marketing report samphhhle

MKTG 2383

Marketing Report: Luxury Cars

Mercedes-Benz, Lexus, BMW and AUDi

11/17/2014

MKTG 2383Section E

Mon/Wed: 11:30-12:45pmSuzanne Milner

Saint Mary’s University

1 | P a g e


Table of contents

Brand Descriptions…………………………………………………………………………..........

Marketing Objectives……………………………………………………………………………..

Marketing Strategy (Target Markets/Segment Positioning)……………………………………

Marketing Mix (4 P’s) ……………………………………………………………………….........

SWOT Analysis……………………………………………………………………………………

2 | P a g e


Brand Descriptions

Mercedes-Benz

Many people don’t realize this, but way back in 1886 a man by the name of Karl Benz introduced the first

petrol powered automobile to the world, a three wheeled vehicle named Benz Patent Motor Car

(Edmunds). A few months later another company headed by, Gottlieb Daimler, unveiled a four wheeled

car powered by his own Daimler engine (Edmunds). Forty years after these innovations were created both

Karl and Daimler’s companies merged, forming Daimler-Benz whom founded the Mercedes-Benz brand

(Edmunds). Today, Mercedes is one of the oldest luxury car brands still in existence showing no signs of

slowing down in the near future. They specialize in luxury automobiles that provide a high end feel both

aesthetically and performance wise.

BMW

BMW (Bayerische MotorenWerke) is one of the most prominent motor manufacturers around the world.

The company was founded in 1916 with headquarters located in Munich, Germany. Before they began

their foray into luxury cars, they were known as an aircraft manufacturer. When they decided to begin

manufacturing cars they coined two very popular slogans to describe exactly what they strive for in their

products. These slogans became crucial components of their mission statement, “The Ultimate Driving

Machine” and “Sheer Driving Pleasure”. These words lend themselves well to what the general public

perceives BMW vehicles to be, both fast performance vehicles that are a pleasure to drive. BMW has

more than 3000 dealerships around the world while actually selling in over 100 countries worldwide. As

well, BMW operates an aircraft engine division under the name Rolls Royce. Today, BMW is proud to be

in an extremely strong market position within the luxury car market all over the world.

LEXUS

3 | P a g e


Lexus, located in Nagoya, Japan (HQ) is a division of the Toyota motor corporation which specializes in

the manufacturing of luxury cars. Lexus first began in 1983 when the chairman/founder of Toyota, Eiji

Toyoda, wanted to challenge his company to create a luxury car that could compete with Europe’s finest.

After 6 years of intensive R&D, 450 different prototypes and 4.5 million kilometers of testing, the Lexus

LS 400 was born (1989). A 4 door sedan that created a new type of quality and refinement, while at the

same time challenged the look and quality of all luxury cars. 25 years later and still going strong Lexus

has sold and marketed in over 70 countries worldwide and is ranked top 10 among Japanese global brands

considering market value. The estimated value of the brand is said to be $3 billion US. That being said,

Lexus has over 1700 dealerships in North America and 295 in Japan, with an astounding overall total of

364,630 units sold in the companies existence and counting. Lexus is highly known for ensuring that a

customer is purchasing the safest vehicle in its class while at the same time being ergonomic and

comfortable for the rider(s). The Company has won countless awards regarding safety, reliability, quality

and satisfaction.

Audi

Audi is a German auto company that has been around since 1930 in the Formula One racing circuit. The

Audi emblem of four rings linked together was formed in 1932 when four independent manufacturers

joined together. The slogan of Audi is “Vorsprung Durch Technik”, which translates to Advantage

through Technology. Audi is a brand that symbolizes elegance and luxury through the use of technology

as well as always working on maintaining high standards of safety and reliability. Since the late 80’s the

brand has come a long way. It was tagged as being called “grandfathers car” which speaks volumes of

their prestige in the automotive world. They soon developed a new line which advanced them into being

referred to as elegant and superior. Throughout the following years of constant design and technological

advancement, Audi has become one of the best known names in the motor vehicle industry.

4 | P a g e


Marketing Objectives

Mercedes-Benz

- Maintain above all else, an extremely high quality product.

- Create value through long term customer relationships mixed with superior brand quality.

