Smart Subjects: Application Independent Subject Recommendations
Smart Car Marketing Recommendations
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![Page 1: Smart Car Marketing Recommendations](https://reader034.fdocuments.in/reader034/viewer/2022051412/54bbb1544a7959755f8b458a/html5/thumbnails/1.jpg)
Leonard Agranat, Daniel Cady, Amanda Cohen, Nikhil Kulkarni, Chris Machielse, Linda Yeung
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Agenda
Origins
Current Big Picture
Areas for Improvement
Revised Big Picture
Recommendations
Q & A
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Origins
Assembly Plant opened
October 27, 1997
January, 2009 Waiting list in US is 12 months
Idea developed by Nicholas Hayek, CEO of SMH
Late 1980’s
July 3, 1991 Agreement reached with Volkswagen to develop new project
Volkswagen terminated
project
1993
March 4, 1994 Joined forces with Mercedes-Benz October, 1998
Smart car sales launched in 9 European Countries
2010 sales were only 5,927 units
December, 2010 No longer associated with SMH
January 1, 1999
Officially launched in the U.S.
2008
3
July 1, 2011 Penske Automotive Group rescinds all US distribution rights to Mercedes-Benz
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Current Big Picture
marketing objective
source of volume
business objective
place
price
promotion
execute
product
service
position
segment
target
STP
4
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Current Big Picture
marketing objective
source of volume
business objective
place
price
promotion
execute
product
service
position
segment
target
STP
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Business Objective
• Smart Car USA Fundamental Entity
• Technology
• Engineering Core
Competence
• Undefined Goal
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Marketing Objective
Acquisition
– Small category: fuel-efficient subcompacts
– Recent entry to market (2008)
– Small customer base
– Challenge: Overcome head and heart loyalty
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Source of Volume
Only have 0.1% market share
Stimulate Demand for subcompacts
– Main variable: small size and fuel efficiency
– Dynamic variable: price and customizability
“SmartCar is unique and has no real competition”
Raising awareness for subcompact cars
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Who is Smart talking to?
Pulling buyers
into the subcompact
category.
Target buyers of competing
vehicles.
Have current
owners purchase more
Smart Cars.
Retain current customers who
also own competing vehicles.
retention acquisition
stimulate demand
steal share
Marketing Objective
Source of Volume
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Current Big Picture
marketing objective
source of volume
business objective
place
price
promotion
execute
product
service
position
segment
target
STP
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Segment
Source: Strategic Business Insights
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How does Smart segment?
Address high degree for self-expression
Need to look “cool”
– Regular compact cars are boring
Sponsorship at young, urban events
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Target
Jenna
Age 23
“Urban hipster”
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Lives in the city
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•Large cars hard to park •Public transportation is tedious
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Cares about the environment
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Fashion forward
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Smart Car changes with her style
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Positioning
“unBig, unCar”
Small cars are just as capable as big cars
Deemphasize importance of having big car
Small cars are fuel efficient
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5-Box Positioning Statement
When I look to buy a car, I will buy a big car,
or SUV
When I want to buy a car, I
want something big
and strong
Bigger cars are not necessarily
better
Driving small cars are smarter.
When I look to buy a car, I will
buy a Smart Car.
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Current Picture Diagram
marketing objective
source of volume
business objective
place
price
promotion
execute
product
service
position
segment
target
STP
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Product
Has not changed product line since 2008
– Pure coupe
– Passion coupe
– Passion cabriolet
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Search Attributes
Price
Miles per gallon
Appearance
Safety
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Price
Base price $12,490
All models under $20,000
– Offer affordable car to young target market
Competitive with other subcompact cars
2 year, 24,000 mile warranty
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Miles per Gallon
High fuel economy
– 33 city and 44 highway mpg
Highest mileage, gas-only vehicle in US
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Source: FuelEconomy.gov
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Appearance
Sleek look
Small enough to fit in tight spaces
Entirely customizable exterior
– Color, design, pattern, change panels
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Safety
Highest possible crash test ratings
– Frontal offset
– Side-impact
– Roof strength
Source: Insurance Institute for Highway Safety
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Experience Attributes
Ride quality
– Excels in turning radius and parking ease
– Stiff suspension
– Automatic transmission feels like manual
– Rough riding experience
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Promotion
Buzz around US launch
Few TV or print ads
Active on social media
Lowest brand awareness car in America
29
Source: Young Intelligence
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Promotion
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Place
Sold in Mercedes-Benz dealerships
– Share the same showrooms
Intimidates potential Smart Car buyers
– Loss of sales due to this reason
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The unSales Growth
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Rick Perry, General Manager
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Revised Big Picture
marketing objective
source of volume
business objective
place
price
promotion
execute
product
position
segment
target
STP
35
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Revised Big Picture
marketing objective
source of volume
business objective
place
price
promotion
execute
product
position
segment
target
STP
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unGoal: 1500 units/month
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Revised Big Picture
marketing objective
source of volume
business objective
place
price
promotion
execute
product
position
segment
target
STP
38
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Revised Big Picture
marketing objective
source of volume
business objective
place
price
promotion
execute
product
position
segment
target
STP
39
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Source of Volume
Steal Share from other cars in category
Clearly not the market leader
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Size
Safe
ty
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Size
Val
ue
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Revised Big Picture
marketing objective
source of volume
business objective
place
price
promotion
execute
product
position
segment
target
STP
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Important Attributes
3.56
3.95
3.46
3.85
4.44
4.11 4.02
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
Size Fuel Economy Brand Name Exterior Styling Reliability Value Safety
Re
po
rte
d Im
po
rtan
ce
Attribute
Importance
n=92 45
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Most Important Attributes
1. Reliability
2. Value
3. Safety
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Address Importance
I will buy a new
car without
considering MPG.
