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John Paul Mifsud




    Mercedes A-class - A consumer Behaviour approach




CCT 5580 Consumer & Organisational Buying Be...
Introduction
The following analysis will provide an insight on how consumers behave and relate to the
Mercedes A-class. Th...
The Compact Multi Purpose Vehicle (MPV) market can be divided into two major
segments: mainly the Premium market composed ...
The A-class was designed to a particular market segment. In order to identify their target
market Daimler-Benz made use of...
extra-luxury models such as the S-class and CL-class. As stated earlier, the A-class was
not introduced in North America s...
Brand name awareness is a gateway for entry into consumers' consideration set. ‘A well-
known brand name enhances initial ...
The assignment of a personality/ celebrity (user imagery) to a brand is a powerful driver
since it makes it easier for the...
Personality has a fundamental role in influencing consumers in the decision making
process. The Freudian Psychographic the...
(Christina Aguilera and Giorgio Armani - Prominent ambassadors of the “Follow your
own star” motto, 2004). This type of pr...
their parents image. The A-class might be a successful move into providing a ‘fresh’ and
innovative car, appealing to a yo...
The first step in the decision making process is the recognition of a need. The need of
buying of a car is essentially an ...
decisions such as choosing the make or country of origin, the dealer and the financing
options (Schiffman & Kanuk, 2004).
...
Mercedes A-Class Range: MERCEDES BRINGS ITS A GAME, (N.D.). Accessed 23rd
November 2009.
http://uk.cars.yahoo.com/car-revi...
Anurit, J., Newman, K. & Chansarkar, B. (N.D.). Consumer Behaviour of Luxury
Automobiles: A Comparative Study between Thai...
PRODUCT           PRICE (£)
                                      AMG
                    From       To   version
        ...
Source: Assignment MMG, (2006)         Source: Assignment MMG, (2006)




Figure 1                         Figure 2
Source: Ads, (N.D.)   Source: Ads, (N.D.)



Figure 3              Figure 4




Source: Ads, (N.D.)   Source: Swiss Knife ...
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A Class Consumer Behaviour

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A Class Consumer Behaviour

  1. 1. John Paul Mifsud Mercedes A-class - A consumer Behaviour approach CCT 5580 Consumer & Organisational Buying Behaviour
  2. 2. Introduction The following analysis will provide an insight on how consumers behave and relate to the Mercedes A-class. The automobile was developed by Daimler-Benz. in 1997 after the company decided to launch a small, compact car that would fit within the product portfolio. Unlike the other Mercedes classes currently on the market, this car strikes the consumer as being utterly unique in comparison. It was the smallest Mercedes ever introduced in the market. The A-class was designed to be one of the safest and compact cars on the road, particularly on the narrow roads of crowded cities in Europe. The A- class was a response to both the changes in market trends and the consumers’ needs and wants (Benetton et Al. 1997). Market Environment & Competitors
  3. 3. The Compact Multi Purpose Vehicle (MPV) market can be divided into two major segments: mainly the Premium market composed of Mercedes A-class, the BMW 1 series and the Audi A3; and the mass market with a large volume of brands such as Renault Scenic, Mazda 3, Ford Focus C-Max and others. The compact MPV market is one of the most saturated markets in the automobile industry (Colley, 2004). On the other hand only a few brands have ventured in the premium segment of MPVs. Of all the vehicle segments, the compact MPV registered the biggest explosion in new car registrations between 2000 and 2007. The increase in sales by 56,800 during this period had a reversal effect on the market of used cars (Compact MPVs, 2008). The Premium market of the MPVs is relatively small but has the potential to grow due to increasing standard of living and expectations of commodities, the urban lifestyle and limited parking space and the governments’ (EU & US) policy favouring incentives for low emission cars. The A-class, the BMW 1 series and the Audi A3 share similar prices with the highest version falling under the £20,000 (Audi A3 vs BMW 116i vs Mercedes A170, N.D.) The Mercedes A-class is not targeted to the North American market. On the other hand the BMW 1series and the Audi A3 have penetrated the market (Benetton et Al. 1997). The Mercedes A-class is expected to enter the Northern American Market in 2011 (Aziz, 2008). There is a strong competition between BMW 1 series (Marketing Plan – BMW 1-series in Germany, N.D.) and the Audi A3 (Audi A3 review, 2007) since they both target a similar segment. Their target groups are the educated younger generation which are sports oriented and wish to purchase a premium ‘affordable’ car. As we shall discuss, the Mercedes A-class is different from its competitors (The Death of America’s “Big Car” Culture: GM Gives Up on Hummers, 2008). Segmentation and Market Segment
