Market Analysis Of Audi, BMW, And Mercedes Benz Essay.

Assignment Task:

Undertake secondary/digital research to provide information about the current market scenario and provide recommendations to the manager for the chosen “underperforming brand” for it to become more successful.

Demonstrate a moderate level of numeracy skills sufficient to make management recommendations from qualitative, quantitative and statistical analysis.

Provide evidence of advanced problem solving and critical thinking skills to synthesise and integrate digital research to inform management decisionmaking.

Demonstrate the ability to communicate interpretations from analysis and justifications of recommendations in a clear, concise and accurate manner.

BMW

This report describes the market performance of the famous brands in the automobile companies i.e. Audi, Mercedes Benz and BMW. Among three companies, Audi is the underperforming company in the market while Mercedes Benz and BMW is good performer in the automobile industry. This report focuses on the market positions of the companies and describes the suitable recommendations for the underperforming company based on the market research. The objective of this report is to analyze the marketing strategies and operations of the performing brands so that the recommendations can be provided to the underperforming brand to improve the position in the market. For collecting the information of market, secondary research is done in this report. It is well known that to perform on the global level, companies need to adopt various strategies. For achieving competitive advantage on the global level, Audi needs to understand the marketing strategies adopted by its competitors in the global market. The market conditions and demand for luxurious cars is described below.

BMW or Bayerische Motoren Werke is a German car and Motorcycle maker company on 7 March 1916. BMW in Australia expects its record sales to continue in 2017 but it is not certain that the brand will be able to threaten Mercedes-Benz for market leadership or not. The company has achieved strong market position in over hundred countries i.e. United States, Canada, China, India, United Kingdom, and Korea etc. In present time, the company has established itself in the premium segment with the three famous brands in all over the world i.e. BMW, Mini, and Rolls-Royce. The market research for the company BMW is as follows:

The Company has total 23 production and assembly plants in 3 countries across the world. Along with this, there are 12 research and development plants in five countries. It is analyzed that there are 1,341,048 cars sold out all over the world in which BMW has great contribution. The company sells 1,043,829 cars across the world. Figure is given below-

Table 1: Total sales of BMW

The market of automobile industry is product and customer oriented. All the competitors in the industry offer the combination of luxury and powerful cars including high level of quality and services. Car manufacturing companies such as Toyota, Audi and Mercedes Benz the customer oriented. In the car industry, BMW is popular as the leading luxury car manufactures in all over the world. In the automobile industry, the market share of BMW is 18% among all the car manufactures (ETAuto, 2017).

Mercedes Benz

Figure 1: Market Share

The company BMW has more than 50 competitors in all over the world. In each country, the local car manufactures creates tough competition for the company. Basically, direct competitors for the BMW are Lexus, Mercedes Benz, Audi and Porsche. But, by the analysis, it can be seen that the level of selling cars of BMW is high as compared to its competitors in the market. The estimation of car selling can be seen in the graph below. The graph provides the information of car selling in the year 2016.

BMW has basically categorized the market segment in three different engine sections and that is very helpful for the customers to differentiate as each engine has different price. The company uses demographic market segmentation in which the company allows the customers to take purchase decisions based on the needs and requirements. The segments are divided into age, gender and income (Carter & Lee, 2012).

BMW group is the best provider of premium products and services to the customers in the automobile market. The strategy of the BMW is based on the ‘new opportunities’ and ‘new efficiency’. The activities of the company include the development, production and marketing of the luxury cars and full financial services to the private and business customers. The company has strong R&D capabilities and strong product innovation by which the company is able to achieve strong position in the industry (Kluyver, 2010). The company targets the young generation for its new products by the effective advertisements. Along with this, R&D has played an important role in the business strategy of BMW. In the year 2015, the R&D investments were increased by EUR 135 million to more than EUR 4.2 billion. To stay competitive advantage, BMW is focused on the innovative products, capabilities and features on a regular manner (BMW, 2016).

