NEW ORLEANS (Reuters) - While millions of TV viewers focus on the outcome of the upcoming Super Bowl XLVII in New Orleans, executives at Mercedes-Benz USA will be waiting for a late-game commercial introducing the car they hope will bring them thousands of new, younger customers.
Marking only the second time Daimler AG’s (DAIGn.DE) luxury brand has advertised in the National Football League’s championship game, the February 3 advertisement will unveil the 2014 Mercedes-Benz CLA, a sporty compact sedan due to go on sale next fall priced from around $30,000, according to a source familiar with the company’s plans.
Slotted below the C-class as the company’s entry-level model in the United States, the 2014 CLA will be aimed at buyers in their 30s who can step up to higher-end Mercedes models as they grow older and more affluent, according to Stephen Cannon, chief executive of Mercedes-Benz USA, in an interview.
The four-door CLA, which is due to make its public debut in March at the Geneva auto show, features a sloping coupe-like roof line similar to that on the larger, more expensive CLS. A preview of the CLA, called Concept Style Coupe, was staged last April at the Beijing Auto Show.
“This isn’t going to be a kid’s vehicle,” Cannon said. The CLA will be priced “significantly below the C-class,” which is Mercedes’ current entry point. The CLA does not target a first-time car buyer, “but it’s going to lower the entry age,” he said, from the current 52 years.
Bringing in new, younger buyers is a target all luxury brands are racing to hit to keep themselves relevant in a highly competitive market.
General Motors Co’s (GM.N) Cadillac brand earlier this year introduced the 2013 ATS compact sedan that starts at about $34,000, and Ford Motor Co (F.N) will show a concept version of the 2014 Lincoln MKC compact crossover at the Detroit auto show in January.
Cannon said the Super Bowl commercial and a promotional campaign built around it represent the largest single marketing investment the company will make in the U.S. market next year. Air time, according to the latest industry estimates, may cost upward of $7 million for the 60-second spot set in New Orleans’ French Quarter. The ad will feature singer Usher as a high-styled man about town with swimsuit super model Kate Upton as the object of his desire, according to a Mercedes representative.
“If you’re going to step into the Super Bowl, you’ve got to step up your game,” Cannon said.
Cannon declined to reveal the amount of the company’s 2013 ad budget. Mercedes spent more than $516 million on U.S. advertising in 2011 and that was up 1.6 percent through the first half of 2012, according to ad-tracking firm Kantar Media.
Cannon said the German automaker’s Super Bowl marketing strategy began taking shape more than a year ago, before he became chief executive, while he was the company’s marketing chief.
Mercedes already had ties to New Orleans through businessman Tom Benson, who owns a local Mercedes dealership and also owns the New Orleans Saints football team.
Benson helped attract charitable contributions from the automaker after Hurricane Katrina struck the city in 2005. He later worked with Mercedes on a deal to buy naming rights to the Louisiana Superdome.
Mercedes stamped its name on the football stadium in October 2011 after signing a 10-year deal for an undisclosed price that some reports placed above $100 million.
Cannon, who said he “quarterbacked” the decision to buy the naming rights, was at that point already deep into a long-term strategy for dealing with the aging population of Mercedes car buyers.
Mercedes last year held just over 17 percent of the U.S. luxury car market that encompasses nearly two dozen makes, according to industry research firm LMC Automotive. This year, it leads the segment with 245,910 sales through November.
Cannon said that while Mercedes customers are loyal to the brand and buy increasingly expensive models over time, indicators are that fewer entry-level buyers will be waiting in the wings in coming years.
Data from R.L. Polk & Co. show that the average age of U.S. luxury-car buyers rose by three years between 2007 and 2011 to 51, while the age of Mercedes buyers climbed from 49 to 52 during that period.
While the company sold more than 260,000 cars in 2011 — up some 30 percent from 10 years earlier — Cannon said it needs to find ways to bring younger buyers into the fold to replenish the brand. Noting that the average transaction price for Mercedes vehicles in the United States is $56,000, he said: “That is not a price point that a lot of younger buyers can afford.”
The strategy for getting potential buyers excited about the car began while the CLA was still in development, and the Super Bowl appeared to offer a singular opportunity to reach potential CLA buyers as well as affluent older consumers.
Reporting By Kathy Finn in New Orleans; additional reporting by Paul Lienert in Detroit; Editing by Kenneth Barry