Advertising Plan

Prepared By Christopher Reynolds For Professor J. Tripp San Francisco State University August 13, 2007

Brand Performance
Product Description
Mercedes-Benz is a luxury automotive manufacturer located in Munich, Germany. The oldest of all German manufacturers, they were founded by Karl Benz in 1871. They distribute their cars to dealers all around the world, but have a particularly high demand in North America, specifically America.

Sales (in Millions)

SALES Mercedes Benz
2005 $21.0 2006 $29.0 2007 $39.0

Geographic Distribution

Dealerships located in downtown San Francisco and in Colma. Majority of buyers reside in affluent areas within San Francisco.

Pricing Strategy

Pricing strategy is a reflection of the quality and luxury of automobile as well as the brand itself: top of the market.

Advertising Expenditures (in Millions)

ADVERTISING EXP. Mercedes-Benz
2005 $1.5.0 2006 $1.8 2007 $2.3

Competitive Trends
Two Major Competitors

Major competitors are BMW and Audi for the San Francisco market.

Competitive Sales (in Millions)/Share of Market

Mercedes Benz BMW Audi Industry Total % Change 2005 S.O.M. 2006 S.O.M. 2007 S.O.M. $21.00 37.50% $29.00 36.71% $39.00 35.45% $23.00 41.07% $31.00 39.24% $45.00 40.91% $12.00 21.43% $19.00 24.05% $26.00 23.64% $56.00 100.00% $79.00 100.00% $110.00 100.00% n/a 30.00% 28.21%

Competitive Product Line

Product line for both competitors consists of automobiles designed with German engineering and craftsmanship at the core of the automobile. The unique advantages for each competitor are solely based on brand reputation and loyalty. The automobiles of Mercedes Benz are in no way more superior to those of BMW or Audi, only the brand is stronger.

Competitive Positioning
BMW positions itself at the high-end of the automobile market. Audi positions itself at the mid to high-end of the automobile market.

Competitive Marketing
BMW positions itself as a sport inspired luxury automobile. Audi positions itself as a automobile inspire by German tradition and technology.

Competitive Advertising (in Millions)/Share of Voice

Mercedes Benz BMW Audi Industry size

2005 $1.5 $2.1 $1.2 $4.8

S.O.V. 2006 S.O.V. 2007 S.O.V. 31.25% $1.8 30.51% $2.3 29.87% 43.75% $1.9 32.20% $2.6 33.77% 25.00% $2.2 37.29% $2.8 36.36% 100.00% $5.9 100.00% $7.7 100.00%

Industry Trends
Size of Industry (in Millions)
2005 $56.00 2006 $79.00 2007 $110.00

Industry Total

Industry Growth
2005 n/a 2006 30.00% 2007 28.21%

% Change

Consumer Profile
Demographics

Male dominated market Ages 28 50 College educated 150K + income level

Psychographics

Fit into the Status, Action Oriented and Innovators VALS2 categories.

Segments

Brand Awareness (U: Unaided, A: Aided, T: Top-Of-Mind)

2005 2006 2007 U A T U A T U A T 80% 92% 52% 83% 94% 53% 87% 95% 51% 67% 81% 29% 68% 85% 31% 72% 85% 30% 33% 57% 19% 35% 60% 16% 45% 71% 19% 100% 100% 100%

Mercedes Benz BMW Audi TOTAL

Survey

Mercedes Benz was considered the most luxurious with 48%, BMW with 31% and Audi with 21%. BMW considered most sporty with 61%, Audi with 31% and Mercedes Benz with 8%. Mercedes Benz was considered the most safe with 58%, BMW with 37% and Audi with 5%.

Problems & Opportunities

Problems

Mercedes Benz regarded as least sporty of German manufactured Automobiles. Mercedes Benz Share of Market has decreased 2% in the last 3 years from 37.5% to 35.4%. Audi Share of Voice has increased 11.1% from 25% to 36.6% in the last 3 years. BMW unaided and aided brand awareness has increased overall from 2005-2007. Audi unaided and aided brand awareness has increased overall from 2005-2007. BMW manufactures similar models and price points to the Mercedes Benz product line. BMW has highest share of market of the three German automobile manufacturers.

Opportunities

Mercedes Benz has experienced a sales increase of $18 million from 2005 2007. The luxury German automobile industry has grown 30% from 2005 2006 and 28% from 2006-2007. Mercedes Benz is considered to have the most luxurious and safest automobiles in the market. Mercedes Benz has the highest levels of Unaided, Aided and Top-Of-Mind brand awareness in the industry. Mercedes Benz brand awareness has continued to increase in all three categories from 2005 to 2007

Marketing Objectives

Increase Share-Of-Market 5%.

Marketing Strategies
Product/Packaging Changes

Mercedes will make minor cosmetic changes to certain members of their product line-up to increase the sportiness of the products. The changes will be minor and cosmetic only.

Pricing

Pricing will increase during 2008 to compensate for increased advertising. This increase will be very minor and translate to a 1.2% overall increase.

