Customer Acquisition and Retention NMIMS, Mumbai

Mercedes Benz – C Class

Company Background

Mercedes Benz comes from the house of Daimler AG, a German manufacturer of automobiles,
motor vehicles, and engines. Mercedes Benz cars are an important part of the history of the car
with many "firsts." They were the first to build a diesel-powered car in the 1930s, the first to
build a car with fuel injection in the 1950s and the first to offer antilock brakes in the 1970s.

The parent company was born when an agreement of Mutual Interest was signed on May 1, 1924
between Karl Benz of Benz & Cie (founded 1883) and Gottlieb Daimler and Wilhelm Maybach
of Daimler Motoren Gesellschaft (founded 1890). Both companies continued to manufacture
their separate automobile and internal combustion engine brands until, on June 28, 1926, when
Benz & Cie and Daimler Motoren Gesellschaft AG formally merged becoming Daimler-Benz
AG and agreed that thereafter, all of the factories would use the brand name of Mercedes-Benz
on their automobiles.

In 1998 Daimler-Benz AG "merged" with the American automobile manufacturer Chrysler

Corporation, and formed Daimler Chrysler AG. In 2007, when the Chrysler group was sold off to
Cerberus Capital Management, the name of the parent company was changed to Daimler AG.

Daimler produces cars and trucks under the brands of Mercedes-Benz, Maybach, Smart,
Freightliner and many others.

Company Timeline

Benz & Company, 1883–1926

Daimler Motoren Gesellschaft AG, 1890–1926
Daimler-Benz AG, 1926–1998
DaimlerChrysler AG, 1998–2007
Daimler AG, 2007–present

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Customer Acquisition and Retention NMIMS, Mumbai

Product Line

Daimler sells automobiles under the following marques worldwide:

 Mercedes-Benz Cars
o Maybach
o Mercedes-Benz
o Smart
o Mercedes-AMG

 Daimler Trucks
o Commercial vehicles
 Freightliner
 Mercedes-Benz (truck group)
 Mitsubishi Fuso
 Thomas Built Buses
 Sterling Trucks - operations wind down in 2010
 Western Star
o Components
 Detroit Diesel
 Mercedes-Benz
 Mitsubishi Fuso

 Daimler Buses
o Mercedes-Benz buses
o Orion Bus Industries
o Setra

 Mercedes-Benz Vans
o Mercedes-Benz (vans group)

 Daimler Financial Services

o Mercedes-Benz Bank
o Mercedes-Benz Financial
o Daimler Truck Financial

Target Market

Geographic

City & Urban and Rural Areas

The Target Market for Mercedes Benz cars is Metros and Class I cities i.e. urban areas. Though
with increase in income of people in Class II, Class III cities and Rural areas they have a Target
market in these areas as well.

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Customer Acquisition and Retention NMIMS, Mumbai

Demographic

Age
The Target Market for Mercedes is people above 25 years old. It is only after this age that people
can afford a Mercedes Benz car.

Income
Mercedes Benz targets people with a very high income.

Occupation
The Target Market of Mercedes is Businessmen, Industrialists, Corporates and very senior
Executives.

Socio Economic
SEC A1, A2

Education
The Target Market of Mercedes is generally well educated and their communication takes into
account this fact.

Psychographic

According to VALS Model Innovators and Achievers will be the Target Market for Mercedes
Benz.

Behavioural

The Target market is the Elite Class who seeks Luxury, Style and Class.

Positioning Strategy

Mercedes Benz positions itself as an Engineering Marvel - “Engineered like no other car in the
world”. The three-pointed star inside of a circle symbol of Mercedes-Benz designed by Gottlieb
Daimler stand for land, air and sea because Daimler's engines were used not only in cars and
trucks but in airplanes and boats. It stands for safety, luxury, and precision engineering.
Mercedes Benz positioning was once centred on the safety, luxury, and precision engineering of
its cars, but due to increasing competition in the luxury car industry and changing consumer
attitudes about the Mercedes Benz brand that strategy has changed. Now their positioning 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 can be

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Customer Acquisition and Retention NMIMS, Mumbai

directly connected to the expansion of its target market, which now includes persons twenty
five to thirty five years old as well as its initial targets the baby boomers.
The Marketing Mix

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.

