Luxury Cars Market: An Introduction

What are Luxury Vehicles?

Luxury vehicle is a marketing term for a vehicle that provides luxury — pleasant or desirable features beyond strict necessity — at increased expense

The term suggests a vehicle with higher quality equipment, better performance, more precise construction, comfort, higher design, technologically innovative modern, or features that convey an image, brand, status, or prestige, or any other 'discretionary' feature or combination of them. The term is also broad, highly variable and relative. It is a perceptual, conditional and subjective attribute that may be understood differently by different people; "what may be luxury for one may be premium for another."

In contemporary usage, the term may be applied to any vehicle type— including sedan, coupe, hatchback, station wagon, and convertible body styles, as well as to minivans, crossovers, or sport utility vehicles and to any size vehicle, from small to large—in any price range. Moreover, there is a convergence in the markets and a resulting confusion of luxury with high price: where there may have been a clear difference in price between luxury and others, there is no longer an absolute separation between premium and luxury, with what may be premium brands now more expensive than the equivalent so-called luxury ones.

Automobile manufacturers market specific makes and models that are targeted at particular socio-economic classes, and thus "social status came to be associated more with a particular vehicle than ownership of a car per se." Therefore, automakers differentiate among their product lines in "collusion" with the car-buying public. While a high price is the most frequent factor, it is "styling, engineering, and even public opinion which cars had the highest and lowest status associated with them."

Every era in automobile history has had "a group of car marques and models that have been expensive to purchase, due to their alleged superiority of their design and engineering". Aimed at wealthy buyers, such automobiles might be generically be termed luxury cars." This term is also used for unique vehicles produced during "an era when luxury was individualistic consideration, and coachwork could be tailored to an owner like a bespoke suit." Although there is considerable literature about specific marques, there is a lack of systematic and scholarly work that "analyzes the luxury car phenomenon itself."

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A Global Analysis of the Luxury Car Market:

Despite prevailing economic pessimism, 2012 proved to be a record year for sales for many luxury auto manufacturers. Within the Volkswagen Group, Audi, Bentley and more-recently-acquired Porsche all achieved record-breaking sales for the period.

The BMW Group cemented itself as the world’s biggest premium car company, with a total of 1,845,186 BMW, MINI and Rolls-Royce vehicles delivered worldwide. Both the BMW and Rolls-Royce brands surpassed previous sales records, achieving balanced sales across all continents.

Few would be surprised to learn that Europe’s new car market shrank in December at its fastest monthly pace since October 2010 . But what defied expectations was the performance of the United States, which even outgrew China to become the number one market for Rolls-Royce.

Sales of Jaguar Land Rover (JLR) last year were 30% up on the previous year. Over the past two years JLR has taken on 9,000 people, and has just decided to near-double the size of the engine factory it is building in the West Midlands.

Rolls-Royce, which sold a record 3,575 of its ultra-luxury cars last year, is on a roll too. At the Geneva motor show it unveiled the new Wraith, a coupé for playboys with at least €245,000 ($320,000) to spare who want to leave the chauffeur at home and do the driving themselves. Bentley, which launched a new Flying Spur limousine at the Geneva motor show, enjoyed sales growth of 24% last year.

These days JLR is owned by India’s Tata Group, Rolls-Royce by BMW and Bentley by Volkswagen, but the cars’ appeal still relies on their quintessential Britishness. Similarly, the success of BMW, Mercedes and Audi cars rests on their German styling and precision engineering, both in rich countries and among the new wealthy of the emerging world.

The contrast between the luxury end and the mass-market part of the European car business is striking. BMW has recently been making operating profits of about €4,000 ($5,200) on each car it sells whereas Opel-Vauxhall, the European arm of GM, has been losing about €1,500 per car. And the global boom in premium-priced cars looks likely to continue. “One thing is for sure,” says Rolls-Royce’s boss, Torsten Müller-Ötvös. “You will see more rich people in the world.” The group of “ultra-high net worth individuals” from which his customers are drawn is expected to grow by 3-5% a year in the years ahead. And in East Asia, where sales are growing fastest, it is more acceptable—expected, even—to underline your success in life by conspicuous consumption.

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In a recent study of motor-industry executives from around the world by KPMG, those from rich countries said customers were scaling down to smaller, more efficient and greener models, whereas those from the BRIC countries reported that buyers wanted upmarket models. Even those who could not currently afford these seemed to be looking forward to the day when they would. Tata’s super-cheap Nano has not sold well because India’s first-time car buyers would rather wait than drive what they see as a poor man’s car.

