The Race Is On Between BMW and Mercedes Benz

YASHAR YAZDANI 1091200093

MARKETING MANAGEMENT AMIR HABIBI 1091200086
MORTEZA TABASSI 1081200585
GROUP ASSIGNMENT

Lecturer:
DR. ABU BAKAR BIN SADE
The market share of National and
NON-National cars in Malaysia

2007 2008
Passenger cars market share
in Malaysia

6.8%

7.3% 42.4%

32.6%
THE BEST
S TWO
O MODELS
O S BETWEEN LUXURY
U U CARS
C S
AS A SYMBOL OF WEALTH AND EXTRAVAGANCE
ACROSS MALAYSIAN SOCITY

MERCEDES-BENZ
0 8%
0.8%
BMW 0.5%
 Market Trend

Changing Consumer Behavior

Increasing Purchasing Power

Changing
g g of Culture/Lifestyle
y
 SWOT Analysis

• The overall evaluation of a company’s

performance.

• It involves monitoring marketing

environments.
Internal – strength & weakness
External – opportunity & threat
 Strengths
• Brand equity
q y – Sporty
p y look,, attractive
design and superb car handling.

• Has sophisticated and high technology

oriented engine.

• Price is comparative lower than Mercedes-

Benz.

• Complimentary of BMW Service + Repair

Inclusive for 3 years.
 Weaknesses
• High fixed cost.
cost

• Requires specialist and appropriate tools

to repair the engine.

• Limited dealers and service centers.

•Less aggressive in on-line promotion.

 Opportunities
• Growth of K
K-economy
economy create bigger group
of younger successful executive with better
purchasing power.

• Innovator and creative designer.

• Environmental practices – introduction of

BMW’ flagship
BMW’s fl hi 7 series
i sedan
d that
th t runs
on liquid hydrogen.
 Threats
• Market share has reduced from 3.0%
(Jan~June 2007) to 2.4% (Jan~June 2008)*.

• Price rising of fuel oil.

• Over-emphasized of the brand as the

paragon of performance driving – “The
Ultimate Driving Machine”

* Malaysian Automotive Association (MAA) 2007/2008 Passenger Car Registration

 Strengths
• Brand equity – Reliability and safety
features
features.
• Strong brand loyalty among successful and
worthy
orth bbusinesspersons.
sinesspersons

• Apprentice Training Centre was set up in

2003.
• Over 26 showrooms and services centers
nationwide - Mercedes-Benz Service
Excellence Award for service dealers.
 Weaknesses
• Price is relatively higher.

• The cars are equipped with old fashioned

engines.
 Opportunities
• Market share has increased from 2.9%
(Jan~June 2007) to 3.8% (Jan~June 2008).*

• Back up by skillful technician from the

Apprentice Training Centre – 450 trainees
h
have graduated.
d t d

• Road Map at website – easy way to locate

the nearest showroom.

* Malaysian Automotive Association (MAA) 2007/2008 Passenger Car Registration

 Opportunities

Mercedes-Benz Malaysia Sdn Bhd

Level 48 & 49, Menara TM
J l P
Jalan Pantai
t i Bahru
B h
59800 Kuala Lumpur.
Malaysia.
Tel: (+603) 2246 8888
Fax: ((+603)) 2246 8899
Website : www.lowemotors.mercedes-benz.com.my
 Threats
• Facing keen competition from other luxury
cars esp. BMW.

• Brand barrier – less attractive for young

and successful executive.

• Price rising of fuel oil.

Target
g Market

According to our research and

development
p department
p our TARGET
MARKET is safety, handling, elegant,
luxurious. Companies such as BMW
and
d BENZ dod their
h i best
b when
h they
h
choose their target markets cautiously
and prepare tailored marketing
programs.
Segmentation
We divide our customer into several parties:

The men and women age g between 20-34 who are looking g
for luxury and indulgence car. BMW series 6, X6, Z3, Z4,
Z8, Z9… And BENZ series C, CLS, SLK, SLR…..

The men and women age between 35-60 who are

searching for safety, luxurious, guaranty, and handling
and after sale service.

