Within the next 18 months, Mercedes-Benz is launching a series of models, ranging in price from $US25,000-$450,000, to cater for the vast majority of income groups in the US. Careful repositioning will allow it to sell higher volumes while still being associated with quality, so long as Mercedes can hold on to its dependable image that is.
Mercedes-Benz, one of the world’s largest luxury vehicle makers, is attempting to reposition itself in the largest automotive market in the world. Historically, the Mercedes brand has been synonymous with wealth and reaching a certain status in life. However, Mercedes is trying to reposition itself as a brand that has a far greater mass-market appeal. Its key strategy in this transition is to start an advertising campaign showing two drivers, both famous and everyday people, standing next to their Mercedes cars.
This could prove to be a risky strategy, largely because the notion of the exclusivity often associated with driving a Mercedes car is being thoroughly challenged and this may dissuade some of the more wealthy buyers.
However, Mercedes does not really have much choice. Remaining exclusive allows Mercedes to charge a premium but this impacts sales volumes. Utilising its brand image to attract drivers in other income groups may dilute some of the more traditional brand associations but it is likely to lead to greater sales and profitability in the medium term.
A more pressing challenge for Mercedes is a decline in the apparent quality of its cars, which is now creeping into several vehicle surveys in the US. In a recent survey on long-term dependability by JD Power, Mercedes was ranked 26th compared to being ranked first in this same category in 1990.
The stunning brand image and associated high residual values that Mercedes has garnered worldwide is in serious danger of slipping if the company does not improve the quality of its vehicles. This is where Mercedes needs to focus its efforts, if it is to continue being one of the world’s leading vehicle makers.
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