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Marketing Strategy of Mercedes and BMW

Info: 3145 words (13 pages) Essay
Published: 15th Jan 2018 in Marketing

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What is marketing? Who really knows? In our era, most of the people have in their mind a different meaning of the marketing. For me, marketing is a mean which pulls the strings of our economy. The language of marketing has been borrowed from the military. We talk about defensive marketing, offensive marketing, and guerrilla marketing. Often overlooked, however, is flanking, one of the most powerful military strategies.

As for the official meaning of the word, marketing is:

Marketing is the process by which companies create customer interest in goods or services. It generates the strategy that underlies sales techniques, business communication, and business developments

Marketing is defined by the American Marketing Association (AMA) as "the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.

The Chartered Institute of Marketing defines marketing as "the management process responsible for identifying, anticipating and satisfying customer requirements profitably.

Maybe there are thousands different meanings of marketing but in the end they are all agreed that it was created to help the market and the consumers to fulfill their needs.

BMW VERSUS MERCEDES-BENZ

This assignment is to analyze and compare the marketing strategies of BMW and Mercedes-Benz. Both companies are renowned market leaders in supplying automobiles. The pair has a history of providing innovative cars for the past century. Over the years with the improvement of technology BMW and Mercedes-Benz have met customer needs by producing the most inspiring and well developed cars of their times. The BMW Group concentrates on selected premium segments in the automobile market. This means that they specialize in providing a high quality product and in return they can achieve higher revenues per vehicle sold. In contrast Mercedes-Benz which also provide to the premium segment of the market have concreted their name in history as manufacturers of luxury cars, have opened their doors to a range of more dynamic models targeting the slightly younger market. Mercedes's most powerful competitor has long been BMW. The two companies' marketing strategies seemed to mirror one another in the 1990s. Thus in 1996, Mercedes signed a deal to promote its vehicles in Universal Pictures' The Lost World, but it was several years behind BMW, which in 1995 made an agreement to feature its vehicles in the James Bond film Goldeneye.

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More important was an overall shift by both companies in response to the rise of Japanese luxury vehicles such as Lexus and the Acura Legend. Farrell reported in Brandweek, "With repricing and repositioning-advertising messages emphasize more value instead of luxury-Germany's two luxury leaders, Mercedes and BMW, are on the offensive … Both have rebounded with a reversal of marketing strategies that include new, lower-priced products and even ads that tout price." Nonetheless, of the two manufacturers, "Mercedes has made the more drastic changes."

THE HISTORY OF BMW

Bayerische Motoren Werke AG (BMW), or Bavarian Motor Works, is a German automobile, motorcycle and engine manufacturing company founded in 1913 with the formation of the Rapp-Motorenwerke company by Karl Rapp. The firm were engaged in the production of aircraft engines from a former bicycle factory located near Munich. It was close to this plant that Gustav Otto established the Bayerische Flugzeugwerke AG aircraft factory and in 1922 these two organisations merged to form BMW. The letters stand for: Bayerische Motoren Werke.

In their early years BMW produced mainly aircraft engines, but also some motorcycle engines. In fact the BMW badge is supposed to resemble a spinning aircraft propeller. It wasn't until 1928 when BMW bought a car factory at Eisenach/Thuringia that BMW began producing cars. Along with the factory they bought the license to produce a small car called the Dixi. It was in 1936 that BMW introduced the type 328 roadster which quickly became the most successful sports car of the time. The type 328 roadster accumulated a number of prestigious wins on the racing circuit and was nominated as car of the century in 1999.

BMW's involvement in aircraft engine production during WWII led to a 3 year ban on production at the end of the war. It wasn't until 1949 that they were able to return to production which they did with the 250cc R24 motorcycle.

It was in 1951 that BMW introduced a spacious, 6-cylinder sedan called the 501. This was followed by the 502 which featured a lightweight alloy V8 engine. Later in the 1950s they began producing the BMW 507, a lightweight, V8 propelled sports car. This was the vehicle they hoped would revive the sporting success they'd achieved with the 328 roadster. But this wasn't to be. They were losing money on every 507 that was produced and so production stopped in 1960.

Also during the 1950s BMW bought the design and manufacturing rights to the Isetta which was to become one of the most successful microcars in the post WWII years. It was a time when cheap, short distance transportation was much needed and the 2-seater, with an economical 250cc engine, fit the requirements nicely. Manufacturing rights for the Isetta were sold to various production companies around the world and these included the British Railways works in Brighton, UK.

The 1960s saw BMW enjoying a number of notable successes including the BMW 1500 which was a 1499cc, four cylinder touring sedan introduced in 1961. This was the first of the modern BMW sports sedans. They went on to produce a series of popular sedans including the famous BMW 2002. This was a 2-door sedan that had been based upon the 4-door 1600. The 2002 was to be the forerunner of the BMW 3 series and production of this successful model continued until 1976.