The group of people who earn above 4000 $ per month.

The bunch of people that can afford expensive model of
BENZ and BMW. For instances BMW series 7, 6, 5 and
BENZ series S, ML, E
 Question 1
Who are involved in the decision
process to purchase
p p luxury
y car?

What role does each participant play?

Reference: http://www.udel.edu/alex/chapt6.html
 Purchasing Decision Processes
Need recognition

Pre-purchase
Search for information

Pre-purchase evaluation
of alternatives
Purchase
Purchase

Consumption
Post purchase
Post consumption
evaluation
Reference: http://www.nssa.us/nssajrnl/24_1/10-Moser-CombatingPost-PurchaseDissonanceOnline.htm
 Factors Influences To Purchase

Cultural factors

Social factors

Personal factors

Reference: http://www.udel.edu/alex/chapt6.html
 Factors Influences To Purchase

Cultural factors

fundamental determinant of a person’s

wants and behaviors

• it acquires values, perceptions,

preferences
through family or other institutions

organization image, upper

management
must drive a luxury car
Reference: http://www.udel.edu/alex/chapt6.html
 Factors Influences To Purchase
Social factors

• Consumer wants influenced by opinion

leaders eg. reference groups, social
classes
l

• Reference groups influence on values and

attitudes eg. advice about brand category

• Social classes eg. individuals who have

similar social rank

Reference: http://www.udel.edu/alex/chapt6.html
 Factors Influences To Purchase
Personal factors

• demographics factors eg. age, gender

• situational influences eg. price based

offers during purchase

• personal desires eg. occupation, income

status

• psychological factors eg. motives,

perception,
perception lifestyles

Reference: http://www.udel.edu/alex/chapt6.html
 Users
Use s Buyers

R l in
Roles i
decision making
Approvers
Influencers

Deciders

Reference: http://www.udel.edu/alex/chapt6.html
What is a luxury car ??
Is a $50,000 Ford a luxury? What about a $20,000 BMW?
It is probable that no strict financial criterion can be applied.
Rosecky and King (1996)

Unique characteristics :
- consistently premium quality
- craftsmanship
- recognizability
- exclusivity
- reputation
- distinctive variation
- a clear
l reflection
fl ti off personality,
lit values,
l andd heritage
h it
- association with a country of origin that has an especially
strong reputation as a source of excellence in the relevant product
category
category”
(Nueno and Quelch, 1998, pp. 62-63).
The Penang Island Jazz Festival presented by
DaimlerChrysler
 Table 1 Luxury brands of the top 12 auto manufacturers

Production a
Company (parent,
( alliance, or group)) ( illi
(million, Origin Luxury brands
2007)
General Motors 11.7 USA Cadillac, Hummer, Saab

Ford 7.8 USA Aston Martin,, Jaguar,

g , Land Rover,,
Lincoln, Volvo
Toyota 7.5 Japan Lexus
Renault-Nissan 5.9 France & Infiniti
Japan
VW Group 5.0 Germany Audi, Bentley, Bugatti,
Lamborghini
Daimler-Chrysler 4.8 Germany & Mercedes-Benz, Maybach
USA
PSA 3.3 France -

Honda 3.2 Japan Acura

Hyundai-Kia 3.1 South Korea -

Fiat 2.0 Italy Alfa Romeo, Ferrari, Maserati

Mitsubishi 1.5 b Japan -
BMW 1.3 b Germany BMW, Rolls-Royce, Mini

Notes : a PriceWaterhouseCoopers (2007); b International Organization of Motor Vehicle Manufacturers (2007)

ANALYSIS
MERGER
Date 6 May 1998, new DaimlerChrysler company valued at $75 billion.

OBJECTIVE
• lower costs through volume purchases
• slashed redundancies
• Daimler-Benz’s key advantages in quality, innovation & exclusivity
• Chrysler’s success on size, rapid decision-making, and flexibility
(Smith, 1998).

OUTCOME
Blending of luxury and mass-market automobile brands in one corporate
portfolio engages advantages of scale and scope economies,
economies but induces
potentially fatal brand corrosion.

