At any given time, businesses are happily buying other unrelated businesses to d

iversify their risks and raise their growth rates - while other businesses are u
nhappily flogging the disappointments that have resulted from following a simila
r strategy in the past.Probably the numbers are about equal. The success rate wi
ll never improve, because of the inherent difficulties of mastering a business o
f which you know nothing. That isn't only true of acquisitions - it also applies
to so-called organic diversifications that you've started yourself.
Listen to an expert like Fred Buggie of Strategic Innovations International, and
the first lesson to be learnt is that successful diversification springs from y
our existing strengths, not from those you buy in. Firms that propose to make a
complete break from their present abilities are asking for trouble - and deserve
it.
The reasons were made perfectly clear by one of Sir John Harvey-Jones's trouble-
shooting visits. This small sub-contractor, Velden Engineering, indulged in golf
carts and adjustable beds. These couldn't have been much further removed from i
ts main activity, making small components to order for other engineers.
The golf carts look quite nifty, but not the firm. First, it has no experience o
r capacity in marketing. Second, it had no experience or facility in efficient s
eries production of assembled products. Third, conducting the first stage of a B
uggie investigation - assessing the existing strengths of the would-be diversifi
er - would be deeply depressing.
The company makes far too many products far too inefficiently. As the trouble-sh
ooter pointed out with some force, using obsolete, slow and labour-intensive mac
hines because they're cheap destroys productivity and damages quality. Despite (
or because of) buying cheap machinery, Velden's profits are exiguous.
You can't hope to diversify successfully from a weak base. Any new enterprise wi
ll divert time, attention and money from the main business. The first step in di
versifying, therefore, is paradoxical - making sure that the base activities are
being run as efficiently, productively and profitably as possible.

But what if your inventory of strengths, honestly compiled, does come up with a
more encouraging platform? The world is full of possibilities. It isn't just a q
uestion of making a choice. Before reaching that stage, management must establis
h a list of alternatives, potentially valuable uses and extensions of the firm's
true talents.
That doesn't mean extensions of your existing product line (which account for mo
st so-called 'new' products). When Mercedes-Benz moved down in size and price to
compete against BMW, it wasn't truly diversifying. The current venture into mic
ro-cars, though, does take the company into genuinely new territory.
Its deep knowledge of cars and engineering (and its equally deep purse) are key
strengths. But because the micro-car market is so different, Merc has sensibly a
llied itself with Swatch, which knows far more about low-cost production, miniat
urisation and mass marketing.
Like Merc, true diversifiers of any size need outside help. Buggie recommends th
at, having established what the firm is good (and bad) at, you set down the crit
eria (product characteristics, return on investment, sales volume, share of mark
et, etc) that the new line of business should satisfy. Then you look outside as
well as inside.
Beecham wouldn't now be part of SmithKline Beecham, a global health-care giant,
if it hadn't turned to Ernst Chain, the great penicillin pioneer, for advice on
where to direct its research. That counsel led to fermentation chemistry and the
money-spinning synthetic penicillins. Buggie calls his equivalent use of outsid
er expertise a 'brain bank' .
First, you need to brainstorm as many ideas as possible in a highly organised se
ssion, preferably held away from the firm, with a leader from inside and an outs
ide facilitator. The session needs from five to seven people, drawn from differe
nt backgrounds. And you use 'brain bank' experts, recruited from universities, t
he trade press or wherever, to help the insiders screen ideas and test their tec
hnical and economic feasibility.
That will generate a short-list. Then you go through the same process all over a
gain, until you arrive at the single diversification which best satisfies your o
riginal criteria. The procedure sounds painstaking and time-consuming. So it is.
That's why most diver
sifiers (see Velden) instead operate on hunch and hope. And that's why they fail
.

