Explain Daimler’s business strategy since 1998 for introducing the Smart Car into global international markets, including the United States
The Daimler company strategy aims at the production of vehicles that set standards with regards to safety and the environment. The company also seeks to provide special service solutions for the products it offers (Daimler). The Smart car is manufactured in Hambach, France, by the Daimler Mercedes Car group. This vehicle was initially introduced to the US market in 2008. This year was particularly favorable because the price of fuel had been rising on an almost weekly basis. During this period many Americans had begun considering changing to more fuel-efficient vehicles due to the high fuel prices.
This, plus the fact that the Smart car had also recorded wide acceptance in other parts of the world went a long way to making the vehicle’s entry fairly smooth. According to the Company, the use of the vehicle portrays an expressive personality and lifestyle all over the world. It is reported that the sales were more than 900,000 between 1998 and 2008 in Europe, Australia, The Middle East, Canada, and Mexico. The successful entry of the vehicle in the US has seen the market expand to include Brazil and China.
The vehicle is reported to be successful in 41 markets across the globe. Daimler’s international expansion for this vehicle has been especially innovative and can be the reason for the wide acceptance of smart cars. For example, the Company set up a website to allow potential customers to reserve orders for the car thus easing the process of placing an order. This concept alone was so successful that it saw the waiting list require a few months of waiting before delivery.
It is reported that customers eager to receive their vehicles were willing to pay as much as $39,000 for the European vehicle to be customized to meet US specifications (Daimler). In addition to that innovative concepts such as the car2go pilot project in Ulm and Austin, Texas are likely to go a long way in providing service to communities and providing public exposure to the vehicle. The company concept used in the introduction of the vehicle to the US market of making a 50 city tour also went a long way in easing the rapid entry into the US market (Daimler).
After examining the Smart Car’s global expansion, what are some advantages and disadvantages of the Smart Car?
On introducing the vehicle to the US market the Daimler Company presented the Smart Fortwo vehicle in three different models. First is the pure model which is the basic version of the two-seater vehicle priced at $ 11,590 (Daimler). Second is the Smart ForTwo passion coupe that has more features such as improved interior finishing priced at $ 13,590. The third model is the Smart ForTwo cabriolet which is the convertible version of the vehicle with leather seats and additional features priced at $ 16, 590.
Though there is an efficient diesel version it is not among the three popular models used in the introduction to the US market (Daimler). The SmartUSA ForTwo vehicle is generally equipped with four airbags, an antilock braking system, and a collapsible steering column, all that allows the vehicle to meet minimum US vehicle safety standards. The car comes in 3 exterior colors with an additional 3 exterior colors offered at an extra cost (Daimler).
This vehicle promises the owner several advantages, such as a high fuel efficiency rate that promises large savings in fuel costs and minimal exhaust emissions. The vehicle is fairly cheap and can travel as many as 40 miles on a gallon of fuel. In addition to that the size of the car makes it very suitable for driving in crowded streets and parking in small spaces. One disadvantage of the vehicle is the significant stamina given that the engine produces a significantly lower horsepower (71hp) in comparison with other popular vehicle models.
This may not be a serious problem given that it appears other manufacturers may soon follow suit and begin production of similar high-efficiency vehicles. The vehicle is produced for the city dweller based on its size and fuel efficiency.
City driving is often a stop and goes affair that is the cause of dangerous gaseous emissions and losses associated with wastage during the idle phases. This high-efficiency vehicle aims to improve fuel efficiency in urban driving situations by 20% (Daimler). The smart car is mainly a city vehicle, therefore, a factor to consider before purchasing this vehicle is the typical driving environment. This vehicle is probably unsuitable for off-road use and unsuitable for drivers who often have to drive on rough terrain.
What type of marketing & advertising strategies has Daimler used to fuel its international expansion (including the USA) of the Smart Car?
The Daimler Company has incorporated the use of the internet in its marketing strategy for this vehicle. this is evident in the use of a website to market the vehicle as opposed to the use of a traditional dealer network (Smart). Through the website, the Company was able to generate a significant amount of interest and advance orders that have boosted the sales of the vehicle. In addition to this strategy, the Company has also suggested the launch of the car2go pilot project.
This strategy is aimed at providing these vehicles for rent by the public 24 hours a day (Daimler). This strategy aimed at improving urban mobility options in selected cities will most likely improve knowledge of the vehicle and its capability. The strategy to use the web for marketing is likely to be successful in several parts of the world given current trends on internet use. In countries such as China, internet use is higher than in Europe and the USA, therefore, such a strategy is likely to be successful.
However, in other parts of the world where internet use is lower, this strategy may be less effective. Alternatively, an effective marketing strategy that may be incorporated in other parts of the world is the provision of a smart car taxi service. This service can be provided within the central business district within major cities at a lower cost to showcase fuel efficiency.
Discuss Smart Car’s USA expansion
It has been indicated that during the introduction of the vehicle the website used for ordering was jammed with orders (Daimler). This situation suggests that there was a higher demand for vehicles than the supply. In response to this, it would be beneficial to suggest an increase in the production of the vehicles to meet the current demand and reduce the waiting periods. Further, the introduction of new technology to make the vehicle even more fuel-efficient could go along way in improving the slump in vehicle sales. According to Daimler, the full-electric version of the vehicle is expected in 2012 (Daimler).
The Company should redouble efforts in the production of this version of the vehicle to capitalize on the monopoly created. It has been indicated that other companies are also in the process of designing similar vehicles. As the competition rises within this category the sales will drop even further. Therefore the Company must make efforts to remain ahead of the competition in innovation for products in this category.
Having enjoyed considerable success after the launch it may be wise to encourage the merging of Penske with the regular dealership network to provide improved after-sales service. A motor vehicle is prone to wear and tear, and the dealer network of the Daimler group across the world is certainly more established than that of Penske. Having successfully launched the vehicle, the Company should let Penske handle marketing and design and leave distribution and sales to the established dealer network.
Would you buy a Smart Car?
Even though they are not an enjoyable drive this discussion has presented information that would incline in favor of purchasing a smart car. First of all the high fuel efficiency of 40 miles per gallon makes this a very smart decision (Daimler). Also that the low initial purchase cost suggests that the buyer will get to enjoy the convenience of a vehicle and less financial burden (Daimler). Considering the cost of a vehicle could easily exceed $20,000, a purchase that is in the range of $11,000 and $17,000 is very reasonable. The current controversy with regards to climate may very well change the automobile market shortly. A vehicle such as this that already complies with required emission guidelines is a purchase that will not be affected by any future changes in legislation.
Works Cited
Daimler. Smart – Open your Mind. dailmler.com, n.d. Web.
Smart. Smart – Smart for two. Smart.com. n.d. Web.