- Expand the market to reach the younger generation of buyers by ways of social media/online ads.

- Expand its delivery network through more locations and small pop up stores in up and coming

market spaces.

BMW

- Satisfy all market segments they produce for by providing aggressively priced products that give

customers the BMW experience.

- Produce above all else a quality driving experience with a mix of performance and comfort.

- Expand the market by ways of market development.

LEXUS

- To become the safest and most ergonomic luxury vehicle of its class while continuously striving

to pursue perfection.

- Rely on loyal customers to make repeated sales.

- “To attract and retain customers with the highest value products and services and the most

satisfying ownership experience in America”

Audi

- Be the most successful premium car brand, both locally and internationally, by 2015.

- Continue to win prestigious awards at the European circuit level.

5 | P a g e


- Continue to lead the way in technological innovation within the automobile industry.

Marketing Strategies

Mercedes-Benz

Mercedes has been the most recognized luxury car manufacturer in the world for many, many years. For

its lifespan as a company it has targeted upper class working professionals with cars that look the part in a

high class business environment. However over the past few years Mercedes has started expanding its

market to include the younger generation x population and the up and coming millennials. To achieve this

form of market development Mercedes has started advertising through social media, developing a much

larger online presence as well as using celebrities in their campaigns. These strategies have worked

extremely well for the brand and will continue to grow as time goes on.

“The best or nothing” – Daimler

Above all things Mercedes strives to provide its target market with the highest quality product compared

to its competition. They don’t cut corners in any of their product using a “more for more” mentality that

ensures the customer knows they are getting the best in terms of quality and service for their money.

Mercedes knows their target markets inside and out, using a form of differentiated marketing to gain a

competitive advantage on the quality of their product compared to competitors.

BMW

The brand value that BMW breathes by in their design is that each and every car produced must satisfy

this message.

"Driving a fun and chic lifestyle" - BMW

Thus, BMW spares no effort in improving handling, performance, and comfort in all their product

offerings to ensure their driving experience never feels old or stale. Undoubtedly, BMW's success is

6 | P a g e


consistent with their brand positioning showing that a perfect marketing mix, one that BMW has, is an

extremely valuable tool when employed the right way. The company also uses a lot of different research

strategies to maintain such a great marketing mix, but one of their most successful methods would be

their implementation of consumer focus groups! This has allowed for a personalized look into exactly

what their customers are looking for from their products and brand experience as a whole. BMW's high-

profile targeting strategy employs a more for more pricing concept in the same way as Mercedes.

However, instead of luxury as the driving factor, BMW uses comfort, driving experience and fun as well

as the prestige of the BMW brand image to warrant the high price tag of their vehicles. This pricing

strategy also requires a high bar in terms of customer service. BMW is one of the only brands that employ

their own company run dealerships. These allow BMW to incorporate quality service their way. From in

person at the dealership to their excellent online touch points, BMW gives a great streamlined experience

regardless of where the customer goes.

LEXUS

Lexus does not flood the market with their product, but instead relies upon sending exclusive emails for

upcoming products to build up hype, and the returning sales from current customers with an outstanding

65% chance of repeated purchase.

“Engineering the impossible; the pursuit of perfection” - Lexus

Lexus bases their efforts towards perfecting the look and feel of their cars both inside and out. With this

in mind Lexus has a rather staggered price, focusing more on the upper class as their target market. They

also focus on the niche market they created which is based on a car that is ergonomic and ahead of any

other manufacturer when it comes to safety features, while also competing with their rivals in terms of

performance. When it comes to their market research, they focus a lot of energy towards researching the

average person who buys a Lexus. Using this information Lexus has found that the average age of a

customer who buys their product is 52. They incorporate these findings to help segment their market and

7 | P a g e


focus in on this age demographic. Advertising strategies incorporate this knowledge as well, often putting

ads in high class magazines that the wealthier and older crowd will be drawn to (Forbes and fortune

magazine). When it comes to television advertisements Lexus primarily focuses on time slots that relate

to network news, and golf classics (Car ads are “elegantly subtle” to show off their stylish design and are

referred to as the finest in engineering and craftsmanship.)

