Critical discussion of the market development strategy for the greater area of North America through German multinational companies of the automotive industry from a market oriented perspective.
What is Market Development and Cultivation?
Market development may be defined as the process in which a company takes the strategic step of developing and enhancing a particular market; it may also involve the process of entering a new market altogether, where the company would have to target a different segment of buyers and consequently adopt an innovative, new marketing strategy to increase sales (Malysheva et al. 2016). Market cultivation may be defined as the method employed by a company while it conducts international business. Market development and market cultivation, which are often used interchangeably, involve processes that are twofold – it would begin with extensive research into the market the company is planning to penetrate; this stage would include segmentation analysis and target market analysis (McDaniel and Gates 2013). The purpose of such research is to gather sufficient information on the unexplored market, assess the risks associated, study the geographical and demographic conditions and finally make an informed decision in the second step (Baker 2014). In the next phase, the company would be endowed with the responsibility of creating a robust promotional and marketing campaign that would help the company make a mark in the market (Urde, Baumgarth and Merrilees 2013). To study market development, the following report takes into account the case of Mercedes - Benz, a German luxury automobile company.
Mercedes, founded in 1926, is a subsidiary of the multinational company, Daimler AG. Established in Stuttgart, Germanny, Mercedes - Benz today is one of the leading names in luxury cars, trucks, buses and coaches. With the slogan, “the best or nothing”, the origins of Mercedes as we know it can be traced back to 1886, when the first ever gasoline automobile was introduced (Mercedes - Benz-benz.com 2018). In the early 1900s, Daimler Motoren Gesellschaft was entrusted with the responsibility for Mercedes - Benz marketing. However, since then, Mercedes has introduced several new technological advancements and innovations related to safety which have set the benchmarks in the automotive industry. Apart from the fact that Mercedes is one of the oldest automobile brands in the world, it is also important to remember that it is today one of the most popular luxury car brands around the globe. Daimler AG, the parent company of Mercedes - Benz, is engaged in the development, management, manufacture and distribution of a wide array of automotive products. At present, the company carries out operations globally and occupies a significant portion of the market in Germany, United States, Asia Pacific and Western Europe. For generations, Mercedes - Benz, with more than 350,000 people employed under the banner, has been one of the leading manufacturers of top quality cars. One of the main reasons for that could be the culture prevalent in the company’s homeland – Germany. With regards to this, it must be asserted that the culture of a country plays a crucial role in determining its marketing strategy and its performance level as well. German organizations, typically, are characterized by high efficiency levels; the fact that Germany has a speed limit that is unlimited, it is important for the car manufacturers to develop vehicles that can perform at optimum speeds without hindrances like internal noise or strains. This factor has provided Mercedes with a competitive edge in international markets as well.
Introduction to Mercedes-Benz
In 1945, Daimler AG began to promote its export strategy because it was assumed that the export of automobiles would help it in securing a strong position in the international market. It was assumed that the automobile market in Germany would be too small for the long term plans that Daimler had for Mercedes - Benz (Caiazza and Nueno 2014). Moreover, as far as luxury cars were concerned, only a specific niche market was found in Germany and it was deemed highly insufficient. The automobile industry had begun to expand after the war, however, mass motorization had gained momentum only in the 1950s; thus, it was estimated that to allow the company to grow, Daimler would have to penetrate international markets, especially that of North America (Meinel 2014). Moreover, the fact that there were several other German automobile companies which were competing with Mercedes - Benz, it was important to make mark in the international market to gain a competitive advantage. Additionally, by expanding to international markets, namely North America, it was possible for Daimler to abide by its moderate and stable pricing strategy (Watzenig and Horn 2016).