By the 1970s BMW had cemented their reputation as an innovative automobile manufacturing company. The 70s saw the introduction of the 3-tier sports sedan range consisting of the 3-series, 5-series and the 7-series. Between 1970 and 1993 BMW car production quadrupled and turnover increased by 1700%.

The 1990s, after 1994, saw BMW take ownership of the British Rover Group. This was not a successful venture and in 2000 BMW disposed of Rover.

Today's 'beemers' have retained their highly prestigious reputation for quality and reliability. The company are taking steps to reduce the impact they and their motor cars have upon the environment so we can expect to see more innovative and exciting developments from the motor car company who have not only survived two world wars and a massive depression, but thrived.

TARGET MARKET OF BMW

BMW marketing targeted customers between the ages of 25 and 45 who were new to the luxury car market, nevertheless without alienating their current customer base. The customer base of BMW was 46-year-old male, married with no children, and had a median income of about $150,000. More importantly, the Internet was used by 85% of customers before buying a BMW (Hespos, 2002). "Combining the ideas of producing a series of short films and using the Internet in an advertising campaign, short films for the Internet was born with BMW Films" (Hespos, 2002).The luxury automobile maker that has established a mark for itself in the luxury car segment with its high performance cars. BMW is a powerful brand that is truly experienced by car lovers all over the world as a symbol of performance, power and luxury, all combined into its power packed machines that are treat to watch, drive, and possess. That's why, it is truly known as the "Ultimate driving Machine".

BMW's tighter feel and enhanced responsiveness gave drivers the sense they were in complete control, something no other brand of automobile offered. This handling advantage was greatly appreciated by sports car aficionados and car enthusiasts.

MARKETING STRATEGY OF BMW

BMW has many different strategies of marketing. One of these strategies is the support of its dealer network. This succeeds only through a range of actions.

Dedicated Dealer Marketing Service which assists with all marketing requirements for example:

Local advertising for product range

Support for local promotions

National promotions

Hire of promotional equipment for dealer events

Image library which stocks various images available for dealers to use when creating their own marketing communications such as leaflets, invitations and direct mail.

Educational materials

Moreover, there is a Continuous Customer Contacts Program (CCCP) with the objective of increased customer loyalty and satisfaction.

BMW also focuses on a great range of advertising. One thing that all BMW adverts have in common is that they focus entirely on the cars.

On TV there are many branding campaigns and new car launches. Some TV spots depict stereotypical corporate-cog executives who squelch creativity and initiative. "Beware of the compromisers". They say things like, "Choose your battles", or "Is this idea really worth falling on your sword for?" Later, the recurring message throughout the campaign comes in, "At BMW, ideas are everything".

Radio branding campaigns (2002 was the first year that BMW used radio for national advertising) also uses. It does not tend to be used at a national level, although may be used regionally.

As for the press, Color press is listed, for example: Tatler, Vogue, lifestyle magazines, motoring publications, broadsheet newspapers and tabloid newspaper weekend color supplements. Black & white: national press.

In addition to higher profile national advertising, dealers also run their own local campaigns through:

Local press

Radio

Bus advertisements

At the cinema, screens usually show short films. Other ways of advertising includes supply of sales literature, brochures, direct marketing, price lists and point of sale materials. Finally, other methods BMW use to promote its brands and products:

Product Placement

BMW Art Car Collection

Sponsorship

These and many others are the marketing strategies of BMW in order to enhance its market share. As for Mercedes-Benz…….

THE HISTORY OF MERCEDES-BENZ

The roots of Daimler-Benz went back to the 1880s and founders Carl Benz and Gottfried Daimler, whose separate companies became one in 1926. Besides the two Germans, an important early 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, "because that was where the horse used to be." After outlining a type of racer that he wanted built, he promised to purchase 36 of them, a sizable order at a time when few people had even ridden in an automobile. In return he asked that Daimler name the car after his one-year-old daughter, Mercedes.

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The car, introduced in 1900, had a top speed of 30 miles per hour, which at that time made it one of the fastest vehicles on the road. But a Mercedes could go much, much faster, and just nine years later its manufacturers built a special Benz capable of reaching 141 miles per hour. In the economic upheaval that followed World War I, Daimler's and Benz's companies joined forces as Daimler-Benz AG, founded in 1926. Its symbol was a three-pointed star, which reportedly symbolized air, land, and sea-arenas in which Daimler engines dominated.

During World War II, Daimler-Benz became associated with the Nazi regime. Hitler had several models specially built for his use, and the company turned to producing airplane engines and military vehicles for the Third Reich. But it recovered quickly from the war and in the 1950s established itself as a manufacturer of luxury sedans in Europe and America.