Audi

To build brand awareness Audi likes to advertise during public events that will be seen by millions of

people, instead of running regular commercials throughout the year. Exceptions to this rule have seen

Audi run commercials during the Superbowl, the largest football event on TV, as well as during the

Olympics, however these are viewed worldwide. They were the exclusive sponsor during the FIFA World

Cup, the biggest soccer event on TV (Young, 2010). Film sponsorship is also a marketing strategy they

use. Their vehicles have been used in a variety of Hollywood movies, most recently, Ironman 2 (Li,

2012). Recently in an excellent form of market development, Audi had huge parties for the launch of the

Audi 3. These parties include an invite only crowd and are for the target ages of mid 20’s to early 40’s.

The parties are designed to appeal to this age group. Everything from the decorations, music, food and

drink were chosen with them in mind. Audi feels that if they can get this age group to buy their first Audi,

they will never leave. This shows that the company greatly understands customer lifetime value and that

they are confident that once you own one, you will never want anything else (Nelson, 2014). Keeping up

to date with today’s consumers and their use of technology to get information, Audi has an iPad

application where consumers can view every aspect of an Audi inside and out, pick the extras they want,

get a price, find a local dealer and book a test drive. Technologically driven marketing ideas as well as

social media with digital advertising via Facebook, Twitter and the website are constantly being updated

to further appeal the brand to a younger audience (Lamb, 2011). That being said Audi has not forgotten

about their older customers or of their roots in the racing community. As recently as October 2014, Audi

had a video on ForbesLife showing their advancements in design and technology. At the German Grand

8 | P a g e


Prix in Hockenheimring, they showcased their car which was computer driven, no human intervention

was involved (ForbesLife, 2014). This truly encompasses Audi’s slogan of “Vorsprung Durch Technik,”

(Advantage through Technology). At the dealership level, Audi is focused on customer service and

providing an enhanced buying experience at every touch point possible. They have opened their first

North American factory to bring the product closer. Audi hopes that opening a plant on another continent

will strengthen their growth strategy and allow them to grow their North American market (Glon, 2013).

As of December 3rd, 2013, Audi’s CEO, Stadler, said the company’s next target in sales is two million

dollars by the year 2020 (Ciferri, 2013).

Marketing Mix: 4 P’s

Mercedes-Benz

Product

- Mercedes-Benz is one of, if not the most recognizable automotive brand in the world. It’s known

for developing high quality luxury cars. However one thing most people don’t know about them

is that they have product lines in not only cars, but coaches, buses, and commercial trucks as well

(Bhasin), all of which stay true to their luxurious design qualities. Sticking with luxury cars,

Mercedes offers a vast line up to choose from including the B, C, CLA, CLS, E, G, GL, GLA,

GLK, M, S, SL, SLK, SLS, AMG GT, SPRINTER, and AMG class all of which, excluding the

AMG class, are commercially available (Mercedes-Benz, 2014). One thing stays the same among

all of their models and that’s build quality. Low quality materials are never used ensuring a

premium feel regardless of vehicle class. Quality parts aside, the C class lineup comes in 4-door

and 2-door versions. It’s marketed as their most complete design, blending performance,

efficiency and practicality into a mid-size family sedan or stylish compact like the new CLA. The

G and M class on the other hand make up the SUV portion of Mercedes’ lineup. With ample

seating and storage you get a safe and roomy way to get around regardless of road conditions.

9 | P a g e


Finally the S class is their full size luxury sedan that puts everything Mercedes strives to achieve

as a company into an automobile while the SL/AMG classes do the same, just in a sportier

design. The quality, comfort and performance of the S class are all of the highest quality,

meaning buyers know that they’re getting the best in terms of luxury, practicality, and

performance in a full size family sedan. The same being true for the SL/AMG line where top

notch performance meets a luxurious and pleasurable experience (Mercedes-Benz, 2014).

Price

- Mercedes employs a more for more pricing strategy. Compared to their competition, they charge

more per car. However they provide the highest and most luxurious quality, and standard features

among competing brands. Mercedes takes pride in the quality they deliver to their customers and

they understand the market segment they go after. They know that high income business

professionals want to be taken seriously and look professional. A car that doesn’t compromise on

design or quality is something they will be willing to pay a little extra for.

