As specialists in the field have predicted, since 2005 the Chinese luxury and sports vehicles market has diversified, and so did the competition. Due to production outsourcing, a greater number of premium sedans have started to be produced in China, due to lower manufacturing costs. The Chinese premium sedan sector is dominated by Audi, which sold approximately 50,900 units in 2004. However, in the past few years the price of import premium sedan has exploded because of the increased car import license. This situation favors the local producer Audi, whose prices were considerably lower than those of import sedans.
As one can easily observe, Mercedes Benz is not yet a strong competitor on the Chinese Market. However, there is still room for improvement, as China has a tremendous market potential that has not been explored yet. Luxury sedans only account for 8% of the total auto market in China. Since Mercedes Benz entered this market in 2005, the company did not have enough time to create a strong position on this market. However, the release of the 2008 C300 should be considered as an opportunity that must be taken advantage of so that the company establishes a stronger presence on this market. It is expected that Daimler will raise its output of Mercedes Benz E-Class and C-Class sedans to 25,000 units and will open a new workshop located in Beijing.
Current trends on the sports and luxury vehicles market predict that this market segment will increase even more in the following years. Experts state that the luxury segment will account for 17% of the car market by 2012. In order to increase its market share, Mercedes Benz puts at its clients disposition a series of benefits, like free car washes, airport parking up to 30 days, and free Mercedes loaners, since "the luxury segment is all about service, personalization and building a world-class guest experience," as Garth Blumenthal, one of the company's managers, has stated.
Regarding Mercedes Benz, the company's officials have stated that 2004 was the best performing year in terms of sales volume with 221,610 units sold (Danziger, 2007). This increase in sales was due to the new entry near-luxury C-Class model, which was sold at a price of $26,000-$54,000. Compared to 003, unit sales for C-Class models have increased up to 5%, accounting for 31% of the total volume sold in the United States by Mercedes Benz. Experts say that the new model of C-Class is better for the long-term success of the company and the brand as well. It seems that more customers have been gained due to C-Class models, which are more affordable.
Mercedes Benz's brand positioning strategy relies on building a player image across a more expansive range of potential car buyers, instead of excluding the brand.
Mercedes Benz Market
From a geographical point-of-view, Mercedes Benz is present on both internal and external markets. The company has an international presence that is continuously expanding. Mercedes Benz's market is strictly urban. The company's general market phase is the maturity one, while the luxury and sports vehicles market is in the growth phase. The company's international markets include: Europe - United Kingdom, France, Albania, Austria, Belarus, Belgium, Bosnia and Herzegovina, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, Gibraltar, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Lithuania, Luxembourg, Macedonia, Malta, Montenegro, Netherlands, Norway, Poland, Portugal, Romania, Russia, Serbia, Slovakia, Slovenia, Spain, Sweden, Switzerland, Turkey, and Ukraine; Asia, United States, Latin America, Africa, and Oceania. The most profitable international markets for Mercedes Benz are by far Europe and the United States. Emerging markets in Asia, like China and India, present great potential that could be exploited by the company.
Mercedes Benz Target Segments
Mercedes Benz's main segment of customers is consisted of male aged 45 to 55, with high financial possibilities, high education level, and high social position. The company's luxury models address especially businessman and celebrities, which are able to afford the company's products. Mercedes Benz's products are a symbol of tradition, luxury, safety, they inspire success. In terms of luxury products, the higher the price, the more appreciated the product is. And Mercedes Benz luxury vehicles make no exception. Customers that buy these products are trying to achieve or to prove a certain high status that is proven by the luxury car they drive.
One of Mercedes Benz's secondary customer segments is consisted of male aged 35-45 years of age, with increasing financial strength, high or ascending social status, and medium to high education level. The company's sports models and smart vehicles that are commercialized at smaller prices allowed Mercedes Benz to create a loyalty feeling among this segment of customers as well.
Another secondary customer segment that Mercedes Benz is trying to address refers to male aged 25-35, with medium to high incomes, medium to high social status, medium to high education level, and a quite sophisticated lifestyle. Through its C-Class models, Mercedes Benz is trying to build o position among...
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