Before understanding how Mercedes - Benz, under Daimler group, managed to enter the North American market, it would be beneficial to analyze the German automobile market and the prevalent trends in the industry. Since Germany has always been the hub for luxury car manufacturers, the market is highly segmented. Firstly, the market is product oriented; this means that Mercedes - Benz, with its upper price ranges and high technological innovations, ranks high in the market (Wesseling et al. 2015). Secondly, the market is also segmented on the basis of the customer’s demographics, their behavioral and buying patterns (Hunke and Prause 2014). The market in Germany is dominated by a number of automobile brands like Mercedes - Benz, Volkswagen or Opel which are fundamentally defined through innovative abilities and marketing communications; along with that, these companies have a strong position both in the home markets and in the global context (Timmer et al. 2015). However, according to the executive committee at Daimler AG, Mercedes would be able to dominate the international market only by entering the market of US, specifically North America. Moreover, the economic crisis in Europe in 2008 and 2009 proved to be detrimental for the industrial sector, and the automotive manufacturing industry was no exception; as a result, a large number of automotive companies, including Mercedes - Benz, were forced to shift their focus to international markets (Pavlinek 2015).
The main purpose behind expanding into the North American market was to pave the way for low risk, cost effective and quick reconstruction of the company’s international operations abroad (Cabigiosu, Zirpoli and Camuffo 2013). Since Daimler was spreading its branches far and wide, the chances of risk were distributed and thus relatively less. Before entering the North American market, it was important for Mercedes - Benz to set up a cost effective sales organization and partner up with other companies. It established a brand image of being a company that guaranteed exemplary customer service and top quality products (Bloomfield 2017). The policy in mind before entering the new market was quality and market oriented, and it was called “Americanization” of the German automobile company.
Expansion Strategy of Mercedes-Benz
There were quite a few factors which fuelled Daimler’s decision to introduce Mercedes - Benz to the North American market. The US market was one of interest for most German automobile companies because this market was already well developed and broader as far as the context of automobiles was concerned (Schmitt and Van Biesebroeck 2013). The three reasons why Mercedes - Benz targeted this particular market were:
- The vast size of the market. In the early 2000s, the automobile market in the US and Northern America was only booming and the number of people looking to purchase passenger and luxury cars was massive (Gopal et al.2013).
- Mass motorization was already underway all over United States, with Henry Ford establishing the roots for the Ford Motor Company. As a result, a number of laws and regulations pertaining to sales and car prices were introduced all of which catered to the general population, enabling them to buy cars. This was further made possible by the low prices of gasoline, tires and oil; this made it more favorable for automobile companies to carry out operations in America than Europe, specifically in Germany. Germany, when compared to America, had sky high manufacturing costs, which adversely affected the sustainability of the Daimler organization (Wells 2013). Moreover, in Northern and other parts of America, owning a car was deemed as a kind of status symbol; as a matter of fact, in Germany and America, having a car symbolized freedom from the hegemony of power structures in the post war era, and this had a profound impact on the sales of cars. Mercedes - Benz penetrated the American market at the right time, when the customers were open to the idea of purchasing cars and were looking for best possible options. In addition, a large number of banks in America were offering car loans, enabling more number of people to buy their own first hand cars.
- At the time when Daimler decided to export their automobiles to North America, the buying power of Americans was soaring; this was largely an effect of the Korean War of 1951 and the Second World War. These political and social conditions catered favorable circumstances for Mercedes - Benz to enter the market.
The company strategy, as Mercedes - Benz prepared to enter the new market, was to use the most advanced sales and marketing system so as to build a strong, loyal and satisfied customer base for long term relationships. With the number of competitors increasing in Europe, Daimler AG realized the importance of tapping into the North American market which boasted of relatively low operating and running costs; gradually, Mercedes - Benz emerged as the top premium brand for luxury cars across the United States.
