Name – Divyani Dixit
Roll no - 21MBAMKT235
Case Study No 3
BMW and Mercedes – Both luxury cars are selling to different
consumers.
BMW is aggressive and fast, and its Indian journey proves that. Within four years of its launch,
the company unseated Mercedes to become the top-selling luxury car in India, its market share
has moved up from 9% in 2006 to 42% in 2011.
Appealing to the younger buyers (average age of a BMW buyer is 40 years), it has introduced a
varying product range at different price levels, starting with its cheapest model X1
At its Chennai plant, BMW assembles 3, 5 series and X1 while others like X3, X5 are imported
as a fully built unit. But with growing sales, it may set up its second plant by 2015. It might also
scale up its manufacturing facility from just complete knock-down (CKD) kits. Their local
component sourcing, currently low, will rise. Already, they have a global sourcing team here to
cater to their global needs and have identified 20 vendors so far. This number should go.
Its marketing strategy has largely been to create touch points like professional golf tournaments,
wine tasting sessions and events with fashion designers. Last year they organised an Xperience
Drive in Gurgaon which brought in international trainers with a live performance by the
Australian Raw BANG. A test course, with 10 obstacles, was especially designed to bring out X
range’s special features.
BMW is growing its dealer network and hopes to touch the 60 mark by 2015. With 80% of its
cars being financed by its own financial services arm, BMW financing is a brisk business. Its
recently launched used-car business BMW Premium Selection will soon be available across all
its dealerships.
Mercedes-Benz
Brand positioning:
A symbol of power. The ultimate car for those who have arrived and is almost always chauffeur
driven. The brand symbolises social status with the tagline “The best or nothing”, says Pradeep
Saxena, executive director, TNS Automotive.
Strategy:
This is the oldest and the best luxury car India has known. It set up India operations in 1994 and
has the best infrastructure among the three in terms of dealer reach and domestic component
sourcing which stands at around 34%. But the leader has been on the backfoot ever since
younger and peppier BMW unseated it in 2009.
Mercedes is now reorienting its India strategy to target the youth. The company is working on its
model line-ups, marketing and brand positioning to keep them aligned. For example, the luxury
brand is now increasingly emphasising on performance and sportiness of its brand in India. It is
now closely associated with F1 in India. Further, the company has brought in performance cars
from its AMG stable to appeal to young Indian buyers.
It is planning to invest Rs 350 crore as part of its strategy to introduce new small and compact
cars in India by 2015. The company is expected to bring in its B-class, front-wheel-drive small
family car sometime around the festival season (October-November) this year. Currently
Mercedes’ cheapest car is the C-Class.
With B-Class hatchbacks, it will lower the entry threshold. The B-Class hatch, owing to its
styling and agile contours will be positioned as sports tourer. During the next few years,
Mercedes-Benz has planned the introduction of most of its 10 new global cars in India, and for
this it is considering assembly of its SUVs ML, GL and GLC-Class here.
The company has recognised the need for more compact cars in countries like India and China
and assembling them in local markets is considered beneficial. With better localisation of
content, they will have a pricing edge over others. On the back of all this, as Indian luxury car
market expands, the company is hoping to sell around 55,000-60,000 cars (from current 7,430)
by 2020. This is part of the bigger plan for Mercedes to regain its top slot in India.
BMW
*Dependability Ranking: It measures problems experienced during the past 12 months by
original owners of three-year-old vehicles. It checks 202 different problem symptoms like
dependability of body, features, accessories, interiors and powertrain.
Mercedes-Benz
Apeal Ranking?: The ranking study examines how gratifying a new vehicle is to own and drive,
based on owner evaluations of more than 80 vehicle attributes including feature and instrument,
comfort, style and performance of the vehicle.
Clearly, Mercedes-Benz has performed well in quality in the recent past, both in terms of initial
quality and longer-term quality. BMW performed better in terms of feature contenting and
delighting consumers via styling and vehicle layout. Audi, positioned close to where BMW is
pitching itself, has grown rapidly in the recent past to become the second largest luxury car seller
on the back of successful launches and better value offering in its cars.
