Mercedes, the industry leader in luxury cars, has introduced a new discounted sedan targeted towards “less-affluent buyers.” By appealing to consumers other than their primary “blue chip” buyers Mercedes hopes to attract younger buyers and keep them as long-term customers as they “climb the corporate ladder”; once the younger buyers have a larger income they will be able to afford Mercedes’s higher end vehicles. The decision to launch this product is a bold move on Mercedes’s behalf because there is the risk of losing “blue-chip” buyers for their high-end cars as they downshift to the more affordable market. Mercedes’s is modifying their business model by enhancing their customer relationships and revaluating their customer segments. Mercedes’s is expanding their target market by attracting consumers who would like to buy a Mercedes’s but cannot afford one while still maintaining their relationship with current customers who buy their higher-end models. Mercedes’s has a unique strategy by attracting new customers who are not necessarily the most important segment right now, but will be in the future as their income increases. As a result of modifying their customer relationships and segments by introducing a new product, Mercedes’s also have to revise their production operations. The company must evaluate the costs of supplies/equipment, production, as well as marketing and distributing it to the customers. Mercedes’s has proved to be successful by changing their business model and as a result car sales were up 6.7 percent in September 2013.

http://www.businessweek.com/articles/2013-10-02/mercedes-cla-sedan-with-budget-price-outsells-high-end-models-in-u-dot-s-dot-debut#r=com-ls