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Mercedes Benz Cars Germany - Market Analysis

Using the Approach of SWOT and PEST Analysis

©2013 Hausarbeit (Hauptseminar) 34 Seiten


An analysis of the German automotive market and the Mercedes-Benz cars division, as an actor on this market, are done. Therefore firstly the relevant external factors for the German automotive market are audited by examining its` political-legal, economical, sociological and technological factors. Secondly an internal audit is done by examining strengths and weaknesses of the German division of the company. As a result a holistic picture of Mercedes-Benz cars` market related situation is assessed.


Table of Contents

Executive Summary

List of Abbreviations

1 Introduction
1.1 Problem Definition
1.2 Objectives
1.3 Methodology

2 Framework for the Market Definition and Analysis
2.1 Theory of SWOT Analysis
2.2 Profile of the Daimler AG and Definition of Mercedes Benz Cars Germany
2.3 Definition of the Relevant Market
2.4 Target Group

3 SWOT Analysis for Mercedes-Benz Passenger Cars Germany
3.1 Analysis of the External Factors
3.1.1 Political and Legal Factors
3.1.2 Economical Factors
3.1.3 Sociological Factors
3.1.4 Technological Factors
3.2 Assessment of the External SWOT Factors
3.3 Analysis of the Internal SWOT Factors
3.3.1 Competition
3.3.2 Company Condition
3.4 Audit of the Internal SWOT Factors

4 Results

5 Conclusion




ITM-Checklist 1: 360-degree analysis

Executive Summary

An analysis of the German automotive market and the Mercedes-Benz cars division, as an actor on this market, are done. Therefore firstly the relevant external factors for the German automotive market are audited by examining its` political-legal, economical, sociological and technological factors. Secondly an internal audit is done by examining strengths and weaknesses of the German division of the company. As a result a holistic picture of Mercedes-Benz cars` market related situation is assessed.

List of Figures

Fig. 1: SWOT Synthesis

Fig. 2: Social position and basic orientation of the Sinus-Milieus

List of Abbreviations

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1 Introduction

Since the man was getting aware of the complexity of his environment, every try to handle this complexity was founded on a strategy. This includes all aspects of human engagement, whether it is of political, social, military, or, of course, economic behavior. But without knowing the object every strategy would be only a waste of effort. The decision making process of a company is no exception for this, and so an important aspect of it is described in this work: the analysis, in particular the analytical approaches of Strengths, Weaknesses, Opportunities and Threats (SWOT) – and Political, Environmental, Social and Technological – Analysis.

The need for definition and use of a strategy for a company is caused by the limitation of the success relevant resources (Grant 2005, p. 5). The concept of market oriented strategic planning, which is depending on this observation, is therefore a management-driven process to adapt goals and resources of a company to changing market situations. Strategic planning means the choosing of the right goals and the measures to achieve these with a horizon of three or more years, whereas tactical and operational planning on lower company hierarchy levels determine the ways for reaching these goals with the given measures with a horizon of normally one financial year (Kotler et al. 2007, p. 88; Kreutzer 2010, p. 67f.). Therefore, instruments of market analysis are part of strategic planning.

The result of this strategic planning process is a marketing plan to coordinate and control the companies` activities which induct impacts on the markets by a clear market definition and market selection (Kotler et al. 2007; Morgan 2011, p. 110), but this is not be part of this work.

Why is the automotive branch such an interesting analysis object? In the last decades in this branch significant changes have occurred and are actually in progress. Growing overcapacity and market saturation on the triad markets have caused high competition pressure. The focus of the following work lies on the market for new cars, which is expected to be the drive of the automotive branch. Other parts of the automotive value chain and the other market components, e.g. Research and Development (R&D), are taken into consideration (Ernst & Young 2001a, p. 1; Dietz 2009, p.15, p. 19-27).

1.1 Problem Definition

The analysis-relevant objects have to be defined. Furthermore the relevant factors have to be identified, examined and evaluated. These factors have to be summarized and connected to each other to get the SWOT-analysis in result.

