Mercedes-Benz and other German brands provide an excellent roadmap to success for luxury brands using marketing segmentation.
Audi, BMW, and Mercedes-Benz provide a profitable method of gaining a younger audience without losing brand prestige.
The methodology can be applied to any luxury brand seeking to retain its cache and gain a younger audience.
Mercedes-Benz, BMW, and Audi decided to reach further back into the customer lifecycle and attract a younger consumer demographic. The German brands seek to influence a younger audience away from companies, such as Ford, GM, Toyota, and Chrysler.
Let’s start by providing a definition of marketing segmentation from Philip Kotler, one of the legendary figures in marketing.
“Market segmentation is the sub-dividing of market into homogeneous sub-sections of customers, where any sub-section may conceivably be selected as a market target to be reached with a distinct marketing mix.”
The target audience includes consumers ranging from ages in the early twenties to early forties. The estimated market size is substantial with 75 million potential customers. Marketing Segmentation using generations provides a way to reveal the untapped potential of the Millennial and Generation X target audience.
The main motivation for entering into the younger demographic is the significance of the market size making it very attractive for these luxury automotive manufacturers.
Mercedes-Benz, BMW, and Audi are using strategies similar to the mass market automotive manufacturers. The strategy that most mass market automotive manufacturers use involves providing a product for the consumer throughout their lives with progressively higher priced products as the consumer moves up income brackets.
The challenge for luxury brands is how to appeal to a younger demographic without losing the prestige of the brand, risking the loss of its core customers.
The primary methods to entice the younger and less affluent consumers have been the introduction of new models or product line extensions with a lower price point.
A lower price reduces the barrier to entry and the price objection for less affluent customers while leveraging the luxury brand appeal.
Mercedes-Benz has launched the CLA at a starting price just under $30,000. BMW has launched a new 3 Series with a starting price just under $33,000. Audi has launched a new A3 sedan starting just under $30,000 to compete directly with the other two German manufacturers.
The other methods of influencing the younger audience include the size and the styling of the new vehicle.
Mercedes-Benz began the process of using marketing segmentation to reach a younger audience in 2010 with the creation of “Generation Benz” an online community of approximately 200 to 250 people between the ages 20 to 39. This online community provided consulting to the Mercedes-Benz marketing team about buyer habits and preferences in this demographic.
The “Generation Benz” online community helped to produce a customer profile for Mercedes Benz. The company leveraged the insight from the community to create a successful marketing campaign launching the Mercedes-Benz CLA product.
The campaign Mercedes-Benz created, included a Super Bowl ad featuring Usher and Kate Upton, not to mention the stadium the Super Bowl was being played in was sponsored by Mercedes-Benz (Mercedes-Benz Superdome in New Orleans).
Mercedes-Benz used digital and social media channels to target Millennials with a mix of earned media, paid media, and owned media to reach key influencers in the target demographic to create brand awareness and ultimately brand equity.
Mercedes-Benz uses digital media with extensive use of microsites for each product line. Social Media channels that include YouTube, Twitter, Facebook, and Instagram are also used to increase awareness around campaigns, such as the #clatakethewheel campaign targeting the early 20s to early 40s demographic.
Mercedes-Benz used paid media, such as a paid Facebook ad targeted to the early 20s to early 40s (millennial and generation x) demographic. The paid ad could be seen in the target’s newsfeed linked to a well-produced content piece (video) to create a viral response.
Mercedes-Benz used a content marketing strategy utilizing a converged media approach specific to gaining a younger target audience. The earned media component involved a partnership with Casey Niestat, one of the key influencers in this demographic providing a cool, somewhat edgy, adventurous, and authentic image for the product.
Casey created several videos for Mercedes-Benz including the paid Facebook ad. Casey is a key influencer that creates content millennials share.
Mercedes-Benz partnered with the five most popular photographers to share the new CLA model. Using a documentary-style video approach Mercedes-Benz created content focused on the target audience. The videos consisted of interviews with celebrity guests including Tinie Tempah and Daisy Lowe discussing fashion and style. The guests were interviewed while driving the Mercedes-Benz A-class hosted by Reggie Yates.
Marketing segmentation combined with the converged media approach inside a content marketing strategy provided the following wins listed below for the brand and the CLA product marketing campaign.
The Mercedes-Benz example provides unique insight into how a premium brand can engage a younger demographic, remain true to its brand strategy, and increases sales using marketing segmentation. A more traditional approach helps to explain Mercedes-Benz’s approach and the key marketing elements used to obtain a younger target audience.
The feedback from an online community was critical in providing Mercedes-Benz with the insight needed to obtain a younger demographic and remain true to its brand heritage. Mercedes-Benz offers an example of the key Benefits to Market Research as the foundations for marketing strategy success.
Mercedes-Benz used a combination of price and product along with the media (social/digital – converged media) plan and a unique creative strategy to reach its younger target audience. The $29,800 starting point, the appealing styling cues, and the product size eliminates the barriers to purchase and offer significant value for its target consumer.
The brand and creative strategy used by Mercedes-Benz is a brilliant example of an integrated marketing communications (IMC) approach. Mercedes-Benz blends the new product and price points in a way that is not seen as degrading the prestige of the brand and communicates the same brand messages across multiple platforms engaging the target audience.
The Mercedes-Benz media plan approach included a mix of owned, paid, and earned media using social and digital media. Key influencers in the younger demographic provided a critical element in choosing the correct creative strategy and media plan that engaged with brand messages that resonated with a younger target audience.
Mercedes-Benz provides an example of how a prestige brand can effectively segment and target a different audience without losing its brand prestige. Mercedes-Benz had failed in this area before but had learned from their past mistakes.
This was not a revolutionary approach Mercedes-Benz invented, but one steeped in good old-fashioned strategic planning and execution based on thorough market research of the intended target audience. Other prestige brands can take note of this excellent case study and use the Mercedes-Benz example as a pathway to move into new segments successfully.