Place

- Mercedes employs a vast network of dealership oriented sales worldwide. They have always

focused on the older generation x market segment. However, they are beginning to use market

development strategies to branch out to the younger portion of the generation x population as well

as the older portion of the millennials. Small pop up dealerships in up and coming locations is an

example of ways that they are trying to reach those smaller market segments.

Promotion

- Traditionally, Mercedes based their marketing strategies on the luxury and high quality standards

of their cars (Bhasin). This worked for the older portion of the generation x population, but to

capture the younger segments they had to do something different. Recently their marketing

10 | P a g e


strategies have been focusing on a more fun, cool and approachable type of promotion (Bhasin).

Using social media, celebrity endorsement and excellent customer service within its dealerships

are just some of the ways they’re changing to better suit the younger up and coming millennials,

as well as the younger portion of the generation x population.

BMW

Product

- BMW has various lines in their product offerings. Each product line offers something new,

generally higher performance. Currently BMW has the 1, 3,5,6,7, I, M, X and Z product lines.

The 1 series is a compact sedan model, 3 is the mid-size sedan, while 5 is the premium mid-size

sedan that offers quality design with outstanding performance. Moreover, the 6 series is the

Phantom Coupe which is the company’s main sport touring offering with a two door body style.

The I series is a new concept electric sports car that is not in mass production yet. It’s a profound

step towards a greener scene offering outstanding performance and design while melding

unbelievable fuel economy into the package. Series M is the more traditional high-performance

gas powered sports car that many people know and love. Finally the X model line comprises their

SUV offerings while the Z series holds their Entry-level sports sedans. (“Introduction to BMW”,

2011.)

Price

- BMW, like most luxury car manufacturers, price their products with a more for more mentality as

well as using market oriented strategies. As stated earlier, BMW puts great emphasis on the

drivability, fun, and design of their vehicles both inside and out. The prestige of the name plus

these qualities justifies the high prices of their vehicles because as a company they have done

such an excellent job in marketing their brand value and allowing it to grow. Strategies used to

determine these market segments are further discussed in the promotion segment.

11 | P a g e


Place

- BMW has professional employees working in more than 100 countries with over 4400

dealerships worldwide. They obviously use the dealership method as their main method of

distribution; however, they also mix traditional showrooms (O’Regans) with directly appointed

BMW dealerships. This investment in their own independently run showrooms is very expensive,

but it allows them to raise their customer service standards to a new level tailoring the customer

experience exactly how they see fit. This tactic allows a streamlined customer experience

basically worldwide which is quite impressive, not to mention awesome for the customer.

Promotion

- BMW has always done an amazing job when it comes to the promotion of their products.

However, what impresses most is their dedication to market research. Their use of focus groups,

based on many different age demographics, has allowed them to tailor their marketing strategies

in ways that allow for market development towards a younger demographic, but also maintain the

qualities that their legacy is built upon. Of course, aside from these focus groups BMW also

advertises in many high profile events such as golf tournaments and films. They use celebrity

endorsements as well as subtle hints of social media and online presence to appeal to the younger

demographics. BMW is also using the idea of early adopters and innovators to market a new

concept electric sports car. There are only a handful of them available worldwide but the

company did a great job raising awareness within these groups of consumers and has sold a fair

amount of concept models to date.

LEXUS

Product

12 | P a g e


- When it comes to a Lexus’ product, there are 2 aspects that are heavily focused on during the

development stage, an ergonomic design that includes top notch safety features. Examples of

these are ease of use of controls, the instruments, switches, pedals, and the steering wheel all

combined to provide a comfortable and easy to use vehicle. Being known as such a safe vehicle,

Lexus offers countless safety features depending on which model you purchase (ranging from the

basic model to the high end model).

• Anti-lock braking system

• Is designed through 500 specific product standards which is referred to as “Lexus

musts”

• High intensity discharge headlights (increases visibility at night, blocks glare

from oncoming traffic)

• Vehicle stability control (detects and reduces loss of traction)

• Vehicle dynamics integrated management (omnibus computer which links

traction control, electronic stability control and steering to improve

responsiveness to driver input, performance and safety)

• Infrared pedestrian detection systems

• Driver monitoring system with facial recognition (infrared sensors, monitor

driver attentiveness and if driver is not paying attention warning lights and

sounds go off followed by the vehicle automatically applying the brakes.)