1.2 Objectives

The objective of the assignment is a holistic analysis of the market situation of Mercedes-Benz cars in Germany.

1.3 Methodology

For market analysis the SWOT-approach is used. For analysis of the external factors the PEST-approach is utilized. The used data is obtained of professional magazines or free accessible studies of institutes, authorities and accounting firms.

2 Framework for the Market Definition and Analysis

SWOT Analysis is a powerful method for analyzing a market in preparation of a strategic decision. The instrument itself and its theoretical background are explained in the following chapter, as is the object of the analysis itself, the Mercedes Benz Car Division and its engagement in Germany.

2.1 Theory of SWOT Analysis

To become a universal view on the companies` market situation an analysis requires information about the market itself, the product or product group, the competitors, the distribution channels and the markets` environment. For information gathering and analysis these different points are divided in two main categories of factors: Macro-environmental, or external, factors and micro-environmental, or internal, factors. Both areas have to be analyzed on relevance for the companies` engagement (Kotler et al. 2007, p. 121; Kreutzer 2010, p. 5).

The SWOT analysis is a method for integrated market analysis. The purpose is to gain an assessment of the companies` own performance and competitiveness in relevance to its competitors and evaluation of future market perspectives. The already mentioned internal factors are analyzed in the parts strengths (S) and weaknesses (W), which constitute the internal perspective of this method. These factors have to be chosen specific to the product line and closely related to the internal organization of the company. Identified strengths should point out successful strategies, and on the other hand identified weaknesses should show improvement needs. The macro factors are analyzed in the parts Opportunities (O) and Threats (T), which constitute the external perspective and are evaluated through PEST analysis. Factors, which are considered most important, should be evaluated with more attention, and countermeasures should be mentioned if possible. The synthesis of both perspectives allows the formulation of strategies for the company. For this, essential problems should be emphasized. Decisions in relation to these problems build the basis to formulate strategies and company goals (Kotler et al. 2007, p. 125-126, p. 233; Kreutzer 2010, p. 74-83).

Design-forces in the macro environment are, as already mentioned, external and therefore not controllable for the company. According to the PEST schemata, these forces can be divided in political/legal (P), economical (E), sociological (S) and technological (T) factors, which are interdependent and have to be taken in consideration this way, for a development in one of these areas seems not possible without effecting every other in different intensity (Kotler et al 2007, p. 233ff; Kreutzer 2010, p. 39-45).

Possible points for considering the micro environment are the competitive strategy, the relevant target group or the financial capabilities as done in chapter 3.3.

The analysis of the SWOT factors insists three steps (Kreutzer 2010, p. 74-83). For analyzing S and W factors a definition and audition of the found success-factors is needed. In a next step the T an O factors are also audited, according to the specific branch of the company and with use of the found and described analysis relevant points. In the last step a synthesis of the evaluated factors is done using the following matrix:

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Fig. 1: SWOT Synthesis (Kreutzer 2010, p. 82)

2.2 Profile of the Daimler AG and Definition of Mercedes Benz Cars Germany

Daimler is one of the world`s automotive pioneers and therefore an interesting objective for economic analysis. The main business of the Group is the development, production and distribution of cars, trucks and vans. Through direct or indirect controlled companies Daimler is also participating in business with buses and financial services.

The product portfolio of Mercedes-Benz ranges from small cars (A-Class) to SUV (M-Class) to luxury cars (Maybach models) and covers all types of passenger cars. These cars are mainly produced in Germany, but the division also has production facilities in the United States, China, France, South Africa, India, Vietnam and Indonesia with a total of 18 production sites (as of December 2011). The most important markets for Mercedes-Benz Cars in 2011 were Germany with 21% of unit sales, the other markets of Western Europe (24%), the United States (18%) and China (16%) (Daimler 2012a, p.72ff. Daimler 2012b, p. 7).

2.3 Definition of the Relevant Market

To be clear about the perspective of the SWOT-analysis the market has to be defined. For this assignment this is the German automotive market. Significant differences between business to business and business to customer markets on the demand and supply sides and are taken in consideration where necessary (Meffert & Bruhn 2000, p. 1204f.).

