Business overview of Mercedes

Mercedes is a German company founded in 1871, and consisted of three people, Gottlieb Daimler, Wilhelm Maybach and Karl Benz. Although they have strong competitors but still they are a leading automobile company all over the world. The growth in sales has increased over the past few months after being hit by recession.

They have increased the range of model lineup.

Mercedes leads in engineering technology as it has managed to feature in its vehicles some of the most important, up to date and good quality car parts and safety features…

Mercedes needs no introduction for the people who are fond of cars. It is the most famous name linked with German Automobile manufacture, both on account of its historic origins in pioneering days of automobile design, innovation, quality and style. Since its foundation this name has been dealing with the world class brand of cars, trucks and buses. The two fathers, Mr. Karl Benz who first founded the company in 1871 and Mr. Gottlieb Daimler and Mr. Wilhelm May Bach who founded the division of Mercedes Benz called Daimler AG, 1890. The headquarters of this company is located at Baden-Wurttemberg and Stuttgart, Germany. During this time the company producers a range of luxurious cars, trucks and buses in its manufacturing facilities which is all over the world besides Germany. Safety of its passengers is the most important factor for this company while designing all types of vehicles ever since it started production. Mercedes is one of the most well automotive brands in the world today and it is also the world’s oldest brand still in existence.

MARKET ENVIRONMENT

GEOGRAPHICAL MARKET

Mercedes Benz is being sold all over the globe. The Mercedes dealers are in more den 130 countries of the world .It is sold with different specification in the different regions of the world according to the geographical factors of the region.

BUSINESS NATURE

Mercedes is one of the world’s biggest automobile companies which started on 1926. It has a large range of cars, SUV’s, Trucks & buses .They also makes F1 racing cars.

PEST ANALYSIS

POLITICAL

Legislation

Environment : the EU are coming up with a new rule that the average Co2 emissions from new cars that are produced in Europe must be cut to 130g/km by 2015

Competition : the legal hurdles on competition within the European car manufacturers will fall in next 5 years expectedly.

Taxes and Duty: MOT, price will be increased, and the road tax will be directly linked to quantity of emissions.

Subsidies:the Government has met the automobile sector to discuss the help available to make the industry more rigid.

ECONOMICS

Recession & Boom :because of the current economic crunch Mercedes and other car production companies are finding very hard to sell their cars and due to which many manufacturers closed their plants.

Exchange Rate- the exchange rate difference between a Euro and Pound sterling can effect the cost of vehicle in UK

SOCIAL

The people of what age are interested in buying Mercedes?

Mercedes vehicles are mostly targeted to the people of middle age . They do not entertain youngsters in comparison because the brand is expensive and its hard to get insurance on at the young age . Due to their expense, Mercedes are targeting people of middle and high income . Mercedes doesn’t offer variety prices from high to low so the products doesn’t entertains consumer with a low income

Mercedes should focus on trend

Mercedes is recognized as a quality, expensive, corporate, up market and mature brand. They have to make sure that they are updated with fashion, technology and social trends to keep up with its image.

TECHNOLOGICAL

Safety- Advanced in technologies such as shatter-proof windscreens, airbags, crumple zones and collapsible to manufacture safer cars.

Plant efficiency- they are applying latest production techniques that will make the vehicle more efficient.

E-commerce

COMPETITION

The rivalry among firms in the same market as Mercedes is highly intense.

The main competitors of Mercedes are the following:

BMW

Audi

Cadillac

Lexus

Volvo

Jaguar

Sales and Profit Trend Of Competitors

Company

May Numbers

Percentage

Year-To-Date

Percentage

BMW

90,643

-18.1%

408,370

-20.9%

MINI

18,348

-19.1%

79,260

-22.6%

Rolls-Royce

51

-53.6%

276

-27.6%

BMW Group

109,042

-18.3%

487,906

-21.1%

Smart

11,000

-14.9%

50,100

-9.9%

MB Cars

97,300

-12.4%

433,100

-21.1%

Audi AG

82,800

-6.1%

374,750

-12.1%

Market Share of Competitors

Target Market

The target market for these kind of automobile companies are professional employees at the upper part of corporate ladder as their focus is on production of luxury cars.

THE COMPANY

Sales and Profit Trend of Mercedes

Mercedes sales were the highest in Asia. China’s demand was leading to 11,500 cars sold, up to 10% from last year. In China, the sales previous month were 69% to 3300 Mercedes sold, compared with 2000 vehicles sold in 2007.

SWOT ANALYSIS

STRENGTHS

Resale Value

Mercedes retain good resale value because it is known for producing high quality vehicles. It is found that it is a leader amongst other cars based on their resale value. Mercedes vehicles are on the top 10 list for cars that held their residual value over three years.

Successful F1 team

Mercedes has enjoyed success in the new sport of motor racing throughout their histories. They took part in the championship in1954 and 1955. Mercedes engines were used to win the constructor’s championship. They then sold back 40% stake to the McLaren Group and bought 70% of the Brawn GP team.

Environmentally friendly cars

Environmental protection is a matter of great concern at Mercedes-Benz. They offer 58 models that represent a significantly reduced burned on the environment. The innovations that go under this are named Blue EFFICIENCY.

