Executive Summary
The prevalent positioning has diverted the brand image of all the Daimler products to be luxurious in use and niche in pricing, in spite of the corporate brand aiming at building an image based on product quality, safety features, and services. In case of Daimler, the management of the corporate brand, the eventual positioning of the corporate identity (through integrated marketing communications), and the strategic association between the brand portfolio and corporate brand is managed under the Daimler’s brand architecture framework (Keller, 2009, p.251). The latest target for focusing the product and corporate branding for Mercedes comes in form of the untapped potential available in addressing the car requirements of the Millennial and Generation X audience. Specific recommendations to reposition the corporate and product image branding are made in this report.
Introduction: Mercedes Benz
The industry of luxury cars has a few dominant brands which have occupied the global level markets and Mercedes Benz is definitely one of those brands known as a German band car which has been famous across the seven seas. Breaking its earlier brand image of being the car of rich and affluent, now Mercedes Benz has ventured into a wide variety of other segments like Automotives and Commercial vehicles (Lamb, 2011, p. 1). The industry in which Mercedes Benz operates has some widely acknowledged car manufacturers like BMW, Audi, Jaguar Motors, etc. Still, the first brand positioning of Mercedes Benz comes in the minds of general people as a luxury car. The brand has persisted in the international markets by adopting a strategic blend of marketing mix, product variations, value differentiation based on safety, alternative pricing policies, and consistent branding initiatives. This report aims at acknowledging and recommending the corporate branding strategies for Mercedes Benz owing to the stiff competition and changing market dynamics which it faces as an established brand.
Industry Analysis
The product lifecycle for Mercedes Cars has faced significant growth and persistence in the international markets in the form of low end cars (A, B, C and Smart segment) having steady growth in sales. The futuristic strategy of Mercedes Benz is to capture the rising passenger car markets in the international markets, specifically BRIC countries where expected growth is more than 10% (Schmidt, 2012, p.13). The industry has stiff competition for Mercedes Benz from other brands those have established their image with more of youth oriented positioning. For example, researchers surveyed that almost 59% of the total pool of 21-29 year old respondents in America gave a positive impression about Mercedes brand but only 50% of them expressed willingness to purchase them (Li, 2014, p.1). On the other hand, almost all of them felt it suitable for elderly like their father and mother as per the prevalent safety and luxury standards for the brand (Li, 2014, p.1). These buyers were more inclined towards brands like BMW, Audi, Nissan, etc for their personal use based on their assumption that these brands had better connect with the youngsters in terms of their prevalent brand image of being more funky and sparkly when compared to that of Mercedes.
Competency and Capability analysis
Presently, the Mercedes brand comes under the umbrella of the big three German car manufacturers and this group comprises of Audi and BMW as the other two brands. The competency of Mercedes in the international car markets comes in following factors:
Sponsor of big sports events makes the brand an emblem of classy events like those of the Golf cups, Tennis tournaments, and the New-York Fashion week. Most of the elite crowd is brought under communication via these big events (Bhasin, 2015, p.1).
Low cost manufacturing facilities worldwide give a cutting edge in terms of better logistics and economic efficiencies of operational costs. Mercedes has its manufacturing units spanned across 26 nations for both, cars and buses.
Ongoing technological innovation to give value based differentiation for cars, buses, commercial vehicles, etc. The Daimler has been internationally acclaimed to gain an aggressive stance over the competitors by continuously innovating over the product’s technological aspects (Bhasin, 2015, p.1). The recent advancement in the Mercedes brand has been in terms of augmented safety features and after Volvo, Mercedes is known to have maximum number of safety features in both the cars and buses.
Strong product portfolio and enhanced financial stability due to multiple products offered under the same parent brand which gives a better edge over the competition because of the capability to share the parent company’s resources (Bhasin, 2015, p.1).
Strong foothold in developing countries and emerging markets like BRIC nations. Mercedes has been designing its product portfolio mix in a way that the major car buyers in the developing countries and emerging markets are capable of purchasing the cars (Bhasin, 2015, p.1).
A Perfect blend of various promotional communication strategies in the current marketing mix for the brand exists for Mercedes Benz. The brand has been accessing its target market communication by using digital marketing, social media communication, multimedia advertising and print media (Bhasin, 2015, p.1).
The prime motif behind entering these younger generation driven markets is to try for positioning the brand in the minds of youth who have slightly higher inclination towards rival brands like Audi and BMW in all the markets (Zoeller, 2015, p.1).