Consumer perceptions…..
Luxury brands
b d vs. mass-market
k bbrandd ((commonality)
li )
COMPETITIVENESS
Global Marketing
- Self-contained markets - linked global markets
- Product life-cycles shorten / global competitors contest

Brand reinforcement
- Innovations
- Consistency

Analyzing needs & trends

- Global vs. local (economic, social-cultural, political-legal,
technology)
gy)
- Market evolution

Marketing strategies revival

- Market leader (market driving vs.
vs market driven) / market share vs.
vs
current profitability
- Systematic program of culture change
[ “the best or nothing” – first espoused by Gottlieb Daimler more than a
century before – was rescripted to “the best for the customer”]
Question No.2
Based on product attributes, what would
you suggest to Mercedes and BMW for
developing appropriate positioning
strategies?
Product Attribute

1 •Feature

2 •Function

3 •Benefits
B fit

4 •Use

5 •Quality
 Positioning Strategies
Differentiation Cost
Leadership

1. Product 1,, Cost Control

Differentiation
2. Service 2. Scale- Efficient
Differentiation Plant
3. Personnel
Differentiation 3. Efficient Value
4. Image Chain
Diff
Differentiation
ti ti
 Product Differentiation

•Focus on innovation technology

Example: The “Engines” of Tomorrow

•Focus on safety
Example: 1)Intervehicle communication using
wireless LAN networks
2)Accident research unit

•Expand product range

 Service Differentiation

•24 hours service centre

•Tailor comprehensive
programmed for women
omen
driver

•Traffic safety programmed

for children, teenagers, and
young drivers.
 Personnel Differentiation

•Hiring and training better people

•Maintain relations to internationally recognized

scientific institutions, colleges and universities
worldwide
 Image Differentiation
Ultimate innovation safetyy driving
g machine
•Advertisement

•Product Placement

•BMW ART Car Collection

•Sponsorship
 Mercedes-Benz
Mercedes Benz
Positioning Strategy
•Duty Structure under Common Effective
Strengthen Partnership Preferential Tariff (CEPT) Scheme for AFTA

•Increase price competitiveness

Expand production capacity•Increase ASEAN market exposure

price competitiveness
 Mercedes-Benz
Mercedes Benz
Positioning Strategy
Increase Product Range
•Target different age group (approximately
33% from 20-50 age group in Malaysia)

•Example: Mercedes-Benz
C class and E class
 Mercedes-Benz
Mercedes Benz
Positioning Strategy

Product Positioning •Explore future automobile thru R&D

•Example: Mercedes Bionic Car,

economical and environmentally friendly
 Summary
• Global Market Share for BMW is increasing,
increasing
(+32% in 2007 vs. 2000) compare with Mercedes
(-5% in 2007 vs. 2000)

• Malaysia Market Share for Mercedes is still

behind BMW
BMW, mainly because:-
– Consumer Perception
– Market Positioning
 References
http://www.stealingshare.com
http://www.udel.edu/alex/chapt6.html
http://www.nssa.us/nssajrnl/24_1/10-Moser-CombatingPost-
PurchaseDissonanceOnline htm
PurchaseDissonanceOnline.htm
www.livemint.com/MercedesBenz-BMW-fight-it-ou.html
www.ibscdc.org/Case_Studies/Strategy/.../CCA0008.htm
www.benzworld.org/1346619-2007-audi-rs-4-2008-mercedes.html
www tradingpost com au
www.tradingpost.com.au
www.carpages.co.uk
http://www.autospies.com/news/Audi-BMW-and-Mercedes-Benz-s-China-
Sales-Soar-in-September-Audi-Remains-Market-Leader-48574/
http://www marketingactuary com/2008/04/audi-bmw-lexus-and-mercedes-
http://www.marketingactuary.com/2008/04/audi bmw lexus and mercedes
benz-three.html
www.globalinsight.com/SDA/SDADetail17458.htm
www.thetruthaboutcars.com/mercedes-benz-bmw-in-ev-talks-with-magna-
steyr/
www.resources.bnet.com/topic/marketing+and+mercedes-benz.html