Despite growing competition and some negative press in recent years, Mercedes-Benz USA is climbing back to the top of the luxury heap with a slate of new models and a focus on its history.
Handling communications for a brand synonymous with luxury might seem simple. But things haven't been so simple for Mercedes-Benz USA in recent years.
Mercedes once had the foreign luxury car market pretty much to itself. That started changing a decade or two ago, and the pace of change has intensified since the start of the new century. As Toyota and Nissan gained greater US market share, they saw the luxury segment as a natural way to expand and launched their own luxury brands.
Today Mercedes finds itself in one of the most competitive categories in the US car market, being pressured on one flank by German rivals, such as BMW and Audi, which have redesigned their cars and have become more competitive, on another by Japanese nameplates like Lexus, and on a third by GM's revitalized Cadillac brand.
Mercedes had tried to stand apart from the growing luxury crowd by adding a variety of new tech gadgets to its cars. But when those items started having problems - a computerized braking system forced a recall, for example - the Mercedes image took a hit on the quality issue that it is still trying to live down today.
"There's always news in number one falling off its spot," says Geoff Day, director of communications for Mercedes USA, adding that it takes time to change consumer and media impressions. "What we have to do is be aware of that, and we have to counter it."
Indeed, reporters say that rather than hide from the issue, Mercedes has been straightforward in addressing the problems and in correcting them. Early last month, Automotive News columnist Edward Lapham wrote that senior Mercedes management in Germany "is no longer in denial."
Ed Hellwig, senior road test editor for automotive website Edmunds.com, agrees. "They've been more direct about [quality issues] than have most manufacturers. That probably will eventually work to their advantage."
Touting new models
While Day and his staff continue to stress that the German carmaker has put quality issues behind it, this year, major PR efforts will go into backing a host of new models that could revitalize Mercedes' image in the US.
The company unveiled a new M-Class SUV recently and showed its new R-Class luxury wagon at the New York auto show, calling it a different category of car dubbed the "sports tourer." It's also brought out a new CLS sedan and last year, an SLK roadster.
Those who follow the luxury market give Mercedes high marks for its new models. Joseph Molina, president of JMPR, which works with luxury brands including Bentley Motors, says "[Mercedes' new] cars are so fresh, people will go to them with an open mind," leaving behind quality issues that have dogged Mercedes in recent years.
After seeing a year-over-year monthly US sales decline of 17% in February, Mercedes' March US sales rose 1.9% over March sales last year - a sign that new models are catching the public's eye.
In addition to talking about new products, PR will harken back to Mercedes' history of luxury in an effort to connect with buyers on an emotional level that few brands can match, says Day. "Essentially, as a PR operation, we are about the promotion of a lifestyle and an affirmation. A Mercedes-Benz customer will choose Mercedes-Benz because when they get out of the car, nine out of 10 times, they will look back and say, 'That's my car,'" he says.
A major challenge, however, will be making the brand's history relevant to today's luxury buyers. Donna Boland, department manager for sales, marketing, and business media/community affairs, recalls that, in the late 1980s and 1990s, survey after survey showed that people associated the Mercedes name with quality cars. Yet "sales were going down year after year. It was a dangerous lesson. You don't want to be an icon on a pedestal. We were not relevant to buyers then." PR today strives to show the relevance of the new Mercedes to a wide range of potential customers.
Day has overseen Mercedes' 20-person US PR operation since January 2004, when he moved from his previous job as communications director for DaimlerChrysler UK. DaimlerChrysler owns Mercedes.
The biggest change Day had to deal with in coming to Mercedes' Montvale, NJ, headquarters was the size of the US market. While national programs alone could be effective in Britain, the US market is too differentiated.
Mercedes sought to deal with the size of the US market in 2002 by creating regional PR managers on the East and West Coasts. Day built on that structure by reaching out for more localized PR initiatives.
"The main tone of any story we set is always at a national level. Eighty percent of the stories about Mercedes are national," Day estimates. "Where the regional staff comes in is in taking that and giving it a regional twist."
Mercedes hired what was then called Magnet Communications in 2003 as its first AOR. It still works extensively with the agency, now known as Euro RSCG Magnet, but has used other agencies, like Patrice Tanaka & Co., to support local PR efforts, such as a scholarship program in Philadelphia. Day says he's spending 50% more on outside PR help this year than last year.
"He's definitely increased the creativity quotient at Mercedes," says Magnet CEO Aaron Kwittken of Day. "He's an idea-based person" who does not get caught up in siloed thinking about PR versus marketing versus advertising. "He thinks across the continuum as it relates to brand."
Mercedes wants to be where upscale buyers are. That's why it supports such events as polo matches in the Hamptons on New York's Long Island or Fashion Week in Los Angeles.
"Customers expect today, particularly affluent customers, that the brand will come to them," says Boland.
But Mercedes is also searching for ways to connect with new buyer segments that aspire to owning luxury cars. "Any smart marketer is going to realize they have to bring new buyers to the brand," says Boland.
Last year, for example, Magnet worked with Mercedes to create an event called "Wheels of Attraction," which was held in Miami.
Working with online dating site Match.com, the event was billed as a speed-dating event on wheels, putting couples in Mercedes vehicles for five-minute dates. More than 20 media outlets attended the event, including local and national Hispanic media. The event tied in with Mercedes' marketing campaigns that have talked about the love affair between Mercedes owners and their cars, notes Boland.
Event marketing is a major part of Mercedes' efforts because they allow for a two-way discussion with customers. "What that two-way does is allow us to keep track of what customers think about the product," Boland says.
The communications department, which is divided into corporate communications, product communications, and lifestyle media PR, works much more closely with marketing than it had in the past, notes Day. PR now is part of the marketing planning process, rather than being brought in after marketing has developed key messages and themes for a campaign. The area where the two groups are interacting most closely has been event marketing.
Product PR this year will focus on the new M-Class SUV and the new R-Class, explains Rob Moran, manager of product and technology communications for the carmaker.
"[The R-Class is] a product that doesn't have any direct competitors right now," says Moran. "We have an opportunity to define what that means for the luxury category."
The R-Class is being positioned as suitable for driving around a team full of youngsters in the day and then going to the country club at night.
With gas prices increasingly in the news, Mercedes also will continue to talk about its diesel engine technology, he adds.
It's a full plate for Mercedes PR, but one Day says he and his team are more than ready to handle.
Director of communications Geoff Day
Department manager for sales, marketing, and business media/ community affairs Donna Boland
Department manager for product and technology communications Rob Moran
Supervisor for lifestyle media and internal communications Joe Richardson
PR agency Euro RSCG Magnet