Luxury Cars

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Technology and quality are extremely relevant for consumers when they paying considerable amount for their purchase. Companies present what type of technology they use to improve car performance and speed. Excellent example of this is Bentleys’ advert which emphasise traditions combined with newest “cutting- edge technology”, this way Bentley’s motor becomes like a watch which allows saving most luxury thing- time.

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These types of advert allow customers’ desire for luxury product even more.

Geographic Segmentation

In every geographic area customers’ lifestyle, taste, culture differences, so advertiser look at customers’ perception about luxury cars first before they advertise it. U.K. is middle climate zone which means that snow is rare that is why we don’t see adverts with snow.

U.K.’s economy is strong so more people will be able to spend on luxury cars.

Demographic Segmentation

We considered the age and income demographics in macro segmentation bases. In terms of gender, in most of Porsche, Jaguar, Bentley’s and Mercedes Benz adverts are male dominated. It came from English culture that a gentleman has to drive a lady, and lady needs to be driven. In addition, car always were a symbol of social position and self- respect.

Psychographic Segmentation

This segmentation is based on customers’ attitudes, opinions and interests. 

What type of activities can a luxury car buyer do? He/she might enjoy travelling, shopping, going to socialise. Customers might share the same interests as good looking and fast cars, so perhaps they might be a fan of Formula 1 as well. Car companies need to carry marketing research in order to find out this information. Values and people opinions are very significant to potential buyers because by choosing a luxury car they aiming for friends’ recognition and prestige.

Behavioural Segmentation

It concentrates on customer relationship with a product. It analyses how people needs changing, what type of benefits they are looking for from luxury car makers i.e. safety, speed, environmentally friendly car. Customers become loyal to the brand depending on how their needs were satisfied.

For instance this Mercedes Benz commercial promotes safety which explains how company developed safety technology through the years.

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Targeting

U.K. car market is competitive car companies use different targeting strategies in order to make the best sales. Luxury car makers target car lovers who are willing to spend for their favourite brand and model, strategy is called concentrated. This type of adverts shares the passion for high speed, excellent quality and beautiful design. Even Mercedes Benz target different segments as well however once it comes to luxury cars they share the same concept and target only one segment.

Product lifecycle  

Car companies are launching new models every year with newest technology in them. Each of them try to offer something unique and exceptional, however due to strong competition new ideas are very often copied by rivals.

Marketing Mix

Products differ from other segments in terms of special design, branding, quality standards and performance. Luxury cars have more features and benefits then other segment cars. Companies are also willing to sell insurance packages as well.

Price is reasonably high and mainly available to high income consumers.

Promotions can be seen and advertised through magazines, TV, radio, on the roads, within showrooms and other places.

Place is chosen to be dealership offices were customers are willing to do most of transactions. People don’t see online purchasing as that popular way because they want to get professional advice before purchasing the car.

Positioning

Every car company needs to know their product position in competitive market. Competition is very intensive between companies because customers expect the best technology, quality especially from the luxury cars. For example, Porsche positions itself by promoting high speed engine “unique mid-mounted flat-six engine”, ordinary person might not understand what it means however they try to show specialisation for the core elements. “The Cayman S responds precisely and immediately to every command” which emphasise smooth running of the car.

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Before car companies decide to position themselves they go through three stages: market research, identification of attributes and ideal level of luxury product. After completion of stages it is important to draw perceptual map of luxury car market.

We draw the graph using low price v high price, functionality v Image as two dimensions. In terms of pricing Porsche, Jaguar and Mercedes Benz has similar strategy whereas Bentley very aggressive. Image and Functionality is important to all of them however observing the adverts some brands prioritise one thing then another; Porsche, Bentley adverts talk about engine capabilities in contrast Jaguar concentrating on design.

Perceptual map of the luxury car market

5. Consumer buyer behaviour

There are certain factors that will affect your decision when purchasing an executive care. These may depend on your personality, social influences, age, income, luxury or necessity/ need or want. Mercedes Benz, Jaguar, Bentley, and Porsche are all known for being luxury expensive cars.  The type of buyer more likely to purchase such a luxury car would be someone who has a high income; this is to show their wealth and their high status due to their income and/or job role.  However some people have a high income may chose a luxury car like the Mercedes Benz as it has high quality reputation for looks and performance, and know that it will last them a long while without having any problems.

