Benz in the Road - Interview

Brandweek,  Oct 26, 1998  by David Kiley

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Not so long ago, a TV viewer might have seen a Mercedes-Benz ad featuring a German engineer, decked in a starched white labcoat, talking about how the car was built and how safe it was to drive. We also might have seen a shot of a big Mercedes S Class sedan gently rolling down a cobblestoned approach to a mansion.

But no more. For the past five years, we have seen ads featuring a singing baby, Ed McMahon, Michael Richards, the copy line, "Yee Ha!," Marlene Dietrich and even Janis Joplin, rasping out her classic song lyric, "Oh, Lord, won't you buy me a Mercedes-Benz," over a beauty shot of the C Class car, a spot that seemed to wake many up to a new accessibility of the brand. It has definitely not been your father's Mercedes-Benz since 1994. In 1993, Mercedes sold 61,899 cars. It's all-new S Class was enormous in both girth and price, and the new C Class was only just hitting showrooms. Since then, the company has introduced an all-new E Class, two Roadsters called CLK and SLK, and a new sport utility built not in Stuttgart, but in Alabama, and sales this year are on track to top 140,000. Sure, the bull market, which only recently turned bearish, has bolstered the German mark and Mercedes' lot with it, but comparative lack of success among some other luxury brands shows that Dow gains don't necessarily lift all boats . A company still has to know how to build the boat, after all. It has to know how to steer. And it has to know where it is going. And with Mike Jackson doing the navigating and steering, the company has maintained a sharp focus on the horizon, while making some refreshing tacks on its course.

Jackson came to Mercedes-Benz eight years ago as marketing chief, having previously left the manufacturer side of the business to become a Mercedes dealer. Last year, he was named president of Mercedes-Benz North America, the first American to hold the post, and will add CEO to his title Jan. 1. Jackson recently spoke with Brandweek's David Kiley about Mercedes' redirection and navigating the course from an engineering/distribution company of an old school to a marketing-driven one.

Brandweek: Mercedes-Benz's comeback is evident in the sales and the personality of the brand communications, which is so different from what the company was doing before 1994. Was there a seminal moment in this process?

Mike Jackson: The moment has to be the decision we reached to go to a total brand approach about five or six years ago. We decided we would walk away from all tactical activities--rebating, subsidized leases, etc. And all our resources would be put behind building the brand in exciting new ways. And we decided to go forward with that plan with a realistic understanding that this would take five years. And we had to make a commitment that, no matter what happened in those five years, we would not be thrown off strategy for any expedient short-term issues. It was an extremely ambitious and risky strategy to undertake five years ago. We hammered out a plan that included: product strategy, innovative and emotional products; communications strategy, creating aspiration instead of admiration; retail strategy, new relationship with our retailers to create a new competitive advantage at retail. What the customer experienced from retail through the brand communications all would become part of a new whole.

BW: You have also been a dealer, which gives you a unique perspective in trying to make this one-voice strategy work as it involves dealers. Dealers tend to have a shorter-term outlook than perhaps is right for a brand overhaul.

MJ: I can recall some legitimate and heated discussions about our intent given the depth of the crisis we were in. How could we be sitting here, the dealers, and even some of our people, asked, talking about a five-year plan without talking about how we were going to survive the next 12 months. That was a very difficult period. There was not a lot of confidence; not a lot of optimism. We took a lot of criticism. And I think it took a lot of fortitude for the whole organization to see the plan through to where we are today. That criticism was very understandable.

BW: Was there any one key to making it work and keeping dealers on board?

MJ: We were careful to involve our dealers in the process, and we spelled out for them what we would achieve for each year from a sales performance point of view, a brand development point of view and from a product point of view. We set benchmarks for each year, and we met or exceeded each benchmark we set. Given that, with each controversial decision we made along the way, we had more and more credibility, more trust and more understanding with our retail partners.

BW: What was an example of a controversial decision?

MJ: There was none more controversial than the one we made at the very beginning to forsake all tactical market support activity, rebates and heavily subsidized leases and the like. All of our competition was doing it, as well as companies that we don't compete with. We said that cannot be a long-term strategy. It erodes the brand. It's a dead-end strategy. Its a bankrupt concept. But the feeling was that without tactical strategies, you couldn't survive. The sky was going to fall.