Market Analysis of Mercedes Benz

This assignment involves a detailed market analysis of Mercedes Benz, covering research on the luxury car segment, competitor strategies, business environment, and Porter's five forces analysis. The work is divided into four weeks, with each week focusing on specific tasks such as market research, competitor strategy analysis, business environment understanding, and Porter's five force analysis. The assignment also involves studying recent trends and data to understand Mercedes Benz's position in the market and making an opinion about their upcoming performance.

Mercedes Benz

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Competitors of Mercedes Benz..............................................................................................1
Competitive advantage...........................................................................................................2
Porter's five forces analysis of Mercedes Benz......................................................................6
Change in position of Mercedes Benz in the recent years......................................................7
Own opinion for succeeding in next 2-5 years.......................................................................8
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9
Appendices ....................................................................................................................................10
Appendix 1...........................................................................................................................10

INTRODUCTION
Auto-mobile is a growing industry and Mercedes Benz is considered as a successful
company of this sector. This organisation was found in the year 1926 and they are running their
business across the globe. They are known for their luxury cars and new innovation which is
assisting them in retaining top position in premium vehicles. This assignment is based on
Mercedes Benz. It will discuss about their major competitors and the challenges which they are
putting in-front of cited enterprise. Analysis like porter's five forces will also become the part of
this report. Changes in positioning of firm in recent years will be explained before providing own
option on the strategy which they can adopt to succeed in forthcoming time.
MAIN BODY
Competitors of Mercedes Benz
An organisation that is running their business in different parts of the world has to face
competition from various players of an industry. BMW and Audi are considered as the main
competitors of cited company. Both above mentioned organisations are growing but Mercedes
Benz is holding the top position as they sold almost 20, 84,000 luxury cars in 2016. BMW was
on second position and their sale was 20, 03,000. There were two main factors which helped
them in replacing BMW from the title of world’s biggest premium car maker. Increased sale in
China is the prime reason that they are achieving success in attaining their short term goals.
Management of organisation understands that Asia is the region which can assist them in earning
huge profit in less time (Alarcón, Polonio and Sánchez, 2013). Most of the countries in this
continent are developing and people living in these nations are getting richer and so they can
afford high priced vehicles offered by Mercedes Benz.
The second reason behind their recent success is their focus on SUV vehicles. This
segment is making a significant amount of contribution in their profit. Most of their competitors
were not giving attention to this section which helped cited organisation in exploiting an
untouched division. Other players of this industry are not concerned about the high revenue of
Mercedes Benz because their sale and market is also increasing. One of the major threat that they
facing in the market is related to tightening of rules for diesel cars. This is giving a breathing
space to some local competitors who are providing luxury vehicles in petrol variant. Companies
like Tesla are taking benefit of this issue. They are promoting their cars by playing pollution free
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card (Rodriguez, Doloreux and Shearmur, 2016). Designing of vehicles made by Tesla is
considered as one of the best that is present in the industry.
Mercedes Benz is ready to face any kind of challenge in upcoming time because they
have done huge investment in recent period especially in research and development department.
Cited organisation is focusing on electric cars, they are trying to offer affordable auto-mobile in
the market. Top level management of this company firmly believe in aggressive advertising, they
are very active on social media and television. They are spending heavy amount on making
convincing advertisements. Normally an enterprise who is offering premium class vehicles do
not care about print media but cited organisation always consider it as a significant source of
marketing (Why Mercedes Will Retain Global Luxury Sales Crown In 2017, And Likely For
Years To Come, 2017). Nowadays, their competitors are also adopting same strategy so they can
stand in this tuff competition.
China helped Mercedes Benz in attaining top position but other players of this industry
are focusing on next emerging market in Asia i.e. India. BMW is capturing luxury segment in
this country by doing aggressive expansion. Most of the experts of this industry believe that
demand of premium cars will rapidly increasing in this nation (GarcÃa, 2013). Competitors of
cited organisation like Audi, is not allowing them to get a significant amount of share in this
emerging market. Mercedes Benz can use their image and brand name to acquire more part of
luxury car segment in Asian region.
Competitive advantage
Mercedes Benz is known for their work in research and development. They have allotted
12 billion dollar to R&D department so they can work on new technology and machinery
because it can give them some extra edge over their competitors. Top level management of cited
organisation understand that in upcoming time people will prefer luxury cars which can run by
using electricity (Madadipouya, 2015). Innovation is part of their organisational culture,
normally an auto-mobile company bring changes in product when they become outdated but
Mercedes Benz modify their vehicles when they develop a new feature. Instead of advertising
new specifications in their model, they try to earn trust of their customers.
Advanced engineering is providing them competitive advantage, they introduce
innovative ideas in their cars and sell them in market before their competitors start thinking on
that concept. Most of the companies who are operating in this industry still think that mechanical
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engineers make cars but they need to understand that role of technology is getting more and more
important every day and IT professions have significant amount of contribution in manufacturing
of a vehicle (Garcia-Escribano, Góes and Karpowicz, 2015). Mercedes Benz is known for
bringing revolution in the industry, their main focus is on ''intelligent drive''. They do not want to
lower down the level of comfort and safety, people understand their mind-set and they trust them
with new technology.
In luxury segment, customers are ready to pay high price for new feature. Cited
organisation adopted a unique strategy which is helping them in earning more profit in short
period of time. They have selected financial profitable areas for manufacturing work but most of
the designing task is done in Germany. Their cost of production is going down which can be
considered as the main reason that they are overtaking BMW in terms of net profit (Netland and
Aspelund, 2013). Most of the companies who make luxury cars either focus on attractive design
or powerful engine, but Mercedes Benz is concentrating on both areas because they have
advanced engineering and constant innovation. Following are three graphs which shows their
dominance in terms of revenue, employees and vehicles sold.
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(Source: Why Mercedes Will Retain Global Luxury Sales Crown In 2017, And Likely For Years
to Come, 2017)
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Illustration 1: Vehicles Sold

