Importance of Branding to Organisations: A Case Study of Mercedes Benz

Introduction

Branding is an important tenet of corporate management because it communicates a company’s value to its customers. In this regard, researchers have linked it to business sustainability, profitability and market expansion (van Everdingen, Hariharan and Stremersch, 2019; Colicev et al., 2018; Kumar, 2018a). Based on its effect on corporate performance, Müller (2018) says that good branding strategies are linked to increased revenues for businesses and a sense of heightened brand awareness among customers. Comparatively, from a customer point of view, branding helps consumers to define their expectations of a company’s products or services to better enhance their brand experience (Makrides, Vrontis and Christofi, 2020).

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Although important to business success, successful branding largely depends on the effective application of marketing communication (Marcom) tools (Carnevale, Loureiro and Kabadayi, 2018). They refer to a set of diversified programs that firms can use to reach their customers effectively (Colicev et al., 2018). Therefore, the tool used will underpin a company’s marketing communication strategy. Some of the most commonly used marketing communication tools include sales promotion, social media, direct mail, and trade shows (Molesworth, Grigore and Jenkins, 2018; Singh and Verma, 2018; Devanathan, 2020).

The decision to choose the right Marcom tool depends on the industry involved and organizational dynamics. This report demonstrates the importance of branding and Marcom tools using Mercedes Benz as a case study. The findings of this paper will be useful in maintaining and expanding the company’s market dominance in the global automotive industry and, by extension, emphasize the importance of branding to organizations and consumers.

Literature review

Brand communication is an integral part of marketing because it determines the effectiveness of companies in influencing consumer behavior (Kumar, 2017; Kumar, Keller and Lemon, 2016). This way, most firms use marketing communication tools to influence the perception and image that consumers have about a product or service (Molyneux, 2019). This statement is particularly relevant to today’s business environment because, unlike in the past, consumers are not willing to buy into brands that have a “manufactured” image; instead, they want to know what it stands for and what the company is doing to achieve its goals (Butt et al., 2018; van Driel and Dumitrica, 2020; Chakraborty and Bhat, 2018).

Marcom tools help companies to effectively communicate this value to their customers. To this end, Gürhan-Canli, Sarial-Abi and Hayran (2018) say that brand communication is an effective managerial tool for shaping consumer perceptions about a product or service. It is based on a determination of marketing strategies that companies can employ to generate high levels of brand engagement within their target consumers (Newcomb, 2018).

Most communication strategies are designed to have an impact on specific target audiences. The concept is particularly important in highly competitive industries, such as the automobile sector, because of similarities in functionality for different types of cars (Law, 2017). Therefore, companies have to differentiate their sales strategies based on brand value as opposed to the utility or purpose of their vehicles (Long, 2016). Major car manufacturers have exploited this market opportunity to increase their visibility across different product categories. This is why many car brands consider market positioning as an important tenet of their overall corporate strategies (Long, 2016; Law, 2017).

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Although several researchers agree on the importance of branding (Kumar, 2018b; Li et al., 2020; Meyer, 2018; Moorman et al., 2019), there is still contention regarding how the concept could be impactful in the automobile industry, which remains largely product-driven. Part of the problem has been the failure of industry experts to explain how certain car companies acquire superior brand value over others (Long, 2015; Newcomb, 2018; Long, 2016). These debates have further spread to investigate why some brands lose their value over time and how they can be restored (Perren and Kozinets, 2018).

To determine the extent of the importance of branding in influencing customer buying decisions in the car industry, extensive research has been done to explain buyers’ purchasing behaviors. Most of the evidence gathered suggests that most customers often have a simplistic understanding of what constitutes a brand’s value (Newcomb, 2018; Long, 2015; Long, 2016). To this end, marketers have largely focused on differentiating products based on lifestyle or emotional imagery (Newcomb, 2018; Long, 2015; Long, 2016). Similarly, studies have shown that some customers make their purchasing decisions based on how well a brand has developed a reputation of product excellence, relative to the costs involved and the availability of substitute products (Law, 2017; Long, 2015; Long, 2016).

Studies have shown that automotive companies largely use advertising and new product development as the main Marcom tools (Law, 2017; Long, 2015; Long, 2016; Whitaker, 2018). Their adoption has been supported by the need to reach a dynamic group of customers that are spread across different parts of the world and who have varying preferences regarding automotive use (Law, 2017; Long, 2015; Long, 2016). Relative to this assertion, Clow and Baack (2014) say that most marketing communication strategies adopted in the automotive industry rely on a macro-environmental analysis that assesses the strengths and weaknesses of the respective firms.

Recently, technological advancements have complicated the marketing communications strategies of car manufacturers through the proliferation of social media applications and other virtual platforms of consumer engagement (Pelsmacker, Geuens and Bergh, 2010). These developments have created new opportunities for car automakers to expand brand awareness and to draw attention to their products and services. For example, some car manufacturers use timely communication channels, such as emails, to engage their customers and notify them of new product launches (Law, 2017; Long, 2015; Long, 2016; Newcomb, 2018), while others use social media to display third party advertisements on the websites of partner companies, thereby expanding their brand outreach across different industries (Long, 2015; Long, 2016).

The diversity of these techniques highlights the importance of branding and marketing communication to corporate success. Mercedes Benz also understands this potential and considers the concept an important tenet of its overall business operations. The section below explains how it has used two Marcom tools (advertisements and social media) to maintain its dominant position as a premium car brand.

