answer

watching

views

amaranthreindeer392Lv1

28 Sep 2019

HOw can Mercedes-Benz position itself effectively to appeal to consumers who are (a) men, (b) younger than 30, (c) from China, or (d) very wealthy?

answer

watching

922

views

For unlimited access to Homework Help, a Homework+ subscription is required.

You have 0 free answers left.
Get unlimited access to 3.8 million step-by-step answers.

Get unlimited access

Already have an account? Log in

Trinidad TremblayLv2

30 Sep 2019

Unlock all answers

Get 1 free homework help answer.

Already have an account? Log in

Related questions

Hello, I am working on an assignment related to Harley-Davidson Motorcycles. After reading the article below, please complete the 3 questions at the end.

Harley-Davidson Wheels Out an Electric Bike; Hog Maker Aims for Younger Riders With Electric-

Motorcycle Test

Harley-Davidson Inc., known for gasoline-powered motorcycles thundering with machismo, is testing a battery-powered model that it hopes will appeal to younger people concerned about the environment.

"We'd like to get customer feedback," Matt Levatich, Harley's president and chief operating officer, said in an interview, adding that the product is at least two years away from being offered for sale. For now, he said, the lithium-ion batteries in prototype models have a range of roughly 100 miles between recharges under typical riding conditions. They can go from zero to 60 miles an hour in "just under four seconds," he said.

The Milwaukee-based company said on Thursday that "select consumers" around the country next week will start getting a chance to ride prototype cycles with rechargeable batteries.

Harley wouldn't be the first to offer such a motorcycle. Companies including Zero Motorcycles Inc., Brammo Inc. and Mission Motorcycles Inc. now sell battery-powered motorcycles, and bigger manufacturers are experimenting. BMW AG sells a battery-powered scooter, dubbed the C evolution, in Europe. So far, said Harley's Mr. Levatich, sales of electric motorcycles are "insignificant."

"We anticipate it's going to appeal to a younger, more urban demographic," a Harley spokesman said. The company said the test was part of a goal of "preserving the riding environment."

The company still hasn't decided whether or when to put such motorcycles on the market and is looking for feedback from bike owners before proceeding further, he said. The project, dubbed LiveWire, has been in the works for four years, he said.

Chris Narayanan, 39, said he is curious about the battery-powered bike. "I'd give it a try if I had the opportunity," said the New York resident. For now, though, he is having fun with his 1998 Harley Sportster 1200 and plans to upgrade to a bigger Harley in a few years. "It's an interesting gamble for Harley. I know they want to appeal to younger riders and get them into Harley."

Justin Massey, general sales manager for a Harley-Davidson dealership in Hammond, Ind., thinks the sporty, racing-bike styling and first-of-its-kind status for Harley will attract an audience on its tour of dealerships. "I'm sure it will create quite a buzz," said Mr. Massey, who doesn't know if his dealership will be on the tour. "It's a good-looking bike and people will want to be around it."

Rather than the rumbling sound of traditional Harleys, the new machines sound more like a jet engine, only much quieter, Mr. Levatich said.

The project wasn't launched in response to environmental regulations, he said. Rather, current technology allows the company to produce a battery-powered cycle and "we feel we should," Mr. Levatich added.

James Hardiman, an analyst for Longbow Research, called the project a surprise. "It's a pretty big departure from anything they've ever done," he said and should help Harley appeal more to a younger and more environmentally conscious crowd.

Initially, "you're not going to get very far from one charge," he said, but battery technology is going to get "a whole lot more efficient in the years to come."

For people who don't already ride motorcycles, Harley promised to offer a "simulated riding experience" rather than a road test. Experienced riders will be invited for highway rides.

In recent years, Harley has striven to reduce its reliance on ageing white male baby boomers and appeal more to young people, women and minorities. As part of the company's strategy, two new bikes, known as the 750 and 500, are being rolled out. These smaller bikes are aimed at younger riders, who might find a traditional Harley touring bike too large or heavy to handle, particularly on crowded city streets.

The company didn't release a possible price for the LiveWire. High costs and limited range have kept demand low for battery-powered cars so far.

