Mercedes Goes after Younger Buyers

Mercedes and BMW have been competing head-to-head for market share in the luxury-car market for more than four decades. Back in 1959, BMW (Bayerische Motoren Werke) almost went bankrupt and nearly sold out to Daimler-Benz, the maker of Mercedes-Benz cars. BMW was able to recover to the point that in 1992 it passed Mercedes in worldwide sales. Among the reasons for BMW's success was its ability to sell models that were more luxurious than previous models but still focused on consumer quality and environmental responsibility. In particular, BMW targeted its sales pitch to the younger market, whereas Mercedes retained a more mature customer base.

In response to BMS's success, Mercedes has been trying to change their image by launching several products in an effort to attract younger buyers who are interested in sporty, performance-oriented cars. BMW, influenced by Mercedes, is pushing for more refinement and comfort. In fact, one auto-motive expert says that Mercedes wants to become BMW, and vice versa. However, according to one recent automotive expert, the focus is still in luxury and comfort for Mercedes while BMW focuses on performance and driving dynamics. Even though each company produces many different models, two relatively comparable coupe automobiles are the BMW 3 Series Coupe 335i and the Mercedes CLK350 Coupe. In a recent year, the national U.S. market price for the BMW 3 Series Coupe was $39,368 and for the Mercedes CLK350 Coupe was $44,520. Gas mileage for both of these cars is around 17 mpg in town and 25 mpg on the highway.

Questions

Suppose Mercedes is concerned that dealer prices of the CLK350 Coupe are not consistent and that even though the average price is $44,520, actual prices are normally distributed with a standard deviation of #2,981.

Suppose also that Mercedes believes that at $43,000, the CLK350 Coupe is priced out of the BMW 3 Series Coupe 335i market.

What percentage of the dealer prices for the Mercedes CLK350 Coupe is more than $43,000 and hence priced out of the BMW 3 Series Coupe 335i market?

The average price for a BMW 3 Series Coupe 334i is $39,368. Suppose these prices are also normally distributed with a standard deviation of $2,367.

What percentage of BMW dealers are pricing the BMW 3 Series Coupe 335i at more than the average price for a Mercedes CLK350 Coupe?

What might this mean to BMW if dealers were pricing the 3 Series Coupe 351 at this level?

What percentage of Mercedes dealers are pricing the CLK350 Coupe at less than the average price of a BMW 3 Series Coupe 335i?

Shell Attempts to Return to Premiere Status

The Shell Oil Company, which began about 1912, had been for decades a household name as a quality oil company in the US. However, by the late 1970's much of its prestige as a premiere company has disappeared. How could Shell regain its high status?

In the 1990's, Shell undertook an extensive research effort to find out what it needed to do to improve its image. As a first step, Shell hired Responsive Research and the Opinion Research Corporation to conduct a series of focus groups and personal interviews among various segments of the population. Included in these were youths, minorities, residents in neighborhoods near Shell plants, legislators, academics, and present and past employees of Shell. The researchers learned that people believe that top companies are integral parts of the communities in which the companies are located rather than separate entities. These studies and others led to the development of materials that Shell used to explain their core values to the general public.

Next, PERT Survey Research ran a large quantitative study to determine which values were best received by the target audience. Social issues emerged as the theme with the most support. During the next few months, the advertising agency of Ogilvy & Mather, hired by Shell, developed several campaigns with social themes. Two market research companies were hired to evaluate the receptiveness of the various campaigns. The result was the "Count on Shell" campaign, which featured safety messages with useful information about what to do in various dangerous situations.

A public "Count on Shell" campaign was launched in February 1998 and met with considerable success: the ability to recall Shell advertising jumped from 20% to 32% among opinion influencers: more than 1 million copies of Shell's free safety brochures were distributed, and activity on Shell's Internet "Count on Shell" site remains extremely strong. By promoting itself as a reliable company that cares, Shell seems to be regaining its premiere status.

Today, Shell continues its efforts to be "community friendly." United Way of America announced Shell Oil Company as one of its three Spirit of America Summit Award winners for 2002 and commended the company for its outstanding volunteer and corporate contributions programs. Several Shell employees were recognized by the Houston Minority Business Council for their continued efforts to provide windows of opportunity for minority business owners and strengthen Shell's commitment to supplier diversity. Shell employees and retirees give back to their communities through such Shell-sponsored activities as America's WETLAND campaign. Shell's Workforce Development Initiative, and other community/quality of life and environmental projects. Shell is also a strong supporter of the Points of Light Foundation, which strives to engage people more effectively in volunteer community service.

Questions

#1: Suppose you were asked to develop a sampling plan to determine what a "premiere company" is to the public.

What sampling plan would you use? What is the target population? What would you use for a frame? Which of the four types of random sampling discussed in this chapter would you use? Could you use a combination of two or more of the types (two-stage sampling)? If so, how?

The four types are: 1) simple random sampling 2) Stratified Random sampling 3) Systematic random sampling 4) cluster (or area) sampling that includes two-stage sampling for large areas in the cluster

#3: Suppose that in 1979 only 12% of the general adult U.S. public believed that Shell was a "premiere" company. Suppose further that you randomly selected 350 people from the general adult U.S. public this year and 25% said that Shell was a "premiere" company. If only 12% of the general adult U.S. public still believes that Shell is a "premiere" company, how likely is it that the 25% figure is a chance result in sampling 350 people? Hint: Use the techniques in this chapter to determine the probability of the 25% figure occurring by chance.

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