Mercedes-Benz is a multinational brand manufactured by German manufacturer Daimler AG. The brand is used for Automobiles, coaches, buses, trucks and is headquartered in Stuttgart, Germany. The name was discovered firstly in 1926 under Daimler-Benz which is widely known as first automobile. Vehicles of the brand are manufactured worldwide. The target market of the brand is middle aged people (25-44 year old age) with middle to high incomes.  Mercedes-Benz then decided to adopt an effective product strategy.  The brand also warranted huge amount of investment in research and development, and capital expenditure to expand its production. This leads to lowering of one- time cost of new models around 3% in the first quarter of 2013 (Forbes, 2015). The sales of the company is in each country is improving every year as compared to its competitors i.e. BMW and Audi. Company has good sales record of its products after the company BMW in the year 2016 (Forbes, 2017). The sales growth of the company can be seen by the analysis described below:

Recommendations for Underperforming Brand

Figure 3: Sales of Mercedes in different country

(Source: Forbes, 2017)

Mercedes-Benz has some important factors by which the company has achieved significant growth in the global market.

Based on the research, it is analyzed that Mercedes-Benz has sold around 1,871,511 vehicles last year in over the world. So, it can be seen that the company has achieved growth by 13.4% in the selling of vehicle. It is assumed that the company will get first position in terms of vehicle sells by the year of 2022.

Market analysis-

The market of automobile industry is on boom. The luxury goods market is expected to grow by 7% in 2018. The big reason behind this rise is the increasing concern of people with the style and personal attitude. In all over the world, China is the leading manufacturer of luxury cars and it is expected that the growth rate in China market will be 18% to 20%. Along with this, growth rate in America will be 5% to 7% and in Europe, it will be 2% to 4%. Japan is the biggest buyer of luxury cars and has third position in the industry now. Customers in the global automobile industry preferred Mercedes-Benz as the status symbol (Kotler, 2009).

Figure 4: Mercedes as status symbol

Along with this, Mercedes-Benz uses best interiors in its vehicles and because of this, the company is first choice among the customers in terms of interiors.

Figure 5: Cars preferred for interior 

There are two types of competitors for Mercedes-Benz in the global market i.e. direct or indirect. In the direct competition, there are well established companies such as Audi, BMW, Ferrari and Porsche. Further, in the indirect competition, there are Chanel, Prada, Hermes, Coach, Rolex and Gucci. These brands have higher brand value in the luxury segment. But, it is analyzed by the sales and production that Mercedes-Benz is performing on the second position after BMW. On the social media sites, Mercedes-Benz has second position among the customers after BMW (Lovejoy, 2015).

Figure 6: Active on social media

Mercedes-Benz has left behind the BMW and Audi in terms of sale of the cars and growth. Although there are many tax barriers by the various governments and discounts provided by the various dealers, but the sakes of Mercedes-Benz has rose by 45% in the global market. In the China Market, the company has got significant growth among 500 dealers. The company has an effective system which is called Pre-safe. This is for detecting any kind of imminent crash and ensures the car safety. This was the first company to introduce to seat belts and ESP. The strategy of the Mercedes-Benz is to target the customers having the common needs and using the media channels and other touch points to reach to the target customers. The company is using product differentiation strategy to target the customers across the world (Cain, 2015).

From the analysis of the close competitors of Audi, it is analyzed that both the companies are doing well in the automobile market. It can be seen that the car manufacturer company Audi is not performing well in the market as the sales of its vehicles has been decreased since last few years. Audi has 3^rd rank in the luxury car market share after BMW and Mercedes-Benz. But, Company is not operating on that scale on which its competitors are operating its business. There are some factors which reveal the reason of low performance of Audi in the market.

• By the revenue analysis, it can be seen that competitors are making same vehicle more cheaply due to economies of scale. The relative unit costs are higher in the company Audi.
• The brand Audi is associated with the national identity i.e. Germany. So, the brand is very dependent upon European market.
• Audi has high maintenance and handling cost in its business operations so sometimes company has to keep the prices of the products high. So, customers switch towards the products of the competitors.
• One more factor of low performance is that the company has limited presence in the emerging markets and it is seen that some other brands are ruling over the market.
• Audi is not using diversification strategy in its products offerings so this is the reason; the company is losing its market share at the global level.
• Audi is promoting its products less than its competitors and this is the big mistake done by the company. To compete with the local manufacturer, effective promotion and advertising is the most important part and Audi is not focusing on it (Keegan, 2002).
• Audi has low product mix which is the weak point for the company. Audi does not have high range of product mix like BMW. This is the reason; Audi is performing after BMW and Mercedes-Benz.
• In terms of market share, it can be seen that BMW has high market share at global level. Audi has only 7% market share as compared to BMW and Mercedes-Benz.