  4. 4. The A-class was designed to a particular market segment. In order to identify their target market Daimler-Benz made use of hybrid segmentation approach by creating psychographic-demographic profiles. The main variables considered were lifestyle, income, status, class, geography and age. As highlighted in table 1 (Assignment MMG, 2006) the A-class target consumers in the middle class (middle managerial, professional or administrative jobs and the lower middle class (supervisory or clerical jobs, junior management). By applying Mc-Cann Erikson lifestyle Model one notices that the customers within this segment want to be contemporary to win approval. They act as indicators of social change, but on the other hand they imitate the flow. Using the Target Group Index classification developed by Geoff Wicken (Assignment MMG, 2006) one can conclude that this car is targeted to outgoing fun lovers characterized as magazine and newspaper oriented, love traveling, entertaining people at home, eating out and above-average viewers of TV. Unlike most Mercedes Models who are targeted for affluent mature customers, the A- class is versatile, capping customers ranging from the age of 25 to 45(Assignment MMG, 2006). In fact the first model of the A-class (1997) was also targeting the late baby boomers cohort desiring a small, practical and compact car that reflects their mentality (Benetton et Al. 1997). Moreover this car is targeted towards females. The statistics show that the target segment is composed of 64% females, 30% males and 20% mixed over 25years. The A-class is an attempt to attract young, but especially female customers to Mercedes since their customers are mainly men (Assignment MMG, 2006). The A-Class is specifically designed to capture the market of professionals over 25, couples with a small family or a two person household. These consumers would normally have to wait until financial circumstances improve before they would be able to purchase a 'luxury car'. The A-Class is also positioned as a desirable second car for those who are already Mercedes owners (Benetton et Al. 1997). Geographically the car was marketed mainly for the European market. The compactness of a city car and the energy efficiency of the A-class make it a perfect match for European urban cities. On the other hand the Asian market seems to favour only the
  5. 5. extra-luxury models such as the S-class and CL-class. As stated earlier, the A-class was not introduced in North America since their market is dominated by local MPVs such as the Chevy Aveo. Furthermore, the American automobile culture is oriented towards expensive big cars. Mercedes is perceived to be a super luxurious car. Currently, the introduction of the A-class in the US market would harm the brand image, although the market is changing due to increasing oil prices. Cultural implication-s UK & Thailand A comparative study was conducted by Anurit et al. (N.D) on how consumers’ perception of Luxury automobiles differs between the UK and Thailand. They argue that while Mercedes cars are more expensive than BMW in every segment in both countries, BMW is more popular in the UK, while Mercedes is traditionally more popular in Thailand. From an economic point of view, Mercedes should appeal more to a rich country such as UK and vice-versa. They argue that the reason behind this discrepancy is due to the symbolic benefits associated with the brands in both countries. The image of BMW as a prestigious, individualistic car appeals more to the successful professionals in the U.K. The image enhanced by Mercedes in Thailand is that the car is very expensive, luxurious and prestigious. The status symbol associated with Mercedes attracts more the Thai market. This image is further enhanced by the Thai royal family sitting in the Mercedes limousine. Purchasing a Mercedes in Thailand is an expression of power, wealth and status while purchasing a BMW in the UK is an expression of achievement. This value is attributed more value in the U.K than in Thailand. Metaphorically we can argue that ‘UK luxury car customers drive the cars’ but ‘Thai luxury car customers let the cars drive them’ (Anurit et. al, N.D.). Through this study one can understand why the Mercedes A- class, as an expensive but affordable car, did not find its roots in the Asian market. Brand Name and Positioning