The automotive industry in the United States happens to be one that is worth more than hundreds of billions of dollars; it has its roots in the industrial revolution, and today a large part of the economy of North America is determined by the automobile industry because of the large amount of revenue it generates (Law 2017). However, since the industry is massive in terms of scope, there are a large number of political, social, economic, environmental, legal and technological factors that affect its growth and the generation of revenue. As a matter of fact, the recent economic crisis took a toll on the automobile industry of North America, but post recession, the industry is back to business with a majority of the population relying on cars for travel and transport (Schulze, Paul MacDuffie and Täube 2015). Moreover, the sales and marketing industry for automobiles is also on the rise; as of the twenty first century, innovation and technology have become the two most important factors that determine the performance of a brand in the market (Guajardo, Cohen and Netessine 2015). Before devising a market cultivation plan for Mercedes - Benz in the United States, it would be beneficial to carry out a PESTEL analysis of the US automobile industry, with special reference to North America to understand the prevailing factors. The Porter’s Five Forces Model has also been applied in this case, in the following sections.
In order to understand the various factors affecting the entry and market development plan of Mercedes - Benz while it targets the North American market, an external analysis of the macro environment of the automobile industry will have to be analyzed to gain a comprehensive understanding (Jurevicius 2013).
Political factors of the country would play a crucial role in determining the profitability of the automobile industry. There are several government laws and policies which regulate the manufacture, production and sale of vehicles in North America (Allcott and Wozny 2014). For example, there is currently a pressure from the government to manufacture vehicles which cause less emissions; this has been done keeping in mind the environmental toll of increasing population of cars and consequent rise of traffic in North America. In addition, the North American government is taking measures to impose taxes on luxury vehicles and fuel, to reduce the number of cars on the road. Following the models of some countries, the government is also planning to introduce a new policy of subsidy for owners of low emission vehicles. Regulations like these are bound to have an impact on the sales rates of vehicles and of course, on the revenue generated as well (Lampón and Lago-Peñas 2013). There is thus an increasing need for car manufacturing companies like Mercedes - Benz to use technology that produces lesser emissions and is also fuel efficient. More importantly, for foreign car brands carrying out trade in North America, the import rates would vary depending on the location; similarly, changes in the government regimes and instable political regulation in the automobile market must also be taken into account (Diaz-Cope, Lombard and Miller-Stevens 2013). Thus, for a brand like Mercedes - Benz, it would be important to keep an eye on wage related policies and regulations (the more lenient, the better) and also manage the operational costs while simultaneously adhering to political factors.
German Automobile Market and Industry Trends
There are several economic factors which must be taken into account while chalking out the market cultivation plan. For example, the United States was recently hit by an economic crisis of epic proportions; as a result, the sales of automobiles, especially luxury cars, suffered (Castells 2014). Additionally, there are usually high taxes imposed on the manufacture and production of luxury cars in developed countries, in this case North America, as compared to the under developed or developing countries. In more developed markets, the buying power of the customers is higher and such customers would be more receptive to the idea of purchasing luxury vehicles; that automatically hints at the fact that the sales of cars belonging to the upper price ranges would be higher (Feng and Figliozzi 2013). However, during economic crises, even the buying power of these customers is bound to decline; that is probably why a large number of local car brands in the US are coming up with low price cars which would appeal to all customer segments. These are some of the economic conditions which Mercedes - Benz would have to keep in mind while determining the profitability of their operations in North America.
According to research, the customer base in North America is steeped in a consumerist attitude, where owning a luxury car is considered to be one of the most important status symbols, reserved only for the rich and the famous. Over the years, there have been a large number of changes in the preferences and trends of the automobile industry, with changes in the attitudes of the customer (Akamatsu, Green and Bengler 2013). In such an unstable social and cultural environment, it can be difficult for the vehicle manufacturers to keep up with the changes. Every year, there are a plethora of new models being released which pique the interests of car enthusiasts. Moreover, different customer segments have different vehicle preferences. For example, a younger customer would prefer something fast and flashy like a convertible while an older customer with a family would probably prefer a sedan (Shende 2014). Thus, for Mercedes - Benz, age distributions would play an important role in determining the target audience and the marketing strategy (Krishna 2013). It would be beneficial for Mercedes - Benz to release vehicles which appeal to the target customer, based on their individual preferences and styles. It is the company’s responsibility to understand that while some vehicles would sit well with some customers and cultures, it might not attract others.