According to Dietz (2009, p. 17-39) the automotive market is segmented due to several special criteria. The first is product related, depending on price ranges and technical properties. For Mercedes-Benz cars this means a classification to the higher medium and upper price segment with highly developed technology. The second criterion is customer related, which means a differentiation in private or business customers, customer behavior, and socio-demographic criteria. For Mercedes-Benz cars private customers with a high brand loyalty and a low pricing-sensibility are the most interesting. In conclusion, Mercedes-Benz cars can be categorized as a Premium brand (Karner 2008, p. 1). According to Rosengarten and Stuermer (2006, p. 5-8) these brands are characterized by fundamentally definition trough innovation and innovative capabilities and a clear marketing communication of these, a strong position in their home and the global markets, strong appeal with an elevated customer segment with internationally similar preferences and at last the advantage of a relatively small and concentrated product portfolio. This characterization has to be taken in consideration especially for S and W factors.

In case of global active companies like Mercedes-Benz, the business results in the several countries depend on the investments done corporation-wide (Bernd et al. 2010, p. 101). So for this assignment not only German-specific engagements of Mercedes-Benz have to be taken into consideration, but also worldwide investments of the Daimler Group, e.g. in case of R&D, which cannot be usefully divided in national or divisional parts.

2.4 Target Group

For the definition of the target group the Sinus Milieus are used (Sinus Sociovision 2009). These differentiations is provided by Sinus Sociovision with the purpose, to define marketing relevant target groups not only using traditional socio-demographic attributes, but taking in consideration the life styles and individual values of consumers. By this, the Sinus milieus should represent real existing target groups (Sinus Sociovision 2009, p. 2ff.). So they seem to be a good instrument for target group definition for Mercedes-Benz.

The position of the several milieus shown in figure X within German society and relating to their social class is shown in figure 3 (Sinus Sociovision, p. 13).

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Fig. 2: Social position and basic orientation of the Sinus-Milieus (Sinus Sociovision 2009, p. 13)

The higher the allocation of a milieu placed in this figure the higher the education, the income and the occupational group. The more in the right part of the figure a milieu is allocated the more socio-cultural modern it can be assumed.

It is assumed, that for the purchase of a new Mercedes-Benz car, the milieus on axe horizontal in line 1 and line 2 seem significant. On axe vertical the suspected target group is located in column A and B. Therefore the possible targeted milieus are A12, A23, AB2, B1, B2, B12, and C12. According to the definition of these milieus (Sinus Sociovision p. 15) the milieu AB2 is dropped out, for old-socialistic ideas are hardly compatible with the Mercedes-Benz image. All remaining milieus are assumed possible target groups, of course with different prospect of reaching them successful. It is furthermore assumed, that the farer away a milieu is positioned from A1, the less attractive the Mercedes-Benz image is for them. In result it can be assumed, that 64% of the Sinus population is a potential target group (see appendix 2). This has to be refined by limitation of the age group, taking into consideration that the Mercedes-Benz image is addressing mainly customers who are established, standing firmly in life and have already be successful in career (Thiemer & Schif 2011, p. 489). Another limitation is the net income. For Germany the Statistische Bundesamt (2010, p. 7) has calculated that 24% of the households got a net income of more than € 5,000, and the relevant incomes might even be above that. But for marketing decisions the Sinus differentiation seems to be a solid basis.

3 SWOT Analysis for Mercedes-Benz Passenger Cars Germany

The following chapter is about the SWOT Analysis as defined in chapter 2.

3.1 Analysis of the External Factors

Environmental issues, growing urbanization and changing customer behavior are the key issues influencing the global automotive industry (KPMG 2012, p. 3). By the use of PEST-categorization and taking the automotive markets specifics into consideration the following factors have been identified.



ISBN (eBook)
ISBN (Paperback)
1000 KB
Institution / Hochschule
FOM Hochschule für Oekonomie & Management gemeinnützige GmbH, Köln
2013 (März)
mercedes benz cars germany market analysis using approach swot pest

Titel: Mercedes Benz Cars Germany - Market Analysis