Mercedes Benz: A Case Study in the Core Competence of Quality
Almost every American, so the conventional wisdom goes, requires a car, except for the few city dwelling populations of Americans who live in cities with adequate public transportation networks. However, most cars serve their basic function of providing transportation fairly well, albeit with some notable safety exceptions. The question of the overall quality or value of this mode of transportation is necessary for many manufacturers of vehicles to thus distinguish themselves against competitors.
Thus, it is necessary for car manufactures to develop some core competencies to distinguish themselves against their competitors, from their quality, to their value, to their reliability and safety. Unlike marketing, advertising, or market positioning, core competencies stress product distinctiveness in a concrete fashion. This is uniquely important for a product such as a car, which consumers usually expect to last longer than a can of soda, for example. A car requires more of a time investment to buy than a pair of jeans. A car contributes to one’s life style as a necessity more than say, a motor scooter or a bike.
Resources that are not standardized thus allow one manufacturer to develop core competencies. It must be difficult rather than easy for competitors to imitate. (Tutor2tutor, 2004) When analyzing Mercedes Benz’s core competencies, one immediately points to luxury, for instance, rather than price, as the primary consumer mental association one has with the brand. Someone seeking a reliable car is likely to go with a Toyota. Someone seeking a reliable car at the most affordable price might go with a Honda Accord. Mercedes has a perception as an expensive German car with an image to uphold. But even in the higher-end car market, there are many cars with similar images, from Aston Martins to Bentleys. Mercedes is unique in that it combines a perception of luxury and also of quality in the high-end car market, thus giving it its key competitive advantage and core competency in the car market. Unlike the sight of a fragile sports car that causes the gazer, after inquiring of the price, ‘who is your mechanic, and do you have him or her on speed dial,’ Mercedes does not have such a perception of fragility in the automotive industry.
In fact, one of Mercedes most successful uses of quality as a core competency was demonstrated in its recent launch of its “M Class off-road vehicle.” As this expensive but sturdy vehicle was entering a crowded market, and that the mere fact that it was a Mercedes would not be enough to guarantee sales, to create a perception of quality in the minds of its a potential sales base, as well as to guarantee a car that would be uniquely well suited to the needs of consumers, the company obtained details of all current owners of off-road vehicles and Mercedes cars. Then, “Mercedes then undertook a series of mail-outs to the names on the database. It began with a personally addressed letter from the head of Mercedes USA.” The mailing said something along the lines of, “we at Mercedes are in the process of designing a brand new off-road car and I would like to know if you would be prepared to help us.” (Temporal
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