There are five stages in which a buyer goes through before making his/or her purchase.  The first stage is need recognition; in this case, it would be prompted by external stimuli, or a change in circumstance, such a new job with a higher income or seeing a friend with a flashy car.  Some advertising can sway people’s beliefs and attitudes; this is by using external stimuli, such as advertisements.   For example in one of the Jaguar adverts, they repeat the word “gorgeous” over and over again, following examples of what makes something gorgeous while showing close ups of the Jaguar.  

       

This insinuates that by buying this car you yourself will be gorgeous because the car is.  Therefore, people who want to be seen as gorgeous will go and buy a Jaguar.

Mercedes Benz has the reputation of having a strong mechanical engine, and they pride themselves on this.  For the E Class, they use the slogan “Beauty is nothing without Brains”.

 

“A girl enters a library and speaking to the librarian orders for French fries, burger and a milk shake. The librarian looks at her and sternly replies that its a library. The girl looks around for everybody engrossed in reading and as though she had disturbed them, she very softly says again… I want to order French fires, burger and a milk shake… lol!

How true… Beauty is nothing without brains

The  Benz E-Class - The Intelligent Car”

This tells the consumer that there are other cheaper and better looking cars but don’t perform as well.  Whereas, Mercedes Benz has the combination of the two and if you bought a “cosmetically” better looking car, mechanically it will let you down.  

The second stage would be the consumers information search.  The consumer would probably already know something about the car they are wanting to purchase, either from the advertisements, or reputation.   Also would gather information from friends and family, and maybe work colleagues as they would be on the same income they possibly would also drive luxury cars and may influence the consumers decision on which car to buy.   Friends are more likely to be pressured into getting a sporty looking car, e.g. Porsche.  However if you’re a little older with a partner and children your more likely will have to get a more “sensible” car such as the Mercedes Benz E Class, as this is still a good looking, well known, upper class car, but has the room to adapt a family and its belongings.  

The third stage would be evaluation of alternatives.  This means just having a few potential cars and comparing them, i.e. difference in price, value for money. These could possibly be between the Mercedes Benz and the Jaguar, these are both luxury cars, that consumer believe to be for an older generation who are wealthy.  The are similar in price, and both have classic looks.   The salient attributes are pertinent when purchasing a car these are, fuel injection, sunroof, alloy wheels and electric windows, the non-salient attributes would be secure door locking and low level boot access.

The fourth stage is the purchase made (or not).  When buying one of these luxury cars, your more than likely to buy it from the original dealer if buying from new.  However if you cannot afford a brand new one but still want to be seen in one, then a second hand dealer or a private purchase.  With the latter two, you are not going to benefit from the services that the main dealers will provide, such as warranties, service and maintenance options, etc.   Some like Mercedes Benz also offer a recovery service.    

Also you will not be so specific in the extras that the car could possibly come with or may not be able to find the colour that you want the car to be in.  With the dealer you can do also of the above and more.  Sometimes dealers throw in a years free tax when purchasing from new, also with brand new cars you don’t have to have an MOT done until the is over three years old.   The firth stage is post purchase behaviour.  Some adverts are there to reassure the customers that they have made the right choice with their purchase and offer after care.  With Bentley, they offer their customers the chance to add extras to the cars after they have bought the car whether a new or used vehicle.  

 

     19" 12-Spoke Alloy Wheels

     Painted and chrome 19” 12-spoke alloy wheels.

     

6. Promotion

Promotion is one element which is commonly used within the luxury car market and is an extremely powerful and effective tool in creating strong, favourable and unique brand associations and also for eliciting positive judgment and feelings associated with the brand.

Billboards are a common means of advertising these luxury cars, particularly due to the fact that their potential customers drive past these mass adverts on a regular basis meaning high repetition and is easily noticeable from a far. However there can be disadvantages to this method of advertising, due to the short exposure- companies are required to shorten the advertisement too which could give a poor image and there are also local restrictions as Place becomes an important factor in where these luxury cars can be advertised.

Brochures and Catalogues are extremely popular for those customers who have previously purchased luxury cars from these companies. For example, Mercedes Benz deliver monthly magazines and catalogues of their latest models to their customers in the hope that they will continue to use Mercedes Benz and to reinforce their memory of the brand itself.

Photo of Mercedes-Benz catalogue

The Mercedes Benz SL Commercial links tradition with the modern day life, it begins with the legendary romantic song, “Unchained Melody”, an uncanny image of an Audrey Hepburn, ‘Breakfast at Tiffany’s’ lookalike is the driver of the Benz. It portrays an image of a luxury lifestyle for those who enjoy living a life of extravagance.