The feelgood factor:

A survey by McKinsey of Chinese consumers found that after an initial burst of “if you’ve got it, flaunt it”, motives for buying foreign luxury brands were becoming more subtle. Some respondents saw having the right car as a visiting card with which to impress potential business partners. Many considered a fancy car a delightful self-indulgence rather than something to show off to others. Mr Müller-Ötvös sees the same trend among Rolls-Royce buyers: they are less interested in exterior bling, more in interior comforts, “like having the fur inside your coat”.

In China the market for luxury cars in the past decade has grown by an average of 36% a year, far outstripping the 26% annual rise in its overall car market. Even as growth slows down in the next few years, McKinsey expects the premium-car market to maintain a lead, expanding by an average of 12% a year to 2020, compared with around 8% for the car market as a whole. By then China will be the biggest market for luxury cars.

Nor is it just Chinese buyers who are keen on status symbols on wheels. JLR’s sales chief, Phil Popham, says his company expects the global market for premium cars to increase by up to 45% over the next ten years. JLR is looking beyond the BRICs into the MIST: populous countries such as Mexico, Indonesia, South Korea and Turkey, whose middle classes are also expanding. Its cars, especially its Range Rover sport-utility vehicle, have joined the elite group of “Veblen goods”, the sort that become more desirable as they get more expensive (named after Thorstein Veblen, a sociologist who invented the concept in 1899). The first incarnation of the Range Rover in the 1970s was a rugged, utilitarian beast ideal for farmers. The latest version, with its sleek styling, plush interiors, high-tech aluminium frame and impressive performance, caters to a different kind of customer. Prices range from £71,000 ($109,000) to well over £100,000.

The key to success in the luxury market, explains Mr Müller-Ötvös, is that customers want to be able to tell their friends, family and business associates some good stories about what they have bought. For a brand as steeped in history as Rolls-Royce, that is no problem. One of its stories is that three-quarters of the cars the company has ever produced are still on the road: “It is a smart investment,” he says. McLaren, a successful British maker of sports cars, is drawing on its heritage as a Formula 1 racing team. Tesla’s Model S glories in being an advanced car made by a Silicon Valley start-up created by a tech billionaire.

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This lucrative market is hard to get into. Even Mercedes recently failed in its attempt to revive Maybach, a pre-war ultra-luxury brand. It took VW’s Audi three decades of steady improvements and skilful marketing to reach its current level of desirability. Japan’s three biggest carmakers have put a lot of effort into creating premium brands of their own—Toyota with Lexus, Nissan with Infiniti and Honda with Acura—but have yet to catch up with Europe’s most prestigious marques. KPMG’s Mr Leech thinks they may do well with those Asian consumers on whom the finer points of German or British styling are lost, but McKinsey’s Mr Kaas is not so sure. Chinese consumers are developing Western tastes, he says, and value the long history and brand cachet of European luxury marques.

Some of Europe’s struggling volume carmakers, such as Peugeot and Opel, are trying to move upmarket too in order to get back into the black. Russia’s president, Vladimir Putin, is calling for a revival of Soviet-era luxury brands such as Zil and Chaika. China’s new carmaker, Qoros, may also be aiming to establish itself as a premium brand. Mr Kaas says they all need to hurry up. Although brand loyalty in emerging markets is less strong than in the West, tastes are maturing and new luxury brands will find it ever harder to grab a share of the cake.

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Luxury Car Market in India:

Despite the slowing economy and shrinking car market, the luxury car market is on a rise. Mercedes-Benz, Audi, Jaguar Land Rover and even Volvo have been growing this year as well. Mercedes-Benz has registered a growth of 22% in this fiscal year till July as the company sold about 4575 units, while JLR India has seen a growth of 68% in the last quarter. Volvo too has been witnessing a growth in its sales and Mr Tomas Ernberg had mentioned that the company has seen a growth of 50% in this year already.

According to Mercedes-Benz India MD and CEO Mr Eberhard Kern “2013 is the year of offensive for Mercedes-Benz India as we have unleashed some of our most fascinating products for the Indian market. At Mercedes-Benz India, we are getting future ready as we are not only launching new segments, but also continuously investing in our production facility in India, strategically expanding our network and also enhancing our cost of ownership programmes. Though the market currently is going through a downturn, we firmly believe that, only fundamentally strong brands like Mercedes-Benz, are able to do better and reverse the trend.”

