Market Development Plan for Mercedes-Benz

Running head: MARKET DEVELOPMENT PLAN FOR MERCEDES – BENZ
Market development plan for Mercedes – Benz
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1MARKET DEVELOPMENT PLAN FOR MERCEDES - BENZ
Executive summary
The aim of this paper is to devise a market development plan or a market cultivation plan for
the world renowned German automobile company, Mercedes – Benz, belonging to the
Daimer AG group. Mercedes, a company based in Germany, is one of the leading and most
trusted automobile brands, manufacturing more than a million SUVs, sedans and luxury cars
on an annual basis. True to its German origins, the brand emphasizes on quality, speed and
performance in order to appeal to customers who are car enthusiasts. However, the company
is planning to expand its horizons, with its vision set on North America. For generations, the
US and Northern America have been the target for international automobile brands; as a
result, Mercedes, along with a few other German brands intend to step foot into the market.
However, in order to do so, the company would have to understand the market trends and the
various factors that affect the customers’ perception of the brand. In the paper, an in depth
analysis has been carried out of the German and North American automobile market, and the
transition of Mercedes from its home country to the host country. Also, a PESTEL analysis,
along with Porter’s model, has been used, to throw light on the factors affecting the
automobile industry in North America. The paper also lists the sales strategy of Mercedes in
North America; the marketing strategy, consisting of marketing objectives, market
segmentation and the marketing mix has been provided. Finally, an action plan has also been
specified for Mercedes in order to maximize results of the market cultivation plan.

2MARKET DEVELOPMENT PLAN FOR MERCEDES - BENZ
Table of Contents
Introduction:...............................................................................................................................3
Discussion:.................................................................................................................................4
Daimler AG’s expansion into the North American market...................................................4
Analysis of the German automobile market...........................................................................5
Developing into the North American market from Germany................................................6
Analysis of the automobile industry in North America.........................................................7
PESTEL analysis of the automobile market in North America.........................................8
Porter’s Five Forces.........................................................................................................12
S.W.O.T analysis of the company........................................................................................14
Marketing and sales strategy of Mercedes - Benz in North America..................................17
Target market and market segmentation..........................................................................17
Marketing objectives........................................................................................................17
Marketing mix for Mercedes - Benz Benz in North America..........................................18
Sales strategy of Mercedes - Benz in North America......................................................20
Action plan...........................................................................................................................20
Conclusion:..............................................................................................................................22
References:...............................................................................................................................24

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4MARKET DEVELOPMENT PLAN FOR MERCEDES - BENZ
Introduction:
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

5MARKET DEVELOPMENT PLAN FOR MERCEDES - BENZ
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.
Discussion:
Daimler AG’s expansion into the North American market
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

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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).
Analysis of the German automobile market
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).

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Developing into the North American market from Germany
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.
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.