According to Forbes (2017), the brand value of Mercedes-Benz in 2017 is $29.2 billion. It is on the list of the most expensive companies, and it has taken the 17th place. The revenue from Mercedes-Benz Cars reached 89.284 million euros in 2016, as it is mentioned in Daimlers annual report. The world knows this brand as a manufacturer of sophisticated, luxurious, and reliable cars. Its symbol is recognizable and combines two different companies, which were independent in the past but then merged and created a huge brand. The article examines both strong and weak sides of the brand by taking into account the historical perspective, and identifies two competitive advantages for future development.
The history of Mercedes-Benz starts in 1886. Karl Benz patented and made the first three-wheeled car at about the same time as Gottlieb Daimler. The two first car companies located in Germany, called Benz & Co Rheinische Gasmotoren-Fabrik and Daimler-Motoren-Gesellschaft (DMG), started their history in 1883 and 1890. Benz had enough finances and wished to focus on car engine development. Except for that, Daimler was working on racing cars and engines for aircrafts and vessels. The success in motorization on water, air, and land was shown in a three-pointed star, the symbol of the company. In 1909, Mercedes appeared as a patented label with a star on each car they produced. The two companies formed Daimler-Benz AG and started working on the Mercedes-Benz brand in 1926. It was an influence of the First World War, when sales on the foreign market became very low, and currency crashed. Smart redesign and changes in market segmentation gave an opportunity to present four luxury models in 1928.
From the beginning, the company had used differentiation in offering a single product (engine) in all variations and prices. Then, the company used a cost-leadership strategy to reduce expenses during the manufacturing of cars, tracks, and vans as compared with their competitors. Mercedes-Benz sells luxury cars, so the segment is narrow and focuses on a small niche. However, it operates on the global market, and these strategies brought the company stability, trust, and high revenue.
Since the market is continuously changing, there are numerous advantages to take. Innovations in replacing CO2-containing fuels by alternative, more sustainable energy sources will create a new niche among buyers. Additionally, the company should aim to widen its market share in Asia. Focusing attention on both developed and developing countries may double the number of customers and increase the demand. The SWOT analysis provides a more detailed perspective in this regard.
Mercedes-Benz is a well-organized company, which has been on the market for more than 100 years, manufactures cars and buses on 6 continents, and has a wide range of products. The parent company, Daimler, which holds four more different brands minimizes operational costs. They spend money on events such as New York Fashion Week to attract more people from the upper class.
Audi, Lexus, and BMW also manufacture luxury cars and have a great number of customers since their products are competitive enough. The maintenance costs are lower and more affordable than buying a new Mercedes car. The company cannot allow further growth as exclusivity is not a unique feature anymore.
The market in Asian countries has not been subdued yet, at least not to the extent that the European and American markets are. In these markets, ecological or hybrid cars running on eco-friendly fuels can provide more opportunities for Mercedes and will pronounce it as the industry leader that cares about the environment.
Environmental policies that are gaining momentum worldwide may stall the production since the majority of the company's products emit CO2. Middle class sales have become lower because of poor economic conditions and competitors, which are strong. Therefore, tough competition is the major threat for the company.
To sum up, the company, Mercedes-Benz, has put enormous effort into its development since 1886, when the first patent was signed. It has taken more than 100 year for the company to become a strong, luxury-oriented, well-developed manufacturer. The proper use of strategies, such as differentiation and cost-leadership, made the company successful. In the highly competitive environment, the company should seek new and better ways to appeal to their customers. Innovations in engines will allow the company to become an eco-friendly brand. The company can widen its market share attracting new customers in Asia. Finally, the company should stick to the above competitive advantages in order to remain the industry leader.
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