Purpose of commentary
The ground why I write this commentary is because I want to happen out more about the company, Daimler AG, which manufacture the good known auto trade name, Mercedes Benz. Despite that, I am besides interested to look into the scheme that is being implemented by Daimler to sell its neglecting Smart auto and determine whether the scheme will be a success or non.
I conducted my research based on secondary resources. Below is the list of the chief supporting paperss I used during my research:
Business tools, techniques and theory
The concern tools, techniques and theory which I am utilizing to look into about this issue is SWOT analysis, Product Life Cycle and Marketing Mix.
Smart in the Small Car Market
The intense competition in the little auto market, every bit good as the lessening in gross revenues gross in the U.S. has placed Smart in the impregnation phase in the Product Life Cycle. Based on the study from Penske Automotive Group[ 1 ], the entire gross revenues of Smart in the U.S. have shown a diminution throughout these 3 old ages. During its introduction twelvemonth, the entire figure of Smart autos that had been sold is about 25,000 vehicles in the U.S. However, after the 2nd twelvemonth, the gross revenues dropped 41 % to 14,600 vehicles last twelvemonth, while this twelvemonth, the sale is estimated to be 7,000 vehicles merely[ 2 ]. Therefore, in order to forestall Smart from falling to the diminution phase, Daimler has utilized a few extension schemes to protract the life of its merchandise. From the back uping paperss, I have identified two extension schemes, which are: the launch of Smart electric auto[ 3 ]and the development of the following coevals of Smart autos together with Renault-Nissan. To happen out more, about the extension scheme, Ansoff matrix is used to analyse the merchandise and its market growing scheme.
The Boston Matrix
On the other manus, if we look into the Boston Matrix, Smart is considered as the Problem Children[ 4 ]as it possess low market portion in a high market growing. Problem kids refer to a merchandise which needed high investing but gives little return to the company[ 5 ]. Due to the little return, Smart is non able to finance itself, therefore depends on the Daimler ‘s Cash Cow[ 6 ]like Mercedes Benz, for the money. Despite of holding the opportunity to go the Stars, Smart might besides be risked of falling under Dogs. Therefore, mensurable scheme demand to be taken by Daimler to guarantee Smart go a success. One of the possible cause of Smart ‘s low market portion might be due to its below par selling scheme. Hence, to place the job occur in the merchandise selling scheme, the selling mix of Smart is assessed.
Analysis and Evaluation
The Ansoff Matrix
Previously, I ‘ve stated the two extension schemes which Daimler are brooding into that is the debut of Smart electric auto[ 7 ]and the development of the following coevals of Smart autos with Renault-Nissan company. By mentioning to the Ansoff Matrix, we can see that, Daimler has chosen to keep its bing merchandise[ 8 ]together with its bing market. This shows that, alternatively of come ining new market or bring forthing new merchandise, Daimler is concentrating on the market and merchandise it has familiar with in order to take down the costs and hazards. Based on the Ansoff Matrix, the scheme which is being implemented by Daimler is Market Penetration. And normally, the scheme is done by bettering its selling mix.
The bing monetary value of Smart is about $ 14,000 to $ 16,500 depending of its theoretical account[ 9 ]. For a size so little, some clients think that it is non deserving the monetary value. Thus, many clients tend to purchase rival ‘s merchandise such as BMW ‘s Mini[ 10 ], a cheaper options with high quality and a good known trade name with its monetary value get downing from $ 11,900. Although keeping premium monetary value for Smart is one of a scheme to make its image, monetary value decrease might besides be a solution for Daimler to pull bing client as good all possible clients. Other than that, Daimler could besides take to add more extra value to the merchandise so that clients would be attracted to purchase it even in a high monetary value.
Apart from that, topographic point or distribution is besides an of import facet to be considered. Throughout the U.S. , there are merely 77 traders available to administer the Smart autos and most of them are congested in the east portion of the U.S. Meanwhile, some provinces like Montana, Idaho, North Dakota and South Dakota have no Smart auto trader at all[ 11 ]. Hence, to increase the gross revenues of Smart in the U.S. , Daimler must put at least one Smart trader in each provinces besides aiming merely the chief City. By making so, the distribution of Smart can be widen to let more possible clients to purchase it.
As for the promotional method, Daimler had used both above-the-line and below-the-line publicity. The visual aspect of Smart auto in the “ Pink Panther ” movies in the twelvemonth 2006 has given the auto a long term image of urban manner. Apart from that, some of the parking installations operators across New York City have been bear downing half monetary value for its parking tickets because of Smart ‘s little size[ 12 ]. If this is applied to all metropoliss throughout the U.S. this can perchance increase the gross revenues of Smart autos in this state. This is because, indirectly, clients will be influenced to purchase Smart in order to avoid parking job and even traffic congestion. In the reverse, non all metropoliss in the U.S. suffer traffic congestion and parking job.
Even though it merely has a limited lading infinite, the urban manner and its little size has make up Smart auto ‘s typical individuality. Despite of its after gross revenues service, Daimler has besides given the chance for the clients to plan their ain Smart auto through Smart Expression Program[ 13 ]. This profitable plan will non merely attract clients to purchase it, but it can besides fulfill the client ‘s wants. This can certainly supply Smart its competitory advantage and clients loyalty if it is a success. However, the Smart Expression Program will increase the auto monetary value and non every clients is willing to pay for it.
Furthermore, Daimler has besides planned a few more extension schemes to hike the gross revenues of Smart auto. One of them is to develop new Smart auto theoretical accounts. A strategic confederation has been formed between Daimler and Renault-Nissan last April where both sides had agreed to fabricate the following coevals of Smart and Twingo[ 14 ]which includes the industry of the electric version. The
Furthermore, its engine besides uses low ingestion of fuel and release low emanation of C dioxide coherent with the green life plan. In extra to that, Daimler has besides produced a new electric Smart theoretical account. This shows that Daimler plays its corporate societal duty towards the environment. This good repute of Smart autos may pull clients who support the run.
In decision, the intense competition in the market every bit good as the diminution in gross revenues gross has truly put Daimler ‘s Smart auto in hazard. Without the right selling schemes, Smart auto which is the Problem Children might hold the inclination to go Dog and subsequently come in its diminution in its Product Life Cycle. Since Daimler is now confronting a fiscal job, it is best if the cost is kept to minimum. The action of organizing a strategic confederation with Renault-Nissan is a good measure taken by Daimler to distribute its cost and hazards.
The extension schemes program by Daimler has a large potency to win. After the selling mix is assessed, there are still infinite for Daimler to better its Smart auto