Bruised Mercedes goes for heartstrings

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Mercedes-benz usa, hurt by less-than-stellar quality reports in the past year, last month launched its first brand campaign since 1999.

"It's a good time for us to reinforce and strengthen a lot of the key attributes we have, our brand heritage and our owners' passion for the brand," says Michelle Cervantez, VP-marketing at the automaker, part of DaimlerChrysler. The effort will continue into 2005 via media bursts.

The national cable TV commercials from Omnicom Group's Merkley & Partners, New York, feature a montage of owners with their cars to show their emotional attachments. Ms. Cervantez says she got more than 1,000 photos from owners earlier this year after requesting submissions via a national newspaper ad, e-mails to owners and the marketer's Web site.

That big idea will be integrated starting in July with a test-drive event called the "Love Mercedes" tour. More owners can post their photos on in a new area the marketer is creating this month. The photos will be shown at the events, which will feature the entire Mercedes-Benz lineup.

In addition, the automaker is separately repeating its 2003 tour, the so-called "C Spot" driving event, for the popular C Class line. Mercedes-Benz will invite about 1 million people to that free 12-stop tour. At its first weekend stop last month in California, the event had to turn away nearly 1,000 people because it could only handle just over 3,000.

Such activity isn't necessarily a low-cost alternative to media advertising. The cost per person to marketers for such events ranges from $200 to $800, one expert estimates.

Mercedes-Benz spent $139 million in measured media last year, up 8.6% from 2002, says TNS Media Intelligence/CMR.

Also on the marketing front, Mercedes-Benz has partnerships with Giorgio Armani and Ritz-Carlton Hotel Co. to reach high-end consumers. Ms. Cervantez declines to give many specifics, saying only she'll do "small parties" and vehicle displays with Armani.

Ritz-Carlton and Armani partnered on last year's "C Spot" tour and are again on board for 2004. The tour includes hand massages and gourmet food offerings. Guests at the Ritz can buy an upgraded package that includes the use of a Mercedes-Benz.

The luxury carmaker's image has taken a few hits, most recently when Consumer Reports ranked it below average for dependability. Consultancy J.D. Power & Associates revealed in its 2003 report that Mercedes-Benz slipped to 15th in initial quality, just above the industry average, based on owner surveys.

Paul Halata, CEO of Mercedes-Benz USA, told Advertising Age earlier this year that he's already started to see quality improvements, based on less warranty work at dealerships.

changing marketing vps

Any confusion over communications for brand positioning could be due to the fact that Mercedes-Benz has had three different marketing VPs between late 1999 and spring 2003, when Ms. Cervantez arrived.

Consultant Todd Turner says Mercedes-Benz confused consumers through its trip downmarket with the entry-lux C230 hatchback in 2001. "It wasn't supposed to be a brand that could be acquired by everyone," says Mr. Turner, president of CarConcepts. He concedes people are buying the automaker's vehicles, but based on Mercedes-Benz's longtime image.

The nameplate has seen buyer consideration decline to its annual lowest level since 1997. According to CNW Marketing/Research, the percentage of shoppers who put Mercedes-Benz on their list and bought one was 88.3% last year, vs. a peak of 92.8% in 1998.

Mercedes-Benz says it sold 218,717 vehicles in 2003, 2.6% more than '02 and its 10th straight annual U.S. record. But in the first three months of 2004, sales slipped 5% from a year ago, to 49,159 units.

The marketer's quality issue "is a gathering cloud that isn't converging on consumers," says Doug Scott, an analyst with consultancy Allison-Fisher.

The issue could become a bigger problem if Mercedes-Benz ignores it another year or two, though Mr. Scott asserts: "Mercedes-Benz is not going to let that happen."

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