Distribution

Distribution will remain the same selling through the already existing bay area dealers.

Promotion

Promotion will consist of using television commercials, magazine advertising and billboard ads.

Segmentation Strategies
Target Audience

Our target audience are those who purchased German automobiles for the sportiness factor. Male buyers 28-55 with median incomes of 150K +

Consumer Buying System

Need Recognition Julian is looking for a German car to impress his peers with its sports car aesthetic and purveyance of luxury. Internal Search Julian remembers that Mercedes Benz and BMW are German automobile manufacturers. External Search Julian searches the Internet and finds dealers in the bay area for BMW, Mercedes Benz and also comes upon Audi, which he didnt know was a German car manufacturer as well. Consideration Set Julian test drives comparable models from all three manufactures. Evaluation Criteria Julian considers price, sportiness and luxury as criteria for his car selection. Purchase Julian purchases a Mercedes Benz. Experience Julian is surprised at how luxurious his new Mercedes Benz is as well as how much of a sports car it really is, though he had never thought of Mercedes Benz as a sports car manufacturer.

Brand Positioning

To users looking for a sports car, our brand offers a sports car for those who care about luxury and safety at the same time.

Advertising Objectives

Increase attitude that Mercedes Benz is the most sporty of German automobile manufactures by 30%

Advertising Strategies
Mass Media: Television Ads, Magazine Ads, Billboard Ads. San Francisco Bay Area.

Geographic Coverage Area: Time of Year:

Q1 and Q3 as well as December and June.

Advertising Budget Determination

Task Method. The reason behind using this method is that there are multiple mediums and our budget is best determined by summing the cost of each medium.

Media Plan
Objectives

Reach 80% of target audience an average of 11 times or more during 4 week ad period. Use a pulsing advertising schedule with heavy emphasis before summer and holiday season as well as the 1st and 3rd quarters of the year. Advertise in San Francisco Bay Area.

Strategies

Reach 80% of target audience X average frequency of 11 times = 880 GRP 12 months X 4 week period => 880 GRP X 12 = 10,560 GRP Use 40% of advertising budget in magazine advertisements, 60% in billboard ads.
Medium Television Ad Magazine Ad Billboard Ad Total GRP's 5,950 2,750 1,860 10,560

Flow Chart
Media Type Television (30") Magazine (FP, 4C) Billboard(#25 Showing) TOTALS Jan 700 325 200 1225 Feb 700 325 200 1225 Mar 700 300 200 1200 Apr 100 100 50 250 May 100 100 50 250 Jun 650 200 200 1050 Jul 700 325 200 1225 Aug 700 325 200 1225 Sep 100 100 50 250 Oct 100 100 50 250 Nov 700 275 200 1175 Dec 700 275 260 1235 Total GRP 5950 2750 1860 10560

GRP Costs
Media Type Television (30") Magazine (FP, 4C) Billboard(#25 Showing) TOTALS Total GRP 5,950 2,750 1,860 10,560 Cost per GRP $300 $200 $50 Total Cost $1,785,000 $550,000 $93,000 $2,428,000

Production Costs
Media Type Television (30") Magazine (FP, 4C) Billboard(#25 Showing) TOTALS No. of Ads 2 2 2 6 Cost per Ad $150,000 $20,000 $75,000 Total Cost $300,000 $40,000 $150,000 $490,000

Total Costs
Total Cost GRP Cost $2,428,000 Production Cost $490,000 $2,918,000

Media Rationale

Television: Introduce new product message and branding, reaches most amount of people. Magazine: Can tailor message by placing in specific magazines. Billboards: Placement allows for message to be reached by specific audience.

Creative Recommendation
Creative Brief
Why are we advertising at all? Mercedes Benz is advertising to change the current view of the sportiness of the Mercedes Benz automobile. Our goal is to increase our share-of-market by 5% and increase the attitude that Mercedes Benz is the most sporty by 30%. Who are we talking to? The target audience are buyers in the market for a sports car. Men ages 28-50, collegeeducated with $150K income level. What do we know about them? Target audience members are people who are status and action oriented as well as innovators. They are avid purchasers of luxury items as well as having the desire to own a sports car. They want something that gives them the sex appeal that a sports car provides. What do we want them to think or do? We are hoping that they will associate the Mercedes Benz company with sports cars and luxury, and the fact that these two go hand in hand. What is the main idea we need to communicate? Mercedes Benz IS the sports car to own, and it is pure luxury at the same time. What support is there for the main idea? The fact that Mercedes Benz has the highest horsepower to weight ratio of our competitors as well as the best handling suspension while still maintaining an extreme refinement for the interior and exterior aesthetics.

Tracking Studies
To measure the success of our advertising campaign, and our success in the marketplace, we will be conducting focus groups as well as surveys to gauge the perception of sportiness for the Mercedes Benz brand and hope to see an increase from the current 8% to 38%, a 30% increase as our goal states.