By the above analysis of the well performing companies i.e. BMW and Mercedes-Benz, it is clear that by the innovations and marketing strategies, both the companies are ruling on the automobile industry. Although Audi is provide same vehicles but the company is unable to achieve the level set by BMW. To get higher market share and effective growth at the global level, there is the need to adopt some effective strategies by the Audi. Here are some recommendations for the Audi which must be followed by the company to improve its performance at global level.

• From the above analysis, it is observed that BMW is focused on the diversification strategy but Audi is not using this. BMW has diversified itself into low cost cars. To increase the turnover and larger product portfolio, BMW has adopted this strategy. This strategy should be adopted by the company Audi to focus on the luxury car segments.
• Further, Audi is not focusing on the promotional activities for its products. By the market analysis of Mercedes-Benz, it is observed that company is very active on the social media platform. It is recommended that Audi should pick up the frequency of promotions as well. Audi is promoting less than the BMW which is not good for the company. Premium brand should be present everywhere. So, Audi should focus on the promotional activities more vigorously then BMW and Mercedes-Benz.
• Audi should increase its presence in the emerging markets. The company should introduce its products in the emerging market also to bring more profit for the business.
• Company should focus on more innovation to improve its position in the market (Perry, 2012). Innovation should be in the form of more energy efficiency, and battery fueled premium cars etc. Innovation should be done with the differentiation strategy which will be helpful for the Audi in long-term.

References 

BMW, (2016), BMW Group set to remain on course in 2016, accessed on 27^th July 2017 from https://www.bmwgroup.com/content/dam/bmw-group-websites/bmwgroup_com/ir/downloads/en/2016/20160311_FINANZEN_PM_EN_2016.pdf

Cain, T., (2015), BMW vs. Mercedes-Benz vs. Audi: U.S. Sales 2006-2015, accessed on 27^th July 2017 from https://www.goodcarbadcar.net/2015/12/bmw-vs-mercedes-vs-audi-usa-auto-sales-stats-2006-2015.html

Carter, S., & Lee, K., (2012), Global Marketing Management, UK: OUP Oxford

ETAuto, (2017), BMW Group revenue up 2.2% in 2016; forecasts upward trend for 2017, accessed on 27^th July 2017 from https://auto.economictimes.indiatimes.com/news/industry/bmw-group-revenue-up-2-2-in-2016-forecasts-upward-trend-for-2017/57555728

Forbes, (2015), How Mercedes-Benz Accelerated Its Growth In 2015, accessed on 27^th July 2017 from https://www.forbes.com/sites/greatspeculations/2015/12/07/how-mercedes-benz-accelerated-its-growth-in-2015/#59fcd6e42a04

Forbes, (2017), Mercedes-Benz Is The Number One Premium Automaker: How It Happened, accessed on 27^th July 2017 from https://www.forbes.com/sites/greatspeculations/2017/01/31/mercedes-benz-is-the-number-one-premium-automaker-how-it-happened/#2e55dd223d9f

Keegan, (2002), Global Marketing Management, IND: Pearson Education

Kluyver, C. D., (2010), Fundamentals of Global Strategy: A Business Model Approach, Business Expert Press

Kotler, P., (2009), Marketing Management: A South Asian Perspective, IND: Pearson Education

Lovejoy, J., (2015), Analysis: The BMW vs Mercedes Social Presence Showdown, accessed on 27^th July 2017 from https://www.brandwatch.com/blog/analysis-the-bmw-vs-mercedes-social-presence-showdown/

Perry, N., (2012), Hyper reality and Global Culture, Routledge