TARGET MARKET OF MERCEDES-BENZ

In 1993, Rosemarie Totzauer reported in Brandweek, "Mercedes is attempting to reinvent itself, to evolve from a company long defined exclusively by its gas-guzzling luxury sedans and sports cars. The reborn Mercedes will offer a broader, more complete line of vehicles for the rapidly changing, more complex, higher risk luxury segment … Mercedes-Benz, therefore, has to gear itself for a metamorphosis into a company known for value and a diversity of vehicle concepts rather than for the prestige of the three-pointed star."

These words, occasioned by the shift in slogans from the old "Engineered Like No Other Car in the World." created by McCaffrey and McCall, to the new "Sacrifice Nothing," gave a succinct statement of the company's changed marketing policy, The target market had broadened, and so had the Mercedes lines. The latter now included the C class, which replaced the 190 series as a product for the low end of the market; the E class, a mid-size luxury car; the S class, for the high-end luxury vehicles that had previously comprised the sum total of the company's product; and the SL for sports cars.

Although, as Fara Warner wrote in Brandweek in 1994, "Mercedes is still considered an exclusive luxury car for white males," the company sought "to broaden its appeal with value prices and new products." Greg Farrell, writing in the same publication a year later, offered a compelling example of the effect produced by the shift in target market: "Maria Pestonit, a 28 year-old Miami computer consultant, didn't like her first three cars … [and] after three performance cars, luxury struck her fancy. Mercedes may have hooked her for life with its C280, costing about $34,000. 'My family had a Mercedes. But that was my parents' car,' she said. 'I thought I could never reach that.'"

MARKETING STRATEGY OF MERCEDES-BENZ

Mercedes Benz marketing strategy was once centered on the safety, luxury, and precision engineering of its cars, but due to increase competition in the luxury car industry and changing consumer attitudes about the Mercedes Benz brand that strategy has changed. Now their marketing 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 marketing 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.

The marketing strategy of Mercedes-Benz is short of the same as BMW. More specifically, Mercedes spends a big amount for advertising campaigns.

Mercedes-Benz launches an international advertising campaign on the theme of sustainability. The first printed advertisements using the new brand design will feature the E 300 BLUETEC to be launched in Germany in December 2007.

Moreover, four different print ads will be placed in all large-circulation magazines in Germany, running in parallel with a TV commercial and an online campaign. The sustainability campaign will then be extended in mid-2008 to include additional vehicles and developments related to Mercedes-Benz' activities which are combined under the heading 'True Blue Solutions'.

"In our marketing campaign on sustainability we promote innovative technologies for environmentally sound mobility such as the BLUETEC emission treatment system, which Mercedes-Benz offers to its customers as the world's cleanest diesel," says Dr. Klaus Maier, Executive Vice President of Mercedes.

Mercedes' new marketing campaign stresses safety over luxury. This isn't surprising since the financial crisis has reversed consumer priorities. It's now frowned upon to brag about buying the most luxurious car. Instead the most popular guy is the one who gets the most worth for as little money as possible spent on a new car.

Mercedes-Benz is now allocating 50% of its UK marketing budget to digital media, according to its VP for brand communications, Anders Sundt Jensen.The dynamics of the UK market and the advanced consumer behavior in the UK meant the automotive brand was already allocating half of its budget to digital, well ahead of other European territories where the company was far from allocating even 40%.The key to the company's success online was the creation of specialist expertise within the company."We don't have normal marketers just doing online ads, or just putting our TV ads online," Anders Sundt Jensen said. "We have a whole department, for example, at our headquarters in Germany just doing digital marketing."

Also, one of the marketing strategies of Mercedes-Benz followed is to start promoting some of its cars on IPhone and Facebook.

Another marketing action than gave a step forward to Mercedes-Benz is the promotion of a series of 'green cars'. Mercedes-Benz brings to the market hybrid cars that are environmental friendly.

To sum up, the key that makes Mercedes-Benz a powerful competitor in the market is the below:

  • Delightful customer care
  • Retail network ready for the future
  • Efficient, integrated processes and systems
  • Sales and Marketing MBC
  • Product Price Place Promotion People Processes
  • Perfectly positioned brand and effective marketing
  • Fascinating products
  • Motivated, qualified employees
  • Effective market penetration

CONCLUSION

Undoubtedly, BMW and Mercedes-Benz were, are and always be two whoppers. Their marketing strategies are about the same. Their advertising campaigns, the tv and radio spots, the costumers services etc. The difference between them and the reason why they are both special is their target market and their market position, what they want their customers to remember about them.

BMW focuses to young customers aged 25 to 45 and it promotes the slogan «Ultimate driving machine». It appeals to those who want to have the sense they were in complete control.

On the other hand, Mercedes-Benz is still considered an exclusive luxury car for white males, but now decides to broaden its appeal with value prices and new products. It appeals to those who love luxury and safe cars but not too expensive.

 

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