A presentation that analyzes the current marketing strategy for Smart USA and offers several recommendations. Created for a Marketing 300 project at the University of Michigan's Ross School of Business.
3. Volkswagen
terminated
Origins
project
1993 Officially launched
Assembly Plant opened in the U.S.
Idea developed October 27, 1997 2008
by Nicholas 2010 sales were only
Hayek, CEO of 5,927 units
SMH No longer associated with SMH December, 2010
Late 1980’s January 1, 1999
March 4, 1994 January, 2009
Joined forces with Waiting list in US is 12
Mercedes-Benz October, 1998 months
Smart car sales launched
in 9 European Countries
July 3, 1991 July 1, 2011
Penske Automotive
Agreement reached
Group rescinds all US
with Volkswagen to
distribution rights to
develop new project
Mercedes-Benz
3
4. Current Big Picture
execute
product
service
STP
segment
price
business marketing source of
objective objective volume target
position place
promotion
4
5. Current Big Picture
execute
product
service
STP
segment
price
business marketing source of
objective objective volume target
position place
promotion
5
7. 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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8. 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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9. Who is Smart talking to?
Marketing Objective
acquisition retention
Pulling buyers Have current
stimulate into the owners
subcompact purchase more
demand category. Smart Cars.
Source of Volume
Retain current
steal Target buyers customers who
of competing also own
share vehicles. competing
vehicles.
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10. Current Big Picture
execute
product
service
STP
segment
price
business marketing source of
objective objective volume target
position place
promotion
10
12. 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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20. 5-Box Positioning Statement
When I want
to buy a car, I Bigger cars are Driving small
want not necessarily cars are
something big better smarter.
and strong
When I look to
buy a car, I will When I look to
buy a big car, buy a car, I will
or SUV buy a Smart Car.
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21. Current Picture Diagram
execute
product
service
STP
segment
price
business marketing source of
objective objective volume target
position place
promotion
21
22. Product
Has not changed product line since 2008
– Pure coupe
– Passion coupe
– Passion cabriolet
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24. 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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25. Miles per Gallon
High fuel economy
– 33 city and 44 highway mpg
Highest mileage, gas-only vehicle in US
Source: FuelEconomy.gov
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46. Address Importance
I don’t think fuel Smart is not only I can travel & do
economy is very a great value, but more for my gas
important. it can save you money with a fuel
money on gas too. efficient Smart.
I will buy a new When I look to
car without buy a car, I will
considering MPG. buy a Smart Car.
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49. Address Perceptions
Smart is a great Smart is a great Smart is both a
value, but it is too value, and it great value and a
dangerous. performs well in safe vehicle.
crash tests.
When I look to
When I look to
buy a car, I will
buy a car, I will
purchase a larger
buy a Smart Car.
vehicle.
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55. Price Ranges
$200,000
$160,000
$150,000
Min
$100,000 Max
$38,000
$50,000
$19,000
$12,000
$0
Mercedes-Benz Smart Car
56
56. 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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57. Revised Big Picture
execute
product
STP
segment
price
business marketing source of
objective objective volume target
position place
promotion
58
58. 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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60. Example Ad
Small is safe.
The Smart Fortwo earns the highest possible ratings in roof
strength, frontal offset, and side impact tests.
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61. 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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62. Key Takeaways
Current Recommended
Cost per 30 second spot:
Business Objective – Goal -- 1500 units / month
– Modern Family: $250k
Source of Volume Stimulate Demand Steal Share
– America’s Next Top Model: $61k
Position Emphasize Smallness Emphasize Safety, Value
1 exposures per episode
–
Product 24 episodes for Modern;mi for Top Model per
2 year / 24,000 10 3 year / 36,000 mi
Place
season In Mercedes Showroom Standalone Dealership
Total Cost: $6,610,000
Promotion
Total GRPs: 167 on Social Media
Focus More TV & Print ads
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67. 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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68. 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
Source: Business Plans Handbook
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69. Dealership Costs
Cost per new dealer = 551k + 265k = $816k
Total Cost (26 new) = 816 * 26 = $21,216,000
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70. 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
Source: TVbytheNumbers.com
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