In the automobile industry, one of the most important factors that determine a company’s success or failure would be the technology they use or their innovative capabilities; automobile companies, more than any other industry, tend to rely heavily on innovation. The more technologically advanced a company is the higher market share it has. Mercedes - Benz, and other German brands are known for incorporating such innovations in their manufacturing processes, in order to satisfy the high European standards (Aydalot and Keeble 2018). Thus, the onus is on the car companies to devise innovative new technologies that are environment friendly and enhance the overall performance of the vehicle. Customers today are looking for vehicles which not only offer a high mileage but also are fuel efficient (Calabrese 2016). Mercedes - Benz, the premium choice in luxury vehicles, has garnered international attention for manufacturing and marketing technologically advanced vehicles. All the vehicles introduced by the brand either incorporate new technologies or improve on existing ones.
Mercedes-Benz's Dominance in International Markets
In the United States, and in North America, a number of laws have been passed by the government so as to reduce vehicle emissions and the air, water and noise pollution caused by cars (Diabat, Khodaverdi and Olfat 2013). With the growing consciousness about environment friendliness, carbon emissions, emissions and vehicular exhaust, there is a rising concern about the way vehicles can adversely affect the environment (Bergek and Berggren 2014). Naturally, automobile companies around the world are being forced to abide by stringent laws and policies which promote low emission cars and subsidies on fuel consumption; additionally, there are pollution tests which must be passed by the vehicle companies before they launch a new product into the market.
There are also a number of legal factors which would affect the manufacture and production of vehicles in Northern America. The country has numerous laws regarding safety measures and quality standards; apart from that, there are pollution laws which must be taken into account (Hwang et al. 2013). Vehicles that would be exported from Germany in the case of Mercedes - Benz would be required to pass the strict controls on emission; moreover, it is important to ensure that the safety laws related to vehicles in a particular country have been adhered to. With the rise in deaths caused by road accidents in North America, the government has imposed strict regulations on safety which Mercedes - Benz would have to incorporate in the business strategy.
In order to understand the structure of the market that Mercedes - Benz would be encountering, the Porter’s Five Forces theory has been applied.
In North America, Mercedes - Benz would be competing with a number of rivals in the same field like BMW, Toyota, Volkswagen, Nissan, Ford Motor and General Motors. All of the competitors of the company are ambitious, powerful and aggressive; moreover, they all engage in order to constantly improve on existing strategies and technologies to gain a competitive advantage. As a matter of fact, the automobile industry in North America has become saturated to the point that customers have a plethora of options to choose from. Thus, to emerge as the clear winner, an automobile company like Mercedes - Benz would either have to add some value to the product or work on their unique selling proposition or reduce the selling price (Su et al. 2014).
Automobile manufacturers like Mercedes - Benz would be requiring a stable supply of raw materials, like hardware parts. This increases the bargaining power of these suppliers. Since there are a large number of competitors competing for the same raw materials in the market, there is a greater demand for raw materials; with fewer suppliers than manufacturers, the power resides with the former.
This technically refers to the number of factors that determine the buying habits or purchasing powers of the customers. It refers to the reasons behind customers choosing one brand over another (Rawlinson and Wells 2016). It is often observed, that individual customers of the automobile industry have some influence against car dealers, which is almost negligible in the case of car manufacturers. Yet, it would be wrong to assume that the buying power of an individual customer would have no impact on a company’s overall performance in the market. Thus, if Mercedes - Benz was to assume that buying preferences of individual customers are insignificant in context of the bigger picture, they would be adversely affecting their own profitability. The management at Mercedes - Benz would have to remember that customers are instrumental in determining the value and the pricing associated with a particular product. This is all the more poignant in an era where customers can simply go online and compare prices of similar models of vehicles belonging to different brands (Reza and Valeecha 2013).