• Rear pre-collision whiplash protection

There are 5 different categories of cars Lexus offers which are sedans, SUVs, coupes, hybrids and

the sporty F types. All models are included with v6 or v8 engines, premium audio systems, and

13 | P a g e


touch screen controls with touch start up. The company is focused on making more fuel efficient

hybrid engines and a more aerodynamic design to ensure perfection throughout their product

lineup.

Price

- Lexus offers many different types of models starting from $36,550-$150,000 US (Lexus), they

are pricier then some competitors, but considering there average customer age is 52, it makes

more sense to sell at a higher price if they offer excellent safety coupled with premium feel and

aesthetics. For the most part they try to stay tight with their competitors so they use market based

pricing strategies corresponding to each model.

Place

- The majority of sales for Lexus come from North American, Japanese, Chinese, and European

markets. Worldwide there are 7 manufacturing plants, 6 in japan and one in Cambridge, ON

which first opened in 2003; however each plant makes different models. The HQ for Lexus is

located in Nagoya, Japan with operational centers in Brussels, Belgium and Torrance California,

USA.

Promotion

- Lexus has an aggressive marketing approach, paying close attention to detail when it comes to

their products, customers, and selling campaigns. Advertisements are usually in golf digests

sports illustrated and time slots around dinner time when the news is on. They decided on these

based on the average age of their customers, these being the media vessels they are most likely to

view. They sponsor golf tournaments and fundraisers as well further reinforcing their knowledge

of age demographics. Customers feel like elite club members upon purchasing a Lexus. For

example, anyone who purchases a vehicle gets the latest news on new products before they are

14 | P a g e


shown to the public. On the website Lexus features a high end graphical program where you can

virtually test drive a car online. Another excellent promotion driven marketing technique includes

the use of celebrities such as Demi Moore and Kelsey Grammar showing off how high class a

Lexus truly is. With all this research Lexus sees a healthy 65% repeat purchase rate, building high

value through a lifetime partnership with their customers.

Audi

Product

- Audi brings the most technologically advanced automotive offerings to the table. They have a

vast product line that includes everything from the more toned down sedan in the A3, to the

sporty RS5 that offers a technologically advanced ride with the performance to match. Audi will

always be a tech leader especially when it comes to new research advancements. As a company

Audi is all about incorporating tech into all of their product offerings to enhance the customers

driving experience.

Price

- Audi, like any other luxury car company, employs a more for more pricing strategy. Compared

to their competition they are priced fairly aggressively, however they provide some of the highest

and most luxurious quality, and standard features among competing brands. Prices for new Audi

vehicles range from a little under $30,000 (A3 Sedan) to upwards of $200,000 (2014 R8). There

are also many certified pre-owned car dealerships that offer used Audi vehicles at more

affordable prices. Obviously Audi targets people who have more money to spend, so prices are

based on quality. A car that doesn’t compromise on design or quality is something they will be

willing to pay a little extra for.

15 | P a g e


Place

- According to its company website, Audi employs 73,751 people within their eleven production

facilities. They are all located in Europe and Asia as these are Audi’s most dominant market

areas. In 2013, 1,570,480 cars were manufactured in these plants. There are two locations in

Germany (the largest Audi production facility is in Ingolstadt), two in China, as well as one in

each of Hungary, Belgium, Slovakia, Spain, Russia, India and Indonesia. These facilities build

different models of Audi vehicles and specialize for different markets. There are also local Audi

dealerships around the world that give buyers anywhere the chance to experience an unforgettable

driving experience paired with excellent customer service at every level of contact.

Promotion

- Audi is part of the National Fleet Incentive program. This is a program that companies can enroll

in to receive incentives to purchase certain vehicle types. To qualify for the Executive Allowance

Bonus Program, an organization must have a minimum of five full-time employees who receive a

regular vehicle allowance and who apply for an Audi Fleet Account Number. Being involved in

this program allows members to obtain certain allowances when buying an Audi. This allows

Audi to ensure that large companies who’s employees fall within Audi’s target market have even

more incentive to purchase from them. The company also uses advertising to display the luxury

and prestige of their cars, often times by having celebrities such as Ricky Gervais and David

Chang in their latest commercials. Luxury car companies often go with these promotional

strategies, and Audi is not much different.