As the world's premier automobile manufacturer, Mercedes Benz takes its responsi
bility for environment care very seriously. Which is why, we are constantly enga
ged in improving every aspect of automotive technology to reduce the impact on t
he environment. BlueEFFICIENCY takes its name from the expression blue planet a de
scription of the earth, when viewed from space. Blue also symbolizes water which
is the only output of a zero emission vehicle - and also the only output of a z
ero emission vehicle.
BlueEFFICIENCY is an agglomeration of numerous advancements: from drag reducing
aerodynamics to energy-efficient power systems. Each of these measures does its
bit to reduce fuel consumption, collectively offering substantial savings while
reducing CO2 emissions by up to 23%.
Efficient energy management
Optimizing energy measures include recovery of braking energy, regulation of pow
er steering and improved transmission ratio of the rear axle. All these measures
help save energy or recover excess energy. All of which has a positive effect o
n fuel consumption.
Aerodynamic efficiency
Less wind resistance means less power expenditure for the drive system, directly
resulting in lower fuel consumption. Targeted measures such as complete underbo
dy panelling, a special "cooler guard" for the engine compartment, lowering the
body level or even use of special wheel-tyre combinations make for less consumpt
ion and help further reduce the CO2 figures.
Tyres optimised for rolling resistance
Mercedes-Benz vehicles of the new generation are equipped with low rolling-resis
tance tyres. Through a special profile and an improved rubber mixture, the rolli
ng resistance significantly decreases on the road surface in comparison to norma
l tyres, increasing efficiency and demonstrating true Mercedes-style handling sa
fety.
Lower weight for higher efficiency
Vehicle weight directly influences energy efficiency and Mercedes addresses this
through a slew of measures. Weight reduction is another approach Mercedes-Benz
is using to reduce the consumption of the BlueEFFICIENCY models. Various measure
s decrease the vehicle weight, depending on the model, by 19 to 23 kilograms, e.
g. through a thinner front windscreen (1.2 kg reduction), forged lightweight whe
els (7 kg reduction) and optimised front wall insulation (approx. 20% reduction)
.
The BlueEFFICIENCY Models:
Environmental protection is not a marketing exercise but a matter of great conce
rn at Mercedes-Benz. As the inventor of the automobile, Mercedes-Benz bears a pa
rticular responsibility, which we fully embrace.
Today we offer 3 models that represent a significantly reduced burden on the env
ironment. The innovations that make this possible go under the name BlueEFFICIEN
CY.
How Mercedes-Benz have increased their sales in a recession
Posted: Sep 25, 2009 | Comments: 0 | Views: 807 |
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I just found this excellent article about the Sales Strategy of Mercedes-Benz du
ring the recession. They have gained market share during the toughest economic p
eriod in recent history without reducing their prices.
The article was originally posted at: http://www.bnet.com and I have copied it b
elow for your convenience. My view is that it s completely unnecessary to reduce y
our price in a downturn. The best sales strategy to use in a recession is to kee
p your price the same while your competitors discount themselves into oblivion.
You could always add on extra features at lower or nil cost, but I wouldn t be red
ucing your main price.
The reason is that your existing customers will feel ripped off, your new custom
ers won t It s not news that the automobile industry is in trouble. GM and Chrysler
have gone through bankruptcy. J.D. Power and Associates expect sales of cars in
the U.S. to drop to 10 million in 2009, down from 16 million in 2007. Luxury veh
icles have been hit especially hard.
However, Mercedes-Benz USA has a couple of success stories. Its new compact spor
t utility vehicle, the $33,900 GLK, launched in January and already leads its ca
tegory. It has sold more than twice the number of vehicles this year as its clos
est competitor, the Acura RDX. Mercedes is also pleased with the sales of its mo
st affordable sedan, the C-Class (starting at $33,600), which has gained 5 point
s of market share, albeit in a shrinking market.
Both successes have a lot to do with Mercedes fierce defense of its brand, accord
ing to Steve Cannon, vice president of marketing for Mercedes-Benz USA. In short
, Mercedes is not succumbing to the temptation to cut prices. You have to stay tr
ue to who you are no matter what, Cannon says. So many of our competitors are doin
g distressed advertising, saying sale, sale, sale. You can t move down-market in t
imes like these.
If you do, you undermine the value of your brand, says David Melançon, CEO of New
York-based brand consultancy The Ito Partnership. Melançon points to Macy s as a com
pany that, once considered among the toniest of department stores, has downgrade
d its image through endless discounting. Why would I ever pay full price for anyt
hing at Macy s ever again? Melançon asks.
The other thing you can t do is stop advertising. In a recession, every CFO wants t
o slash the advertising budget, says Bob Austin, an auto industry brand consultan
t and senior partner of the Auto Futures Group in Ridgewood, N.J. Counterintuiti
vely, Austin believes the worst time to stop advertising is in a downturn. Studi
es have shown that consumers can keep only up to four choices in their minds whe
n they are contemplating a purchase. Even if you re confident that customers know
precisely who your company is as a brand, now is the time to keep reminding them
of its defining characteristics, with plenty of details, Austin says. The guy wh
o can stay visible the longest wins, he says.
Mercedes has wholeheartedly embraced advertising the details. When the company i
ntroduced the C-Class, it opened up the brand to a whole new group of buyers. Bu
t rather than lead with the lower price in messages to new consumers, the compan
y emphasizes all the ways in which the C-Class is still a Mercedes, a product of
100 years of German engineering. The same is true of the GLK and, Cannon says,
of other models Mercedes will introduce later this year. People buy emotionally,
but they justify intellectually, Cannon says. In this market, the justification hu
rdle is a little bit higher.
By hammering home product attributes that make a Mercedes a Mercedes, the automa
ker is helping consumers think their way through to a purchase. And in the proce
ss, Cannon says, Mercedes continues to build its brand rather than chip away at
it. When the market turns, we will have [these new consumers] in the brand, and t
hey will grow with us, Cannon predicts.
(ArticlesBase SC #1269477)

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