In the overall sales for this year, Audi is still leading with 5551 units this year. But with the recently launched new vehicles, Mercedes-Benz could have an edge in this segment. The company recently introduced five new products in the last 90 days. Audi will soon introduce the locally assembled Q3 this month and even BMW is preparing to get the 1 Series on the 3rd of September. Jaguar Land Rover on the other hand will be getting the Range Rover Sport in October and Volvo will be introducing the new S80 and XC90 by the end of this year. Audi will be getting the A3 and S3. It seems that the battle is just getting intense by the year.

Tomas Ernberg, Managing Director, Volvo Auto India said, “The year 2013 has been very good so far. We have achieved a 33% YTD (Jan-July) growth (from 352 cars in Jan-Jul 2012 to 468 cars in Jan-Jul 2013). Despite challenging market and circumstances, Volvo Cars have witnessed increasing strength in the Indian luxury cars segment with continuing acceptability of our products amongst. We are overwhelmed with the faith our customers and dealer partners have bestowed on us, and we are on track to achieve our target of 1000 Volvo Cars in calendar year 2013.”

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Global Marketing Strategy of BMW:“We at BMW do not build cars as consumer objects, just to drive from A to B. We build mobile works of

art “– Chris Bangle

Background of the BMW Group:

BMW (Bayerische Motoren Werke) in English (Bavarian Motor Works) Group is the leading car manufacturer and seller in the world. BMW Group is a German company and manufacturers of automobiles and motorcycles. BMW Group is the parent company of BMW MINI and Rolls Royce car brands.BMW was founded by Karl Friedrich Rapp in 1913, under the name of BFW (Bayerische Flugzeug-Werke). But due to difficulties of over expansion, Rapp left and the company was owned by Franz Josef, an Austrian industrialist in 1917.The headquarters of BMW Group is in Munich, Germany, the famous four cylinder building which was developed in December 1971.

BMW Group employs more than 1 million employees in more than 40 countries. BMW Group has worldwide subsidiaries and manufacturing plants in Germany, the UK, the USA, Egypt, China, South Africa, Brazil, South Africa etc.

Business Strategy of the BMW Group:The business strategy of BMW Group is based on having a powerful brand image. This strategy forms the foundation of the success of the BMW Group. BMW Group believes in maintain core values as technology, innovation, performance, quality, reliability, exclusivity and customer satisfaction. The company slogans of BMW Group in English i.e. “The Ultimate Driving Machine” and “Sheer Driving Pleasure” give us an overview of the marketing strategy it adopts.

The strategy of BMW Group is clearly defined on the homepage of the company i.e.

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“Identify potential and encouraging growth. Knowing what we represent. Recognizing where our strengths lie and making the best use of every opportunity. Goals we have attained are in essence the point of departure for new challenges”. (www.bmwgroup.com)

BMW Group mission statement is defined as “to be the most successful premium manufacturer in the car industry”.

Marketing Strategy of the BMW Group:The success of any company is based on how effective marketing and advertising strategy it adopts. BMW Group adopts a marketing campaign of targeting its customers. In the slogans i.e. “The Ultimate Driving Machine” and “Sheer Driving Pleasure”. BMW tells its customers and other people that BMW cars give a pleasure in driving that no other car can give.

The marketing strategy of BMW also consists of a strong advertising strategy. WCRS has been BMW’s advertising agency since 1979 and have really made a great brand image for BMW by advertising campaigns including famous actors like James Bond, Tom Cruise etc.

BMW Brand Image:The brands of BMW Group include BMW, MINI Cooper and Rolls Royce. The three brands speak for themselves and are of superlative excellence. All of them have great innovation ability and the customers really feel pleasure in driving.This is also BMW’s business strategy i.e. to maintain outstanding brand image among customers. The great advertising strategy of BMW Group is also a reason for BMW’s great brand image. This brand image of BMW has been built by using over 300 colour advertisements. BMW Group in all advertisements have remained consistent on the substance used in the cars themselves.

BMW brand focuses on one thing, “Sheer Driving Pleasure”.

MINI is different; extroverted, spontaneous and in every respect something out of the ordinary and ideal for a society that is young and unconventional.In 2003, Rolls Royce became a part of BMW Group and is the most fascinating and popular brand among customers, “the luxury motor car par excellence”.