(Source: Why Mercedes Will Retain Global Luxury Sales Crown In 2017, And Likely For Years
to Come, 2017)
5
Illustration 2: Number of employees

(Source: Why Mercedes Will Retain Global Luxury Sales Crown In 2017, And Likely For Years
to Come, 2017)
Mercedes Benz is leading in all the three significant areas just because of the competitive
advantage which they are getting because of advanced engineering and innovation (What Is
Mercedes-Benz?, 2017). Their product is known for its uniqueness and people have faith in their
brand so they like to trust new technology which they are offering in their luxury cars.
Porter's five forces analysis of Mercedes Benz
Suppliers' bargaining power – Auto-mobile industry is dependent on aluminium and steel
industry. They also need support from glass and rubber sector. But, all of their suppliers do not
have much power to influence their production process because cited organisation can easily
switch their vendor as they have more options. In late nineties, they faced economic turn-down
as most of the raw material provider denied to supply them necessary elements which are
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Illustration 3: Revenue

required in production process (Ivanova, 2015). They went in a situation where management had
to negotiate with various suppliers.
Buyer’s bargaining power – Customers are god for an organisation who want to earn
revenue by selling goods and services. They have millions of buyers so it is not important for
them to focus on everyone, this means that purchaser do not have much power. But their
significance increases at the time of economic recession because customers have to buy less cost
cars and their bargaining capacity enhances in this period.
Threat of new entry – Policies relating to auto-mobile sector do not change easily.
Government of various countries are getting serious about pollution which is helping newcomers
like Tesla to capture a significant amount of share in market of luxury cars. This company has
deep pockets and they are considered as the main competitors of cited organisation in upcoming
time. Some local car manufactures in developing nations like India, Brazil etc. are also entering
in his segment, they are cash rich organisation and their production capacity is high. They can
become serious challenge for Mercedes Benz in upcoming time.
Threat of substitutes – Hybrid and electric cars can replace diesels vehicles which has
significant contributing in the overall sale of cited organisation. Their competitors in various
countries are offering luxury vehicles at low price. For examples, there are many people in USA
who cannot afford Mercedes Benz, they have found Lexus as the substitute of cars made by this
company.
Competitive rivalry – BMW and Audi are considered as the two main opponent of cited
enterprise (Loh, 2011). They have capacity to replace Mercedes Benz from the position of table
leader in market of luxury cars. Most of their product look similar and they offer almost same
technology in their vehicles. BMW still contain significant amount of share in this industry and
their sound presence in emerging economies can become serious threat to cited company.
Change in position of Mercedes Benz in recent years
All the department of this organisation has worked hard to gain the position where they
are sitting in present time. Before 2016, BMW was considered as the number one company of
luxury car market. They were getting strong in developed economies and at the same time they
were capturing significant amount of share in emerging markets like India (Aaker, 2012).
Revenue of all the firms which are operating in this segment is increasing continuously, but
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because of China and huge investment in R&D department, Mercedes Benz got the position of
table leader.
According to experts of this field, cited organisation will hold their position for a long
time because of their brand value and advanced engineering. 2016 was one of the most
successful year for them, biggest transformation in the enterprise started in this year. Sometime a
firm hold top position in term of either sales or revenue but Mercedes Benz is number one in
both areas and their employees strength is more than Audi and BMW. When other players of this
industry were concentrating on developed economy like France, USA. Cited company focused
on emerging markets like China and India. This move can be considered as the prime reason that
Mercedes Benz replaced BMW from the top position and they are in no mood to leave their
current position (Khan and Aadil, 2012). Their brand value and image in public helped them in
hard time because they have passed a period where they had to put lot of efforts for their
survival.
Own opinion for succeeding in next 2-5 years
One of the most important change that they need to do in their marketing policy is giving
more attention to emerging countries (De Onis, Blössner and Borghi, 2012). They should keep
their attention on advance engineering because this factor is giving them some extra edge over
their competitors. Mercedes Benz must think about increasing production of hybrid cars, they
also have to concentrate on vehicles run by electricity as companies like Tesla are exploiting this
segment aggressively. They can install their manufacturing plant in countries like India, Brazil,
