30-day Challenge – Day 10

Yesterday, I wrote an entry about a questionable co-branding effort. Today, I want to write about what I believe is an absolutely ingenious co-branding initiative between Mercedez-Benz (MB) and American Express (AXP).

This past August, the German luxury automaker and the American multinational financial services firm came partnered on a win-win strategy to add more value for their respective customers; as well as create the excitement that will attract new patrons. I am in full support for this collaboration because I strongly believe that great brands don’t try to compete on price alone – they focus on adding value for the consumer.

You should read this article from Luxury Daily for details about the two new American Express cards, which offer a combination of points, discounts, and exclusive benefits for owners and purchasers of Mercedez-Benz automobiles. What I believe we need to understand is that these brands have identified the single commonality that aligns their efforts towards making the co-branding effort succeed – affluent customers.Based on separate research conducted by each of the partners, the cards are designed as a necessary lifestyle complement for the typical Mercedez-Benz owner. American Express will take care of the approval process for the cards, which are available online and in any MB dealership.

Ingenious Strategy Birthed from Unique Insights

As MBAs, we have been taught a lot about the quantitative approaches necessary to translate complex business intelligence into actionable insight. Well, it doesn’t take an MBA to make a guess on the overlap between the characteristics of Mercedez-Benz owners and American Express cardholders. Each brand is know to hold considerable sway in the premium segment of automotive and financial services, respectively. As such, their products fit well within the lifestyle of their wealthy clients. The clients who are qualified to own Mercedez-Benz vehicles obviously have a good chance of being approved by American Express.

Win-Win

The advantage for Mercedes is that they get access to AXP’s rolodex of clients who are capable of buying a $50,000 piece of “precise German engineering”. MB also gains from the positive effect that new customers will have on maintenance and service profits (automakers make a good part of their profits from maintenance fees).

American Express benefits from the new branding approach which puts its offering closer within the consumer sphere of influence. The company can offer current cardholders more value as well as attract new cardholders who want access to an exclusive set of benefits.

This card is unique because these are two iconic brands coming together to offer extraordinary value, and it is really a lifestyle card,” said Gunther Bright, Senior Vice President and GM of Co-brand Partnerships at American Express, New York.

Blogging has been such a great learning experience for me. More importantly, the 30-day Challenge has inculcated a level of accountability and discipline that I could not have developed on my own.