Segmentation Strategy of BMW:

BMW Group has a strategy of targeting their customers by using segmentation. Geographically, BMW Group targets the areas that are more industrialized like Europe, North America, some parts of Asia and Africa i.e. China and South Africa. More than 70% of sales of BMW cars are recorded in Europe and North America.

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Customer Targeting Strategy of BMW:

BMW Group targets people who are aged between 25 and 40 because these people have a successful image. By, these people have a clean modern look and a feel good factor. BMW Group focuses on being labeled as a “luxury car” and “a foreign or international car”, so BMW Group does not look to target one ethnicity or citizenship.

The aim of BMW Group is to target customers that have an income of 25,000 Pounds.

Positioning Strategy of BMW:

There is a quotation on the website of the BMW Group, which says that “the image that BMW Group has positioned itself in exclusivity, performance, quality, technologically advanced producer in the world. The markets BMW position themselves are very competitive”.

Most of the people value “a feeling of safety” while using BMW, which positions BMW Group ahead of its competitors in customer satisfaction.

.Marketing Mix of the BMW Group:

Product:

The product is probably the cornerstone of BMW’ marketing mix programme, characterized by a high technological content it is definitely the main strength of the company. In order to reach the objectives it is important to expand the range of products already very wide targeting the entry-level segment expanding the line and developing more eco-friendly products such as hybrid luxury cars and compact city cars designed to the middle market.

Price:

Price for BMW should continue to be a consequence for the differentiation strategy; innovation, design and quality have a price. The brand should not lower the prices for premium and high-ended products despite the recent crises in some of the markets. At the same time should differentiate the price for entry-level product by creating special offers aimed at mid-market.

Place:

Exclusivity of the store is definitely a factor to leverage on for BMW; the company should continue to invest in the creation of flagship stores, so as to maximize the consumer experience. At the same time should also focus expanding the amount of authorized dealers, which are already present in more than 100 countries with more than 4.400 stores (Bmw group, 2012).

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Promotion:

BMW is very committed in the promotion of its products, the company in fact invest large amount of money in product placement in movies such as “The World Is Not Enough” and others. New advertising techniques are largely used by the brand to enhance the design and quality of its products, however could probably be profitable for the company to focus on the environmental sustainability of its future products. In order to create awareness in the BRIC countries BMW should apply principles of global marketing to its advertisements, in order to shape them according to the county’s culture.

BMW has always been linked to exclusivity and luxury, but according to the new perspectives of German car maker, seems that the group wants to open the doors to the entry level segment of the market (Bmwgroup, 2012). For this reason, another important marketing objective should be orientated on creating product awareness for this particular sector in one-year time; this would work especially in the markets affected by the crisis in order to regain the lost sales. Without a correct implementation of this kind of strategy, there is in fact the possibility that the customer would not consider the possibility of buying BMW because perceived as too expensive for his budget. At the same time it is important for the company to not lower the perception of the main brand. BMW is finding increasingly interesting the concept of eco-friendly, and environmental sustainability car and way of transportation. The company since 2007 is involved in developing a new sustainable concept of mobility through hybrid and electric cars (bmwgroup, 2013). This can be seen and interpreted in two different ways and it can generate another two important future marketing objective for the company. The first one is product related; BMW will soon lunch in the market the new i3, a fully electric concept car equipped with an high technological content, capable of covering more than200 km on a single charge, and this demonstrates how the group is interested to embark on the road of environmental sustainability. Basically, producing eco-friendly vehicles should be set as a marketing objective bearing in mind the economic crisis, the increase in fuel and new laws in terms of pollution; this objective could be reached in four years time because of the already structured competencies of BMW. Another important example that confirms the theory comes from the New York Auto Show where the first ever four-cylinder diesel, has been presented in the US market from BMW (Autoblog,2013). As far as the for the and last marketing objective it presents itself as a result of the previous one; the group should increase awareness of its Eco sustainability in two year time, which would also give resonance to all the advanced technology achieved trough R&D investments

BMW SWOT Analysis:1) Strengths:

Strong marketing strategy. Customers recognize the strong brand name of BMW Group Company. Strong brand image i.e. BMW, MINI Cooper and Rolls Royce. Significant Investment in R & D Strong Production and Distribution Network.

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2) Weakness:

There is an increasing number of duplicate spare parts of BMW and MINI Cooper. The manufacturing costs of BMW cars are very high as compared to its competitors. This is also

a reason for high pricing of BMW cars. Not a mass market company like Toyota and their volumes are small. Uncertainty of Competitive Advantage Strong Competition in the Luxury Market

3) Opportunities:

There is an opportunity for BMW Group to increase further innovation and technology in their cars due to increasing competition in car industry.