Analysis of Mercedes Benz

Branding strategy

Mercedes Benz’s advertising strategy is hinged on a premium branding strategy that is based on demographic and behavioral factors. For example, the company mainly targets high-income customers who are mainly professionals or executives living in urban areas (Taylor, 2015). Consequently, the brand is widely popular in this market segment. It has further cemented this image by sponsoring premium sports events (Daimler Group, 2019; Daimler Group, 2020; Newcomb, 2018).

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For example, it has sponsored tennis and golf because most high-end customers, who form its target market, have a passion for these games (Daimler Group, 2019; Daimler Group, 2020; Newcomb, 2018). The company’s sponsorship of premium golf events stretches back more than three decades (Daimler Group, 2019). For example, according to the organization’s website, Mercedes Benz is associated with one of the most prestigious golf events in the world – Masters (Daimler Group, 2020). In addition to this game, Mercedes Benz has also sponsored other similarly popular premium professional golfing tournaments in different countries around the world (Daimler Group, 2020).

In line with this strategy, the company’s Marcom tools are consistent with a premium differentiation strategy. Few companies in the industry have managed to maintain this type of brand visibility (van Everdingen, Hariharan and Stremersch, 2019). Sponsoring premium sports events for more than 30 years is only an example of how Mercedes has effectively leveraged a premium branding strategy to convince its customers that it is a part of their lifestyles. This marketing strategy has appealed to its customer group to depths that its competitors have not reached in scope and scale (Tasci, Hahm and Breiter-Terry, D, 2018). Its premium branding strategy has been supported by the adoption of advertisements and social media as the two main Marcom tools.

Communication strategy

Mercedes Benz’s has used advertisements and social media as its two main Marcom to9ols. For example, the company has advertised its cars in magazines that are popular among high-income customers (Long, 2015). However, with the growing prominence of innovation and new product development in the growth and development of the car industry (Candelo, 2019), the company has reformulated its advertising strategies around new product development. For example, Mercedes Benz has garnered global attention in automotive car shows for spearheading the adoption of new technology in some of its key brands, such as the Mercedes S-Class (Candelo, 2019). Through such developments, the company has been able to prepare the market for new products ahead of launch.

Mercedes Benz’s advertisement strategy has been complemented by an aggressive product and service innovation strategy that merges technological innovation with customer comfort. The company has deliberately integrated these features in its cars because they are commonly associated with its target market, which is comprised of people who are inclined to purchase modern and technologically equipped vehicles (Long, 2015; Long, 2016).

Similarly, these customers are known to like style, efficiency and safety – attributes that have been neatly integrated into Mercedes Benz’s advertisement strategy brand (Long, 2015; Long, 2016). Overall, its advertisement strategy has helped to create the image of a reliable brand that understands the target market inside out.

The company’s social media strategy has also been implemented in the same manner because it contains features that are similarly appealing to a premium market. For example, its digital media strategy is known for promoting “big features” and combining data with style. Its digital marketing strategy has also grounded the concept of personality in branding by developing products that appeal to the unique features of its customers. For example, the digital marketing slogan for its A-Class brand is “Just Like You,” which means that the brand understands its customers’ needs (Digital Agency Network, 2019).

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Broadly, Mercedes Benz’s two Marcom tools (advertisement and social media) have helped it to engineer the brand as a premium entity in the automobile industry. Stemming from this messaging, Mercedes Benz has learned to integrate the interpersonal attributes of its customers into its product design and communicated the same features to its customers through its digital and advertising strategies. This is why the Mercedes Benz brand is associated with high-income customers.

Conclusion

This report shows that branding is important to organizations and customers because it highlights the common values shared by both parties. Mercedes Benz has successfully used this strategy to strengthen its image as a premium car brand through advertisements and social media as the two main Marcom tools. These tools have been used to communicate shared values, such as efficiency, safety and reliability to its high-end customer segment.

Therefore, part of Mercedes’s success is pegged on using the aforementioned Marcom tools to address its customers’ core needs. The company’s marketing communication plan has also solidified the company’s positioning as a luxury brand because creating advertising campaigns that appeal to the lifestyle needs and interests of its customers has increased brand visibility among high-income customers. This strategy has been adopted through sponsorship packages for premium sports events, such as golf and tennis.

The relevance of brand communication to Mercedes Benz is consistent with studies, which have demonstrated the importance of advertising and new product development to automotive companies (Candelo, 2019; Taylor, 2015). This relationship was highlighted in the literature review segment of this report and it outlines how companies use marketing communication tools to generate high levels of brand awareness. Mercedes Benz is using the same approach to improve its brand visibility through aggressive advertisements and effective social media marketing.

Recommendations

The findings of this paper demonstrate that Mercedes Benz has mostly focused on targeting the high-end market through advertisements and social media marketing. Indeed, the evidence provided in this report shows that the company’s current focus has been on premium customers, as seen through its sponsorship of the world’s most prestigious and luxurious sporting events. While it has enjoyed widespread success on this front, Mercedes Benz has failed to recognize the potential of expanding its brand offering across a wider poor of customers who have similar characteristics.

For example, it needs to consider other market segments, such as the growing upper-middle-class population, in expanding its brand outreach. This is an “evolving” market, which has similar characteristics to its core clients – premium customers (Kamleitner, Thürridl and Martin, 2019). As a leader in the premium car segment, it could also increase its market share by employing other Marcom tools, such as personal selling, to appeal to upper-middle-class consumers as the next frontier of growth.

References

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NerdyRoo. 2022. "Importance of Branding to Organisations: A Case Study of Mercedes Benz." February 12, 2022. https://nerdyroo.com/importance-of-branding-to-organisations-a-case-study-of-mercedes-benz/.

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