  6. 6. Brand name awareness is a gateway for entry into consumers' consideration set. ‘A well- known brand name enhances initial reaction, interest, and willingness to consider or try the product’ (Benetton et al., 1997). To prevent any negative reactions from the public, Mercedes begun to promote the A-Class a year prior to its launch by stressing that this car continues to uphold the brand image of Mercedes as a luxury car. Furthermore, in order to maintain and protect the exclusive image of Mercedes, they limited the A-Class production to only 200,000(Benetton et al., 1997). As illustrated in figure 1-3, the car is mainly advertised with other Mercedes models. The marketing concept behind these adverts is to inform potential customers that the A-class is not different from the other cars in the Mercedes portfolio, ‘it is the same posy car but a different segment’. The use of Mercedes’ well-recognized brand name on the A-Class automatically provides name recognition and facilitates the communication process (Benetton et Al., 1997). One can therefore claim that the strategy applied by Mercedes for the A-class is umbrella positioning. If this model was marketed separately, like in the case of the Smart model, most probably it would have been just one of the many MPV in the market and possibly fail. Brand Personality Brand personality is a set of human characteristics associated with a brand. These characteristics are important because they form an overall concept of what to expect from the brand (Brand Personality, 2008). Applying Aaker’s brand personality framework (Schiffman & Kanuk, 2004), Mercedes fall within two main categories, mainly competence and sophistication. The luxury attributes associated with the company makes the brand appear to be upper class and charming. Furthermore attributes such as reliability, intelligence and successfulness can also be attributed to Mercedes due to its successful history in producing high-end quality automobiles. The classical Mercedes, such as the E-class, are perceived as wealthy, stylish, traditional, masculine and snobbish. The A-class personality differs in some aspects from the others. The A-class is innovative, unique, feminine, modern, fashionable and less sophisticated than the classical Mercedes.
  7. 7. The assignment of a personality/ celebrity (user imagery) to a brand is a powerful driver since it makes it easier for the consumer to personify the brand (Brand Personality, 2008). Mercedes used Celebrity endorsers Christina Aguilera and Giorgio Armani to promote the brand. Giorgio Armani is associated with fashion and design while Christina Aguilera with courage, success and perseverance. Christina Aguilera claimed “I’ve always followed my own star, and I succeeded in finding my own style. That’s my recipe for success, and it’s also the message of this song and of the new A-Class” (Brand Personality, 2008). Needs & Motivations The choice of purchasing a product-service is triggered by our needs and motivations. Maslow's Hierarchy model of needs provides a framework into understanding why people buy and consume certain products (Schiffman & Kanuk, 2004). The purchase of a Mercedes A-class is triggered by the need to satisfy the social and ego-needs. The Mercedes A-class is perceived to be a premium MPV for an up-scale market. A consumer might decide to purchase such a car to satisfy his needs for affection, respect and sense of belonging to a group. The car could serve as means to integrate the individual in a particular social group or class (end). It could also serve to boost his/her ego needs to gain prestige, status, self esteem. Further to this model one can apply Mc Clelland´s theory of learned needs (Schiffman & Kanuk, 2004). The purchase of this relatively expensive car can serve as a manifestation of wealth. Wealth and power are interdependent (Haralombus & Holborn, 2000). The purchase of this car can be triggered by the need to exercise power and control over others. It can also be motivated by the desire to manifest success and achievement. Similar to Maslow’s model, affiliation suggest that behaviour is strongly influenced by the desire for friendship, acceptance and belonging (Schiffman & Kanuk, 2004). Consumer Personality
  8. 8. Personality has a fundamental role in influencing consumers in the decision making process. The Freudian Psychographic theory suggests that unconscious needs and drives, particularly sexual and biological, shape our personality and motivation (Schiffman & Kanuk, 2004). In this context the need to buy the A-class could be influenced by the need to receive affection, attention, love and to satisfy the sexual drives. On the other hand if one applies the traits theory, the A-class appeals to consumers who have a positive approach to innovation and have a sense of open-mindedness to new products. Moreover this car applies to consumers with a high sense of uniqueness and who prefer an environment crammed with novel, complex and unusual experiences (Schiffman & Kanuk, 2004). Behaviour & Attitudes Our decisions are also a product of our attitudes. An individual might have a positive experience, for example driving his friend’s A-class, which in turn affects his attitude towards Mercedes and changes his behaviour in purchasing an automobile. Attitudes are not constant and change over time since they are a result of experiences (Schiffman & Kanuk, 2004). A car crash might change the attitude towards the brand and one might decide to exclude Mercedes as an option when buying a