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Mercedes Benz - How A Great Campaign Can Almost Kill A Company

Essay 2009 26 Seiten

Medien / Kommunikation - Public Relations, Werbung, Marketing, Social Media

Leseprobe

Table of content:

1 Introduction

2 The Company Daimler-Chrysler – A Global Player

3 The Mercedes-Benz A-Class
3.1 Strategic Reasons for the Invention
3.2 The Launching Campaign
3.2.1 The Challenge
3.2.2 The Objectives
3.2.3 The Structure of the Launching Campaign
3.2.4 Phase 1 – “Big Bang”
3.2.5 Phase 2 – “New Perspectives”
3.2.6 Phase 3 – “New Choices”
3.2.7 Phase 4 – “New Experiences”
3.2.8 The Results of the Launching Campaign
3.3 The Crisis
3.3.1 The “Moose-Test”
3.3.2 Media Reaction
3.3.3 Saving the Image
3.4 The Re-launching Campaign
3.4.1 Objectives
3.4.2 Phase 1 – Inform the Public
3.4.3 Phase 2 – The A-Class is Safe
3.4.4 Phase 3 – Experience the Safety
3.4.5 Phase 4 – The Re-launch
3.5 Results after the two Campaigns

4 Conclusion

5 Annex

6 References

1 Introduction

What started as one of the biggest and most expensive campaigns in the German automobile industry, almost ended in a disaster for the company. The result was the biggest crisis, a German automobile company had ever faced.

Mercedes-Benz is a high-class automobile company. Its products stand for luxury, reliability and dependability. But high-class cars are expensive and only affordable for the richer part of society. To keep pace with the fast developing automobile industry all over the world, Mercedes-Benz decided to invent car that reunites all three values, the company embraces. This car – the Mercedes-Benz A-Class – should have another important feature: It is affordable for the middle class.

With this car, Mercedes was approaching a new market segment and therefore new target audiences. A campaign, that fits the new car in the overall Mercedes image, was crucial. In May 1996 Mercedes Benz started its huge advertising campaign – almost one and a half years prior to the official product launch on October 18th 1997. More than 100 million Euro will this launching campaign cost the company. Despite that the campaign only ran in the European market, the Mercedes-Benz brand and this specific campaign caught international attention. Newspapers from all over the world accompanied the A-Class until its official launch. These newspapers were also there, when the crisis occurred, that almost harmed the company on a long-term basis.

Right after the launch, the car, that was supposed to be innovative, reliable and safe, failed in the so called “moose-test”. After almost two years of positive media coverage, a flood of criticism followed. Due to the high level of awareness for the car, the public was now also aware of the safety issues the Mercedes A-Class had. What followed was another campaign. The goals were to safe the image of the company, to deal with the crisis and to re-launch the A-Class half a year later.

The following campaign analysis explains why Mercedes-Benz had to take the approach and step into the market segment of small cars. In addition, the launching campaign and its four phases: Big Bang, New Perspectives, New Choices, and New Experiences, will be explained in detail. The second part of this analysis will cover the crisis that occurred after the launch of the A-Class and the re-launch in 1998. Finally, the analysis will show whether this incident harmed the image of the company on a long-term basis, and how advertising influenced this development.

2 The Company Daimler-Chrysler – A Global Player

The automobile industry is a key industry in Germany. Its history began in 1886, when Carl Benz granted patent for a three-wheeled car (BBC, 2009). Today, every seventh employment is directly or indirectly connected to the automobile industry (VDA, 2008). The company was founded by Carl Benz and Gottlieb Daimler in 1926. After the fusion with Chrysler in 1998, the new Daimler-Chrysler Corporation became Europe’s biggest automobile company. With more than 270,000 employees and total revenue of 96 billion Euro in 2008, Daimler-Chrysler makes a great contribution to Germany’s export industry. Company’s brands, like Mercedes-Benz, Maybach, and AMG, are sold to almost all countries in the world. In 17 different countries, Daimler-Chrysler has manufacturing facilities (Daimler, 2009). Nevertheless, the company’s way to the top was sometimes stony.