The Benz CL drives through luxurious immaculate settings, beautiful people, palm trees, sunshine and ravish shopping malls. Los Angeles' most eligible bachelors look on in awe at the beautiful woman in her beautiful Mercedes Benz SL. Mercedes Benz is fully aware that all women dream of this particular lifestyle and it gives the false impression that if you own this car, you also own the lifestyle that is portrayed in this particular commercial. However there are disadvantages of using television to advertise, there is low selectivity, a short message life and the costs of production are high.

 

The Mercedes CL television  Commercial (http://www.youtube.com/watch?v=AFDKiWIbUTU)

The Luxury Car market also uses printed advertisements and posters within carefully selected magazines according to the market they are aiming the car at. Newspapers such as the Times and The Guardian are prints associated with the rich, educated and middle class, therefore it common to see advertisements of Bentleys and BMW spread across the pages.

Personal Selling can be described as ‘process of helping and persuading one or more prospects to purchase a good or service or to act on any idea through the use of an oral presentation.’ It is one element of the promotion mix which is commonly used within the luxury car market. It involves face-to-face interaction with prospective customers. Sales presentation in Shopping Malls is a common feature, the latest model of a luxury car will appear polished and in it’s immaculate condition with the sales people surrounding the car hoping to attract potential customers and present their one-to one selling.

The promotional objectives of the luxury car market are generally to gain that competitive edge against other luxury car makers in the industry, to increase awareness of the company or product, to create or reinforce consumer perception of the brand image associations as it is the knowledge of the brand that can affect a customer’s response, create customer based brand equity, and to identify with a particular target market or lifestyle. Many of the brands we have looked into such as Mercedes Benz is successful in portraying an image of extravagance and through this, it can be seen that the primary use of visual imagery is a common element in the choice of media used in this industry. Billboards, television commercials, this industry is successful in promoting an image of luxury and performance and plays strongly on the brand name which often makes the product appear more attractive to the consumer, this is due to their strong associations with the brand.

7. Communication strategy

Each of the car manufactures seek to establish a dialogue with its target market, ie drivers of luxury vehicles. These markets are the ones the company intend to serve by developing a relationship. Part of developing an effective marketing strategy, is to clearly position the product in the marketplace. The key to successful positioning is ensuring the target audience has a favourable perception of what the company is offering, by sending an aspiration message, with a competitive edge.

These messages are communicated to the target audiences using the marketing communications mix, which consists of various communication tools: Such as advertising, personal selling, exhibitions, direct marketing, and direct mail. Each of the tools has a greater or lesser capacity to stimulate dialogue eg, direct response communications (returning a coupon from a newspaper, or entering a e-mail address to arrange a test drive).

(, 16/03/2008)

We will analyze how the brands have created a powerful and effective advert for the marketing of their luxury vehicles, and establish the relevance of the medium, the brand to chosen to advertise in.

The Jaguar advert beside was featured on page 6 of the Independent Newspaper Magazine, Sunday 16 March, 2008.

The new Jaguar is featured in the centre of the page, with a surreal blue background.  The model ‘XF’ is shown in the top right, with the brand name in large print at the bottom of the page. When all the text is put together, it reads; ‘XF, THIS IS THE NEW JAGUAR’. Although the text is not located next to each other like a traditional sentence, it flows like one. At the very bottom of the page in small print is a phone number for further detail, and a web address, which could be used to arrange a test drive or further information.

The advert was featured on page 6 of the Independent Magazine. While it is not the most expensive spot (such as the front page/ back page), it is still a prime location, as would be seen while the reader is looking for the beginning of the core text. Jaguar may have chosen to advertise on a Sunday, as this would give them maximum exposure to its target clientele.

The profile of readers of the Independent on Sunday are; Adults, predominantly Male (61%), In full time employment (61%), from London & South East (57%), Married/ Living with Partner, Home owners (Outright/ Mortgage), Degree or higher (44%). () 

The below advert by Bentley was featured in the centre of Capital Magazine, March 2008.

Using the Acronym AIDA (Attention, Interest, Desire, Action), we can analyze how effective the marketing communication is for the beside Bentley advert.

The advert grabs the readers attention relatively well. A blurred background gives the impression the vehicle is moving at speed, but shows the vehicle in a crystal clear shot. As if to say ‘time stands still when you drive a Bentley’. This corresponds with the statement on the top of the page reading ‘The greatest luxury in life is time. Savour every second.’ This generates Interest, as every reader of this exclusive Culture magazine has a Desire to live a prestigious lifestyle. Sparing no expense to achieve it. The small print text at the bottom gives more information for test-drives, urging the user to take Action and book via the web link or phone number below it.