car. Learning Process The A-class was a new product both for the market and the company. In order to attract consumers in buying the ‘new’ A-class, the company had to lead the consumers (audience) in learning about the product. Consumers do not only learn through repeated trails but also through cognitive learning by developing mental associations. These associations are retrieved from the long term memory and assist the consumer in the decision making process (Schiffman & Kanuk, 2004). As illustrated in figure 4 (Swiss Knife Car, N.D), Mercedes associated the Swiss knife with the A-class. The multi functions of the Swiss knife represent the versatility of the A-class. The message conveyed is that the car is not just another MPV but it is a premium lifestyle car for those who are artistic, sportive and adventurous. For the launch of the new version of the A- class (2004), a song (Hello) was composed by Christina Aguilera exclusively for the car
  9. 9. (Christina Aguilera and Giorgio Armani - Prominent ambassadors of the “Follow your own star” motto, 2004). This type of promotion enhances mental associations between the car and artist/ song. Perceived Price, Quality In the Automobile industry there is a strong relationship between price and quality. Usually price is perceived as an indicator of quality (Schiffman & Kanuk, 2004). Mercedes is perceived as an expensive car with high quality. The traditional Mercedes customer is not price sensitive (S-class AMG) as illustrated in table 2. One can argue the typical customers who purchase an A-class are less price sensitive than those purchasing a mass MPV version, such as the Mazda 3, but are still sensitive to price. The A-class is targeting a younger market with limited resources. Typically the customer would rationalize the high cost by justifying that he/she is buying a premium affordable luxury, i.e. a Mercedes fit to his budget. Normative Influence and Reference Groups According to Bournes (as cited in Benetton et al., 1997) Product-Brand Taxonomy, ‘the purchasing of luxury products that portray highly visible brand names, often reflect a high level of personal influence, predominantly in the forms of reference groups and normative influence’. Consumers, particularly those conscious of their self image, rely heavily upon reference groups. The purchasing of an automobile is one in which a peer's opinion, often determines what brand is actually purchased, more so than the attributes of the car itself (Benetton et al., 1997). As stated earlier, purchasing an A-class might lead to a desired level of social acceptance among the peers. The family is also an important reference group in purchasing a car. If the family has a tradition of buying Mercedes, it will influence the other members to opt for a Mercedes, especially if they had a positive experience with the car. We tend to trust the family’s advice. On the other hand, like the Oldsmobile, Mercedes can be perceived as the old traditional ‘daddy’s car’ and typically the young want to disassociate themselves from
  10. 10. their parents image. The A-class might be a successful move into providing a ‘fresh’ and innovative car, appealing to a younger audience while maintaining the luxury image. Negative Influencers- Elk test (moose) Experts are key influencers when it comes to purchasing an automobile since we tend to trust their judgment. If they rate a car as not worth the money, we tend to conform to their opinion. While key influencers can influence us positively to buy a product/service, they can also influence us negatively. The Mercedes A-Class suffered from a damaged reputation after five Swedish motoring journalists managed to flip over the Mercedes A-class. This meant that the car failed the prestigious elk test, also known as the 'moose test'. (Marketing-1_2_assignment, 2009). The embarrassing publicity was a shock for the prestigious company apart from the fact that the Swedish market got hostile towards the car. The negative effect was catastrophic and this widely reported handling shortcoming represented a major crisis for the company, well-known for its quality and safety standards. The influence these experts exerted was so huge that the company had to stop all deliveries and redesign the chassis (Menke-Gluckert, 2008). Decision making process Whereas some purchases require little or no effort on the consumer's behalf, for most, the purchasing of a car requires extensive problem solving (Schiffman & Kanuk, 2004). This means that the consumer places a significant effort in the purchase making decision. The purchasing of a Mercedes A-class requires a high involvement decision. The cost associated in buying a car is an important variable that leads to high involvement decision but not always. A CEO of a company who wishes to change his old S-class (more costly than A-class) would probably experience a low involvement since most probably the company would buy directly the latest version of the S-class without going into extensive research.