BMW Group should also look to make new collaboration with other car manufacturers i.e. introducing new brands.

BMW Group should also look to produce cheaper cars by new innovation and technology. Expansion of the BMW Group in Asia Pacific, Asia, Africa and Australia. Growing Demand for Hybrid and Electric Cars Scope of Growth in BRIC and UAE Markets.

4) Threats:

Recession which has affected businesses in every part of the world. To maintain the same level of innovation and performance. The growing competition in the automobile industry i.e. competitors of BMW Group include

Mercedes, Audi, Jaguar, Ford, Lexus. The earnings of the BMW Group are Dollar dominated, so the increasing strength of Euro is

another threat for the company. Increase in Fuel Prices Currency Exchange Risk New Government’s Regulations about Polluting Industries Economic Downturn in certain Assured Markets Strong competition in Global Markets

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BMW Marketing Strategy for India:

Marketing is an important part for a Luxury Car Brand. Especially in an impressionable young market

like, India.BMW already had a reputed brand name when it entered India. Within two years of entering

the Indian passenger car market in 2007, BMW toppled rival Mercedes-Benz to become the numero uno luxury car maker of the country. In 2010, the company recorded a 73 per cent growth in sales volume, maintaining its leadership position in the category.

Assuming a growth rate of 25-30 per cent over the next few years, the segment in 2020 would be 1,50,000 cars, which is 10 times its size today. If that happens, India will be among the top ten countries in the world for the BMW Group. Also, if, according to research, India becomes the fourth largest car market in the world in a couple of years, the premium segment will come to dominate a much larger portion. The changes in this segment are driven by several factors. India is at a tipping point where education levels are rising and more and more people have the income to buy a car. Another major trend is the attitudinal change in the new generation. The younger generation has a different view on work-life balance they want to enjoy their lives.

Offline Strategy:

The BMW brand is highly attractive for people who have a modern view of things. It is perceived as a dynamic, sporty, innovative and aesthetic brand and hence has done well with the younger target audience. The average age of the BMW buyer is 40 years.

Therefore, instead of having a huge advertising budget they have developed their touch points to ensure a better connect of the customer to the brand. For Instance, BMW as brand symbolizes Luxury,

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therefore if you walk into any BMW store, you will be treated in a certain way and the store will be designed to exude sophistication. BMW India was the first company to develop a luxury car dealership network in the country. Though in India, most of the luxury customers did not want to visit automobile showrooms, preferring instead for the vehicles to be shown to them at their homes / offices, BMW decided to open dealerships. The company set up showrooms that were of international standards. BMW also started BMW Studio in New Delhi, to provide the complete BMW experience to customers.

BMW has also conducted activities such as professional golf tournaments, wine tasting sessions, events with fashion designers - that have helped them get closer to their customers.

Online Strategy:

With a majority of its target market being a younger generation, BMW has adopted to Social Media to access as much of its prospective customers as it can. BMW India’s Social Media strategy revolves around updates about BMW India’s offline activities and news. BMW India’s overall online cloud demonstrates that its online strategy is helping to enhance the efficiency of its overall PR strategy.

1) Facebook :

BMW India’s Facebook page updates consist of interesting content around the brand like showroom launches, new models, offline events, awards, in-house news, etc.

BMW being an aspiration brand, people would naturally want to talk about it, like it, share it with their friends, or even write about it But the updates on BMW’s page are not interactive, hardly leaving any scope for conversation. A huge difference between the number of likes and comments clearly denotes this.

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Fans have been following and liking the brand, but there is very less engagement and conversation. To some extend this asserts its exclusivity.

2) Twitter:

It has a verified Twitter account, but no tweets or interactions at all.

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3) Youtube:

BMW is doing a very good job on YouTube. BMW India’s YouTube channel is customized with rich with content. Videos depicting test drives, history of the brand, car launches, races, making of the car, etc. are lined up on its YouTube Channel that boast of over 3 lakh video views.

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Global Marketing Strategy of Mercedes Benz:

“Oh, Lord, won't you buy me a Mercedes Benz My friends all drive Porsches, I must make amends.” – Janis Joplin

Background of the Mercedes-Benz Group:Mercedes-Benz is a multinational division of the German manufacturer Daimler AG, and the brand is used for luxury automobiles, buses, coaches, and trucks. Mercedes-Benz is headquartered in Stuttgart, Baden-Württemberg, Germany.

