The Smart Car - Case Study
Christina L. Brown
MRKT 454
Case # 10-2 The Smart Car
June 16, 2012
Competitive advantage exists when there is a match between a firm’s distinctive competencies and the factors critical for success within its industry (Keegan & Green, 2011). There are two basic ways to achieve competitive advantage. First, a firm can pursue a low-cost strategy that enables it to offer products at lower prices than competitors. Next, an advantage can be gained by a strategy of differentiating products so that customers perceive unique benefits, often accompanied by a premium price (Keegan & Green, 2011).
In the case of the smart car, it seems as though the type of competitive advantage that Smart sought to attain was two-fold aiming to achieve a low cost strategy by building “an ecologically inoffensive, high-quality city car for two people” that would sell for about $6,400 along with differentiation by building a composite exterior with panels mounted on a cage-like body frame which would allow owners to change colors by switching panels (Keegan & Green, 2011). Additionally, it would emit almost no pollutants and offer gasoline powered operation using a highly efficient, miniaturized engine capable of achieving speeds of 80 miles per hour (Keegan & Green, 2011). It was in 1991 that the idea was born by Nicolas Heyek, chairman of Swatch. To bring his goal into fruition his company made an alliance with Volkswagen. The alliance with Volkswagon soon dissolved and he teamed with the Mercedes-Benz unit of Daimler-Benz AG. After several months, Mercedes bought out Swatch’s remaining stake in the venture to leverage its engineering skills and broaden the company’s appeal beyond the luxury segment of the automobile market combining ecology, emotion and intellect within the technologically savvy market scope (Keegan & Green, 2011). In 2000 making an additional attempt at differentiation, Wolf-Garten GmbH & Company, a German gardening equipment
MRKT 454
Case # 10-2 The Smart Car
June 16, 2012
Competitive advantage exists when there is a match between a firm’s distinctive competencies and the factors critical for success within its industry (Keegan & Green, 2011). There are two basic ways to achieve competitive advantage. First, a firm can pursue a low-cost strategy that enables it to offer products at lower prices than competitors. Next, an advantage can be gained by a strategy of differentiating products so that customers perceive unique benefits, often accompanied by a premium price (Keegan & Green, 2011).
In the case of the smart car, it seems as though the type of competitive advantage that Smart sought to attain was two-fold aiming to achieve a low cost strategy by building “an ecologically inoffensive, high-quality city car for two people” that would sell for about $6,400 along with differentiation by building a composite exterior with panels mounted on a cage-like body frame which would allow owners to change colors by switching panels (Keegan & Green, 2011). Additionally, it would emit almost no pollutants and offer gasoline powered operation using a highly efficient, miniaturized engine capable of achieving speeds of 80 miles per hour (Keegan & Green, 2011). It was in 1991 that the idea was born by Nicolas Heyek, chairman of Swatch. To bring his goal into fruition his company made an alliance with Volkswagen. The alliance with Volkswagon soon dissolved and he teamed with the Mercedes-Benz unit of Daimler-Benz AG. After several months, Mercedes bought out Swatch’s remaining stake in the venture to leverage its engineering skills and broaden the company’s appeal beyond the luxury segment of the automobile market combining ecology, emotion and intellect within the technologically savvy market scope (Keegan & Green, 2011). In 2000 making an additional attempt at differentiation, Wolf-Garten GmbH & Company, a German gardening equipment
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