Tag Archives: Mercedes-Benz

Brand Strategy, Portfolio, Positioning

Mercedes-Benz may drop its “EQ” branding

Mercedes-Benz is starting to solve its confusing portfolio.  Reuters reports that Mercedes is to drop the EQ product brand.

The Mercedes-Benz portfolio is confusing as I detailed in a previous post in Oct 2021. One of the most striking examples of bad portfolio branding and execution is the Mercedes-EQ product branding for all-electric cars.

“EQS by Mercedes-EQ”

There is so much wrong with that sentence. The car EQS is a model by Mercedes-Benz, not by the Mercedes-EQ model family. And of course, in the Mercedes-Benz context, there is no need to repeat the company brand at all.

A much better solution would have been “New era: the EQ line for all-electric”.

Mercedes-Benz took (I guess) the internal organizational division between Gasoline and EV very seriously and launched an entirely new line of cars, even though in terms of actual car type/categories (SUV, limousine etc) the electric cars are the same as the combustion engine car brothers and sisters.

The combustion engine B on the left, the electric on the right. Same category, same design but a  different name.

A much better solution would have been to just use the EQ moniker to indicate the EV variant, similar to the fully descriptive “Plug-in Hybrid” to indicate the hybrid variant.

 

All Electric

The removal of EQ as a complete product line might take some time:

“The decision is based on Chief Executive Ola Kaellenius’ focus on electric-only cars, making the EQ brand redundant as Mercedes turns away from the combustion engine, Handelsblatt cited the sources as saying.”

In other words: Mercedes-Benz is not really intending to provide portfolio clarity or remove the EQ as a separate line. The company is simply replacing all combustion engine cars with fully electric cars.

The executed Switch Strategy does not come without risk. It is all about the ‘old’ gasoline car brands versus the ‘new’ electric car brands in a category shift. To compete in electric,  Mercedes-Benz will need to be more convincing in the buyer’s mind than the perceived leader in electric.  This means that when a consumer is in the market for an electric luxury SUV, the Tesla Model X has the leadership perception in terms of technology over the Mercedes-Benz GLC EQ.

Mercedes-Benz could have followed the Conquer Strategy, usually the safest and cleanest route to execute the company’s transition into a new category.


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Portfolio

Mercedes-Benz Perfumes: wanna buy one?

Mercedes-Benz Perfumes was launched in 2012 as “the new star of the perfume world”. Ten years later, the product line is still around.  

The Mercedes-Benz Perfumes product line is according to Mercedes-Benz an obvious product range expansion because defined style and exquisite design are central to Mercedes-Benz as a leader within the design industry worldwide.

Design and style are not only essential ingredients for the world of luxury cars, it is a natural step to extend this expertise into other luxury categories.”

Creating luxury products beyond the cars has been a natural evolution, starting with Mercedes-Benz eyewear, leather accessories and other luxury goods. In recent years, the brand has naturally gained visibility and credibility in the most exciting, joyful and vibrant industry: fashion.

 

The Mercedes-Benz Perfumes are available for Him, Her and Home.  The parfum product line follows eyewear, leather accessories and other “luxury goods”.

The idea behind launching all these extensions is of course  that Mercedes-Benz owners would finally have an all-encompassing Mercedes-Benz lifestyle. Drink coffee in a Mercedes-Benz cup, spray some Mercedes-Benz perfume, leave home in a Mercedes-Benz Bodywarmer, drive in the Mercedes-Benz, call with an iPhone covered in a nice Mercedes-Benz cover and when it rains use the Mercedes-Benz umbrella. This is the Mercedes-Benz life.

The question is who is living the encompassing Mercedes-Benz brand life?  And who wants to live life like this?

Still the Instagram account of the Mercedes Benz Parfums has 46.8K followers, not a lot compared to the fashion brands. The Facebook page has 1.36M followers and almost the same amount of likes.

Mercedes-Benz in a tax free shop

I cannot help thinking that this conversation feels weird for anyone linking the brand Mercedes-Benz with cars “Hey want kind of perfume are you wearing?” “Mercedes-Benz”.

And the reaction to the above question is the key to success: when buyers have a strong connection with the Mercedes Benz brand as a car, it will be much harder to accept the brand in another category. When there is no strong connection, the brand can be accepted in parfums.  

An example of a brand like in the case of Caterpillar, the brand for tough equipment and shoes.

Most Cat work boots buyers are not Caterpillar equipment users. They might not even know at all that Caterpillar is heavy duty trucks. And when buyers somehow know that the brand has something to do with toughness then that is exactly the right connotation. On top of that: Caterpillar did something smart to distinct: in work boots the brand uses a different logo “Cat”.