The name first appeared in 1926 under Daimler-Benz but traces its origins to Daimler-Motoren-Gesellschaft's 1901 Mercedes and to Karl Benz's 1886 Benz Patent Motorwagen, which is widely regarded as the first automobile. Mercedes-Benz's slogan is "Das Beste oder nichts" (English: "The best or nothing"). Mercedes-Benz is part of the "German Big 3" luxury automakers, along with Audi and BMW, which are the three best selling luxury automakers in the world.

Business Strategy of Mercedes-Benz:The overriding corporate goal of Mercedes-Benz is to achieve sustainable profitable growth and thus to increase the value of the Group. Accordingly they strive to achieve the leading position in all their businesses. Operational excellence and efficiency along with inspired and high-performing people is the key to their future corporate success. At the same time, their entrepreneurial activities are guided by the principle of sustainability. The group encourages their employee’s to orient themselves on the four corporate values of passion, respect, integrity and discipline. They aspire to lead the competition also in

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terms of integrity. By the end of the decade Mercedes-Benz Cars strives to occupy the Number One position in the premium segment. On the way to achieving this goal, they want to sell more than 1.6 million cars of the Mercedes-Benz brand in 2015.

Mercedes Benz Brand Image:Mercedes-Benz continues to be regarded as the world’s most valuable premium automotive brand. In the latest ranking by respected brand consultancy Interbrand Zintzmeyer & Lux, ‘Best Global Brands 2012’, the three-pointed star brand again took twelfth place – as it did last year – and is therefore the most valuable European brand. Its brand equity has risen to US$ 27.455 billion, an increase of 9 percent compared to 2011. Mercedes-Benz’s brand equity has therefore risen continuously since 2009. This success can be attributed to customer satisfaction with the brand, which is higher than that of all other automotive brands. What’s more, the model initiative launched two years ago is enabling Mercedes-Benz to successfully respond to the market’s demand for ground-breaking, sustainable transport solutions.

Mercedes-Benz Segmentation Strategy:

Mercedes-Benz being a luxury brand targets mostly Developed Economies. It has however started to establish its base in developing economies, due to the huge scope of expansion there. The customer’s it aims at are from upper middle class to highly affluent people, since brand awareness is high in these segments. Also, with a strong brand image it gives its customers a sense of pride to be associated with such a brand.It also customizes its product depending upon the market its selling in, thereby reducing Cost-Of-production and Sale Price to match the customer’s needs while keeping the profit element intact.

Customer Targeting Strategy of Mercedes-Benz:

Efficient customer-care is one of the most important aspects of Mercedes-Benz’s overall business strategy. It aims at giving a luxurious experience to the Customer, which is associated with the brand. Mercedes Benz, therefore targets upper-middle class to highly affluent customers due to strong brand awareness among them. Its aims at establishing a sense of pride and achievement in the customers for being associated with the brand.

Positioning Strategy of Mercedes-Benz:

Mercedes has positioned itself very strongly in the luxury car segment. It along with Audi and BMW are the 3 most recognizable luxury car brands worldwide. The name “Mercedes” exudes luxury achievement, pride, opulence and sophistication. The tagline “Best or Nothing” in one of its advertisements showcases the strong belief it has on its ability to deliver consistently value-for-money products

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Mercedes-Benz SWOT Analysis:1) Strength:

Mercedes Benz has a strong brand value and global leader in premium cars Lack of capital constraints Leader in innovation i.e. 1st to introduce diesel engines, fuel injection and anti locking brakes More than $12bn allocated for R&D Strong presence in motor sport under McLaren Mercedes Manufactured and assembled in over 20 countries across the world Mercedes holds patents on the majority of safety features

2) Weaknesses:

High Maintainence cost of Mercedes-Benz cars Lack of publicity in Social Media to target younger customers

3) Oppurtunities:

Developing hybrid cars and fuel efficient cars for the future Tapping emerging markets across the world and building a global brand Fast growing luxury automobile market & increased income

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4) Threats:

Government policies for the automobile sector across the world Ever increasing fuel prices Intense competition from global automobile brands

Mercedes Benz Marketing Strategy for India:Mercedes-Benz Partners With Buddh International Circuit

Mercedes-Benz India, in a bid to promote what he company calls ‘the spirit of performance Motoring’ has planned a three pronged strategy. The strategy also includes partnering with the Buddh International Circuit for promoting motorsports. Here’s a brief detail on the plans Mercedes-Benz has in store:

Part 1: Official Automobile Partners of Buddh International Circuit: As the Official partners of Buddh International Circuit the company along with JPSI will play a pivotal role in the debut of Indian Grand Prix. The partnership with JPSI is aimed at establishing a stronger connect with motorsports enthusiasts and potential customers. Mercedes-Benz customers shall have exclusive and special access to use the cars on the race track. The company also plans a lot of activities at the Budd International Circuit.