The brand have communicated their message well; its grabs attention, holds Interest, and delivers the aspirational message; To relish your time, purchase a Bentley.

The communication strategy which luxury car brands have used relies on an understanding of what message simulates their target audience, and a measure of success is the response it generates. Getting the message to the target audience to also critical, and having seen the profile of typical readers of the newspapers/ magazines researched, it has clearly been done.

8. Pricing

Price is the revenue received by firm in return for the endeavor that is put into manufacturing and marketing. It is one of the most important elements of the marketing mix, as it is the only mix, which generates a turnover for the other organization. The remaining 3p’s are the variable cost for the organization.

Firm needs to consider a price that blends with its product (car) in return for creating utmost customer value. Charging lower price will reduce their profits and charging higher price will reduce their sales.

Not all the adverts that have been collected show pricing information. The adverts that show (below) take a risk like Bentley which costs £210,000 which not many can afford it. But the Porsche Boxster costs only £33,375 which small number of buyers can afford it. 

2006 Bentley Azure – Blue Sequin                Porsche Boxster

Source:

These types of adverts are targeted who are willing to purchase a car and they can compare it with the different models in the market. Also in terms of suppliers, this advert are promoted to give a boost in their monthly sales and to increase their profit margin.

The advert of Jaguar and Mercedes does not show pricing information; this is because companies fear that the price will not attract customers.

The pricing strategies are a sometimes overlooked part of the marketing mix. It should be given the same consideration as advertising and promotion. A higher or lower price can dramatically change both gross margins and sales volume. There are various strategies that luxury car industry can use, such as Cost-plus pricing, Limit pricing, promotional pricing etc. The pricing strategy used by Bentley is Premium pricing. The reason why there is difference in the price between Bentley and Mercedes is, the product of the former is of exceptional quality and it is distinct from others. It is targeted towards very rich people. Others either use Cost-plus pricing or Competition-based pricing. Managers will calculate the cost of producing a car and adds on a profit to that price to give selling price and taking into consideration the price set by the competitors.

1.       JAGUAR

2.          JAGUAR

3.      Mercedes

4.     Porsche

9.0 Product

The car itself has always been considered as a necessity. Many consumers are excited by the idea of “riding in style”, strongly influenced in the media by the likes of James Bond, and if you can afford it, why not? Companies have identified there is a market for luxury cars and fictional characters such as James Bond, the figure of macho independence has made the prospect of owning these luxury cars ever more appealing. Much of a company’s budget is spent advertising to increase the appeal and to target the prospective consumer. “The car companies spend a lot of money defining their markets and demographics," says Norm Marshall, who runs a product placement firm that represents BMW, Volvo and other carmakers. ‘The new idea of a car is not only the performance, design and craftsmanship, but the concept of comfort and convenience, the idea that everything one needs is in one confined space and every bit of detail is tailored to your very needs.  Companies such as Bentley even offer their customers the opportunity to choose the colour of the thread that will cross-stitch the interior.

Many of the more traditional luxury cars are still in the market however, the novelty and the appeal is quickly diminished, therefore it is important for car producers to introduce new features, be on the ball and advertise to increase brand awareness. The ever-increasing awareness of Global Warming and the effects it can have on the environment has put more pressure on Car companies to act quickly to diminish the amount of co2 omission released from motors. The response to this gave way to the introduction of eco-friendly cars, also known as “Hybrid Cars” which can be seen driven around by A list celebrities such as Leonardo Dicaprio and electric cars can also be seen in the market- due to the uniqueness of these motors, the price range can be high, especially for the average car user.

Hybrid Cars- making a difference to the environment and attracting the market. (l)

The core product is the benefit of being able to travel from one destination to another with the comfort of the driver on their seat. The formal product is the specific features of the car such as the brand, outer appearance, interior, the quality of the performance, craftsmanship and basic features. With competition fierce within the luxury car market, it is important for companies to invest in the marketing of the cars and to create a motor with a difference and have a great visual image to attract prospective customers at first glance.

