CASE STUDY 3
CASE 10-2 The Smart Car
by B. Renea Kosino
1. What is Smart’s competitive advantage? Its brand image?
The Smart Car, made by DaimlerChrysler, offers a cost focus and focused differentiation. It brand image is very narrowly focused. Smart appeals to single people (or families with no children), who primarily do city driving and want a no frills automobile that is economical and eco-friendly. Some advantages that Smart brings to the table are as follows. First, the vehicle has an exceptional look that appeal to those who want to be unique. Next, this very small, but roomy vehicle makes city driving and tight parking easier. Subsequently, crash testing and safety ...view middle of the document...
S. market. First, one of the major reasons that DaimlerChrysler moved into the U.S. market was out of desperation, since they were not as successful in the European market as they wanted, being rated in the bottom five in 2006. With all of the bad publicity, Gen Ys were already skeptical of the Smart Car. Next, while Smart differentiated their product some for the U.S. market, it will not be enough for our Gen Ys. From a psychological sense, this product is not what they want. Gen Ys believed they are entitled enjoy life first and work second, due to being raised by the Baby-Boomers, who taught them that could do and be anything. Therefore, anything they buy needs to be an experience or adventure. Moreover, they have the “Have it your way!” expectations. So, making a no frills car (similar to flying Ryan Air), which means one starts with a very basic model and then has to pay for basic amenities, like air-conditioning, stereos…, does not appeal to this generation. Next, while Smart is economical, great for driving in the city, and can drive up to 90 mph, the vehicle rides very rough. This takes away from the Gen Y’s need for adventure and enjoying the moment. Finally, this generation is unique, but there are many similarities in the way they operate. See attachment 2, which graphs the answer that these Eco-Boomers gave when asked what the five most important brand/product characteristics were. While Smart fits the bill for being eco-friendly and unique, it does not come even close to matching the other twelve items listed.
3. Identify other target markets into which you would introduce this car. What sequence of countries would you recommend for introduction?
Back in 2007, with the Smart Car being so economical and appropriate for city driving, I would recommend expanding the market in England and introducing it to Japan in that order, rather than going to the US. The two countries are known for their large city populations with big city driving. In 2002, England’s city population was over 30 million people, and Japan was over 50 million. Also, while Smart would have to differential their product to accommodate the countries, they would stay quite similar for both markets have similar vehicle specifications, including the requirement for right-hand drive automobiles. In addition, both market are similar that want small economical vehicles for their crazy city driving. While importing vehicle to England is much simpler, Japan has free trade agreements with the European Union. Finally, they would both take interest in the newly developed electric car, called the Smart EV. Once they are back in their “happy place”, Smart should entertain going to developing countries that require vehicle as they introduce themselves. No frills vehicles are perfect for meeting the expectations of this market. In addition, since the vehicles are so simple to assemble, they would want to entertain the idea of manufacturing them within the...