  11. 11. The first step in the decision making process is the recognition of a need. The need of buying of a car is essentially an acquired need. In order to satisfy our needs we set goals. Goals can be either general goals “I want to buy a car” or specific “I want to buy a Mercedes A-class” (Schiffman & Kanuk, 2004). The need to purchase an A-class is not triggered by the functional need for transport but by psychological factors, as discussed earlier. At this stage the consumer will search for information to explore the choices. The information is obtained either internally, retrieved form the long term memory (experiences) and/or externally from his friends, family, marketers sources and public information (Schiffman & Kanuk, 2004). His past experiences and the associations stored in his memory are evoked to guide the consumer. At this stage the reference group will play a decisive role. In the case of buying an automobile, the search is typically extensive, especially since it is a high risk decision (social/financial). This is the most critical stage for marketers. At this point they can evaluate whether their marketing efforts have been a success or not. If the consumer did not recall the A-class, the marketing efforts of Mercedes would have been in vain. A successful information search leaves a buyer with possible alternatives, the evoked set (Schiffman & Kanuk, 2004). If the consumer decided to opt for a premium compact MPV, the possible alternatives would be the Mercedes A-class, the BMW 1 series or the Audi A31. At this point the consumer needs to device a set of criteria (heuristics) to weigh the proms and cons of each alternative. The consumer needs to question, which attributes or features of the car would satisfy my desires and needs? What are my priorities? Once the criterion is set, these attributes are ranked according to their importance. If the individual values more safety, quality, reliability and prestige he/she would be inclined to buy the Mercedes A-class, while if the individual gives more weight to the design, performance, efficiency and sportive look his/her decision would fall for either the BMW 1 Series or the Audi A3. The decision is taken on the basis of which alternatives scores the highest. Furthermore, the individual is involved in a series of other 1 For the purpose of this evaluation and from the limited research carried out I am assuming that only premium compact MPVs in the market are the Mercedes A-class, BMW 1series and Audi A3.
  12. 12. decisions such as choosing the make or country of origin, the dealer and the financing options (Schiffman & Kanuk, 2004). After following this process, the consumer is prepared to make the purchase, in this case, buying the A-class. Now that the consumer has affected the purchase he/she can evaluate the product performance in light of his/her expectations (post purchase evaluation). The A-class might match his expectations (neutral) or exceed his expectations. If the performance exceeds the expectations, the consumer would feel satisfied with the purchase. On the other hand, the product might not satisfy his expectations. In such case the consumer would be dissatisfied with the purchase and may possibly experience a post purchase dissonance (Schiffman & Kanuk, 2004). The consumer might, for example, feel ‘guilty’ of spending so much money on such a small car. The extent to which the process is followed will also determine the extent of the post-purchase dissonance. References Haralombus, M., & Holborn, M. (2000). Sociology: Themes and Perspectives. London: Harper Collins. Schiffman, L.G., & Kanuk, L.L. (2004). Consumer Behavoir. New Jersey: Pearson Prentice Hall. Websites
