Rise of the Millennials

By: Chris Lantagne

The year 2014 will go down as one of the best years ever for automobiles. It brought the successor to the Lamborghini Gallardo, the Lamborghini Huracán. It replaces Lamborghini’s best selling, most produced and longest lasting model. It certainly has pretty big shoes to fill, but is more than ready to produce. It brought the new seventh generation Volkswagen Golf and GTI models. Two completely redesigned models that will only add incredible value to a car already considered the best “all-around” vehicle out on the market today. The year brought the introduction to the all-new McLaren P1. A car that not only put McLaren in the forefront, but put the town of Surrey, England on the map with its state of the art production facility that has become a tourist attraction. The year 2014 is to cars as 1969 was to Rock N Roll music.

There was one particular model though that received attention for creating an entirely new market. The year 2014 brought the introduction to the entry-level luxury sedan market. It’s an all-new market specifically designed to target the younger generation, the millennials. John Pearley Huffman’s article, “Benz, on a Budget, Angling for Youngsters” goes into great depth about the features of the Mercedes-Benz CLA, the car that created the entry-level sedan market. The CLA offers many of the same luxury features as some of Mercedes’ pricier models. Not to mention that the car looks like a baby version of the CLS, a $70,000+ car. The car is specifically designed to attract the younger crowd with the hope that as these youngsters age into their 30s, 40s and 50s that they’ll purchase a higher tier Mercedes.

Starting at under $30,000 Mercedes is allowing a whole new group of people into the Mercedes brand, people who would have never thought in their wildest dreams of owning a Mercedes. What’s more striking about this is how Mercedes is deciding to market this. They’re not doing anything. The consumers are the ones marketing this. Mercedes has launched a campaign called the “Take the Wheel” campaign. Some of the very best on Instagram were handpicked to take the CLA for a week and take pictures of the car at abstract angles or backgrounds and it was a huge success. So successful that Mercedes has decided to do the same thing for the all-new GLA model. Mercedes seems to be changing with the times, a necessary ingredient for prolonged success.

The CLA is the gateway to the historically rich brand of Mercedes. Over 50% of CLA buyers are millennials and 75% of those buyers purchased their very first Mercedes. The CLA is living proof that top of the line luxury can be affordable. For some, luxury at an affordable price isn’t why they’re dishing out the cash. It’s because they want to be part of something big, something never seen before. If you get a CLA you can call yourself a pioneer of the entry-level luxury sedan market too. It truly is the next big thing. With many copy cats already here like the Audi A3 and BMW 2-Series and soon to be arriving, like the baby Cadillac ATS, you can bet your bottom dollar that this market will only grow. The only question left to ask is if you would like to grow with it?

Source: http://www.nytimes.com/2014/03/16/automobiles/benz-on-a-budget-angling-for-youngsters.html?_r=1

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12 thoughts on “Rise of the Millennials

  1. Jeff Marcoux February 11, 2015 / 2:42 pm

    Hi Chris- While it’s a good idea to get into a lower priced market, at $30K (starting price), the Mercedes CLA is still what the average American would consider “expensive.” I do agree that Mercedes will be able to expand their sales at this price point, but if the product quality doesn’t match up to their higher level models then they’ll potentially lose return customers who initially decide to buy the cheap model and are unsatisfied with the performance. In the market there are too many other quality options in the mid-$20K range for this to be a viable long term option for Mercedes. Additionally, the exclusivity of owning a Mercedes will wain and consumers concerned with image will migrate to vehicle brands that show they are truly amongst the elite.
    -Jeff Marcoux

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  2. Zachery Washington February 12, 2015 / 6:15 am

    Hello Chris,
    This marketing strategy by Mercedes is genius. When I read that they lowered the starting price to below $30K I was amazed, and then I read how they marketed the car and it got even better. Their ideas are so genius because the new starting price (below $30K) will allow the middle-class person to have a piece of, or own a high-end brand name. This possession of brand in automobiles is so popular currently as well. I agree that this would lead the younger generations to buy a higher tier car when they get older. The way they marketed the car was amazing as well. They let a select handful of the consumer base to get personal with the product and allow them to drive it for a week and take pictures really created a strong foundation for their product to begin with. The strategy combined with the price adjustment is a recipe for success.

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  3. Andrew Gerry February 12, 2015 / 4:08 pm

    We are in an age where word of mouth reviews and commentary serve far better than corporate marketing schemes. Not surprised to see that this is serving Mercedes well. Great article, Chris!

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  4. Andrew Dresner February 13, 2015 / 7:24 pm

    Chris,

    Great article and presentation. Since I’m a Jeep guy and have decided I will only drive a Jeep for the rest of my life I started to do some research to see if Jeep/Chrysler was doing anything similar to Mercedes in terms of their marketing. Turns out they are (website posted below). Jeep (a subdivision of Chrysler) has created a new marketing plan to try and target to Millennials. They are pushing their new vehicle the Jeep Renegade, MSRP of $18,990, to millennials through a TV and Social Marketing push. Jeep fans seem to believe that with this push Jeep is now starting to change their target audience from the off-roading, physical driver type to the millennial type and anyone who embodies the “renegade spirit” as they call it. I’d buy it.

