Wednesday, April 9, 2014

Daimler's New Strategy is "Paying Off"

Daimler's New Strategy is "Paying Off"
New Market Segments, New Investments, More Production

An April 9, 2014 article on Bloomberg.com by Dorothee Tschampa reported how Daimler's expansion of the "Mercedes-Benz Model" has placed them on track to beat their competitor's sales growth in the luxury car market for 2014. The new strategy is heavily focused on being the dominant premium care producer over competitors like BMW and Audi. For Daimler's strategy to succeed, they not only focused on environmental or industry analysis, but most importantly on internal analysis of their company. 

One strategy Daimler is using to gain market share in the luxury car production industry is to shed its "old-man's image" redesigning new models with features that are more attractive to younger customers. This shift in strategy is proving beneficial as Daimler saw a 75 percent surge in for their S-Class sedan which was revamped in July. 

Daimler has also bolstered demand by upgrading its line of compact cars which are usually less expensive that the bigger, mid-sized models. This includes redesigns for their A-Class hatchback and B-Class model. Additionally, Daimler plans to introduce the five new models this year including CLA model four-door coupe, a new version of their bestselling mid-sized C-Class, a coupe variant of the S-Class and two models for the Smart city-car brand.

Due to increased demand, Daimler's expansion plan has added shifts at two of its production plants and has shifted projects to China which have helped double the production of Mercedes in that country. According to Tschampa, sales grrowth in China, the world's leading car market, are will be key for Mercedes' strategy to be atop the premium car market. Zetsche palns to add 100 dealerships in China by the end of 2014, for a total network of 400 dealerships. Additionally, funds were also set aside to resume the production of passenger vehicles in Brazil as well.  

The Mercedes-Benz expansion strategy incorporates shifts in corporate structure, resources, processes, staffing and culture aimed at putting Daimler at the top of the luxury car market. Brand recognition and competitor differentiation are key to achieving success. Mercedes is expanding the number of models available, but most continue improving the process in which they are produced to keep up with demand. To improve production capabilities Mercedes must continue opening production plants in different countries and/or adding shifts to existing plans. The targeting of younger buyers will work as long as the price of compact cars is affordable as younger drivers cannot generally afford high-end sports cars. Mercedes are know for their quality and they must maintain this, even through rapid expansion. There is no doubt that Zetsche and the rest of the Daimler family is satisfied about how there strategy is working so far, in 2014. 




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