highly individualistic and private people. Children are taught from an early age to think for themselves and to find out what their unique purpose in life is and how they uniquely can contribute to society. The route to happiness is through personal fulfillment. The UK is `ME' culture. The Mercedes-Benz has a wide range of products, which can satisfy the private and selfish expectations of customers, such as SLC Sports car with two doors present an individual, dynamic design and technological features.

The UK is a masculine society highly success orientated. For understanding British people there are necessary to possess an ability to “read between the lines”, because what it's said is not always what is meant. Compared with feminine culture, such as Scandinavian countries, British people live in order to work and realize their ambitions. Initially, Mercedes-Benz Company was targeting the middle-age working males, who already graduated universities, built the carrier, became financially successful and faced the wants to satisfy their social ambitious. The worldwide trend is changing according to cultural differences, but in the UK Mercedes-Benz is operating very successfully.

In the case of uncertainty avoidance, as a British nation, they are quite happy without knowing what the new day will bring and they are always ready to change plans. The British workers are planning their activities, but generally do not focus on the details and usually adapted during the processes. Furthermore, the UK society possesses a high level of creativity and innovation thinking. This is reflected in all cultural aspects, such as the sense of humor, the huge consumption of new and innovative products, the popularity of the creative industries such as advertising, marketing, engineering, arts and so on. For Mercedes-Benz is an attractive point in the English market, as the company positions itself as a highly innovative and creative corporation and is able to satisfy the requirements of British culture.

In the case of long term orientation belief that "a bird in the hand is worth two in the bush" characterizes British culture. Major people build the short - term plans, this can be seen even on the financial statements and the London Stock Exchange when all the predictions and plans are not longer than a quarter. This means that the current British customer of Mercedes-Benz can change his attitude to his car and probably after half a year will want to try something different, more innovative and modern. Thereby, Mercedes-Benz Company should constantly evolve in order to be interested for UK buyers in the future.

4. The Marketing Plan of Mercedes-Benz

The success of Mercedes-Benz in the UK market is changed over time. Until 1940, the company has organized an international network from 186 retailers and it was a success because by the time Mercedes-Benz has already received good reputation and popularity. But because of the Second World War, the company suffered losses and has lost international influence through all territories occupied by the Soviet Union. Only since 1960 is operating successfully and stable in the UK market. Great Britain has always been an attractive market for all manufacturers and businesses, not only for Mercedes-Benz. Several decades ago, just people from upper class could afford to buy a car. That time Britain had a huge international power and possessed many colonies until World War II, its mean that in the Great Britain were lived a lot of potential customers of Mercedes-Benz. Nowadays, the United Kingdom is still very attractive and important market for car manufactures, because it's an economically stable country with high income of people. Furthermore, the geographic location presents huge opportunities in order to reduced cars' shipment through British ports. In the UK Mercedes-Benz does not have production factories and deliver its products from Germany, but the company opened there stores and the branch in order to control all financial and operational processes, and customer service.

4.1 Segmentation, Targeting and Positioning strategy

Mercedes-Benz traditionally operates in the segment of luxury vehicles for the people of success. The Mercedes-Benz offers exclusive and reliable, high quality products for selected customers. People by owning luxury products emphasize their status and prestige as successful people. The prestige associated with owning the Mercedes-Benz is emphasized in every aspect of production and promotion (Anurit, J Newman, K Chansarkar, B 2001). However the demands of the market forced Mercedes - Benz introduced its A-Class hatchback and entered into segment of compact luxury cars in order to compete with BMW 1 and Audi A3 (Marketingweek 2012).

Customers of Mercedes-Benz are middle aged people with high income. The first factor is the price. Not many young people have incomes or other resources enabling them buying such expensive car as Mercedes - Benz. Another factor is design that is not attractive for young clients. The brand of Mercedes - Benz is not associated with dynamic or sporty look preferred by young people. It is associated with classical design, success, luxury and prestige. Therefore it is targeted to responsible, reliable middle aged people emphasizing their success by owning luxury car. However that approaches shifts and Mercedes-Benz recognized the need to address needs of wider range of consumers, especially young generation (Marketingweek 2010).

Segmentation and targeting of the Mercedes - Benz as a luxury product for successful people are consistent positioning company and product as an exclusive brand. Mercedes-Benz has been associated with conservativeness, reliability and responsibility. That it is consistent and appropriate for abovementioned position of Mercedes - Benz. Nonetheless, reaching capacity of the market and new young face of society requires repositioning of the Mercedes - Benz. Now its strategy is more life style oriented and is focused more on presenting the more fun loving, approachable, and energetic side of Mercedes Benz. The evolution of Mercedes Benz's positioning strategy can be directly connected to the expansion of its target market, which now includes persons twenty five to forty five years old as well as its initial targets the baby boomers. In order to provide superior customer value to its target market Mercedes Benz has found it necessary to expand its product line up, provide more competitive prices, increase communications with its target market, maintain accessibility to consumers, and continue its excellent customer service.

