Behind Mercedes’ $75 Mil. E-Class Push

With the launch of a $75 million campaign for Mercedes-Benz’ 2010 E-Class, U.S. vp, marketing Steve Cannon discussed the psyche of Mercedes owners, the role of  “rational red meat” in the ads and why the automaker is creating mobile apps for the first time. The following are excerpts of an interview with senior reporter Andrew McMains.

Adweek: How has the economy impacted your consumers?
Steve Cannon: They’re definitely nervous. They’ve been shaken like they’ve never been shaken before. So, a bunch of confidence has been removed from the system. They’re still very optimistic. For the most part, these are people who are go-getters. They build companies, they’re leaders, they’re entrepreneurs. So, while they’ve taken a hit, there’s an underpinning of absolute optimism in all of our communications that we’ve had with those folks. Everybody has told us that they’re definitely taking tighter control over household finances. They’re postponing some things — some of that casual dining, some of that impulse stuff they’ve cut out. One lady talked about her 24-hour rule. She still loves to shop but she walks back out, gives herself 24 hours and, in most cases, doesn’t go back. So, they’re definitely cutting back. 

AW: What have you learned from your dealers?

SC: The dealers are definitely seeing a more cost-cautious customer. The way the dealers see it, it expresses itself in traffic: There’s a whole lot less traffic out there. [Customers] are giving them some reasons for optimism, so the E-Class is coming at a great time. It gives them a reason to re-engage with a very big customer base. The E-Class is in its ninth generation. We’ve got lots of E-Class customers out there and it’s important in a time like this to work with your loyal customer base. It’s easier to maintain loyalty than it is to [try for] conquest in a tough, tough market.

AW: What are the biggest challenges of marketing a luxury product in a recession?
SC: The biggest challenge for us is to connect with consumers that are postponing [purchases], cutting back. Almost to a person, though, in the dialogues I’ve had with Mercedes-Benz customers, they don’t see their Mercedes-Benz as a luxury. You’ve probably heard a couple of phrases out there, like “conspicuous consumption” and “luxury shame.” None of our customers are ashamed of the cars they own. In fact, for them a Mercedes-Benz is a necessity and it’s not a luxury by any stretch of the imagination. But we definitely have to give them the rational reasons to buy. That’s why our campaign is built on the heritage of 120 years and nine generations, but it’s all about innovation. That’s why we spent a lot of time highlighting [features such as] the attention assist, lane-keeping assist, blind spot merger, this automatic breaking system — life-saving technologies that matter to the customer whether you’re in a recession or not. So, we’ve built communications that’s giving them lots of rational red meat.

AW: Does the E-Class give dealers hope because the people who would be buying it are going to be returning customers and therefore more inclined to buy regardless of the circumstances versus, say, the C-Class, where you’re trying to bring new people into the tent? Is that a more difficult challenge in these conditions?
SC: It’s definitely a more difficult challenge. Most people are talking about taking care of your loyal customers first. You make sure that you’re informing them, you’re pampering them, you’re giving them reasons to buy. Sure we still have to [try for] conquest. But for this launch, at this time for this vehicle — because the E-Class really is the bread and butter of the Mercedes-Benz franchise…as well as the heart and soul…[Dealers are] out there at the local level sort of firing up the base, to use a political term.