Volvo and Mercedes Benz marketing strategies

Introduction

The Volvo Group (Swedish: Volvokoncernen; legally Aktiebolaget Volvo, shortened to AB Volvo) (stylised as VOLVO) is a Swedish multinational manufacturing company headquartered in Gothenburg. While its core activity is the production, distribution and sale of trucks, buses and construction equipment, Volvo also supplies marine and industrial drive systems and financial services. Although the two firms are still often conflated, Volvo Cars, also based in Gothenburg, is owned by Greely Holding Group a Chinese multinational automotive manufacturing company and has been a totally separate company since it was sold to the Ford Motor Company in 1999. The companies still share the Volvo logo and co-operate in running the Volvo Museum.

Volvo was established in 1915 as a subsidiary of SKF, the ball bearing manufacturer; however the Volvo Group and Volvo Cars consider themselves to have been officially founded on 14 April 1927, when the first car, the Volvo ÖV 4 series, affectionately known as "Jakob", rolled out of the factory in Hissing, Gothenburg. The building remains (57°42′50″N 11°55′19″E).

Volvo means "I roll" in Latin, conjugated from "volvere", in reference to ball bearings. The brand name Volvo was originally registered as a trademark in May 1911 with the intention to be used for a new series of SKF ball bearings. This idea was only used for a short period and SKF decided to simply use "SKF" as the trademark for all its bearing products.

In 1924, Assar Gabrielson, an SKF sales manager, and a KTH Royal Institute of Technology educated engineer Gustav Larson, the two founders, decided to start construction of a Swedish car. Their vision was to build cars that could withstand the rigors of the country's rough roads and cold temperatures.

AB Volvo began activities on 10 August 1926. After one year of preparations involving the production of ten prototypes the firm was ready to commence the car-manufacturing business within the SKF group. AB Volvo was introduced at the Stockholm Stock Exchange in 1935 and SKF then decided to sell its shares in the company. Volvo was delisted from NASDAQ in June 2007, but remains listed on the Stockholm Stock Exchange.

Major competitor of Volvo

Swedish manufacturer Volvo Buses, which has been present in India since CY2000, is a clear market leader with over 4,000 buses plying across the country. Volvo, which has its bus manufacturing plant at Huskie near Bangalore, recently announced an investment of Rs 975 crores to enhance production capacity.  The Mercedes Benz is the major competitor of Volvo buses in India, growing competition of bus market in India provides platform for both the companies to grow their business in India. Growing demand for comfortable inter-city transportation in India over the past five years has seen competition in the premium bus (costing upwards of Rs 80 lakh) market heat up. Largely catered to by multinational players like Volvo, and Mercedes-Benz, the segment seems to be gaining traction after a sluggish couple of years.

Segmentation and Positioning strategies of Volvo and Mercedes Benz

The market for any product is normally made up of several segments.  A ‘market’ after all is the aggregate of consumers of a given product. And, consumer (the end user the end user), who makes a market, are of varying characteristics and buying behaviour. There are different factors contributing for varying mind set of consumers. It is thus natural that many differing segments occur within a market. In order to capture this heterogeneous market for any product, marketers usually divide or disintegrate the market into a number of sub-markets/segments and the process is known as market segmentation.

STP process