Literature review
Brand Equity: Mercedes Benz
A brand is an intangible asset to an organization which is built from all the promises made to customer in terms of assured value addition and the perceived quality embedded in the products and services offered to its customers (Chernatony and Harris, 2001, p.444). An established brand indicates the underlying strength of exclusively satisfactory commitments made to its customers in terms of product value and quality features and corresponding acknowledgment of the same values in the minds of its customers (Pakseresht, 2010, p.28). The firms across the world ascertain their attainment of the desired economic performance by offering the product value based differentiation and consequently deliver better return to their stakeholders via better dividend incomes. This notion where intangible assets related to corporate value perceived by the target market segments is termed as the corporate brand equity. Thus, the brand equity confers an intangible value based differentiation that determines the power of brand equity which is always intended to be maximized by the firms (Pakseresht, 2010, p.29).
The brand equity is said to be derived as a summation of the brand loyalty, brand awareness, acknowledged quality standards, associated brands, and other intangible brand value based assets. These values can be empirically calculated to derive the overall brand value of particular brand. In 2009, Mercedes Benz was ranked 12 in the best global brands with a net brand value of 23, 867 $m (Pakseresht, 2010, p.109). Higher the brand equity more is the inclination of the customers towards expressing their satisfaction towards the brand by repetitive purchase decisions and loyalty. Mercedes Benz has deliberately channeled its branding strategy to maximize their sustainability in developing markets of BRIC nations by focusing on rendering value to gain better customer satisfaction and eventually develop their brand equity (Chauhan, 2015, p.1).
Brand attitude: Mercedes Benz
The brand attitude explains the perception of customers for a brand and in case of Mercedes; the prevalent brand attitude is of a luxurious premium segment brand which is exclusively meant for niche users. The brand attitude limits the corporate branding strategy in terms of promised value commitment to the customers because it assures that any change in brand value portrayed via offered product extensions should always comply with the prevalent brand attitude (World Finance, 2016, p.1). For example, luxurious and niche brand attitude for Mercedes has predominantly existed in developed countries like USA and UK. This has affected the corporate branding decisions to shun any plan to extend their product portfolio into low-income level based value proposition. Therefore, in its endeavor of capturing the developing markets in BRIC nations, the products launched were intended to augment the brand attitude for the low-income and mid-income level customer groups (Chauhan, 2015, p.1).
The corporate decision in these markets is to enhance the brand equity by rendering more satisfaction for the mid-income and low-income level customers as they will be able to afford the most luxurious and niche car brand of the world. However, it is shocking that the Daimler board which was in charge of branding the Mercedes Benz said that they never intended to make the price tag as a the brand image defining entity and rather aimed at communicating the technological and quality aspects of the brand (Ries, 2009, p.1). Thus, the brand attitude was not aimed to be focused towards the pricing because the positioning strategy for the Mercedes brand was not aimed to be in terms of its luxurious pricing only.
Brand architecture: Mercedes Benz
The brand architecture is developed from the combined brand equity developed by the product brand, service brand, and corporate brand for an organization. The brand architecture defines the brand portfolio and brand equity allocation to various products offered under a corporate brand (Uggla, 2006, p. 787). The brand architecture enables the companies to decide which brands are doing well in terms of tackling industry competitiveness and what others have a scope of catching up with the ongoing threats of market substitutes (Muzellec and Lambkin, 2009, p.40). Thus, practicing perfect brand architecture will make the companies to reduce the multitude of brands and endorse their most competitive brands by channelizing their marketing budgets towards them (Uggla, 2006, p. 787).
The brand architecture normally represents three ideologies which are brand-dominant architecture, corporate-dominant architecture, and mixed form architecture. The corporate dominant brand architecture keeps the corporate image on prime to ensure that the organization remains a global driver of the brand value (Uggla, 2006, p. 788). On the other hand, product- centered branding tries to develop multiple brand identities for a product range. In case of Daimler, the corporate dominant architecture is implemented to drive the global brand value.
In case of Daimler, the management of the corporate brand, the eventual positioning of the corporate identity and the strategic association between the brand portfolio and corporate brand is managed under the Daimler’s brand architecture framework. Daimler is positioned as ‘The Branded house of brands’ which houses some prime moving brands that drive in global brand equity like those of Mercedes Benz, Setra, and Freightliner (Daimler, 2016, p. 1). This brand architecture provides a stable communication synergy between the corporate brand umbrella and the individual product brands with ample scope for the product brands to garner their share of the global brand equity. This unique brand architecture makes it easier for the marketing managers at Daimler to endorse the best selling brands like Mercedes Benz and Freightliner under the Daimler corporate brand’s endorsement (Daimler, 2016, p. 1).
Strategic options available to handle the traditional corporate branding challenges
The strategic options to the routine corporate branding challenges are as follows:
Developing a corporate brand personality and essence so that the employees and the employer can internalize the desired brand image into their routine operations (Balmer and Gray, 2003, p.974).
