A luxury brand must demonstrate its premium positioning at every opportunity. As the brand guardian, it is the responsibility of the CMO to safeguard this position.
Asking a customer to buy into a luxury brand is effectively asking to “get them to pay that intangible premium, even though they know rationally they should not,” says Melody Lee, CMO at Mercedes-Benz USA.
The luxury car manufacturer has been in the US since the early 1900s, having been established in Germany. From its beginnings in the market, Mercedes-Benz was very intentional about its luxury positioning.
A luxury brand must demonstrate its premium positioning at every opportunity. As the brand guardian, it is the responsibility of the CMO to safeguard this position.
Asking a customer to buy into a luxury brand is effectively asking to “get them to pay that intangible premium, even though they know rationally they should not,” says Melody Lee, CMO at Mercedes-Benz USA.
The luxury car manufacturer has been in the US since the early 1900s, having been established in Germany. From its beginnings in the market, Mercedes-Benz was very intentional about its luxury positioning.
“One of the great things about the folks who brought the brand to the United States is that they really focused on making sure Mercedes-Benz was always in a very premium position,” Lee tells Marketing Week. “When they decided what products they wanted to bring here, they were always the very top of the line, high-end products to ensure that positioning.”
We’ve been around for 140 years and to stay around for another 140 years, we need to maintain our positioning as a luxury brand.
Melody Lee, Mercedes-Benz
As CMO of the brand now, Lee sees herself as having been “entrusted” to continue reinforcing this position for years to come. The role of marketing at Mercedes-Benz is not just to sell cars, but also to set itself up for years and even decades to come.
Lee describes her goal as being to “ensure that we’re both selling for today, as well as building the future”. That’s something that’s always been a focus at Mercedes-Benz, she says, with the business recognising that continuing to reinforce its premium positioning requires investment in brand.
Price as a ‘critical’ element
For a luxury brand like Mercedes-Benz, maintaining and justifying its price point is essential.
As a result, Lee says it is “critical” for marketing to have influence over the price of the brand’s vehicles.
Mercedes-Benz has a long-held reputation as a luxury car brand, and price is a key element of maintaining this, she says. “We’ve been around for 140 years and to stay around for another 140 years, we need to maintain our positioning as a luxury brand,” she states.
While Lee sees influence over price as being a crucial element of her role, research from Marketing Week’s Career & Salary Survey finds that most marketing teams report that they feel a disconnect between their work and pricing strategy. Just a third (34.1%) of the 3,500 marketers surveyed say they or their team has influence or control over their business’s pricing strategy.
Indeed, data from the survey suggests that many marketing teams find themselves confined to just the promotional or communications sphere of marketing’s 4Ps (promotion, price, product and place). While almost nine in 10 (88.7%) survey respondents report having influence over communication and advertising, less than half say they have influence around the product/service (48.8%) or new product development (NPD)/innovation (48.5%).
Even fewer are involved in discussions over place, with just 32.7% reporting having any influence over the distribution strategy.
By contrast, Lee describes her role as “expansive” with influence “over almost every element that touches the customer”. With 385 showrooms across the US, the marketing team works closely with dealers that distribute and sell its product to share creative assets and technology to ensure both consistent messaging and a consistent experience for the luxury brand.
Power of experience
Mercedes-Benz is headquartered in Stuttgart, Germany; however, it has a significant physical presence in the US, with the country being the brand’s second biggest market (after China).
Lee describes the global business as being “very complex”, with the totality of responsibility for all the 4Ps being spread across different elements of the company. For example, as the US CMO, Lee isn’t necessarily able to sit in meetings with engineers at headquarters in Germany; however, the business recognises that the US market must have influence over product.
“Mercedes-Benz works really hard to try to create the right products for the right marketplaces. For example, China has obviously got very different needs than the United States,” she says.
While she might not be at headquarters in meetings with the engineering team, the necessity of bringing products to market that meet the needs of the US consumer means Lee and her team have a high degree of influence over product.
There really is no substitute. We really do encourage our dealers, in their advertising and in their marketing efforts, to bring people into the stores.
Melody Lee, Mercedes-Benz
In addition to product, experience is also a vital component of Mercedes-Benz’s strategy as a luxury brand. That means the experience it provides both in real life and digitally through its apps and website.
The traditional way most customers engage with car brands before purchase is going into showrooms and test-driving a vehicle. However, ordinarily, customers need to be pretty far down the purchase funnel before they take this step.
The brand believes it has cars that customers will want to buy once they’ve had the chance to try them out, but the issue is that not everyone wants to or even can come into store.
Therefore, Mercedes-Benz has worked hard on making its website as engaging as possible to connect with consumers who may not be at the stage of coming into a showroom. Lee says she is “extremely proud” of the brand’s digital presence and how it engages consumers.
“We try to replicate as much as possible what it’s like to be in the car [with digital experiences],” says Lee. “But there really is no substitute. We really do encourage our dealers, in their advertising and in their marketing efforts, to bring people into the stores.”
Outside of that traditional test drive experience, the brand runs The AMG Experience, designed to give customers a taste of its Mercedes-AMG sub-brand. This allows participants to drive various Mercedes-AMG models on racetracks or scenic routes, and participate in other brand events, to really engage them with the cars.
As well as more traditional communications and advertising, investing in experiences like this is a priority for Mercedes-Benz, with this level of engagement being extremely effective for the brand.
This is part one of a two-part interview with Melody Lee, CMO at Mercedes-Benz US. The next article will discuss how the brand is “redefining luxury” and expanding its appeal while remaining true to its roots in the US market.
