MARKETING ASSIGNMENT
__________________________________________________________________________________

I PESTAK
Mar 2015

Contents
1. Introduction 1
2. Background 1
3. Marketing Strategy 1
3.1. Core Marketing Strategy 2
3.1.1. Segmentation 2
3.1.2. Targeting 2
3.1.3. Positioning 3
3.1.4. Branding 3
3.2. Marketing mix 5
3.2.1. Product 5
3.2.2. Price 6
3.2.3. Place 6
3.2.4. Promotion 6
4. Conclusions and Recommendations 8
5. References 9

1. Introduction
The presented report evaluates current marketing strategy of Smart Automobile with respect to its segmentation, positioning, targeting, branding strategy and the effectiveness and synergy of the marketing mix (7Ps of marketing). The last section of the report outlines the recommendations for future marketing strategy and company position on the market.
2. Background
Smart Automobile is a division of multinational automotive corporation Daimler AG (best known for its brand Mercedes Benz).
The basic concept for the 'the car of the future' for city dwellers was triggered by the oil crisis in 1973 and originally developed by CEO of Swatch Group Nicolas Hayek. In 1991 Swatch Group reached an agreement for the Smart car project with Volkswagen. However, the Volkswagen group terminated the share development of the project in 1993 and the first the model was launched in 1998 in co-operation with Daimler AG (co-operation between Swatch and Daimler was officially announced in 1994). In January 1999, Daimler AG purchased Swatch`s remaining stakes in the company and Smart Automobile became fully owned subsidiary of Mercedes-Benz division of Daimler AG.
Smart Automobile products are marketed globally and have been available as the Smart Fortwo Coupe and Cabrio models. Besides these models, there are also design modifications (mainly from Brabus) and electric conversions available on the market [1].
3. Marketing Strategy
Despite poor publicity and delayed launch date for company`s first model in 1998, the marketing strategy for Smart cars soon became extremely inventive (e.g. the Smart towers giving the company centres distinctive and uniform identity, Fig. 1) [2,3].
However, the original output expectations (200,000 units per annum), has never been met and the company sold 'only' 100,000 Smarts during the first full year on sale in 1999. According to Daimler AG, the number of cars sold has remained relatively steady over the period of 2007 and 2013, reaching its peak in 2008 when the company sold 139,000 units, "partially due to the great success of the Smart Fortwo in the United States, where 27,600 cars were shipped in the first year of sales" [4]. The number of Smart cars sold in 2013 reached 98,000 units [5].

Fig. 1 The smart towers

3.1. Core Marketing Strategy
3.1.1. Segmentation
Market segmentation is "the process of breaking down all consumers into groups of potential buyers with similar characteristics" [6]. Based on common marketing characteristics, the Smart car segmentation could be divided into following sections:
Behavioural segmentation: urban commuters who use the car on a daily basis, giving them the benefits of easy parking and low running costs.
Demographic segmentation: Smart mostly targets the 18 and 45 years old, upper to high income class, mostly living in cities.
Geographic segmentation: the brand is marketed globally, though most products have been sold in Europe and the USA.
Psychographic segmentation: majority of Smart customers belong to a busy working class, fashion conscious segment of the population who care about the environment.
3.1.2. Targeting
Market targeting is defined as "a company`s decision on which market segment to pursue" [7]. Market targeting normally commences after the company has segmented the market. Smart cars were designed "specially for the needs of modern cities". The car concept was developed in response to the demand for urban mobility. Thus, the main target market for Smart cars is the population of urban