Mercedes-Benz's Entry in North American Market
While speaking of Mercedes - Benz’ position in the market, one has to take into account the threat emerging from the public transportation. With growing concern about vehicular emissions, more and more people in North America are resorting to public transportation in their daily lives. Moreover, the transportation services in North America are well connected and extremely efficient; thus, people would willingly forego the hassle associated with private transport and instead travel in a bus or the subway (Redman et al. 2013). Other factors that could push people towards public transportation would include increasing prices of batteries, tires and gasoline.
The entry of a new automobile company after Mercedes - Benz establishes its roots in the North American market could potentially uproot the company and reduce its profit margins. However, it must be mentioned that the threat from new entries is comparatively low in this industry. This is due to a few factors. For one, it would require high capital investments to replace the premium brands like Volkswagen or Mercedes - Benz; and secondly, the competition being fierce in this sector, such brands would completely obliterate potential new entries.
Before devising a market development plan for Mercedes - Benz, it would be beneficial to study the strengths, weaknesses, opportunities and threats associated with the company (Phadermrod, Crowder and Wills 2016).
- Quality, durability and reliability
- Precision and safe engineering capabilities
- Respectable and internationally acclaimed
- Strong financial capability
- Has established itself as a forerunner in global economies
- Well defined corporate culture
- Mercedes - Benz was one of the last companies to introduce cars that are fuel efficient
- Has a specific niche market it caters to, which narrows down its target market
- Japanese cars are today gaining immense popularity, which poses a threat to German cars like Mercedes - Benz.
- The brand value is enough to grab attention in foreign markets. The company would be able to take advantage of its international repute in North America.
- The company is well known for its technological and engineering capabilities, which would enable it to spearhead the ongoing revolution in the automobile industry.
- The company boasts of a strong and efficient corporate culture, which would ease its transition into the new market. Owing to its strong foundation, the company would be able to carry out strategic changes effectively.
- In North America, the company would be conducting a number of outsourcing and other operational activities which would help it make the most of the new market.
- A growing consciousness about the impacts of vehicular emissions on the environment has led to a worldwide decline in the sales of Mercedes - Benz automobiles.
- The financial and the economic conditions around the world and in North America is turbulent at present.
- The company faces severe competition from several other enterprises which are just as ambitious and innovative as Mercedes - Benz.
- The consumer preferences and buying preferences are constantly changing, which the marketing team at Mercedes - Benz would have to keep in mind.
- In some parts of North America, the government has imposed some protectionalism measures which would have to be considered by the company.
From the S.W.O.T analysis, it can be assumed that Mercedes - Benz is certainly one of the top brands in the automobile industry with a number of powerful and attractive assets. More than the product sold by the brand, it is the existing corporate culture coupled with brand name that forms its main asset (Mercedes - Benz 2014). The core competencies of the company, which would enable it to target its niche market ad instantly grab the attention of potential customers in North America are as follows:
- The company, Mercedes - Benz, is internationally renowned for its aptitude for innovation. The company has implemented a number of changes in its models since the first vehicle was launched in 1886 – which include float carburetors, four wheels comprising four brakes, the safety cell, an ESO (Electronic Stability Programme) and so on (Liu et al. 2017).
- Mercedes - Benz has also been successfully able to maintain its reputation for producing high quality and durable products.
- Most importantly, Mercedes - Benz has mastered the art of branding and marketing; it conducts a thorough analysis of the market to have an idea of what the customer demands or expects from the brand. It customizes its product based on such market analysis (Brunello 2015).
