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Does Mercedes Have Schizophrenia?
Posted on October 31, 2005 at 8:55 AM CST

Jack TroutWelcome everyone, how was  your weekend?  I was lucky enough to take a two day vacation, and I have to tell you, it was magnificent.

While I was sitting back, sipping piña coladas and watching a few NFL games, I received an email from Left Lane News pointing me to a recent article published by Forbes.

In short, the article deals with the topic of brands having multiple personality disorders.  One example the writer gave was Coke, who thirty years ago only offered Coke, but now offers sixteen different variations, such as Coca-Cola with Splenda, Coca-Cola Zero, and Coca-Cola C2. According to Jack Trout, the author of the article (pictured above), "It's no wonder Coke has lost its fizz."  He's a witty bastard, isn't he?

Jack then went on to discuss Mercedes. According to Jack, "Once upon a time, it [Mercedes] was a high-quality, highly engineered, prestigious car."  He then goes on to say that in Europe, if you walk into a Mercedes dealership, you're faced with a model range priced from $20,000 to $200,000.  As a result, "...in Europe, Mercedes Benz is not listed as the top brand. The Audi A8, BMW, Maserati and Jaguar have taken over this position."

I have to admit, when I first read old Jack's article, I almost fell off my chair in laughter.  Are you kidding me?  I might not have attended Harvard Business School, but I do know when I read something that is utterly absurd.

So Mr. Frost, I've decided it's time for a lesson in Business 101. Get your pen and paper handy and start taking notes, because next time you write a story, I don't want you to sound quite so, how should I put this... doltish.

OK Jack, listen up - Mercedes has implemented a form of brand diversification. Do you know what the highest selling Mercedes models are Jack?  I'll give you a hint - Mercedes flagship S-Class and Mercedes $452,750 SLR didn't make the list.  Rather, the lower priced C-Class and E-Class models sit at the top.

Why is that Mr. Frost?  Because despite the quality, performance, and prestige that a $100K sedan and $450K+ coupe might have, not everyone has this much disposable income on hand.

So what should Mercedes do? Sit back, sell a few thousand cars a year, and tell the rest of the world to go f*** themselves?

Of course not. To succeed in business, a company must adapt to the market.  From the beginning, Mercedes has created a brand that has gained worldwide notoriety as the best. But rather than be content creating one type of vehicle, they have expanded this brand recognition to cover a wide range of vehicles.  Now, Mercedes offers customers the best luxury sedans and the best coupes, but they also offer the best mid-sized sedans, and the best small hatchbacks.  In other words, Mercedes hasn't cheapened its image, they've expanded their trademark name and brand image to allow a greater amount of consumers to experience what it's like to own a Mercedes.

I'll leave you with one final example. In Chicago, one of the most well known and visited stores on Michigan Avenue is Tiffany and Co. Very few people would criticize the Tiffany brand - it's a name synonymous with beautiful jewelry. If you spend some time in their store, you'll be amazed at the amount of people gazing longingly at the sparkling diamonds and exotic gems. But upon inspection, you'll notice few people exit the store with a $250,000 3-carat ring on their hand.  Rather, the $175 dollar sterling silver heart bracelet is one of their biggest sellers.  Jack, do you think that by selling a $175 bracelet, this in any way cheapens the $250,000 3-carat ring?  Of course not; it simply allows a greater number of people to experience the joy that Tiffany brings.

The same holds true for Mercedes.  Mercedes hasn't cheapened their image, they've simply diversified; they've expanded - they are doing what any successful company does.

So Jack, next time you write a story, do us all a favor, and get your facts straight.

Oh, and by the way - don't ever use Maserati and Mercedes in the same sentence again.

For a look inside the mind of an idiot, you can read Jack's article here.



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