Part 2: Popularizing Motorsport: Mercedes-Benz will start a nationwide promotional and activation campaign to popularize Motorsport and give enthusiasts access to witness the action at the Indian Grand Prix at Buddh International Circuit. Mercedes-Benz plans to create Pit Stops at all its dealerships which will sell tickets for Indian Grand Prix and also merchandise for enthusiasts and collectors.

The Mercedes-Benz Speed Date is another activity planned around third week of October at Mumbai with participation of over 100 Mercedes-Benz and AMG cars.

A college activation program, MTV Date with Speed, is fun filled program, with youth engagement, music, cars all woven around the theme of Motorsports. Mercedes-Benz will also be organizing lifestyle parties across multiple cities at the hippest pubs. A host of other promotional campaigns targeting the young audience will ensure the country gives a rousing welcome to the grand debut of Indian Grand Prix.

As an Official Automobile Partner, Mercedes-Benz cars will serve as the Official Safety car, Fast Intervention Vehicles and Race Control Cars in Motorsport event in the country.

Part 3: Performance Driving Academy: Mercedes-Benz along with JPSI will create a Performance Driving Academy to create a platform to provide high octane experience to motorsports enthusiasts in India. The new Academy will offer structured programs, cars, trainers and help groom new talents on the

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racing circuit. Mercedes-Benz has a rich history of motorsport. In fact no other automobile manufacturer in the world shares the same relationship with racing as Mercedes-Benz.

Publishing a Magazine:

Mercedes-Benz announced its partnership with MaXposure Media Group to launch the ‘Mercedes’ magazine for the first time in India. With up to eight existing international editions already, ‘Mercedes’ magazine hit the Indian market through private circulation. Poised to serve as a coffee-table book, the magazine seeks to have considerable reach in the dynamic and young affluent sections of society. Published quarterly, the magazine will be circulated to the exclusive clientele of Mercedes-Benz in India and to the ever-growing group of people who aspire to be a part of the Mercedes-Benz family.

‘Mercedes’ will cover topics ranging from high-end products and services to fashion, hobbies, holidays, and communication and entertainment. The magazine will also cover the global lifestyle of the rich and famous. Besides these, sections on Mercedes-Benz history, heritage, production and future technology have been incorporated for automobile aficionados.

The international counterpart of this avant-garde magazine is published by Daimler AG.

2) Online Marketing:

Mercedes Benz listened to what customers were saying about them online before creating and implementing their social media strategy. Through this time of listening, they created a “short list” for a two year social media strategy. They also discovered, much like Mini did when they conducted similar listening, that their customers were drawn to Mercedes for the type of image and lifestyle that it portrayed, so that gave them a starting point for how to construct their media to best display the Mercedes lifestyle.

The second objective Mercedes fulfills in their social media strategy is talking. Unlike other companies, Mercedes Benz has spent no money on digital advertising, including email campaigns . Instead of using this old style of one-way marketing, Mercedes talks to create conversations. They create these conversations through platforms like Twitter and Facebook. With this method, Mercedes talks to customers, but customers also talk to Mercedes.

Over the last couple of years, Mercedes has launched several campaigns to engage customers through social media. They have an annual fashion week in New York City, but added a social media element to that for 2012. Through the “Star Style Challenge,” which has a special page on Mercedes’ Facebook fan page, people could answer the question “what does ultimate star style look like on the red carpet at the Academy Awards” by creating “sets” using fashions by featured fashion week designer Naeem Khan, and Mercedes-Benz cars. This reached out to a different set of people, fashion enthusiasts instead of car enthusiasts, but perpetuated the idea that Mercedes Benz is the best in glamour cars, as these sets paired world class fashion and the red carpet with their vehicles. Over 5,000 people entered the contest. In addition, Mercedes launched the Mercedes Benz Tweet Race in 2010, leading up to the 2011 Super

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Bowl. In the race, Mercedes created cars powered entirely by tweets. The cars raced throughout the country, and the campaign led to thousands of tweets devoted to the race. The race was so popular that one of the team name hashtags actually became a trending topic on Twitter.