Market segmentation may be defined as the process of dividing the market into a number of homogenous sub categories consisting of a specific group of customers, where any of these sub categories might be conceived as the target market of a definite marketing mix in a marketing strategy (Cross, Belich and Rudelius 2013). While entering a new market, any organization would have to pay due attention to the audience they would be targeting their marketing strategy at and the way the market is segmented, so as to gain better insight into what the customers really want (Solomon et al. 2014). In the case of Mercedes - Benz, the market in North America would be segmented based on psychographic, demographic and other behavioral factors. The target audience for Mercedes - Benz is North America would be customers, both male and female, ranging from ages twenty to forty, which includes potentially 75 million customers. In North America, the company would be exploring the previously untapped market of millennials and the Generation X. Target customers would also include upper class individuals who are inclined towards vehicles with state of the art technology, safety features, exquisite style and enhanced efficiency. The purpose of carrying out market segmentation is to find out how Mercedes - Benz could appeal to the younger demographics. As a result, the Generation Benz which comprised people ranging between ages twenty to thirty. These people belonging to an online community acted as consultants for the marketing team so as to educate them about the preferences and buying habits of the millennial generation.
Market Development and Cultivation Processes in International Business
The purpose of listing marketing objectives is to establish the long term and short term goals that the organization would like to achieve within a given time frame in a specific location (Burns, Bush and Sinha 2014). The objectives for Mercedes - Benz in North America are as follows:
- To establish the brand as the premium name in vehicle manufacturing, especially luxury vehicles, and enhance vehicle connectivity, digital mobility, transport services, electric mobility and autonomous driving (Propfe et al. 2013).
- To safeguard its position as the finest in the core global business.
- To gain a competitive edge over Volkswagen and Opel, which have already established themselves as frontrunners in North America.
- To increase their sales by at least fifteen per cent in the upcoming fiscal year.
The purpose of the 4 P’s of marketing, namely product, price, promotion and place, refer to the four integral components of a marketing strategy (Huang and Sarigöllü 2014). Before entering a new market, it is important to understand the marketing mix for Mercedes - Benz, so as to understand the foundations of its market cultivation plan:
In the marketing mix for Mercedes - Benz, the strongest component in its favor would be the product itself. It has been established earlier on that the company is indeed a leading premium vehicle brand. It boasts of a wide array of passenger vehicles, luxury cars and both heavy and light automobile equipment. However, Mercedes - Benz would largely be focusing on its passenger cars, which include SUVs, sedans and also sports cars. Recently, the brand has launched the A Class, CLA and the B Class segments, targeted at newer generations (Londhe 2014). As a matter of fact, Mercedes - Benz also markets roadsters and cabriolets, along with trucks. The company uses a BlueTEC and the 4matic technology in most of its cars, which has been tried and tested over generations. Thus, as far as the product of Mercedes - Benz is concerned, the brand ensures both quality and technology to the customers.
Mercedes - Benz is mainly a luxury car brand, which manufactures and sells cars with premium prices. It has already been mentioned that the car caters to specific niche segments of the market – thus referring to customers who are willing to pay any price, as long as they are assured of the quality (Raj, Sasikumar and Sriram 2013). This means that the company would be following the same high priced strategy that it was following in Germany. In North America, it is estimated that the prices would range from 30,000 dollars to about 100000 dollars. The pricing strategy of Mercedes - Benz is based on the features and the competition from other brands.
To explore the previously unexplored market, Mercedes - Benz would have to follow an aggressive promotional strategy. The promotional campaigns of Mercedes - Benz essentially tend to focus on the precision of safety engineering and the luxury aspect. However, while entering a new market, they would have to adjust their marketing strategy according to the evolving attitudes of the customers (Shalender and Singh 2015). Mercedes - Benz would thus attempt to focus on their approachable, more fun loving and energetic side. Mercedes - Benz would attempt to advertise their products and services through multi media channels which include social media, online advertising, billboards, television and so on. More emphasis would be laid on online advertising than traditional methods (Stead and Hastings 2018). To promote the brand in North America, several customer oriented activities will also be implemented.
All promotional and manufacturing activities would be carried out of North America. The company is planning to target customers in North America, and thus the strategies would have to be adjusted according to the traditions, culture and customer perceptions prevalent in the area. There are numerous Mercedes - Benz dealerships located all over North America, along with factories to support manufacture.