Harley-Davidson is the dominant U.S. supplier of heavyweight motorcycles. For this year's first quarter, the company reported that its share of sales in the U.S. market for new motorcycles with engines of 601 cubic-centimetres displacements or greater was 56%.

(Please use detail in answering each question below. And also please use the information in the article above to answer the three questions below).

1. Please segment the consumer market for motorcycles in the US using a needs-based segmentation strategy.

2. For each needs-based segment, determine which demographics, life-styles, and usage behaviors make the segment distinct and identifiable (actionable by marketers).

3. Based on the information in the article and your own research, determine the overall attractiveness and profitability of each segment.

scarletlizard877

Target costing Mercedes-Benz All-Activity Vehicle (AAV)

Introduction

During the recession beginning in the early 1990s, Mercedes-Benz (MB) struggled with product development, cost efficiency, material purchasing, and problems in adapting to changing markets.

In 1993, these problems caused the worst sales slump in decades, and the luxury carmaker lost money for the first time in its history. Since then, MB has streamlined the core business, reduced parts and system complexity, and established simultaneous engineering programs with suppliers.

In their search for additional market share, new segments, and new niches, MB started developing a range of new products. New product introductions included the C-Class in 1993, the E-Class in 1995, the new Sportster SLK in 1996, and the A-Class and M-Class All-Activity Vehicle (AAV) in

1997. Perhaps the largest and most radical of MB's new projects was the AAV. In April 1993, MB announced it would build its first passenger vehicle-manufacturing facility in the United States.

The decision emphasized the company's globalization strategy and desire to move closer to its customers and markets.

Mercedes-Benz United States International used function groups with representatives from every area of the company (marketing, development, engineering, purchasing, production, and controlling) to design the vehicle and production systems. A modular construction process was used to produce the AAV. First-tier suppliers provided systems rather than individual parts or components for the production of approximately 65,000 vehicles annually.

The AAV Project Phases

The AAV moved from concept to production in a relatively short period of time. The first phase, the concept phase, was initiated in 1992. The concept phase resulted in a feasibility study that was approved by the board. Following board approval, the project realization phase began in 1993, with production commencing in 1997. Key elements of the various phases are described next.

Concept Phase, 1992-1993

Team members compared the existing production line with various market segments to discover opportunities for new vehicle introductions. The analysis revealed opportunities in the rapidly expanding sports utility vehicle market that was dominated by Jeep, Ford, and GM. Market research was conducted to estimate potential worldwide sales opportunities for a high-end AAV with the characteristics of a Mercedes-Benz. A rough cost estimate was developed that included materials, labor, overhead, and one-time development and project costs. Projected cash flows were analyzed over a 10-year period using net present value (NPV) analysis to acquire project approval from the board of directors. The sensitivity of the NPV was analyzed by calculating "what-if" scenarios involving risks and opportunities. For example, risk factors included monetary exchange rate fluctuations, different sales levels due to consumer substitution of the AAV for another MB product, and -product and manufacturing costs that differed from projections. Based on the economic feasibility study of the concept phase, the board approved the project and initiated a search for potential manufacturing locations. Sites located in Germany, other European countries, and the United States were evaluated. Consistent with the company's globalization strategy, the decisive factor that brought the plant to the United States was the desire to be close to the major market for sports utility vehicles.

Project Realization Phase, 1993-1996

Regular customer clinics were held to view the prototype and to explain the new vehicle concept. These clinics produced important information about how the proposed vehicle would be received by potential customers and the press. Customers were asked to rank the importance of various characteristics, including safety, comfort, economy, and styling. Engineers organized in function groups designed systems to deliver these essential characteristics. However, MB would not lower its internal standards for components, even if initial customer expectations might be lower than the MB standard. For example, many automotive experts believed that the superior handling of MB products resulted from manufacturing the best automobile chassis in the world. Thus, each class within the MB line met strict standards for handling, even though these standards might exceed customer expectations for some classes. MB did not use target costing to produce the lowest-priced vehicle in an automotive class. The company's strategic objective was to deliver products that were slightly more expensive than competitive models. However, the additional cost would have to translate into greater perceived value on the part of the customer.