Roadside Assistance Connection

It provides roadside assistance connection is a simple way to contact the Mercedes roadside assistance in case of any flat tire or a vehicle breakdown by pressing the wrench button in the vehicle. Mercedes roadside assistance representative can identify the vehicle’s location even if the customer is not sure of the exact location.

WEAKENESS

Waiting List

The waiting period is sometimes really long. It could go up for months. For example: Mercedes-Benz CL65 AMG-18 months.

High Price

Mercedes has a long history of producing high quality luxury cars. Prices for the recent model year Mercedes cars tend to run higher than other luxury car brands. They are expensive and highly priced mainly targeting at the higher income group since the lower income group wouldn’t be able to afford one which is a clear downside.

Building Time

At Mercedes 10,000 workers churns out 1200 E class sedans a day. It takes a lot of time to manufacture one car which means that they have a poor manufacturing process.

OPPURTUNITIES

Professional Sport Sponsorship

Mercedes has an offer to platinum sponsor the second Arabian Sports Forum in Abu Dhabi by the Professional Sports Group taking place in December.

Joint Venture

Hybrid Vehicles

Flexible Fuel Option

Depending on the ethanol source used, E85 can reduce greenhouse gas emissions by anywhere from 15 to 17 % when compared to gasoline.

Development of new models

Mercedes will develop four new versions of the future B class and one of them be named and will have AMG rear traction. They are going to launch seven new models over the next three years.

THREATS

Little but no experience

Entrance to new markets

The current economic crisis

MERCEDES- MARKETING STRATEGIES

The 3 strategies used by Mercedes are:

Differentiation

Cost leadership

Product development

TARGET MARKET

The company’s marketing program has been instrumental in cultivating this reputation. Mercedes target the upper middle class and upper class in who are aged 40+ as its target market. The company is also adapting new technologies and techniques to make its cars more famous among the customers.

SEGMENTATION

Mercedes is a dominant player with a market share of 40%. It is the market leader in the luxury car segment since it is a very prestigious and profitable segment.

POSITIONING

The new brand identity of Mercedes revives an entire presence and ensures an unmistakable image which combines tradition with a future oriented approach.

NICHE MARKET

There has been an increase in the number and type of cars that have entered Mercedes traditional niche with the result being that the company now competes against European rivals BMW and Jaguar and also Nissan and Toyota [Lexus and Infinity models].

MARKETING MIX

PRODUCTS

A detailed version of all the cars and automotives are:

Benz Patent Motor wagon 1886

Benz Velo 1894

Mercedes Simplex 1902

GP Mercedes 1908

Blitzen Benz 1909

Mercedes Grand Prix Racing Car 1914

Gullwing Coupe 1954-1957

Roadster 1958-1963

G-Class 1979

SL-Class 1957-

A-Class 1997-

C-Class 1993-

CLK-Class 1998-

E-Class 1995-

Mercedes-Benz B-Class 2005-

Mercedes-Benz C-Class

Mercedes-Benz CL-Class

Mercedes-Benz E-Class

Mercedes-Benz GL-Class

Mercedes-Benz M-Class

Mercedes-Benz S-Class

Mercedes-Benz SLK-Class

Mercedes-Benz SLR-McLaren 2003-

PRICE

Earlier Mercedes used the cost plus method when pricing its car , making engines insensitive to costs. The company found that its cost were 30% above Lexus. Now the company has shifted to toward setting the prices according to their competition. The company has broad price structure with models targeting the low end of the niche luxury car market(prices in $30,000 range) and continuing to cars costing up to $100,000.

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PLACE

Mercedes Benz has its distributors in over more than 130 countries and placed their product according to convenience of their target customers which are mostly in developed countries .They have given their distribution to all big dealership companies in all the countries to provide the best services to their customers. They kept different specification for the vehicles for different regions of the world keeping in mind the climate and the geography of the region.

PROMOTION

The Mercedes Benz runs a big advertisement campaign for the promotion of their cars. They use all kind of promotion tools billboards, television ads , printing media and sponsorships for different events .The F1 is also another medium for the promotion of their brand . Other then the advertisement they give promotional deals on their products. The internet marketing is the key for all automobile companies so they focus a lot on it. According to a survey 85% of people check vehicle online before buying it.

EVALUATION OF MERCEDES

CURRRENT POSITION

Strong improvement of EBIT over the last quarters (2009 & 2010). Their return sales are 3.2%, 3.5%,5.3%,7.0%,9.8%.

Strong increase by higher sales volume in all regions specifically in China.

Positive exchange rate development and efficiency.

EVALUATION OF THEIR SUCCESS

Mercedes posted that in the first quarter their EBIT of 130 million Euros and forecast full year profit of 500 million Euros to 800 million Euros. Their first quarter had an EBIT of 119 million Euros. The Vito model has the highest market growth of 25.8% with sales of $ 344 million and C class model has the highest sales of $2902 million with a market growth of 3.2%.

FUTURE PROSPECTS

A new range of engines would be introduced by Mercedes-Benz starting late next year that will heavily rely on turbocharging and direct injection to deliver gains in power, efficiency and CO2 reduction.

In 2011 C-Class coupe will join a face-lifted C-Class lineup.

CONCLUSION

Mercedes, the name itself creates a picture of luxury in every ones minds. There is a comfort feeling which attracts customers but they are also forced to restrict itself in launching any low-end car under Mercedes in USA. Although in other parts of the world it has increased and expanded its customer base by launching comparatively cheap cars in the world.