3 The Mercedes-Benz A-Class

The following section describes the Mercedes-Benz A-Class in detail. It gives reasons, why the company invented this car, with which they entered a totally new market segment. It also describes the launching campaign, the launch of the A-Class on October 18th, 1997, and the following crisis, which led to the re-launch campaign in December 1997 until February 1998.

3.1 Strategic Reasons for the Invention

“There was a time when a board meeting at Mercedes-Benz looked more like a bingo game in a retirement village – the big decisions within the company being taken by a group that had grown out of touch with reality. The old-timers of Benz made decisions based on the impression that, above all else, a Mercedes was the world’s most desirable four-wheel status symbol. […] But increasing competition rivals and a tired model line-up saw Benz sales decline” (Webster, 1996).

The market is changing. Trends show, that especially in Europe car buyers more and more choose smaller cars over the bigger ones. In response to this trend, Mercedes-Benz invented the smaller A-Class that was launched in 1997. For over a hundred years, the brand Mercedes-Benz was known for big luxury cars, but the changing market required an expansion of the Mercedes segment. The president of Mercedes, Jürgen Hubbert, announced in 1996: “It must be our main concern to avoid any dilution of the Mercedes brand. With the A-class, we are in a process of expanding the orientation of the brand”. The automaker would have eventually faced an existential problem if it continued to focus solely on the luxury market segment. “In Mercedes’ defense, Mr. Werner [Helmut Werner, chairman of Mercedes-Benz] stressed the automotive market is changing to reflect the tastes of younger buyers, we well as environment pressures. For its long-term future, Mercedes must adapt” (Eisenstein,1996).

Exploring new market segments and talking to a new and younger targeting audience were the only ways for Daimler-Chrysler to survive in an industry with an increasing number of competitors (Olson and Thjme, 1998, p.1).

3.2 The Launching Campaign

For the launch of the Mercedes A-Class the company considered a global campaign, because the car-market is simply a global market. Mercedes had to find out, whether they can use a global or a local strategy for their campaign. Therefore the company had to consider the taste, the preferences, and the price. For a global strategy speaks the fact that “products and services tend to become more and more standardized” (Olson and Thjme, 1998, p.1). Finally, the Daimler-Chrysler company is with facilities all over the world globally oriented company. Still, the cultural factors had to be considered in the campaign. “'However important harmonization may be (between European countries), the differences in culture, tradition and lifestyle which have grown up over the centuries will persist - so there will be no Euroconsumer” (Olson and Thjme, 1998, p. 1). Research conducted by the company showed, that consumers, no matter Germans, Norwegians, or people from other European countries, were looking for the typical values of the brand. Innovativeness, quality, environmental friendliness, and the premium status were the factors that count for the audience that is in favor of purchasing a Mercedes-Benz. In contrast to that, the A-Class concept was likely to damage the image of the brand in the U.S. and the Asian market. Therefore the campaign was limited to the European market. “For the United States and Asian markets, the small size, and relatively low price and performance of the A-class was found to be too incongruent with the associations that most consumers in those markets carried for the Mercedes Benz brand name”, (Olson and Thjme, 1998, p.2). Therefore, a global launching campaign wouldn’t have been successful. But still, as later will be shown, the campaign caught international attention. Nevertheless, to create a successful campaign, Daimler-Chrysler had to face several challenges.

3.2.1 The Challenge

With the A-Class, Mercedes-Benz was entering a segment the company had no experience in. There were no Mercedes cars the company could base the construction of the new A-Class on. All parts of the A-Class had to be designed completely new. Furthermore, the company used a new technology for the A-Class, the so-called “Sandwich-Concept”. This concept had to be explained to the public.

In addition to that, especially in the small car market much more experienced competitors like Volkswagen or Opel were holding the greatest market shares. They were competing in a segment, where other companies already have established target audiences. “Marketing will pose the greatest test. The A-Class is expected to cost 10% to 15% more than popular compact hatchbacks, such as the VW Golf against which it will compete” (Simonian, 1996).

Additionally, Mercedes-Benz was not facing only the challenge to find their target audience in this unknown lower-cost segment. They also had to be able, to compete with other automakers for the car-buyers. “We have to try to be present in market segments in which our future customers will come from”, said Helmut Werner, chairman of Mercedes Benz (Eisenstein, 1996). The fact, that the company knew very little about those new audiences and had to get to know them first, made this challenge even more complicated.