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    • Chris Lantagne February 17, 2015 / 3:45 pm

      I think over the next several months we may hear of a lot of companies implementing a similar strategy. I can see something like this working for Jeep. I even saw an article that Bentley was thinking about introducing a new entry-level coupe. Of course, this model would still be ultra expensive, but the concept of capturing new customers is the same. For highly luxurious car brands, like Bentley, they would never think of making the car out of lesser quality materials. The car would be “entry-level” and cheaper than the rest of the lineup mainly because Bentley plans on offering less engine output.

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  5. Linsey Walker February 16, 2015 / 1:03 am

    Hi Chris,

    I really enjoyed your presentation.The part I find particularly interesting, which Zachery mentioned as well, is that their marketing strategy for this new offering is quite minimalistic– as you said, they’re not doing much at all. Instead, they’ve launched a campaign that relies on Instagram users taking photos with the car, which perfectly blends two elements that Mercedes is looking to stress in targeting Millennials: luxury and community. Instagram creates a sort of intimacy, wherein the follower feels like a friend of the person posting the photos. It’s common for people to emulate their friends in an effort to fit in as part of a community. At the same time, Mercedes targeted the best of Instagram users, showing that the cream of the crop like this car, lending aspirational and luxurious elements to the perception. The fact that Mercedes hit the nail on the head in targeting their customers, while putting in such minimal effort on their end, is very impressive and shows how tuned in the company is to current trends.

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  6. David Collins February 16, 2015 / 2:52 am

    I think the idea of having a gateway brand will certainly pay off for the various luxury car brands. For myself, the first car I bought was a Jeep, and when it was time to get rid of it, the first place I looked was at more Jeeps. As long as the experience is positive, people tend to stick with what they know and stay at their comfort level. In regards to Millennials, it’s smart to bring in a lower price point. It gives people the feeling of success without breaking the bank. Nowadays, with student loans being a huge anchor on people, it’s much harder to justify spending 40-50k on a car. This gives people the feeling of accomplishment and “spoiling themselves,” without making the decision financially irresponsible.

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    • Yafen Liu February 16, 2015 / 3:58 am

      Hello, David

      I totally agree with you. It is wisdom for Mercedes to provide low price car. In addition to famous brand, Mercedes is attracted to most of consumers, especially the millennials. Take myself as an example, I will choose Mercedes with 30K, which is light luxury and practical to the younger generation. On one hand, I found it is difficult for me to control a car if it is too big because of my height. Camry, for example, my first car, I have to adjust the seat for a better sight every time. Jeep, to me, is too hard to control. In other words, it is not worth. Just like Camry, Mercedes, on the contrary, is easier for me to control and the price is affordable. On the other hand, Mercedes means high quality. Obviously, customers would choose quality if the price is almost the same. What is more, customers are willing to pay more money for the high quality and famous brand. As a result, I prefer Mercedes if the price is below 30K.

      By the way, you did a good job, and it was an interesting presentation, Chris.

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      • sirisha Pochiraju February 17, 2015 / 12:31 am

        That was a nice presentation in class. It is interesting to know that Mercedes Benz is at least providing an opportunity to buy the economy size car for 30K. But it is not using a conventional way of marketing CLA Sedan as such it’s already been popular in the market with its high end cars . It’s using Instagram as a social media marketing to attract youngsters. It’s not only the brand that matters but also the performance of the car is equally important.
        I hope CLA sedan maintains the same quality as it’s high end cars.
        I myself a great fan of Mercedes Benz . I believe it’s really expensive for an average American to consider buying and would almost still remain as a dream vehicle.

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    • Chris Lantagne February 17, 2015 / 3:57 pm

      Yes, good point. I wanted to add that when it comes to purchasing, specifically buying a car, people are very likely to go back to that brand. In America, people tend to be loyal to their pickup trucks. There’s the Chevy people, the Ford people and the Dodge people mainly. Purchasing a new car is a big purchase, but also a big commitment and decision. Chances are you’ll be using this car for the next ten years. With that said, getting the business of millennials early will likely be retained in later years.

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  7. Jackie Lurvey April 15, 2015 / 6:57 pm

    I think Mercedes is starting a genius new trend. While I agree that the prices are still expensive, they will definitely reach a new market and, most of it will be younger. People tend to stick with what they know, which makes brand loyalty so huge, especially for cars. So by making Mercedes more accessible to the younger population, they can get them hooked on their brand, and attain lifetime customers. Just the fact that they are using a new marketing technique with social media proves that they are reaching out and being accessible to the younger population. This new campaign should greatly benefit Mercedes!

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  8. Charlie O'Connor May 7, 2015 / 9:18 pm

    I think this is brilliant of Mercedes, along with it’s competitors that as offering a more affordable version of their luxury brand. I believe it will start people buying Mercedes earlier in life and in turn result in customer retention, which seems to be their goal. One draw back is the way you might look driving one. As long as people catch on that you’re driving a $30k Mercedes, I can’t help but question why? There must be something cheap about it and theres something to be said for someone who wants to pretend they’re elite. I say, don’t a luxury car until you can afford the real deal, might as well buy a fully loaded Camry for $30k. It just sounds like a pretender’s car.

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