Successful brand positioning into the minds of the customers by specifically targeting through brand culture and by building apt relationship between corporate brand and its product brands (Binder and Hansenns, 2015, p.1).
Brand extension and revitalization challenges if the brand is under the strategic expansion of entering new markets or aiming at rebuilding its dying brand image to gain back the market share.
Brand loyalty to be ensured for the brand by adopting adequate positioning and value based positioning strategies developed from the customer buying preferences. It is always economic for the brand managers to change the positioning on the basis of existing customers buying behavior rather than that of aiming for acquiring new customers (Urde, 2013, p.1017).
Brand equity optimization: There are a number of approaches which can be used to optimize the brand equity which are discussed below:
Economic approach- This approach provides an optimum marketing mix that yields in terms of maximum economic gains for the business in terms of brand equity. The optimum marketing mix will ensure that maximum returns to stakeholders are aided due to enhanced customer loyalty and beneficial transactions for the brand.
Identity approach- This approach puts a challenge in terms of how uniformly the corporate and products position a common identity. The corporate identity and the organizational identity should be in sync with the corporate brand image (Hedigg, Knudzen and Bjerre, 2009, p.83).
Consumer based approach- The brand positioning should be firmly positioned in the minds of customers and appropriate market communication can directly impact the corresponding brand value creation.
Personality based approach – This approach works on the human psychology by affecting the various types of human personalities and tends to develop a consumer-brand relationship (Hedigg, Knudzen and Bjerre, 2009, p.117)
Community and Cultural approach- These two approaches define the corporate branding activities to both comply with the practices and traditions of a community or a culture and thus maximize the brand equity based on this association.
Analyzing Daimler’s corporate branding strategy
The Daimler’s corporate branding has a 4 point strategy to achieve the desired brand value and market share. These corporate branding strategies are discussed and analyzed below:
Communicating the leadership in innovation by deploying green technologies for passenger cars using the cross divisional research facilities for the Mercedes Benz Cars (Daimler, 2016, p. 1). This corporate branding strategy is effective in developing a community based approach towards those customers and organizations which have a flair for protecting the environment and thus building better customer-brand relationship. This entity can maximize the brand equity for the entire Daimler brand through direct positioning of the greener technology enabled Mercedes Benz Cars (Chen, 2010, p.308).
Gaining more satisfied customers due to enhanced product quality and service mobility (Daimler, 2016, p. 1). The Mercedes Benz has already established its product brand image as an emblem of superior quality in terms of engine and body standards. The personal relation based approach results in enhanced services offered to the customers to gain their loyalty which ultimately augment brand equity (Keller, 2001, p.10).
Excellent teams and employee oriented brand image positioning for getting ahead of the competition through excellent team-work and great productivity (Daimler, 2016, p. 1).
The strategic brand positioning in the minds of employee and employer is an extremely important notion for aligning their efforts in a common direction of strategic brand equity maximization for the organization (Arons, Driest and Weed, 2014, p.1).
Gaining optimum return on average sales of at least 9% by averaging out the sustainable returns from each of the products endorsed by the Daimler brand such as Mercedes Benz Cars, Daimler Trucks, Benz Vans, and Buses (Daimler, 2016, p. 1). This ratifies the use of economic approach by the corporate brand (Daimler) to utilize the individual profitability of its product brands portfolio for maximizing the overall brand equity of it, thereby envisaging the optimal brand transactions to maximize the stakeholder income (Jia and Zhang, 2013, p.325).
Recommendations and Conclusion
The corporate branding of Daimler and the products branding for Mercedes Benz have already worked on various options available for strategically maximizing their brand value and brand equity. As the positioning of the corporate brand has been more diverted towards pricing, the most important point of focus for tackling the rising competitive threat from established players in the industry is in terms of the brand image establishment (Kapferer, 2004, p.96). The most important recommendation for the strategic branding team is to work on the brand architecture with an aim to revamp the product branding values and use the market branding communications to channelize the Mercedes Benz Cars for youngsters. At last, it can be concluded that maximization of brand equity for corporate brand and product brands in case of Daimler is not impossible provided the brand image and attitude are thoroughly repositioned in terms of quality, rather than premium pricing.
Bibliography
Arons, S., Driest, F. and Weed, K., 2014. The Ultimate Marketing Machine. Harvard Business Review, [online] Available at :< https://hbr.org/2014/07/the-ultimate-marketing-machine> [Accessed 20 March 2016].