Another problem was the established image of the brand. A Mercedes-Benz was also considered as a premium car that stands for luxury, quality, reliability, and safety. The new, Mercedes-unusual car had to fit into the company’s strategy and image (Rother, 2003, p. 92). “The Mercedes name and tri-star logo have become synonymous with large, expensive luxury cars. But as the German automaker begins rolling out a wave of new, nontraditional products, it is betting a bundle it will be able to maintain its upscale appeal while drawing a new generation of buyers” (Eisenstein, 1996).

As explained, this incongruence with the traditional view on Mercedes-Benz led to the limitation of the campaign to the European market. In Europe, the company was taking a different approach to fit the A-Class into the company’s image. The new A-Class should be just as valuable as any other Mercedes-Benz: Innovative, reliable, and safe; the premium car of its segment.

3.2.2 The Objectives

There were several goals Mercedes-Benz wanted to achieve with the A-Class. First of all, the company wanted to sell 80,000 cars in the first fiscal year. Additionally, Mercedes-Benz wanted to gain a six percent market share in the small car segment on a long-term basis. Finally, the company wanted customers from competitors to switch to Mercedes-Benz.

There were also communication goals, the company wanted to achieve. The A-Class should be positioned as the future of the automobile industry. The car should also attract a younger target audience. For the product, the communication should keep the public informed about the new technological concept of the car, and generate a great interest in purchasing the car (Springer & Jacoby, 1999).

3.2.3 The Structure of the Launching Campaign

“Mercedes-Benz is breaking into the small car segment with the unusual strategy of advertising a product more than a year before anyone can buy it” (Mussey, 1996). On May 20th 1996 Mercedes-Benz started the campaign “Ein starkes Stück Zukunft” [“A strong piece of future”] for the A-Class. The campaign was structured in four phases and should create a great tension for the launch of the car on October, 18th 1997. The four phases were “Big Bang”, “New Perpectives”, “New Choices”, and “New Experiences” (Rother, 2003, p. 97).

3.2.4 Phase 1 – “Big Bang”

“A strong piece of future” announced Mercedes-Benz for fall 1997, the start of the “Big Bang”-phase. The purpose was to get the attention of new potential customers. In this phase, the company invited over 250 journalists to Stuttgart, Germany. With the slogan “Fall in Love”, Mercedes-Benz offered the media a first glance on the new A-Class in June 1996. The media coverage was immense. In only a few weeks the new Mercedes was covered in more than 68 million magazines and newspapers. TV broadcasting stations dedicated more than two hours of time to the “Baby-Benz”. The German magazine Auto-Bild wrote: “Mercedes-Benz re-defines the word ‘compact’. The new A-Class let other cars look so bad, that they wish they have never been produced. A Mercedes in his youngest conditions” (Rother, 2003, p. 98).

Beside those product presentations the company started to run print ads. In those advertisements the general value of the car was emphasized, like the length (Annex #1, #2), the safety (Annex #3), and the comfort of the car (Annex #4). Those print ads always included direct response tools, like hotlines. Interested consumers could call to get more information about the A-Class. With those contacts, the company created a target audience that was very likely to purchase the new car after the release. With the help of this direct response tool, Mercedes-Benz identified more than 408,000 interested people. 170,000 of those were very likely to purchase the new A-Class. Even more satisfying for Mercedes-Benz was the fact, that two thirds of those future customers were driving a competitor’s car at this time.

To keep those people informed, Mercedes-Benz created a forum called “Forum for the new car”, where all members got the latest information about the A-Class and from time to time little gifts, like A-Class shaped cookies for Christmas (FEDMA, p. 2).

[...]

Details

Seiten
26
Jahr
2009
ISBN (eBook)
9783640360390
ISBN (Buch)
9783640360154
Dateigröße
868 KB
Sprache
Englisch
Katalognummer
v129176
Institution / Hochschule
Ohio University – E.W. Scripps School of Journalism
Note
A
Schlagworte
Mercedes Benz Great Campaign Almost Kill Company

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Titel: Mercedes Benz - How A Great Campaign Can Almost Kill A Company