MBMC Case: AMG | Turning the most affluent prospects into loyal clients

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Phases

• Awareness
• Consideration
• Purchase Decision
• Handover & Usage
• Retention

Additional phases are also permissible, and the creativity of the interviewee is welcome here. However, it is important that all phases of the customer journey are covered.

“You shall focus your investigation on measures regarding phase (3) “Purchase Decision”. The client wants you to explain possible examples for each measure that fit to this category.”

Some possible examples would be:

• Exclusive sales rooms & lounges, e.g., Individualization-Hubs
• Optional equipment exceeding the standard pricelist, e.g., exclusive bags fitting car line and car color
• Special individualization like names stitched into the seats

One possible framework for structuring the problem is a SWOT-Analysis. All other frameworks are also permissible, again the creativity of the interviewee is welcome here.

Profit = Revenue – Costs (Fixed + Variable Costs)

Revenue:

• Average extra revenue per unit sold in a hub with special equipment

Variable Costs:

• Average variable costs per unit sold in a hub with special equipment

Fixed Costs:

• Salaries
• Overhead
• Machinery
• Rent

Show solution via screenshot. Interviewer will at this point also provide profitability of ME & Asia profitability plus overall profitability globally.

Current deficit: -600.000 €

Current contribution margin: 21.000 – 12.000 = 9.000 € per vehicle

There are 300 cars sold in the Americas, that need to make up for the -600.000€ deficit. So, every car needs to contribute another 2.000€. Therefore, the new price for the Americas and the EU is 23.000€ and the resulting RoS worldwide is 20%.

Now this is your time to shine! As there is no right or wrong answer at this point, we do not want to give you a proposal for a solution. However, we recommend you to be creative and to put as much of your own personality and business acumen as possible into your pitch. We wish you the best of luck!

Yet, a possible response could sound like this:

1. Point out the context and task of the assignment briefly with your interim conclusion:
   We evaluated the customer journey of AMG top-end customers. It was our goal to find means to increase AMG profitability. We identified 4 global AMG Individualization-Hubs to reach our goal. After an initial qualitative and quantitative assessment, I propose we continue to set-up these centers for our most affluent top-end customers.
2. Describe your Top-Down conclusion:
   To increase profitability, we analysed a typical customer journey and identified the purchase decision phase as critical. Thus, we conducted a SWOT analysis to evaluate the risks and opportunities of setting-up a global AMG individualization hub structure. Customers willingness to pay for ultra-specific individualization was identified as a potential measure to reach our goal. This was underpinned by a quantitative profitability estimation.
3. List your supporting arguments:
   Based on the original qualitative assessment, the AMG individualization hub structure can help to strengthen our position as a luxury performance brand and furthermore helps to increase customer loyalty of our most affluent clientele. Also, the individualization hubs might further stimulate revenue of the existing Manufaktur offerings.
4. Point out risks:
   The quantitative assessment has shown that the global profitability forecast supports our proposal. Yet, the Americas region projects a minor deficit, and a price increase is necessary to reach break-even. This comes at the risk of losing potential customers.
5. Outline the way forward:
   To validate our initial findings, we should conduct further market research, including potential customer interviews and discussions with regional AMG managers regarding customer price sensitivity and consumption behavior.