China because it will help them in lowering down overall cost of the product. They can earn
more net profit if they execute this idea. In upcoming time, most of the governments are going to
make tuff rules against cars run by diesel so they should think about other options in order to
maintain their position as in this highly competitive market (Ryback, 2012). They should not
sacrifice their brand value by selling products at low rate, they can enhance their sale initially by
adopting this tactics but in long run cited organisation may have to face its consequences.
CONCLUSION
At the end, it can be concluded that Mercedes Benz got the top position in luxury car
segment after hard work of many decades. They replaced BMW from their position of table
leader because of their advanced engineering and aggressive marketing strategy. Their brand
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value is assisting them in increasing their sale as they can easily enter in an emerging market
without spending much money on promotion of company and its cars.
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REFERENCES
Books and Journals
Aaker, D. A., 2012. Building strong brands. Simon and Schuster.
Alarcón, S., Polonio, L. G. and Sánchez, M., 2013. Strategies for the development of new
products in the Spanish agri-food industry. E-Innovation for Sustainable Development of
Rural Resources During Global Economic Crisis. IGI Global. pp.181-198.
De Onis, M., Blössner, M. and Borghi, E., 2012. Prevalence and trends of stunting among pre-
school children, 1990–2020. Public health nutrition. 15(1). pp.142-148.
GarcÃa, M. J., 2013. Why Implement A Co-Country-Branding Strategy In The European
Mediterranean?: Analysis Of Some Of The Main Benefits. Turismo y Desarrollo Local,
(15).
Garcia-Escribano, M., Góes, C. and Karpowicz, I., 2015. Filling the Gap: Infrastructure
Investment in Brazil.
H. Netland, T. and Aspelund, A., 2013. Company-specific production systems and competitive
advantage: a resource-based view on the Volvo Production System. International Journal
of Operations & Production Management. 33(11/12). pp.1511-1531.
Ivanova, K., 2015. Market Potential Analysis of Finland and the UK; Business case–“Sidebar
business proposition”, Case Company: Orion Automotive.
Khan, M. F. and Aadil, F., 2012. Efficient Car Alarming System for Fatigue Detectionduring
Driving. International Journal of Innovation, Management and Technology. 3(4). p.480.
Loh, C. Y., 2011. Internationalization And Market Penetration Of Ingress Into Thailand Issue Of
Relocation Beyond Border (Doctoral dissertation, USM).
Madadipouya, K., 2015. A review on the strategic use of it applications in achieving and
sustaining competitive advantage. arXiv preprint arXiv:1507.01233.
Rodriguez, M., Doloreux, D. and Shearmur, R., 2016. Innovation strategies, innovator types and
openness: a study of KIBS firms in Spain. Service Business. 10(3). pp.629-649.
Ryback, D., 2012. Putting emotional intelligence to work. Routledge.
Online
Why Mercedes Will Retain Global Luxury Sales Crown In 2017, And Likely For Years To Come.
2017. [Online]. Available through:
<https://www.forbes.com/sites/neilwinton/2017/04/04/mercedes-will-retain-global-
premium-sales-crown-in-2017-and-for-years-to-come/#395f6a215f05>. [Accessed on 9th
September 2017].
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What Is Mercedes-Benz?. 2017. [Online]. Available through: <https://infogram.com/mercedes-
benz-1g6qo2qwzje7278>. [Accessed on 9th September 2017].
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APPENDICES
Appendix 1
Week 1
Targeted work days
Market research 3 days of starting week
Analysation of market rivalry Remaining 4 days
Work done Days
I did market research of Luxury cars segment In starting 2 days of first week
Found and study major competitors of
Mercedes Benz. Remaining 5 days.
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Week 2
Targeted work Number of Days
Find strategy of major players of auto-mobile
industry
Initial 3 days
To find various competitive advantage that is
available to cited organisation.
Remaining 4 days.
Work done Days
I analysed strategies of companies like BMW
and Audi.
It took 3 days
I tried to found competitive advantages This work was next in next 4 days
13

Weeks 3
Targeted work Days
To understand business environment of
Mercedes Benz
First 4 days
To conduct Porter's five forces analysis Remaining 3 days
Work done Days
I worked on various methods for understanding
business environment of Mercedes Benz
2 days was given to this task
Porter's five force analysis of cited
organisation
5 days was taken for accomplishing this work
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Week 4
Targeted work Days
Analyse position of cited enterprise First 4 days of week
Study recent trend and data Last 3 days of week
Work done Days
I studied the process which earned them top
position
First 3 days
Analysed position of their rivals Remaining 4 days
15

Week 5
Targeted work Days
Gather various information and data about
Mercedes Benz
First 2 days
Make my own opinion about their upcoming
performance
Remaining 5 days
Work done Days
Studied articles and different report about cited
organisation
In starting 3 days
Made my own opinions about their strategy in
next 2-5 years
Last 4 days of 5th week
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