Purpose of commentary
The reason why I write this commentary is basically because I want to discover more about the company, Daimler AG, which create the well known car brand, Mercedes Benz. Even though, I am also interested to research the strategy that is being executed by Daimler to sell its faltering Smart car and determine if the strategy will be a success or not.
Methodology
I conducted my research predicated on supplementary resources. Below is the list of the main supporting documents I used within my research:
Business tools, techniques and theory
The business tools, techniques and theory which I am using to research about this issue is SWOT research, Product Life Cycle and Marketing Combine.
Smart in the Small Car Market
The intense competition in the tiny car market, as well as the decrease in sales earnings in the U. S. has located Smart in the saturation stage in the Product Life Cycle. Predicated on the report from Penske Automotive Group, the total sales of Smart in the U. S. have shown a decrease throughout these 3 years. During its debut yr, the total number of Smart cars that were sold is approximately 25, 000 vehicles in the U. S. However, following the second calendar year, the sales slipped 41% to 14, 600 vehicles this past year, while this year, the sale is approximated to be 7, 000 vehicles only. Therefore, in order to prevent Smart from slipping to the drop stage, Daimler has employed a few expansion strategies to prolong the life of its product. In the supporting documents, I've identified two expansion strategies, that are: the start of Smart electric car and the introduction of the next generation of Smart cars as well as Renault-Nissan. To find out more, about the extension strategy, Ansoff matrix is employed to analyze the product and its own market progress strategy.
Market Share
High
Market Growth
High
Stars
Low
Cash Cows
The Boston Matrix
On the other hand, if we check out the Boston Matrix, Smart is recognized as the Problem Children as it have got low market show in a higher market growth. Problem children refer to something which needed high investment but offers small go back to the company. Due to the small return, Smart is not able to funding itself, thus depends upon the Daimler's Cash Cow like Mercedes Benz, your money can buy. Despite of having the chance to become the Personalities, Smart may also be risked of falling under Canines. Therefore, measurable strategy have to be considered by Daimler to ensure Smart become a success. One of the possible reason behind Smart's low market share might be because of its below par online marketing strategy. Hence, to recognize the problem occur in the merchandise marketing strategy, the marketing mixture of Smart is evaluated.
Analysis and Evaluation
Product
New
Market
Existing
Market penetration
New
Market development
The Ansoff Matrix
Previously, I've stated the two expansion strategies which Daimler are dwelling into that is the benefits of Smart electric car and the introduction of the next era of Smart cars with Renault-Nissan company. By referring to the Ansoff Matrix, we can easily see that, Daimler has chosen to keep its existing product as well as its existing market. This demonstrates, instead of stepping into new market or producing new product, Daimler is focusing on the marketplace and product it offers familiar with in order to lower the costs and risks. Based on the Ansoff Matrix, the strategy which has been integrated by Daimler is Market Penetration. And usually, the strategy is done by increasing its marketing blend.
The existing price of Smart is approximately $14, 000 to $16, 500 depending of its model. To get a size so small, some customers feel that it isn't worth the purchase price. Thus, many customers tend to buy competitor's product such as BMW's Little, a cheaper alternatives with high quality and a favorite brand with its price starting from $11, 900. Although retaining advanced price for Smart is one of a technique to build its image, price lowering might also be a solution for Daimler to attract existing customer as well all potential clients. Other than that, Daimler could also choose to include more additional value to the merchandise so that customers would be drawn to buy it even in a high price.
Apart from that, place or circulation is also an essential requirement to be looked at. Throughout the U. S. , there are just 77 dealers open to disperse the Smart autos and the majority of them are congested in the east part of the U. S. In the mean time, some states like Montana, Idaho, North Dakota and South Dakota have no Smart car supplier by any means. Hence, to raise the sales of Smart in the U. S. , Daimler must place at least one Smart supplier in each states besides targeting only the key City. In so doing, the distribution of Smart can be widen to permit more potential clients to buy it.
As for the promotional method, Daimler acquired used both above-the-line and below-the-line promotion. The looks of Smart car in the "Pink Panther" movies in the entire year 2006 has given the car a long-term image of urban style. Apart from that, a few of the parking facilities operators across New York City have been charging half price for its parking seat tickets because of Smart's small size. If this is put on all locations throughout the U. S. this may possibly increase the sales of Smart cars in this country. This is because, indirectly, customers will be inspired to buy Smart to avoid car parking problem and even traffic congestion. Inside the contrary, not all cities in the U. S. put up with traffic congestion and parking problem.
Even though it only has a restricted cargo space, the urban style and its small size has constitute Smart car's distinctive individuality. Despite of its after sales service, Daimler in addition has given the opportunity for the clients to design their own Smart car through Smart Manifestation Program. This profitable program will not only appeal to customers to buy it, but it can also satisfy the customer's desires. This can surely provide Smart its competitive advantages and customers devotion if it is a success. However, the Smart Manifestation Program will improve the car price rather than every customers is inclined to cover it.
Furthermore, Daimler has also planned some more extension strategies to boost the sales of Smart car. One of them is to build up new Smart car models. A strategic alliance has been created between Daimler and Renault-Nissan previous April where both edges had agreed to manufacture the next technology of Smart and Twingo which includes the manufacture of the electric version. The
Moreover, its engine also uses low ingestion of energy and release low emission of skin tightening and coherent with the green life program. In additional to that, Daimler has also produced a fresh electric Smart model. This implies that Daimler takes on its corporate interpersonal responsibility towards the surroundings. This good reputation of Smart cars may entice customers who support the marketing campaign.
Conclusion
In finish, the powerful competition on the market as well as the drop in sales earnings has really put Daimler's Smart car in jeopardy. With no right marketing strategies, Smart car which is the trouble Children might have the tendency to be Dog and later enter its decline in its Product Life Routine. Since Daimler is currently facing a financial problem, it is best if the cost is stored to minimum. The action of forming a tactical alliance with Renault-Nissan is an excellent step considered by Daimler to pass on its cost and risks.
The expansion strategies plan by Daimler has a big potential to achieve success. After the marketing mixture is assessed, you may still find space for Daimler to boost its Smart car
