Does Mercedes Have Schizophrenia?

Posted by www.eMercedesBenz.com on October 31, 2005 at 8:55 AM CST

Welcome everyone, how was  your weekend?  I was lucky enough to take  
a two day vacation, and I have to tell you, it was magnificent.

  In short, the article deals with the topic of brands having  
multiple personality disorders.  One example the writer gave was  
Coke, who thirty years ago only offered Coke, but now offers sixteen  
different variations, such as Coca-Cola with Splenda, Coca-Cola Zero,  
and Coca-Cola C2. According to Jack Trout, the author of the article  
(pictured above), "It's no wonder Coke has lost its fizz."  He's a  
witty bastard, isn't he?

Jack then went on to discuss Mercedes. According to Jack, "Once upon  
a time, it [Mercedes] was a high-quality, highly engineered,  
prestigious car."  He then goes on to say that in Europe, if you walk  
into a Mercedes dealership, you're faced with a model range priced  
from $20,000 to $200,000.  As a result, "...in Europe, Mercedes Benz  
is not listed as the top brand. The Audi A8, BMW, Maserati and Jaguar  
have taken over this position."

I have to admit, when I first read old Jack's article, I almost fell  
off my chair in laughter.  Are you kidding me?  I might not have  
attended Harvard Business School, but I do know when I read something  
that is utterly absurd.

So Mr. Frost, I've decided it's time for a lesson in Business 101.  
Get your pen and paper handy and start taking notes, because next  
time you write a story, I don't want you to sound quite so, how  
should I put this... doltish.

OK Jack, listen up - Mercedes has implemented a form of brand  
diversification. Do you know what the highest selling Mercedes models  
are Jack?  I'll give you a hint - Mercedes flagship S-Class and  
Mercedes $452,750 SLR didn't make the list.  Rather, the lower priced  
C-Class and E-Class models sit at the top.

Why it that Mr. Frost?  Because despite the quality, performance, and  
prestige that a $100K sedan and $450K+ coupe might have, not everyone  
has this much disposable income on hand.

So what should Mercedes do? Sit back, sell a few thousand cars a  
year, and tell the rest of the world to go f*** themselves?

Of course not. To succeed in business, a company must adapt to the  
market.  From the beginning, Mercedes has created a brand that has  
gained worldwide notoriety as the best. But rather than be content  
creating one type of vehicle, they have expanded this brand  
recognition to cover a wide range of vehicles.  Now, Mercedes offers  
customers the best luxury sedans and the best coupes, but they also  
offer the best mid-sized sedans, and the best small hatchbacks.  In  
other words, Mercedes hasn't cheapened its image, they've expanded  
their trademark name and brand image to allow a greater amount of  
consumers to experience what it's like to own a Mercedes.

I'll leave you with one final example. In Chicago, one of the most  
well known and visited stores on Michigan Avenue is Tiffany and Co.  
Very few people would criticize the Tiffany brand - it's a name  
synonymous with beautiful jewelry. If you spend some time in their  
store, you'll be amazed at the amount of people gazing longingly at  
the sparkling diamonds and exotic gems. But upon inspection, you'll  
notice few people exit the store with a $250,000 3-carat ring on  
their hand.  Rather, the $175 dollar sterling silver heart bracelet  
is one of their biggest sellers.  Jack, do you think that by selling  
a $175 bracelet, this in any way cheapens the $250,000 3-carat ring?   
Of course not; it simply allows a greater number of people to  
experience the joy that Tiffany brings.

The same holds true for Mercedes.  Mercedes hasn't cheapened their  
image, they've simply diversified; they've expanded - they are doing  
what any successful company does.

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