Throughout the project realization phase, the vehicle (and vehicle target cost) remained alive because of changing dynamics. For example, the market moved toward the luxury end of the spectrum while the AAV was under development. Besides, crash test results were incorporated into the evolving AAV design. For these reasons, MB found it beneficial to place the design and testing team members in close physical proximity to other functions within the project to promote fast communication and decision making. Sometimes new technical features, such as side airbags, were developed by MB. The decision to include the new feature on all MB lines was made at the corporate

level because experience had shown that customers' reactions to a vehicle class can affect the entire brand.

Production Phase, 1997

The project was monitored by annual updates of the NPV analysis. Also, a three-year plan (including income statements) was prepared annually and reported to the headquarters in Germany.

Monthly departmental meetings were held to discuss actual cost performance compared with standards developed during the cost estimation process. Thus, the accounting system served as a control mechanism to ensure that actual production costs would conform to target (or standard) costs.

Target Costing and the AAV

The process of achieving the target cost for the AAV began with an estimate of the existing cost for each function group. Next, components of each function group were identified with their associated costs. Cost reduction targets were set by comparing the estimated existing cost with the target cost for each function group. These functional groups included the following: doors, sidewall and roof, electrical system, bumpers, power train, seats, heating system, cockpit, and front end. Next, cost reduction targets were established for each component. As part of the competitive benchmark process, MB bought and tore down competitors' vehicles to help understand their costs and manufacturing processes.

The AAV manufacturing process relied on high-value-added systems suppliers. For example, the entire cockpit was purchased as a unit from a systems supplier. Thus, systems suppliers were part of the development process from the beginning of the project. MB expected suppliers to meet established cost targets. To enhance function group effectiveness, suppliers were brought into the discussion at an early stage in the process. Decisions had to be made quickly in the early stages of development. The target costing process was led by cost planners who were engineers, not accountants.

Because the cost planners were engineers with manufacturing and design experience, they could make reasonable estimates of costs that suppliers would incur in providing various systems. Also, MB owned much of the tooling, such as dies to form sheet metal, used by suppliers to produce components. Tooling costs are a substantial part of the one-time costs in the project phase.

Index Development to Support Target Costing Activities

During the concept development phase, MB team members used various indexes to help them determine critical performance, design, and cost relationships for the AAV. To construct the indexes, various forms of information were gathered from customers, suppliers, and their own design team. Although the actual number of categories used by MB was much greater, Table 1 illustrates the calculations used to quantify customer responses to the AAV concept. For example, values shown in the "Importance" column resulted from asking a sample of potential customers whether they consider each category extremely important when considering the purchase of a new MB product. Respondents could respond affirmatively to all categories that applied.

To gain a better understanding of the various sources of costs, function groups were identified together with target cost estimates. (MB also organizes teams called function groups whose role is to develop specifications and cost projections.) As shown in Table 2, the relative target cost percentage of each function group was computed.

Table 3 summarizes how each function group contributes to the consumer requirements identified in Table 1. For example, safety was identified by potential customers as an important characteristic of the AAV; some function groups contributed more to the safety category than others. MB engineers determined that chassis quality was an important element of safety (50% of the total function group contribution).

Table 4 combines the category weighting percentages from Table 1 with the function group contribution from Table 3. The result is an important index that measures the relative importance of each function group across all categories. For example, potential customers weighted the categories of safety, comfort, economy, and styling as 0.41, 0.32, 0.18, and 0.09, respectively. The rows in Table 4 represent the contribution of each function group to the various categories. The importance index for the chassis is calculated by multiplying each row value by its corresponding category value and summing the results: (0.50 X 0.41) + (0.30 X 0.32) + (0.10 >< 0.18) + (0.10 X 0.09) = 0.33.

As shown in Table 5, the target cost index is calculated by dividing the importance index by the target cost percentage by function group. Managers at MB used indexes such as these during the concept design phase to understand the relationship of the importance of a function group to the target cost of a function group. Indexes less than 1 may indicate a cost above the perceived value of the function group. Thus, opportunities for cost reduction consistent with customer demands may be identified and managed during the early stages of product development.

