Fading star on the road to recovery

Mercedes-Benz launched a new marketing slogan – “the best or nothing” – last month with a redesigned version of the brand’s three-pointed star logo. Dr Joachim Schmidt, executive vicepresident of sales and marketing at Mercedes-Benz Cars, says the symbol is more than a design motif; it also embraces the company’s new business philosophy about perfectionism.

“If we want to grow into a heavyweight car manufacturer, knowing that the brand is our most important asset, we have to display it in a more prominent way,” says Schmidt. “This was driven very much by marketing but it was not my decision alone. It was discussed among our top management in late 2009.” The company’s new identity divides the brand’s operations into three areas – “perfection”, “fascination” and “responsibility”. Each of these then subdivides to look at areas from safety to design and sets out the company’s position in these areas. The idea is that everything adds up to the brand being “the best” in all its activities.

Schmidt says that much of the new brand work set out in this brand “star” is designed to remind the company’s staff about how to take leadership into every area of the business. “We are something special, and every employee at Mercedes has to have that ambition,” he argues. With a target of growing from 1 million global unit sales to 1.5 million by 2015, the company will clearly need buy-in from its staff.

The slogan, meanwhile, aims to give potential customers the same message. Schmidt says: “We had hundreds of proposals for a slogan, but Mercedes-Benz has returned to the phrase implemented by our founder Gottlieb Daimler many years ago – ’the best or nothing’. It doesn’t mean we are the best in all these disciplines, although we are in many, but it is our ambition to be the best.” The need for Mercedes-Benz to establish a new business philosophy is clear. Its German rivals BMW and Audi have been eating into its market share. In 2009, BMW was the world’s top selling luxury car brand and in the first quarter of 2010, Audi exceeded Mercedes’ global sales for the first time and by some margin – 264,100 units versus 248,500.

Mercedes-Benz has returned to the phrase implemented by our founder Gottlieb Daimler many years ago – ’the best or nothing’

Dr Joachim Schmidt, Mercedes-Benz Cars

Both Audi and BMW have followed an aggressive product expansion strategy in the last decade and taken luxury into smaller market segments – like the VW Golf-sized BMW 1-series and the new Mini rival Audi A1.

Crucially, these moves have attracted new, younger customers to their brands without undermining their premium-to-luxury brand cachet. Mercedes-Benz, apart from creating a new sales niche with its large CLS four-door coupé, has taken a more conservative approach in both its marketing and products.

As a marketer – who does not wish to be named – from an upmarket non-German car brand says: “Out of the big three German marques, Mercedes has dropped back in terms of perception, coming third in many areas including quality in recent years. It has also been seen by many as the least progressive.”

Schmidt is aware that the brand will need to attract a younger generation of customers if it is to reverse its market share decline. He admits: “If you want new, young customers, you need to have a brand that is sexy and sporty. The reason we didn’t get this customer before to the extent we wanted was not a brand issue, but more of a product issue. We didn’t bring out products focused on younger people.”

Mercedes’ cheapest cars – the A- and B-Class compact MPVs – tend to attract families and older customers, who appreciate their high-roof and big-boot layout plus their practicality to enter, exit, drive and lug stuff about.

These cars are not specifically aimed at younger people hoping to graduate through the range from affordable models to more expensive versions later on. However, Mercedes cars do get larger, more luxurious and more expensive as the model names move through the alphabet – the executive E-Class and luxury S-Class saloons being cases in point.

Mercedes-benz and its rivals

• Mercedes-Benz has a target of growing from 1 million global sales to 1.5 million units by 2015. Audi also aims to reach 1.5 million units by the same year.
• In 2009, BMW was the world’s top selling luxury car brand. The brand achieved 265,809 sales in the first quarter, an increase of 14% over the same period last year.
• In the first quarter of 2010, Audi exceeded Mercedes’ global sales for the first time – 264,100 units versus 248,500. In March this year, it announced it would make an extra profit-sharing bonus payment to its employees of €1200 (£980), on top of an average payout of €2300 (£1880)
• Mercedes-Benz’ €800m (£655m) profit for the first quarter of 2010 is equivalent to a 7% return.
• Mercedes-Benz’ new strapline “the best or nothing” competes against Audi’s famous phrase “vorsprung durch technik”. BMW uses different slogans in different areas, currently focusing on “joy of BMW”.

Sources: Company reports/Mercedes-Benz.