The sales strategy of the vehicles manufactured by Mercedes - Benz in North America would include the aforementioned 4 P’s of marketing – this takes into account the products marketed by the brand and also the services to be provided to customers. Apart from that, it is also important to determine the customer service organization, which is associated with the system of distribution. This forms the distribution mix, which refers to the various distribution channels that would be used to ensure that the products are delivered in a timely manner at an optimal cost. The sales strategy would also include the communication mix, which in marketing refers to the way information is consciously designed in order to target a specific market. The purpose of this is to ensure that the strategy in question positively impacts the behavior and buying patterns of both new and existing customers. The sales strategy to be followed by the company would include a goal oriented and customer centric approach which would optimize the company’s performance in the new market.
The action plan to execute the market cultivation plan would be as follows:
- It would be beneficial on the company’s par to get an insight into the prevalent market trends and that of the foreseeable future in order to chalk out a definite strategy. Also, an in depth market analysis would be recommended so as to understand the customer demands, their preferences, buying patterns and factors that determine their decision to purchase a vehicle.
- In order to appeal to a younger and more dynamic generation, the company could include certain environmental concerns into their operations. For example, more advanced technology could be utilized while developing fuel efficient cars. This is all the more poignant given the fact that the prices of gasoline and petrol are expected to increase in the upcoming years.
- It would do well to remember that though Mercedes - Benz is one of the leading brands as far as luxury cars are concerned, it faces tough competition from other German brands like Volkswagen, who have already made a mark in the market. Thus, a robust marketing strategy would have to be devised accordingly, so as to give it a competitive edge.
Timeline for the market development plan:
ACTIVITIES TO BE EXECUTED
SOCIAL MEDIA MARKETING
TRADITIONAL MODES OF ADVERTISING
PUBLIC EVENTS (CUSTOMER CENTRIC ACTIVITIES)
BROCHURES, NEWSLETTERS ET CETERA.
TOTAL MONTHLY EXPENSES:
(Figure: Time plan)
To conclude, it can be said that market development plan of any organization would refer to the strategies adopted by the said organization to step foot into a previously unexplored market. The purpose of a market development plan is to gain insight into the new market, and devise a strong business strategy accordingly, so as to ensure that profitability of the organization is maximized. Mercedes - Benz is the most renowned and trusted brand, as far as luxury automobile brands are concerned. Having been established as a forerunner in the industry in the mid 1900s, the brand has received respect and love in all the countries it has expanded into. Being a German brand, the business strategy of Mercedes - Benz is largely based on the policies, principles, values and tradition of its home country. However, while expanding its horizons to different countries like North America, the company would have to make adjustments to its marketing and business strategy according to the traditions, culture and conventions prevalent in the host country. It must be asserted that the customer expectations in Germany would be vastly different from that in North America; in the above paper, the various social, technological, political, economic, environmental and legal factors that would affect the sales and profits of Mercedes - Benz have been discussed. Moreover, it is equally important to understand the buying preferences of the customer in the host country, and the factors affecting it. That is why it is important for the marketing team at Mercedes to first understand the customer behavior and carry out market segmentation based on psychographics and demographics. Mercedes - Benz has grabbed attention across the globe for having manufactured and produced premium luxury cars, which are highly regarded not just in terms of quality but also technology. It is for this very reason that Mercedes maintains a high pricing strategy; the purpose of such a marketing strategy is to cater to customers who are willing to spend more if it means getting assurance on the quality. Additionally, over the years, Mercedes has also introduced a number of technologies which are well developed and give it a competitive edge over other brands; as a matter of fact, the team at Mercedes strives to incorporate newer and more advanced technologies which can further improve the performance level of the vehicles manufactured by the company. Such endeavors succeed in setting the company head and shoulders above the rest, like Volkswagen, BMW, Audi or Opel. Therefore, in order to optimize results of the market cultivation plan, efforts would have to be made first by the management and marketing team at Mercedes to grasp the key features that characterize the automobile industry and the luxury car market in North America; failure to take the above into account would lead to ineffectual marketing strategies that do not strike a chord with the North American customers.
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