16 | P a g e


S.W.O.T Analysis

Mercedes-Benz

Strengths

- Strong brand recognition as a global leader in luxury vehicles.

- Over $12 Billion allocated towards research and development.

- Leader in innovation (first to introduce ABS, Diesel engines and fuel injection)

- Company held patents on many of its desirable safety features.

Weaknesses

- High maintenance, costs could deter new buyers.

Opportunities

- Great market development potential within the younger demographics.

- Quickly growing market for luxury cars due to increased income.

- Development of hybrid fuel efficient vehicles for the future.

Threats

- Government policies enforcing new regulations on automobiles across the world.

- Increasing fuel and raw material prices.

- Extremely competitive market from global automobile brands.

BMW

Strengths

17 | P a g e


- Excellent brand reputation.

- Environmentally friendly design choices.

- High quality standards in all offerings.

- Highly skilled workforce.

- Strong brand presence in emerging markets like China.

Weaknesses

- High cost structure with the more for more pricing strategy.

- Customers still perceive BMW as a high priced car causing hesitation with first time buyers.

Opportunities

- Increasing fuel prices.

- Positive attitudes from consumers on environmentally friendly vehicles.

Threats

- Intense competition within the luxury car market.

- Increasing raw material prices and fuel prices.

- The increasing Euro exchange rate.

- More and more government policies enforcing stricter regulations on automobile manufacturers.

Lexus

Strengths

- High end product offerings.

- Loyal customer base.

- Prestigious brand name.

18 | P a g e


- Strong presence in racing events.

Weaknesses

- High prices limit the development of the younger age demographics market.

- Tough competition and limited market share.

- Limited distribution and service network.

Opportunities

- People are more inclined to buy international branded vehicles due to reliability.

- Large demand for hybrid vehicles.

- New customers made through market penetration and development.

Threats

- Costly brand with limited exposure to the public, mostly for people with higher income levels.

- Competition from rivaled brands (frugal engineering) (BMW, BENZ)

- Product innovations within the market demand high amounts of investment into research and

development.

- Rising gas and raw material prices plus government policies make production all the more costly.

Audi

Strengths

- Being a division of Volkswagen (2nd largest automobile company in the world) high amounts of

cash for R&D, and marketing is available.

- High return of equity and return of assets compared to competitors.

- The 4 rings logo is one of the most identifiable logos worldwide.

19 | P a g e


- Spends $3 billion a year on R&D creating new products.

Weaknesses

- Major product recalls over the past several years due to transmissions. This shows poor quality of

products reducing customer loyalty and trust.

- Smaller market share makes it harder to compete with companies like Ford and Toyota.

- Dependent on European market for sales.

Opportunities

- Demand for Hybrid vehicles.

- Increased manufacturing plants to meet product demand generated through their advertising

campaign.

- Expansion of new products as well as market development opportunities by introducing new

vehicles at lower costs.

Threats

- Competition from competing brands is fierce in the luxury car market.

- Limitations of the product are seen due to government policies when entering foreign markets.

- Company faces high fixed labor costs.

- Recession in Europe and North America leads to decrease in sales especially because of high

market presence of Audi in European markets.

While there are many similarities in the way these companies use marketing strategies, one thing

is for sure. Each and every one of them is a leader and driving force in the automotive industry. It’s

the small subtle details that say volumes about the beliefs that each company has. Whether it’s the

extreme level of quality that Mercedes strives for, or the outstanding technological advances that

20 | P a g e


Audi is famous for, the customer always knows they are getting a quality product. This ensures that

the marketing strategy, regardless of what the company leverages, is working and building lasting

profitable customer relationships.

21 | P a g e

marketing report samphhhle

Documents

luxury cars marketing

luxury cars mktg

luxury car market

manufacturing of luxury

luxury automobiles

luxury carsmercedesbenz

oldest luxury car brands

bmw vehicles