Balmer, J. M. T. and Gray, E. R. ‘Corporate Brands: What are they? What of them?’.European Journal of Marketing, Vol. 37 (2003) :972-997
Bhasin, H., 2015. SWOT analysis of Mercedes. Marketing 91, [online] Available at:< http://www.marketing91.com/swot-analysis-of-mercedes/> [Accessed 20 March 2016].
Bhasin, H., 2015.Marketing mix of Mercedes Benz. Marketing 91, [online] Available at:< http://www.marketing91.com/marketing-mix-mercedes-benz/> [Accessed 20 March 2016].
Binder,C. and Hansenns, D., 2015. Why Strong Customer Relationships Trump Powerful Brands. Harvard Business Review, [online] Available at:< https://hbr.org/2015/04/why-strong-customer-relationships-trump-powerful-brands> [Accessed 20 March 2016].
Chauhan, P.C., 2015. Customer satisfaction, brand equity as important as sales: Eberhard Kern, Mercedes-Benz. ET Brand Equity, [online] Available at:< http://www.marketing91.com/marketing-mix-mercedes-benz/> [Accessed 20 March 2016].
Chen, S.Y. "The Drivers of Green Brand Equity: Green Brand Image, Green Satisfaction, and Green Trust". Journal of Business Ethics, Vol.93 (2010): 307-319.
Daimler, 2016 . The Corporate Brand and Its Relationship with the Product Brands. Daimler brand, [online] Available at :< https://designnavigator.daimler.com/Brand_Architecture?lang=en> [Accessed 20 March 2016].
Daimler, 2016 . Objectives-Our Strategy. Daimler brand, [online] Available at :< https://www.daimler.com/company/strategy/objectives.html> [Accessed 20 March 2016].
Harris, F. and Chernatony, L. (2001), “Corporate branding and corporate brand performance”, European Journal of Marketing, Vol.35, (2001): 441-456
Hedigg,T., Knudzen, C. and Bjerre, M., 20009."Brand Management: Research, Theory and Practice".1st Ed. New York: Routledge Publications.
Jia, Y. and Zhang, W. "Brand Equity Valuation: an Optimized Inter-brand Model which is Based on the Consumer Perspective". International Academic Workshop on Social Science, Vol.1 (2013): 325-330.
Kapferer, J., 2004. "The New Strategic Brand Management: Creating and Sustaining Brand Equity".3rd Ed. London: Kogan Page Publications.
Keller, K.L., 2009. " Strategic Brand Management: Building, measuring and managing Brand Equity".3rd Ed. New Delhi: Pearson Prentice Hall Publications.
Keller, K.L. "Building Customer-Based Brand Equity: A Blueprint for Creating Strong Brands". Marketing Science Institute, Vol.1 (2001): 8-12.
Lamb.R., 2011. Mercedes-Benz 360-degree marketing strategy increases sales 14pc. Luxury daily,[online] Available at :< http://www.luxurydaily.com/mercedes-marketing-merit-sends-sales-up-14pc-in-january/> [Accessed 20 March 2016].
Li, J., 2014. Innovative marketing strategy brings success to Mercedes-Benz
.The daily Pennsylvanian, [online] Available at:< http://www.thedp.com/article/2014/04/how-mercedes-markets-itself> [Accessed 20 March 2016].
Muzellec, L. and Lambkin, M.C. “Corporate branding and brand architecture”, Marketing Theory, Vol. 9 (2009): 39-54.
Pakseresht, A. "Brand equity and corporate responsibility- A review of brand valuation methods".Swedish University of Agricultural Sciences, Vol.1 (2010): 25-30.
Ries, A,.2009. Brand Strategy: The Flanking Move. Branding Strategy Insider, [online] Available at :< http://www.brandingstrategyinsider.com/2009/09/brand-strategy-the-flanking-move.html#.Vu5wV3oa_IU> [Accessed 20 March 2016].
Schmidt, J."Mercedes-Benz Cars Sales and Marketing Strategy".Daimler, Vol.1 (2012): 11-16.
Uggla, H. "A conceptual model for the creation of Inclusive brand architecture". European Journal of Marketing, Vol.40 (2006):785-790.
Urde, M. Core value-based corporate brand building’. European Journal of Marketing, Vol. 37(2003):1017-1040.
World Finance,2015. Mercedes Benz Brand Attitude. Maps of World Finance, [online] Available at :< http://finance.mapsofworld.com/brand/value/mercedes-benz-attitude.html> [Accessed 20 March 2016].
Zoeller, S., 2015. How Mercedes-Benz Uses Marketing Segmentation? [online] Available at:< http://www.stephenzoeller.com/how-mercedes-benz-and-german-luxury-car-brands-use-marketing-segmentation/> [Accessed 20 March 2016].