Choices made during the project realization phase were largely irreversible during the production phase because approximately 80% of the production cost of the AAV was for materials and systems provided by external suppliers.

The AAV project used a streamlined management structure to facilitate efficient and rapid development. The streamlined MB organization produced an entirely new vehicle from concept to production in four years. Using the target costing process as a key management element, MB manufactured the first production AAV in 1997.

https://drive.google.com/file/d/0B7DlLcOZwfeKXzdfbVQwMlVteUE/view?usp=sharing link to required tables

Required Explain the process of developing an important index for a function group or component. How can such an index guide managers in making cost reduction decisions? How does MB approach cost reduction to achieve target costs? How do suppliers factor into the target costing process? Why are they so critically important to the success of the MB AAV? What role does the accounting department play in the target costing process?

rubygoose141

Case Study: Wine exports to China rise in value before the mid-1990s, the wine market in Asia was non-existent and many wine producers did not see potential in the Asian markets. But during the late 1990s and early 2000s, the markets started to change, and, almost overnight, wine became a symbol of wealth and class. The only problem was that very few producers were serving the market.

As more producers became aware of the new potential markets, they started to enter China, Thailand, Singapore, Korea, and Japan. China posed specific problems for producers and importers as distribution channels and marketing strategies were virtually non-existent because the market was too new.

The wine market maintained double-digit growth from 2005 - 2010, and it should grow faster than any other alcoholic beverage sector in the coming five years. With consumption rising at 10% - 15% per year it can be tempting for producers, whose traditional markets are stagnant, to consider China as a possible solution to their problems. Though there is little doubt that the market will continue to expand, the challenges are numerous:

1. A lack of transparency, counterfeit products, and unreliable information.

2. Dominance of the domestic giants.

3. Consumer and cultural challenges.

4. Distribution and logistics.

The rewards are great for any foreign winery that can crack the market but the challenges are also great. The first step a winery must take before they carve out their niche, is to understand the reasons behind Chinese consumers buying habits, and how consumers purchase wine in China.

WHY CHINESE CONSUMERS BUY WINE

The majority of wine purchases are made during the major holidays: Chinese New Year, Spring Festival, and the mid-Autumn Festival. Most of these purchases are destined as gifts for people.

This is an interesting insight because gift-giving in China is important to the concept of face.

The Chinese wine consumer is typically a market follower, not a leader. He needs to feel safe about his purchase and does not want to lose face by choosing the wrong wine or admit that his knowledge of wine is limited.

Chinese consumers buy wine to impress or gain face (the Chinese word guanxi or the concept of face is somewhat analogous to influence or opportunities) within their social groups. Buying the right bottle of wine for a boss during the holidays could mean a promotion.

In contrast to America or Europe, wine is also used as a social lubricant in place of spirits or beer. European consumers will often pair wine with food but Chinese are more likely to use wine as a social lubricant at parties or events.

HOW CHINESE CONSUMERS BUY WINE

A survey conducted by the research company Wine Intelligence, which surveyed more than 1,000 Chinese upper middle-class drinkers of imported wine found that 75% of them said they often go online to look for wine information, and 62% said they frequently use social media as a source.

New wine consumers were increasingly reliant on the digital world to learn about wine, with an estimated 13 million Chinese adults frequently accessing information online. This is a significant percentage of consumers searching for information online.

Wineries that are looking to make an impact in China must create a strong digital strategy.

(Source: http://www.digitalintheround.com/chinese-wine-market-digital-strategy/)

Question 7a:
Which is the main macro-environment factor that provides an opportunity for wine products in China? Justify your answer.
(5 marks)

Question 7b:
Which is the macro-environment factor that leads Chinese consumers to purchase wine? Justify your answer.
(5 marks)

ceriseserval213

Weekly leaderboard

Home

Homework Help 3,900,000

Economics 400,000

HOw can Mercedes-Benz position itself effectively to appeal to consumers who are (a) men, (b) younger than 30, (c) from China, or (d) very wealthy?

Unlock all answers

Related textbook solutions

Principles of Economics

Principles of Macroeconomics

Principles of Microeconomics

Related questions

Weekly leaderboard