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Global Marketing Strategies of Audi :“ If driving a car is meditation, driving an Audi is achieving nirvana” – Hugh Jackman

Background of the Company:The Audi Group, comprising the two brands Audi and Lamborghini, has for many years been one of the world’s leading carmakers in the premium and supercar segment. Through the acquisition of DUCATI MOTOR HOLDING S.P.A., Bologna (Italy), and its subsidiaries, the Audi Group has moreover since July 2012 been able to offer its customers motorcycles built by one of the most successful manufacturers in that segment.

Sporty, sophisticated and progressive – the premium vehicles from the Audi brand

The core of the Company comprises the Audi brand, whose vehicles delight customers with their outstanding modern design, technological innovations and high build quality. The ambition to fulfill challenging customer expectations with pioneering vehicle concepts is manifested in the brand essence “Vorsprung durch Technik,” which encompasses the brand values sportiness, sophistication and progressiveness.

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Business Strategy of Audi:The Audi brand has placed evoking customer delight worldwide at the very heart of its strategy, as the key component of its mission. The brand values sportiness, progressiveness and sophistication are convincingly embodied by the products of the Audi brand. In addition to supplying technologically advanced, innovative automobiles, it aims to generate customer delight in a wide variety of other ways. The Audi brand has defined its understanding of customer delight in greater detail in the following four areas of action, which it examines, formulates and substantiates as part of an ongoing process:

We define innovation We create experiences We live responsibility We shape Audi

Marketing Strategy of Audi:Marketing has played an instrumental role in Audi’s inexorable rise from being a niche brand to challenging for the lead in the prestige car sector. It is proof that consistent needn’t mean conservative, and that creative can also mean effective. For 25 years, Audi’s distinctive approach has continued to challenge the boundaries of convention in marketing and the car industry alike. It has become synonymous with one of the most memorable striplings in advertising: Vorsprung durch Technik (Advancement through Technology).

Audi’s Brand Image:Audi’s investment in aligning their brand with the values of the Olympic games continues to pay-off. Through their sponsorship of the 2010 US Alpine Olympic Team and smart campaign placements deliver a remarkably high level of association with this pinnacle of sporting events. The shared symbol of interconnecting rings provides a powerful visual link that reinforces the brand relationship. As a brand it is closely associated with an image of ‘cool, nice and classy.’ The appearance of individual Audi models in the list of top brand associations including the Quatro, tt and A4 suggests the brand has successfully built differentiated market propositions for the brands in its product portfolio. Further, the description of the ‘Audi rings’ reflects a high level of awareness and association of the visual properties in Audi’s brand identity.

Segmentation Strategy of Audi:

Audi mainly utilizes Geographic, Demographic, and Psychographic Segmentation :

1) Geographic segmentation:

The first decision Audi's marketers would make is which cars to market in which countries. Europeans, for example, drive much smaller cars than Canadians. Within a country like India, Audi might also

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segment the market into rural and urban areas. People who live in rural areas are more likely to buy a Audi A3 than a Audi A7.

2) Demographic segmentation:

Age is a relevant demographic for car buyers. The very young and the very old do not drive, and in between, say, from ages 20-70, the choice of car will be partly influenced by the person's age. Take the Audi A6, for example. A 20 year old is more likely to choose this car than a 70 year old because it is more flashy. There's more to demographics than simply age, though, such as segmentation by gender. Are women more likely to buy certain Audi models than men? Are men more likely to buy certain Audi models than women? There's also segmentation by income. A person's income level is a major influence on their choice of car. A young man just starting his career, or an older man working in a low-paying job, might desire an Acura NSX, but at $89,000 U.S., neither could afford to buy it. Family status, whether a person is married and whether they have children, is also a demographic factor that influences their choice of car.

3) Psychographic Segmentation:

When it comes to social class, Audi aims for Upper Middle Class to High class people, because it is a luxury brand. People’s interest in various products can be determined by their lifestyles, and indeed people can often express their lifestyles through the goods that they consume like cars. Psychographic segmentation has demonstrated its use as a practical marketing tool in consumer markets.

Customer Targeting Strategy of Audi:

Audi targets customers from upper middle class and highly affluent financial background. It also targets people in the age group of 20 to 70,instead of targeting only young and affluent.For that purpose it has developed a wider range of models to suit the needs of each age bracket.

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