The Product Line of Mercedes consists of all types of products at all price points. They have
exclusive Mercedes Benz showrooms in major cities that define the Luxury, Class, and Style of a
Mercedes Benz. In recent years they have changed their promotional strategy and have spent
heavily to communicate their new positioning and product line. A major portion of their
Promotions are online as research shows 85% of their customers used the internet in the Buying
process and 60% asked for more product information via email.

In 2004 their biggest selling model was the entry-level, near-luxury C-Class model (priced
$26,000-$54,000). Sales of near-luxury C Class cars accounts for 31 percent of MBUSA's total
volume. Mercedes' next best selling model is its E-Class ($49,000-$80,000), and trailing far
behind is the M-Class ($38,000-$47,000). Four of Mercedes' pure luxury models experienced a
significant drop in unit sales in 2004: S-Class ($75,000-$125,000) down 11 percent; M-Class,
down 14.4 percent; CL-Class ($90,000-$179,000) down 21 percent; and G-Class ($78,000-
$100,000), down 25 percent. The super-luxury SL-Class ($90,000-$179,000) was down just a tad
from previous year, 3.3 percent.

At first blush, it might look like consumers are trading down from the 'real' luxury Mercedes
models to the lower-priced ones. Some people argue that this ultimately degrades the luxury
value of the brand. Rather, the net gain of nearly 70,000 new model Mercedes Benz C-Class cars
out on American roads is far better for the long term success of the company and the brand. They
may be sacrificing some revenues by selling fewer of the more expensive car models, but the
company has attracted lots of new consumers to get 'up close and personal' with the brand

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Customer Acquisition and Retention NMIMS, Mumbai

through the more affordable C-Class model. As a result, MBUSA is building its base of lifelong
brand-loyal Mercedes drivers. The brilliance in Mercedes strategy is to position the brand as a
player across a more expansive range of potential car buyers, rather than exclude a Mercedes
brand car entirely from the consideration of slightly less affluent car buyers. Delivering
Mercedes-brand qualities and features at a more moderate price is a luxury marketing strategy
conceived with a long range vision. Their goal is to build lifetime brand loyalty by meeting the
automobile consumer at nearly every price point throughout their progress through different life
stages. So the thirty-something C-class buyer turns into a forty-something E-Class driver, then
on to a fifty-something S-Class consumer and then back again to a C-Class model after
retirement.

The simple fact is the rich don't become rich overnight. They attain wealth and affluence over
time and progress through different income levels at different life stages. Creating a loyalty bond
with a less affluent consumer, who tends to be younger, will pay off in the long term as their
incomes grow and their affluence rises. Luxury marketers need to open their minds to the
tremendous marketing opportunities that exist at the borders of their traditional market. Luxury
marketers that firmly target the 'classes' need to seriously study the luxury potential within the
'masses.'

Mercedes Benz understands that its customers are not simply buying a car to get from point A to
point B, so before they actually sell a car they must first sell an idea about that car. Mercedes
Benz sells their ideas through promotion and advertising. Mercedes Benz wants to change the
perception of their brand at the personal level and reposition their brand so that they are more
appealing to young professional men of all ethnicities. Secondly, Mercedes Benz is
communicating to its target market the idea that they are a more approachable, personal, fun, and
energetic brand. This new message was evident in the Janus Joplin advertisement, in the
sponsoring of the Elton John concert in New York, and the sponsoring of professional tennis. In
the summer of 2003 Mercedes Benz launched a marketing event in 16 cities across the United
States to promote the new C- Class to younger buyers. The campaign gave potential buyers a
chance to test drive the C-Class product line on courses that simulated real life driving conditions
and gain information from current Mercedes Benz owners in attendance.

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