Founded in 1886 by Gottlieb Daimler and Karl Benz. Division of Daimler and Chrysler ... Mercedes Benz produces many vehicles with a diversity of prices that are ...
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Group One presents…
Jamie KendigJason KutzavitchEliseo RoquizEmily SylanskiA.J. Zubaty
Table of Contents
Table of Contents (Continued)
Ceteris Paribus Factors of Demand
CL 600 Coupe
Price of Related Goods
Price of Related Goods
1.) Initial demand for vehicles
3.) Demand for vehicles after price of fuel pumps go down.
Price of Related Goods (con’t.)
3 steps on demand for vehicles w/
a complement involved:
2.) Price of a fuel pump goes up from $150 to $500.
Market Share Among Top Vehicles Segments
1996 = 14.2%1999 = 19.9%
1997 = 17.0%2000 = 21.0%
1998 = 18.8%SOURCE: Polk
Expectations of consumers
Sales of Mercedes Benz Automobiles in the United States,
1992 to 2001
Expectations of consumers (cont.)
Number of Buyers
E= ∞ Perfectly Elastic
E> 1 Relatively Elastic
E= 1Unitarily Elastic
E< 1Relatively Inelastic
E= 0Perfectly Inelastic
Elasticity = -2.456
Consumer Demand in the United Statres: Analyses and Projections, H.S. Hauthakker, L.D. Taylor. 2nd Ed., Harvard Press. (263).
All 3Estimates of Elasticity of Demand apply to Mercedes:
1.There must be a downward-sloping demand curve for the firms output.ex. Mercedes Benz has a typical market demand curve.
2. The firm must be able to identify consumers willing to pay more.
ex. Mercedes makes high price cars for high income people
3.) The Firm must be able to prevent low-price customers from reselling to high price customers.ex. Contract agreements will prevent resale with the dealerships
2003 E320 Sedan*all options the same
$47,615.00at John Sisson Motors
-VS-$45,545.00at Bud Smail Motorcars Limited
ex. “3 Wishes”
ex. Motor Trend
1.) New York
2.) Washington, D.C.,
4.) San Franciso
5.) Los Angeles
Large number of buyer and sellers.
1,600 Mercedes Benz dealers located worldwide
Mercedes Benz sold over 206,633 vehicles in 2001.
Vehicles Produced (Cars, Trucks, SUVS)
Many people consider vehicles to be the same. They do not differentiate between vehicles made by Ford or General Motors. The exception to this would be cars that are built for superior safety and styling, example would be Bentley.
Easy entrance and exit
No barriers to entry
Companies are free to enter and long as they produce a product that consumers will purchase.
No barriers to exit
Companies that do not produce to where MR=MC will not last in the market
Delorean Motor Company(1986)
Buyers and sellers have the same knowledge.
With information available in magazines such as MotorTrend and on the Internet, there is no reason that buyers and sellers should not be aware of prices.
The physical space on which production takes place, as well as the natural resources found under it
Land occupied all over the world by factories, sales and service outlets
50 world-wide production plants
6,300 world-wide full service and sale outlets for passenger and commercial vehicles
Each dot on the map represents a major manufacturing facility owned by
Daimler Chrysler in the world.
The time human beings spend producing goods and services
Mercedes currently employs more than 199,000 people in the company's vehicle section throughout the world
General Laborers are found in DaimlerChrysler’s plants (engine, assembly, glass, axle and stamping) and parts distribution centers.
Long-lasting tools people use to produce goods and services
Physical Capital – Buildings, machinery, and equipment
50 factories for production of passenger and commercial vehicles
6,300 service and dealer outlets around the world
Mercedes factories are up to the 21st Century standards when it comes to machinery and production line equipment
Human Capital – the skills and training the workers possess
Two classes of workers based on skills they possess
General Laborers - found in plants (engine, assembly, glass, axle and stamping) and parts distribution centers
Skilled Trades – include welders, pipe fitters, tool makers, and metal cutters, etc.
Human capital also includes automobile engineers and designers.
Satisfies an unsatisfied want or desire
These wants are satisfied in the following way:
New vehicle concepts
Ways for vehicles to be more fuel efficient and safer for customers
Vehicles based on Internet multimedia that will allow customers to access information pertaining to the safety and maintenance of the vehicle
Concept Cars: F 300 Life-Jet
Fuel Efficient Cars:
New Electric Car (NECAR)
Fuel Cell Sprinter
Thank you for you attention.