A-class is a miniature model that can hold 4 passengers and their luggage without strain. It can also be adjusted to become a single seater with room for luggage. It basic 390 litres of cargo space distinguishes it from other cars in its segment. Up to 70 percent of the A160’s total length can be made available for legroom and front headroom. This particularly makes it unrivalled and gives it competitive advantage. With only 7.2 litres of fuel per 100 kilometres mark, Mercedes A-class stands out as being economical in fuel consumption. It also meets and exceeds the EU emission control by as much as 40 percent.REF
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Over the last 3 years, there has been significant fall in car sale all over the world. However certain car segments experienced dynamic growth during the period. According to Datamonitor (2006b) the sales of utility stylish vehicles were healthy. This according to Windecker (2005) shows the influence of socio-cultural forces which is responsible for the increased preference towards fashionable cars.
The objective of the marketing decision is to increase sale and boost up market shares of Mercedes Benz in the Nigerian automobile market. This is to be achieved by introducing the stylish and fashionable A-class model. The target is to sale 5,000,000 units of Mercedes Benz A-class by 2015. The added features of A-class and its relatively low price will be the key to achieving the target. The lunch of A-class in Nigeria is also to compete with the low end Japanese utility cars that are domination the African car market.
Smith (1983) argues that a market is a particular group of people who share some common characteristic, and it is the nature of that characteristic which defines the market. Carol et al (1994) adds that grouping potential customers into fairly homogeneous segments will enables marketing to be done with a ‘carefully targeted rifle rather than with a shotgun scattering pellets every which way’.
In order to successfully enter the Nigerian markets using a segmentation approach, Mercedes Benz would first identify the segments within the overall Nigerian market, choose the segment that fits with the organizations objectives and goals, and then develop a marketing strategy that appeals to the selected target market.
Demographic and behavioural segmentation variables would be used to segment the Nigerian market for the A-class model. As Mercedes-Benz has been serving the luxury market for a long time, it is found that the original customers of Mercedes Benz are generally over 40 years. Mercedes Benz has been trying to break into the market of the younger generation. The invention of A-Class helped to actualizes the company’s strategy of opening new market.
Given the peculiar consumer demand pattern and cultural difference in Nigeria, the marketing of the Mercedes Benz A-class in Nigeria is targeted at young executives who are “trendy”. These are urban professional generally between the ages of their late twenties and mid-thirties. This group of individual will welcome an affordable car that is also luxurious. Usually employed in a professions job, and often living in an urban setting, this target group tend to earn in the middle class income range at an early age.
In accordance with the segmentation, the target market for the A-class in Nigeria is young professionals usually between the ages of 23 and 35. In penetrating this unique segment, Mercedes Benz strategy of maintaining brand image while defending the “yuppies” image for the new generation is found to be appropriate. This targeted segment tends to be conservatives and focus on making money to fuel an expensive life style. It is believed that the stylish design and versatility of A-class will appeal to this generation of young people.
The strategy employed is a market development strategy as a current product is being introduced to a new market. The A-class model has been successful in the European market. Mercedes having a reputation for very expensive luxury cars in Africa is looking for a way to expend their market share in Africa.
The design concept of A-Class is to gain market shares from expending its product range downward. A-Class carries with it the traditional supreme quality of Mercedes Benz products but at the same time, offers an affordable, very flexible functionality and a strong sense of security. It would appeal to the Nigerian market since consumers stress on quality and functionality affordability.
Despite the functionalities and value added features of A-class, It’s relatively low price is its critical success factor in Nigeria.
Market situation in Nigeria
Nigeria with a population of 150 million people is the most popular country in Africa. It shares border with 4 other African countries and is regarded as the economic hub of West Africa. DaimlerChrysler can take advantage of Nigeria’s developing economy, population and proximity to many other African countries by marketing its Mercedes Benz A-class model in the country. REF
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It is a well-known fact that owning a new car in Nigeria is expensive. Even after buying a new car, registering, and licensing it in Nigeria is also expensive. However, a relatively cheap luxurious car with very low cylinder volume is a definite advantage in a high oil price region like Nigeria. Furthermore, the environmentally friendly version of A-class compact fitted with fuel-cells will also appeal to the Nigerian population.
The prestige of owing a Mercedes is a long-standing dream for many Nigerian people. It is a recognizable symbol of success to own a Mercedes Benz in Nigeria because of the reputable brand name that it has acquired over the years. Amongst its brand values, the most important is the Germany tradition of engineering precision and complexity, which helped Mercedes Benz to design and manufacture high performance motors and sophisticated engineering designs.
Not until the launch of the A-class, owning a Mercedes-Benz has been very unaffordable. The list price of many models Mercedes model in Nigeria is above N700, 000. As the A -Class would be priced around N619, 7000, not only would it be affordable but comes very close to the prizing of some mid-range Japanese models like Camay of Toyota.
The chosen pricing strategy for Mercedes A-class will seek to attract high income earners as well as middle income earners. It would be made more affordable as the price would above 10 percent lower than the cheapest Mercedes model in the market.
To meet a target sell of 125,000 units by 2015, Mercedes would have to sell 25,000 yearly. For this to be achieving, it will require massive promotions and advertisement. KPMG (2004) notes that promotional budget usually comprises 1%-2% of the expected sales. As the initial target for Mercedes Benz is to sell 2,500000 units of A-class in the first year of operations, the expected sales in a year would be 1549 Billion Naira and the marketing budget will be 1549 Million Naira. For effective marketing, 50% of marketing budget will be allocated to TV advertisings, 25% – promotional activities in Car and Magazines. 25% – will be allocated for point of sales promotions, events and co-marketing activities. To increase the level of coverage the company will look for partnerships that can strengthen its promotional appeal.
The cost factor and the capability of direct and indirect costs is one of the key issues in maintaining competitive advantage (KPMG, 2004). One of the key issues that will influence the profit derived from a sells will be labour-specific costs. Major emphasis will be put on labour-specific cost saving. It is expected that 10 percent of sale revenue would be gross profit and 7.5 percent net profit as a result; the company is expected to earn 154 Million Naira and 110 Million Naira as gross and net profit at the end of each business year.
In conclusion, the paper identified certain strengths and weaknesses of Mercedes Benz A-class. These brand attributes are controlled by the company and are what shape the brand and determine its position. This analysis also reveals certain Opportunities for and Threats to the A-class model. These are conditions beyond the company’s control, yet they strongly influence the brand and can either strengthen the brand or seriously weaken it.
The paper suggested that he Nigerian market was chosen due to the presence of the number of favourable business factors such as entry medium to other African countries, medium entry barriers and future growth potential.
The price is the key success factor and is set to attract price sensitive individuals and young executive. The company will launch advertising campaign designed to create awareness and communicate the advantaged of the A -class model to prospective buyers. The names of the game are will be “Brand” and “Safety”; for they are the core competency of Mercedes Benz.
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