I don’t think fuel
economy is very
important.
Smart is not only
a great value, but
it can save you
money on gas too.
When I look to
buy a car, I will
buy a Smart Car.
I can travel & do
more for my gas
money with a fuel
efficient Smart.
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Perception Problems
1.96
4.46
2.83
2.11
2.82
2.55
1.80
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
Size Fuel Economy Brand Name Exterior Styling Reliability Value Safety
Perception
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Lowest Ranking Perceptions
1. Safety
2. Size
3. Styling
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Address Perceptions
When I look to
buy a car, I will
purchase a larger
vehicle.
Smart is a great
value, but it is too
dangerous.
Smart is a great
value, and it
performs well in
crash tests.
When I look to
buy a car, I will
buy a Smart Car.
Smart is both a
great value and a
safe vehicle.
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Discrepancies Between Importance and Perceptions
3.56
3.95
3.46
3.85
4.44
4.11 4.02
1.96
4.46
2.83
2.11
2.82
2.55
1.80
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
Size Fuel Economy Brand Name Exterior Styling Reliability Value Safety
Importance
Perception
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Revised Big Picture
marketing objective
source of volume
business objective
place
price
promotion
execute
product
position
segment
target
STP
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Improve Warranty Coverage
Increase beyond 2 year/24,000 mile
Match Ford Fiesta
– 3 year/36,000 mile bumper-to-bumper warranty
– 5 year/60,000 mile powertrain warranty
– 5 year/60,000 mile roadside assistance
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Revised Big Picture
marketing objective
source of volume
business objective
place
price
promotion
execute
product
position
segment
target
STP
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Place
Make separate dealership for Smart Cars
Different target markets hurt potential sales of Smart Cars
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Price Ranges
$38,000
$12,000
$160,000
$19,000
$0
$50,000
$100,000
$150,000
$200,000
Mercedes-Benz Smart Car
Min
Max
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Cost of Implementation
Add 26 dealerships in urban areas with Jennas
– e.g. Southfield, MI instead of Bloomfield Hills
Cost per new dealer = $816k
– $265k annual salaries
– $551k startup costs
Total cost = $21,216,000
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Revised Big Picture
marketing objective
source of volume
business objective
place
price
promotion
execute
product
position
segment
target
STP
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Promotion
Image promotion need people to realize what Smart Car can offer for value.
– Currently there are poor views of Smart Car.
– More GRP’s
– Promote on young, hip shows (Modern Family, America’s Next Top Model, etc.)
Promote what matters to consumers
– Safety, value
Mercedes has allocated $25 million for media
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Example Ad
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Small is safe.
The Smart Fortwo earns the highest possible ratings in roof strength, frontal offset, and side impact tests.
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Cost of New Promotion
Cost per 30 second spot:
– Modern Family: $250k
– America’s Next Top Model: $61k
1 exposure per episode
– 24 episodes for Modern; 10 for Top Model per season
Total Cost: $6,610,000
Total GRPs: 167
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Key Takeaways
Cost per 30 second spot:
– Modern Family: $250k
– America’s Next Top Model: $61k
1 exposures per episode
– 24 episodes for Modern; 10 for Top Model per season
Total Cost: $6,610,000
Total GRPs: 167
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Current Recommended
Business Objective – Goal -- 1500 units / month
Source of Volume Stimulate Demand Steal Share
Position Emphasize Smallness Emphasize Safety, Value
Product 2 year / 24,000 mi 3 year / 36,000 mi
Place In Mercedes Showroom Standalone Dealership
Promotion Focus on Social Media More TV & Print ads
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Questions?
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Works Cited
http://www.strategicbusinessinsights.com/vals/usframework.jpg
http://www.iihs.org/ratings/ratingsbyseries.aspx?id=632
http://young-intelligence.com/2011/11/ad-review-smarts-uncar-campaign/
Interview with Rick Perry, General Manager of Mercedes-Benz of Bloomfield Hills
Business Plan Handbook
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SUPPLEMENTAL SLIDES
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Supplemental Slides
Competing Vehicles Launched Since 2008
Dealership Cost Calculations
GRP Calculations
unBig, unCar spot
Crash test video
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Must Keep Pace in Increasingly Competitive Segment
Chevy Cruze Chevy Sonic Fiat 500
Ford Fiesta Kia Forte Kia Soul
Nissan Cube Nissan Leaf Scion iQ
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Dealership Costs
Currently: 74 dealerships; add 26
Average unit sales for US car dealer: 653
– Smart Car goal: 180 (1500 units/mo. * 12 mo. / 100 dealerships)
27.5% of operation
Dealership Startup Costs: $265k
Average payroll: $2M/yr. * 27.5% = $551k
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Source: Business Plans Handbook
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Dealership Costs
Cost per new dealer = 551k + 265k = $816k
Total Cost (26 new) = 816 * 26 = $21,216,000
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GRP Calculation
Viewers per episode
Modern: 13.5 million
Model: 4 million
Episodes per season
Modern: 24
Model: 10
18+ citizens of America: 217.8 million
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Source: TVbytheNumbers.com
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GRP Calcuation
GRPs = ∑ reachi × frequencyi
GRPs = 13.5𝑀
217.8𝑀∗ 24 +
4𝑀
217.8𝑀∗ 10 = 167.125
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