  13. 13. Mercedes A-Class Range: MERCEDES BRINGS ITS A GAME, (N.D.). Accessed 23rd November 2009. http://uk.cars.yahoo.com/car-reviews/car-and-driving/mercedes-a-class- range-1004055.html Benetton, C., Fricke, E., Kesselman, J. Nasief, S. & Tang, H. (1997) Mercedes A-Class, a Consumer Behavior perspective. School of Management: Boston University. Accessed 23rd November 2009, http://managementboy.tripod.com/Final.htm Assignment MMG, (2006). Accessed 23rd November 2009. http://www.coursework.info/University/Business_and_Administrative_studies/Marketing /page.cgi?g=University%2FBusiness_and_Administrative_studies%2FMarketing %2FThis_case_study_will_allow_us_to_exhibit_L84578.html. Christina Aguilera and Giorgio Armani - Prominent ambassadors of the “Follow your own star” motto, (2004). Accessed 23rd November 2009. http://www.baby-benz.com/portal/new-a-class-w169-/christina-aguilera-and-giorgio- armani-prominent-ambassadors-of-the-follow-your-own-star.html. Brand Personality, (2008). Accessed 23rd November 2009. http://www.scribd.com/doc/6841796/Brand-Personality. Audi A3 vs BMW 116i vs Mercedes A170, (N.D). Accessed 24th November 2009. http:// www.autoexpress.co.uk/carreviews/grouptests/214578/audi_a3_vs_bmw_116i_vs_me rcedes_a170.html Colley, D. (2004). Corolla Verso enters busy compact MPV market. Accessed 26th November 2009 http://archives.tcm.ie/irishexaminer/2004/02/25/story466947846.asp Aziz, N. (2008). N. Mercedes B-class and A-class headed for U.S. by 2011. Accessed 26th November 2009. http://www.leftlanenews.com/mercedes-b-class-and-a-class-headed-for-us-by-2011.html Compact MPVs, (2008). Accessed 25th November 2009. http://www.glass.co.uk/EditorsBlog/9a869ea0/Compact-MPVs.html Marketing Plan – BMW 1-series in Germany, (N.D.). Accessed 26th November 2009 content.grin.com/document/v69455.pdf The Death of America’s “Big Car” Culture: GM Gives Up on Hummers, (2008). Accessed 24th November 2009. http://www.dailygalaxy.com/my_weblog/2008/06/the-death-of-am.html
  14. 14. Anurit, J., Newman, K. & Chansarkar, B. (N.D.). Consumer Behaviour of Luxury Automobiles: A Comparative Study between Thai and UK Customers’ Perceptions. Accessed 23rd November 2009. http://www.economicswebinstitute.org/essays/carthai.pdf Menke-Gluckert, W. (2008). Baby Benz faces the moose: Mercedes A Class model fails the moose test. Accessed 25th November 2009. http://findarticles.com/p/articles/mi_hb3134/is_199802/ai_n7803948/ Marketing-1_2_assignment, (2009). Accessed 25th November 2008. http://ivythesis.typepad.com/term_paper_topics/case_study_analysis/ Adverts Ads, (N.D.). Accessed 26th November 2009. http://www.freelanceartdirector.com.au/ads %20one.html Swiss Knife Car, (N.D.). Accessed 23rd November 2009. http://www.advertolog.com/admirror/swiss-knife-car/ Exhibits Table1 Table 2
  15. 15. PRODUCT PRICE (£) AMG From To version A-class 13.025 19.890 C-class 19.995 29.200 43.790 E-class 24.940 41.840 60.640 SEDAN S-class 44.410 87.580 85.890 C-class 20.945 31.650 44.740 BREAK E-class 25.840 40.840 56.940 SLK 25.080 31.350 44.460 CLK cab 29.940 44.190 ROADSTER SL-class 54.641 67.790 89.040 CoupeSport 18.795 22.105 CLK 27.240 43.040 57.040 COUPE CL 66.440 81.940 84.140 G-class 35.487 54.444 4WD M-class 29.395 41.990 51.690 Vaneo 14.680 18.680 VAN V-class 23.880 27.915
  16. 16. Source: Assignment MMG, (2006) Source: Assignment MMG, (2006) Figure 1 Figure 2
  17. 17. Source: Ads, (N.D.) Source: Ads, (N.D.) Figure 3 Figure 4 Source: Ads, (N.D.) Source: Swiss Knife Car, (N.D.)

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