4.2 Marketing mix strategy

Product: Mercedes-Benz produces wide range of luxury vehicles for different prices and distributed over 200 countries. The company product strategy is based on its quality and safety. In 2012 Mercedes-Benz spent 6.27% of total revenue for research and development in order to constantly evolve and produce the best products for their customers. (Picture 3)

R&D Ratio of Mercedes-Benz 2012 3 863 m EUR (6.27%)

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Picture 3

The product is associated with the brand and reputation of the company, so Mercedes guarantee the quality, safety and prestige of its vehicles. Furthermore, the company categorized its products in different classes according to size, characteristics, design and prices, allowing customers to choose the car in accordance with their criterias and requirements. In addition, purchasing a car is connected with customer service that allows the buyer to get a complete set of Mercedes-Benz product.

Product line of Mercedes-Benz

Price: Mercedes - Benz pricing strategy is based on high quality of workmanship and technology (Pezzullo, M. A. 1998, p. 52). It is based on ideology high quality equals high price. Mercedes - Benz can demand high prices based on the reputation of delivering high quality luxury product. But the company offers big discounts for the last year car models due to the fast progress of technology new invention matures very quickly. Therefore every year manufacturers are required to introduce new solutions and improvement of their products.

Place: Mercedes-Benz has two kinds of clients - institutional (both private and state owned entities) and individual clients (BBC 2010). The institutional entities buy usually without intermediaries. Individual clients buy from retailers, but Mercedes-Benz maintains control over pricing and dealer's commission is around 10% (House of Commons 2010, p. 22). Furthermore the company introduced the European Delivery Program, when the customer can buy the car through the internet on the official website. This program includes professional travel assistance with hotels and airline reservations. Upon arrival in Germany, the client will take a tour of the factory at Sindelfingen, once the customer will receive his new vehicle in Sindelfingen and will be sent on the way with a full gas tank, all vehicle shipping and handling expenses settled in advance. Also, its include other benefits, such as 7% discount on the vehicle, one night hotel accommodation in one of 14 luxurious hotels, the factory tour, two tickets to Mercedes-Benz Museum, fifteen days of insurance.

Promotion: Mercedes-Benz is well established and renowned brand. Promotion is based on the luxury of the product and is directed to the special group of consumers that require high quality prestigious products confirming their financial status. However Mercedes-Benz has decided to change or more precisely return to the strategy based not on prestigious status itself but mainly on quality by reinventing the slogan “the best or nothing” (Marketingweek 2010). The promotion of Mercedes-Benz is based on global and local strategies and on traditional promotion mix such as personal selling, sales promotion, public relations, direct mail, trade fairs and exhibitions, advertising and sponsorship. Mercedes-Benz uses also new means of communication and has it's profile on the Facebook. The Mercedes-Benz is now allocating 50% of its UK marketing budget to digital media, because of advance consumer behavior and dynamics of UK market. The key to the company's success online was creation of specialist expertise within the company. Mercedes - Benz not just giving advertisement online or some TV videos online but the company has whole department at the headquarters in Germany just doing digital marketing. Furthermore, Mercedes-Bens is an official car sponsor of London Fashion week, the most prestigious, unique event, like Mercedes cars. Also, Golf is a significant part of the UK culture and Mercedes-Benz is a partner of all golf competitions.

Conclusion

Mercedes-Benz has the strong brand and excellent technology performance and meets the objective it has good relationship with the customer it has strong market share value in the UK market. In total, for the year 2012 in the UK were registered 85,819 vehicles, an increase for 4.5% compared to 2011. The leaders of market share were B-Class and C-Class sedan. Mercedes-Benz has a long history in the UK, but since 1960 is operating financially successful. According to PEST analysis the United Kingdom is a politically and economically friendly environment for business development of Mercedes-Benz in order to realize its mission. Furthermore, geographic location of the UK is an opportunity for reducing shipments' costs, because British ports are able to host and serve huge amount of companies in efficient and rational way. According with Hofstede theory the positioning and marketing strategy of Mercedes -Benz are aligning with British cultural aspects. The UK society is driving by personal success and achievements and the expensive car became more a status symbol and associated with high quality and prestige. Mercedes-Benz is always in development, forming new ideas and making enhancements to automation. And in responding to `Green technology' demand of the UK society Mercedes-Benz has also taken on an environmentally-responsible role by using green resources such as natural gas-fuelled engines and petrol or diesel-electric Hybrid model options. The “Blue-Efficiency” model has special features specifically designed to economise fuel, such as an electronic start-stop system and a direct injection. It also comes with numerous aerodynamic modifications. The latest “Blue-TEC models” are equipped with a diesel engine and selective catalytic reduction exhaust after-treatment. This new technology has seen a lot of investment gone into it with some having come from its racing traditions. However, most of it is derived from innovative technical design processes. The latest models are working demonstrations of all of this effort and has led to recognition by the motoring press who have shortlisted Mercedes-Benz for the 2012 “UK Car of the Year” award.

Furthermore, Mercedes-Benz Company has a strong customer service and communication strategy which allows the company to receive directly clients' needs and feedbacks in order to react and adapt to changing customers' wants and demands. In general, the marketing strategy of Mercedes-Benz for the UK market is completely successful and the new A-Class car introduced in 2012 is expended the targeting market for Y generation, its mean that the company analyzed, reacted to the young clients' needs and adopted new strategy. This approach can lead Mercedes-Benz Company to the new perspectives and markets.

References

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21. http://www2.mercedes-benz.co.uk/.

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