Introduction
Mercedes Benz is an automotive company that does not require any introduction, especially to car enthusiasts. Mercedes Benz is the most popular automotive company on various issues such as historical origin, innovation design and quality. Since its establishment in the late 19th century, the company has been producing prestigious sedans. Moreover, the company is also known for the manufacture of trucks and buses. Mercedes Headquarters is based in Stuttgart, Germany. Today, Mercedes is one of the most popular automotive brands globally.
Core Competencies
Without core competencies, it might be impossible for the organization to maintain its leading position in the automobile industry. Indeed, based on high-quality consumer preference for the brands, it is easy to predict that the organization holds several great core competencies in the market. The following are some of the core competencies held by the organization. One of the core competencies held by the organization up to its respectable position in the automobile sector is innovative capabilities. For instance, the combustion system was first presented by the organization back in 1886. The Organization also led the replacement of the fuel injection using the float carburetor. Mercedes Benz was the first company to manufacture the first car with brakes on all four wheels, as well as the safety cell concept. As earlier discussed, the ability to market as well as build high-quality products in the automotive industry. This is one of the core competencies held by the organization. With the consideration of the consumer needs, the organization has been capable of crafting best brands in the market, and an accomplishment envied by many other automotive companies.
SWOT ANALYSIS
Strength
Mercedes Benz brands have some of the best resale value since the organization has a reputation of producing high-quality vehicles. Some recent studies have indicated that Mercedes Benz is one of the prominent motor vehicles in the resale. Some other strengths of the company include safety and high-level quality manufacturing of its automotive units. This has resulted in a high status for the organization.
Weaknesses
Mercedes Benz brands have a long history of producing luxury models. Nevertheless, the cost of most of its brands is often higher prices compared to other luxury brands, such as Audi, among others. The models are often very expensive since the target market is the high-income groups, and thus, the lower class won’t be able to purchase the product. Other weaknesses included less fuel-efficient models as well as a slow introduction of fuel-efficient cars.
Opportunities
Mercedes Benz has flexible fuel options in the future. This would help in reducing air pollution by at least 20%. Mercedes Benz also has the opportunity to capitalize on its brand name to get into new markets. Additionally, the high advancement in the fields of technology and engineering has allowed the organization to establish new innovations, thus leading to a strong revolution.
Threats
Mercedes Benz is often faced with the threat of the rise of environmentally mindful consumers, and unpredictable economic situations. In addition, The Western World is full of numerous luxury vehicles, thus making it a highly competitive market.
Segmentation, Positioning & Targeting Strategy
The company segments are luxurious brands with mixed demographics and behavioral factors. The main target is usually the upper class, executives as well as professionals who want to have a taste of modern technology, equipping vehicles with more safety, efficiency, and style. The company began the process of utilizing marketing segmentation in order to reach the young generation by establishing the campaign known as the generation Benz. This is an online interaction of about 300 people between the ages of 20 to 39 years. This online platform offered a better way of consulting with the Company’s consulting team about the habit of the buyers as well as their preferences in the demographic. Mercedes Benz also utilizes a differentiation targeting strategy to attract new consumers and ensure that they satisfy their needs. The main target is the young buyers who have a passion for driving cars that resonate with who they are and their style. Other targeting strategies include sports sponsorship such as motorsports; this strategy is usually successful since it has the ability to reach a huge number of prospective consumers. Another strategy applied by the company is designing product destinations. This is usually done by associating its products with success.
Mercedes Benz positions itself through emotional appeal thus facilitating the creation of awareness thus assisting the organization to become one of the best luxury models in the world. The Organization has adopted a positioning strategy as a producer of high-quality auto-mobiles, resulting in luxurious pieces similar to international rivals. Today, the company provides exclusive new technologies to assist in making accidents less severe and even less likely. Due to such advancements, the new models have been engineered to safeguard the customer in ways may never have imagined.
Strategy Limitations
In the past year, Mercedes has faced the challenge of incomplete portfolio. This requires the company to develop new languages in order to accommodate new consumer bases. While the company has been successful in retaining most of its loyal customers, the company has been assertive in its conquest of new consumers. The plan to maintain the first position as a brand is based on a consolidation of its strength and simultaneously striving hard to capture the new emerging opportunities. Therefore it is important to always keep the consumer in mind as they make the new changes. This can be accomplished by focusing on establishing different pillars to create the best experience for consumers and the most appropriate brand connection.
Competitive advantage
It is important to mention that the automotive industry is very competitive. Some of the key rivals include Audi, Volvo, and Jaguar. All these brands have different designs and functionality. Since the price of these brands is high, it is necessary to conduct thorough marketing for the products to be recognized. In 2017, the company was ranked first in quality products worldwide. Bargaining power is another important aspect of the company. Automotive companies often require various types of materials from different suppliers. Some of the key items include raw materials, market consultancy, and hardware, among others. As stiff competition continues to squeeze the profit margin of the various motor companies, any upsurge in the costs of the products could plunge the profitability of the company. However, conducting an examination of the negotiating power in the car industry is a complex process. Nevertheless, top companies such as Mercedes Benz have been able to establish a strong linkage of suppliers around the world. The bargaining power of its suppliers is moderate. New entries into the automobile industry are a puzzling process. First, the trademark equity for reputable organizations is hard to break. Numerous automotive industries have tried to break into the existing brand but ended up failing since they are incapable of holding their market share. Therefore, threats to Mercedes Benz are low.
Another important factor in analyzing the competitive advantage of the company is the bargaining power of buyers. In the world of automotive companies, some customers have a higher level of influence against the suppliers but have a very little impact on the manufacturer. It is complicated for the producer to maintain its customers and, at the same time, raise the price of the products. As a result, the bargaining power of the consumers is very high. This has been demonstrated to be adverse for the automotive industry. It is important to mention that luxury cars such as Mercedes Benz are not just means of transport but are also a sign of higher status and achievement. Substitutes for luxurious cars are low-cost vehicles such as Mercedes. However, Mercedes still faces low threats of substitution since the brand can only be acquired by the rich hence making threats moderate.
Recommendations and Conclusion
Mercedes Benz should continue to safeguard their strong brands as well as its reputation. The company must make the customers feel that the product they are using is worth it. Moreover, the consumers must be able to identify their specialty and unique innovation. Otherwise, they might lose their strong reputation. Mercedes Benz has always used statistical forecasting of the market it intends to operate. The company uses the latest information and communication technology to establish the process of documenting consumer patterns and utilizes the information in making critical decisions. The reliance of the company on research in making critical decisions is a fundamental signal of the strategic significance of the consumer database. Through research, the organization has been keen on identifying new designs, improved technology and styling. Mercedes also highlighted that model-specific advertisement is more effective than comprehensive brand advertisement; the net value, and the rate of returns evaluations forum in the company’s financial statements suggest that the management does not allocate resources until it has extensively analyzed all the financial information. Moreover, the company has been able to establish a strong marketing response framework using historical data and market mix and is utilizing it in making important market decisions.
