Marketing Trends – Recognition can be More than Half the Battle

It’s amazing how big companies ignore trends. The music industry and downloadable music, Kodak and the digital age, and Yahoo’s Search Technology of the 90s are all examples of large companies ignoring trends.

Mercedes Benz has ignored the segment of hybrid cars in the automobile sales category for years. The hybrid segment is the one category in automotive production where the production does not meet the demand; the two components that are driving sales in this category are gasoline prices and the increased concern of the environmental impact of automobile emissions. The release of a hybrid model by Mercedes Benz came ten years after Toyota Motors released the Prius Hybrid, a vehicle with sales surpassing a million units per year. Is it too late for Mercedes Benz? Only time will tell. One of the reasons for Mercedes Benz taking ten years to get into hybrid production is because they initially went with diesel car production. The main reason they chose the diesel was because the technology was already invented and all that was needed was improvement in the performance and this would keep the innovation cost down. The only problem in that plan was the consumers started demanding hybrid cars and not producing one was devastating to automakers. (GM, Ford, Chrysler. Ring a bell?) However, Mercedes Benz executives still don’t feel like their customer base has reached the stage of enlightenment and would want to trade in their big cars to drive smart on vacation.

Segmentation is the key element when it comes to the sale of luxury cars. Mercedes launching its new S-Class hybrid is a case in which a successful company has innovated an exclusive/desirable product. Value is what separates the Mercedes S-Class and the Toyota Prius. Some people, particularly those who are wealthy, see more value and style in cars at double and sometimes triple the price of the market average.

New advances in technology are quickly replacing old obsolete products. Having a strong product development emphasis was central to Toyota’s success. Their product research and development team did their homework and the results were positive. However, by investing into the wrong idea, a company can lose money. Another reason Mercedes entered the hybrid market so late is because they and other German automakers such as BMW and Audi decided to focus more on optimizing diesel engines. While they may be popular now, in the future they may be obsolete with oil prices continuing to climb higher and higher.

Mercedes is taking a step in the right direction by releasing a hybrid car. Toyota and Honda, both Japanese companies have newly innovated cars for consumers, and by looking at the prices, both can appear to be just as luxurious. Toyota luxury line, Lexus, has its LS 600h priced around $105,000 dollars and the new innovated Honda Hydrogen, can be leased for three years at $600 a month.

Besides segmentation, product innovation is crucial for the success of automakers. It would appear that the Japanese are well ahead, and in order for U.S and German automakers to take back market share, they will have to research and innovate. Nothing is a better example than the financial situation of the big 3 car companies in Detroit nowadays. They should learn from their mistakes, or just learn from the competition.

-Duran Inci

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