The augmented product of a luxury car is that they often come equipped with special features such as satellite navigation, air conditioning, and mini televisions on the back seats. For example, Porsche offer their customers the opportunity to include these extra features to personalise their motors as extra cost options and to give the vehicle added value. As seen in their catalogue, customers can include rear seat entertainment, natural leather seat; Porsche Crest embossed on headrests, alloy wheels, loudspeakers finishes on the doors and at the rear of the car in leather. All of which gives Porsche that extra edge and has a psychological impact on their target market in that customers will believe that no other person has the same car and gives the impression of exclusivity.

Bentley used a co-branding marketing strategy, which involves “the linking of two or more existing brands from different companies to form a product in which the brand names are visual to consumers.” Bentley merged with another independent brand, Breitling- a luxury watch company to create high performance motors - as the watch is intended to be a sign of accuracy.

Breitling For Bentley, Website Introduction

 

10. Place

Another element of marketing mix is Place. It is the mechanism through which products are moved from the manufacturer to the end user or consumer. As for nay product to achieve its recognition and maximizes its potential sales it is essential to have a correct choice of distribution channel. The companies should distribute the product to the user at the right place at the right time. Efficient and effective distribution is important if the organization is to meet its overall marketing objectives.

The companies can use two types of distribution channels.  The first channel could be Manufacturer to Consumer. In this approach the product manufactured straight gets supplied to customer. Companies like Porsche and Mercedes have their showroom and consumer can look at the care, its features and decide whether to but or not. Some consumer may buy car online. However it is very rare. The biggest advantage it avoids middleman (retailer). This approach is well adopted by the business as it reduces its costs and increases their profit margin. Advert 4 shows that Porsche can be directly bought from their showroom. The second channel could be Manufacturer to Retailer to Consumer. This approach is an indirect selling chain where retailer will have all brands of car and will sell it for slightly higher price. Figure 1 shows direct and indirect distribution channels.

The distribution strategy that is being used is Exclusive Distribution. It involves limiting distribution of product (car) to a single outlet. The number of car in a single outlet could not be more than its capacity. The product price is very high. As it can be seen from “Price” the price is very high. This distribution strategy requires an intermediary that will have good knowledge of the product and will be able to sell the product to the consumers.

Not all the adverts tell us about the strategy. But in advert 4, there is an intermediary which explains all the features of new Porsche. This strategy will help companies to increase their sales as intermediaries will try, with skills and knowledge, to sell cars.

The distribution of cars is mainly a “push” strategy i.e. the consumers are presented with wide range of products to choose from. It is a product that is advertised in television, newspapers and magazines. For example, Mercedes, Porsche etc has many models to choose from. However, it can also undertake “pull” strategy. In this, consumer request for the product. In case of cars, consumer can order an engine from different model and main body from different model i.e. convertible.

FIGURE 1: Direct and Indirect Distribution Channels

11. Critique & Recommendation

The growth of emerging markets should draw attention from the Luxury brands we have analysed, and have bearing on their future strategy. Countries such as China and India have the highest growth rate, and the number of wealthy individuals with high disposable income is growing rapidly. Increasing the budget for marketing in those areas could be beneficial in the future. However, it is necessary to undertake market research, and establish if there is a growing demand for this; as consumers may be more price sensitive.

Recent media has given publicity to the Governments green emission targets, and raised awareness of pollution caused by high emission vehicles. The manufactures of the luxury vehicles should be aware of the ethical stance more individuals are taking, and react to peruse innovative solutions, by producing greener and more environmentally friendly vehicles.

Developing a relationship with customers is important to increase consumer sovereignty, and prevent them purchasing another brand of vehicle. More importantly is, understanding the client and their needs. Ensuring the manufacture keeps in touch with them, by interaction, developing products with style, they will surly contribute in retaining them.

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12.0 BIBLIOGRAPHY

1. www.bentleymotors.com

2.www2.mercedes-benz.co.uk 

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13. Page 6 of the Independent Newspaper Magazine, Sunday 16 March, 2008.                                                    14.  

15. Capital Magazine, March 2008

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22.  http://query.nytimes.com, Film; It’s the cars that make the characters go, By Phil Patton, Published: April 21, 1996 23.,Bentley Experience, cited 28/02/2008

24., Department For Transport, Vehicle Licensing Statistics: 2006, cited 30/02/2008

24. Principles and Practice of Marketing, 5th Edition, David Jobber, Managing Products, Page 353, cited 10/03/2008

25. Porsche, Exclusive 911, Ultimate Personalisation, Cayenne117, Cited 08/03/200826. Breitling For Bentley, http://www.breitlingforbentley.com/en/, Cited 17/03/2008

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