Project #78681 - marketing 5

Read Case Study 9-1: Smart For two: One Car for Narrow European Alleys and answer the following questions in an essay format.

1.      What strategies does Smart use in the European market? Is the automobile adapted to consumers’ driving needs in Europe?
2.      Why is the Smart not changing to adapt to the U.S. market, dominated by large trucks and sports utility vehicles? Will the lack of adaptation hurt sales in the United States?
Your answers must include content and cite reference materials where appropriate. To assist in this requirement, a good rule of thumb is that each answer should be approximately 200 to 250 words in length.
 
case study below

 

Mercedes-Benz would be a consistently profitable

business, had it not been trying to fix its small car

business. The Smart, its iconic, but troubled

brand, has been in the red ever since its launch in

1998. In 2005, the Smart cost the company more

than $2 billion in charges for job losses and cutbacks:

In the process of restructuring to reduce

Smart’s fixed costs, the company had to cut

600 jobs in Germany and 100 in France.

However, things are looking up for the smart

fortwo. Initially designed as a cute cobble-stone

negotiator in crowded European alleys, the little

car is planning to help U.S. consumers better negotiate

the shrinking gasoline purchasing power of

consumers in the land of SUVs. This is a story of

market adaptation. Sort of.

The Story of Smart

In the world of joint ventures, the smart fortwo has

a distinguished history. The smart fortwo was propelled

to stardom in the mini-automobile category

in the early 1990s, as a joint venture between

Mercedes-Benz and Swatch. Daimler is the luxury

automobile manufacturer that has created the

Mercedes automobile, the worldwide standard for

luxury on the road. Swatch is a creative and quirky

company that makes Swatches, watches with colorful

designs. The smart fortwo joint venture was created

with the purpose of enhancing the Mercedes portfolio

with an ‘‘ultra-urban’’ automobile that negotiates

well narrow European alleys, fits neatly on the sidewalk

if the parking spaces are all taken, and otherwise

makes the driver look good (see Figure 9-8).

Though small, the smart fortwo protects its passengers

well. It has a tridion safety shell, a hard

shell that protects occupants in case of impact. It

is also equipped with electronic stability control,

which prevents it from flipping over, and antilock

brakes. It has a high driving position to ensure

the greatest visibility on the road. The design

team focused on creating an energy efficient automobile

using recyclable materials. Compared with

the luxury Mercedes line, the smart fortwo is

affordable: A two-seat, 9-foot-long smart fortwo

costs about $11,000 for the bare model, reaching

about $15,000 for convertibles. Its gas consumption

is 40 miles per gallon, and it reaches

90 miles per hour on the highway. It seats two

and is so small that two cars can fit in a traditional

parking spot.

The smart fortwo’s problem, however, is that its

market performance has been poor. Although

Smart’s global sales have grown steadily since its

launch thanks to the introduction of new models,

it has consistently missed its targets. The company

launched the forfour model to compete in the saturated, from the market.

 At first, Mercedes-Benz had considered eliminating

Smart, but quickly determined that it had too much

brand franchise and bailing out the brand was the

best option from a shareholder point of view.

Its recovery plans included having Mercedes take

over purchasing, sales, and service operations, and

creating a better fit with the needs of European

consumers. Smart has been testing several prototype

models using alternative fuels, including an

electric-powered Smart, a compressed natural gas

version, and a hybrid model. Smart’s proposition

of being the ‘‘ultimate urban solution’’ will be

even more relevant now that more cities in Europe

are looking to introduce congestion charging.

The U.S. Launch

The new fortwo model, launched in Europe in

2007, already complies with U.S. safety and emission

standards, and plans are to introduce it in the U.S. in

 In a parallel development, the

company also intended to build the formore,

designed for the U.S. SUV market. However, after

steep losses, coupled with additional problems—

Mercedes had to recall 1.3 million vehicles, including

its luxury E-Class—the company reconsidered

its strategy.

The Turnaround

At first, Mercedes-Benz had considered eliminating

Smart, but quickly determined that it had too much

brand franchise and bailing out the brand was the

best option from a shareholder point of view.

Its recovery plans included having Mercedes take

over purchasing, sales, and service operations, and

creating a better fit with the needs of European

consumers. Smart has been testing several prototype

models using alternative fuels, including an

electric-powered Smart, a compressed natural gas

version, and a hybrid model. Smart’s proposition

of being

highly competitive compact-car segment, but

it was quickly discovered that the new model hurt

the brand, ultimately resulting in its withdrawal

 

2008. Smart is not completely without a presence in

the U.S. already, however. A company called Zap

(zero air pollution), which has no connection to

DaimlerChrysler, already started importing the

Smart starting in 2007, after working for 4 years

to make the cars compliant with U.S. regulations.

The company decided on a distributor in the

United States: Roger Penske’s United Automotive

Group Inc., which will serve as the interface between

dealers and Daimler, ordering cars for the U.S. market

and distributing them to about 60 dealers affiliated

and nonaffiliated with the chain.

In the United States, smart fortwo is targeted at

younger buyers, urban residents, baby boomers,

and retirees. In order to target younger buyers,

Penske is following the example of Toyota Motor

Corp. and BMW AG, both of which recently

launched new small cars, the Scion and the Mini,

respectively. Penske will use a largely Internetbased

advertising model that will similarly target

niche buyers, which include younger buyers and

other trendsetting groups.

The company staged a 50-city road tour so people

could drive the car and attracted 10,000 test

drivers. More than 20,000 people have paid down

$99 deposits for the cars through the UAG Reservation

Program. The main question remains: How

will these drivers share the road with America’s

large SUVs?

Analysis Suggestions

1. What strategies does Smart use in the European

market? Is the automobile adapted to consumers’

driving needs in Europe?

2. Why is the Smart not changing to adapt to the

U.S. market, dominated by large trucks and

sports utility vehicles? Will the lack of adaptation

hurt sales in the United States?

Sources: John D. Stoll, ‘‘Smart Car a Shrewd Move?’’ Wall Street

Journal, June 27, 2007, A8; Gina Chon and Stephen Power,

‘‘Can an Itsy-Bitsy Auto Survive in the Land of the SUV? Wall

Street Journal, January 9, 2007, B1; ‘‘Smart Car: Engineering a

Recovery,’’ Marketing Week, May 11, 2006, p. 28; Paul Eisenstein,

‘‘Smart Struggles to Survive,’’ Professional Engineering,

April 13,

Subject Business
Due By (Pacific Time) 08/09/2015 04:00 pm
Report DMCA
TutorRating
pallavi

Chat Now!

out of 1971 reviews
More..
amosmm

Chat Now!

out of 766 reviews
More..
PhyzKyd

Chat Now!

out of 1164 reviews
More..
rajdeep77

Chat Now!

out of 721 reviews
More..
sctys

Chat Now!

out of 1600 reviews
More..
sharadgreen

Chat Now!

out of 770 reviews
More..
topnotcher

Chat Now!

out of 766 reviews
More..
XXXIAO

Chat Now!

out of 680 reviews
More..
All Rights Reserved. Copyright by AceMyHW.com - Copyright Policy