Being successful in multiple categories with the same or similar brand is a careful balance of managing buyer perception. Usually this is easier and much more successful when the categories are perceived to be more distant, like in the Caterpillar case.

 

Portfolio

Mercedes-Benz transitioning to electric

Mercedes-Benz moves into electric using the ‘half-pregnant’ EQ sub-brand approach. The company misses  the point that buyers first and foremost need portfolio clarity.

Whenever there are ground-breaking developments, the incumbent businesses need to watch out. Category shifting breakthroughs are most of the time developed by new companies. They can be so impactful that complete new categories are established and make today’s brands look old and obsolete. Bad news for existing brands!

In the past, we saw it was Nokia versus iPhone, and today it is in the car business Tesla versus the rest. It was not Mercedes-Benz who established the new electric car category globally – it was Tesla. Interestingly, it was Karl Benz who invented the first gas-powered automobile already in 1886. Quite a few years later, in 1901, the Daimler Motors Corporation began selling cars.

Often when a category shift happens, and your brand represents or is a significant player in the old category, the brand will eventually follow the faith of the category. As a brand owner, you need to do everything you can to prevent a downfall.

At Mercedes-Benz, they saw the change to electric coming as well. The company was clearly not ready, and it took time to adapt. For the company, it was vital to continue selling the old gasoline cars to not go out of business. The ‘half pregnant’ business strategy translates directly to the product portfolio strategy. The current Mercedes-Benz portfolio visualizes a company in transition, and it is far from the Mercedez-Benz slogan “The Best or Nothing.”

Look at the entire portfolio as presented on https://www.mercedes-benz.com/en/ and ask yourself:

    • what is the car type? (small family, business, SUV, etc.)
    • what is the ranking of the car inside the overall portfolio (good, better, best)
    • what are the electric cars
    • what do all the letters and combinations of letters mean?

None of it is clear.

Unclear portfolio

 

To make things worse, Mercedes-Benz applied a strange form of sub & endorsed branding with the electric range.

Headlines in car magazines said “Mercedes-Benz’s EQ Sub-Brand Aims to Launch a New Electric Model Every Year” (Car and Driver in 2016) or just as recently as 14 Oct 2021 “Mercedes EQ subbrand to launch in U.S. with electric variant of S-Class sedan” (Automotive News).

What happened at the marketing department at the Mercedes-Benz headquarters? A sub-brand, really? Master-brands and sub-brands are all marketing talk, and they do not exist in the buyer’s mind. People are not shopping for sub-brands or master-brands. They shop for brands and might look for a product within a range.

The basic rule is that people think and buy in the following order:

Brand -> Product range -> Model
not Brand –> Brand -> Product range or Model

It is Mercedes-Benz (brand) -> EQ (range) -> Model
and not ‘Model by Range’ as the Mercedes-Benz Me Lifestyle magazine wants the reader to believe.

So what could Mercedes-Benz have done differently? There would have been two ways to transition the company Mercedes-Benz into the new category or electric.

 

1. Conquer and Switch
The  Geely Holding /  Volvo Corporation strategy. The company repurposed the Polestar brand for just electric cars to compete (conquer) in the electric car segment, while Volvo can switch to electric at its own pace.  For the Mercedes-Benz Company, a new brand (not EQ!) would take on electric while Mercedes-Benz could transition at its own pace.

 

2. Fix the portfolio outside-in and Switch
Let’s face it; the current portfolio is a complete mess with cars inside and outside classes (ranges). This does not help navigate the portfolio and  does not help buyers  relate or understand the order in the portfolio.

Mercedes-Benz should first create ranges that make sense to the buyer or already have meaning, like the A, B, C, G, M, S and V class ranges.  Then slot all cars inside the ranges. No exceptions.

The GLB would move into the G class, and so would the electric EQB. To create clarity, the car model would be renamed GLB EQ.

Then the brand can Switch at its own pace into electric, eventually letting go of all the gasoline models.

Inside-out portfolio

 

Outside-in portfolio

Mercedes-Benz in executing a Switch strategy without clarifying the portfolio to buyers. At this stage option 2 is  the  route to go. Does it come without risk?  Not at all.  It is all about the ‘old’ gasoline car brands versus the ‘new’ electric car brands in a category shift. To compete in electric,  Mercedes-Benz will need to be more convincing in the buyer’s mind than the perceived leader in electric.  This means that when a consumer is in the market for an electric luxury SUV, the Tesla Model X has the leadership perception in terms of the technology over the Mercedes-Benz EQC. Internally there will be a division between those who work on the cool new models and those who need to maintain the old – till the last old gasoline car is sold.

Generally the Conquer strategy is the safest and cleanest route to execute company transition into electric.  The Switch strategy involves  perception risks and can be complicated to execute internally.