Pricing/Distribution in Marketing Decisions For Mercedes-Benzes

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Introduction:

Pricing and distribution are probably the most important components in the marketing decisions of any product since they are the essence upon which a company is able to generate revenue. The pricing and distribution strategies of a company are mainly determined by the market that the company is targeting. Mercedes Benz is one of the luxurious companies in the world that uses prestige pricing to promote, enhance and maintain the image of its products, and to limit it only to the high end clientele. Its pricing and distribution strategies are strength upon which the company generates revenue and is able to compete effectively in the ever changing business environment. This paper analyses Mercedes-Benz's pricing and distribution in marketing decisions.

The pricing strategies implemented by Mercedes-Benzes:

Mercedes Benz which is in the luxury industry uses prestige pricing to promote, enhance and maintain the image of its products, and to limit it only to the high end and affluent clientele both young and old. The company uses a price-quality-value pricing strategy for its products where the customers pay more for better high quality luxurious products. This pricing strategy is mainly based on price skimming strategy where the company uses different pricing phases in different regions at different times in order to generate profits. In this strategy the company targets a market segment that is willing to pay premium price for the brand. The pricing strategy is a reflection on the luxury and quality of the automobile as well as the brand Mercedes-Benz. The company analyzes the value of the product and prices it highly to even enhance its value (Selz and Klein, 2006). This is especially so with its class A vehicles where the price of this vehicle was set at even a higher level than the initial cost analysis done by the car company. Despite this high price the production capacity was fully utilized during the first production year of the product (Dolgui & Proth, 2010).

Why these pricing strategies motivate target customers to buy and continue buying from Mercedes Benz:

Mercedes Benz has various models of automobiles each targeted to different target audience. Traditionally the company had produced luxury cars targeting the upper-mass income. The A-class model is specifically designed to capture the young urban professional market segment, 30 something single or with a small family (Benetton, et al, 1997). Mercedes brand qualities and features have also taken a luxury marketing strategy targeting thirty something consumers with C-Class model, forty something with their E-Class model, Fifty something with their S-Class and a C-Class model for the retired (Danziger, 2005). It has recently targeted younger sporty and affluent customers with its two door SLS sports car model which was launched ...