Signing+Bryant+to+Market+Car+Smart+Step

Title: Signing Bryant to Market Car Smart Step Source: http://www.shanghaidaily.com/article/?id=464184&type= Date: February 19, 2011

This article is about the marketing plans for Mercedes-Benz's Smart Car. On Thursday, February 17th, the NBA Star Kobe Bryant filmed his first TV commercial for the Smart Car. This commercial is targeted at Chinese elites, because of Kobe Bryant's high popularity in China. From 2009, the quantity sold increased from about 2,000 to 4,000 Smart Cars, and with the help of Bryant's high popularity, the company is aiming for a "double digit grow" in 2011. The sales of other cars from Mercedes-Benz raised from around 8,100 to 15,330 in 2010. As the graph above shows, the quantity for the sales of Smart Cars in 2011 is aimed as somewhere between 4,400 and 7,960 cars.

Vocabulary - Advertisement - making the image of a product better to increase the demand - Demand - the curve set by a range of numbers stating the quantity that consumers are willing to buy for each price - Sales - the quantity sold - Average Total Cost - the total cost divided by the quantity sold - Marginal Cost - the extra cost it takes for each extra quantity produced - Marginal Revenue - the extra revenue the company gains for each extra quantity produced - Total Revenue - price times quantity

I think that using Kobe Bryant to advertise smart cars is a smart decision. Although employing a celebrity to advertise for smart cars increases the average total cost of the smart cars, it also increases the demand and the marginal revenue, therefore increasing the total revenue and maximizing the profits. As the graph shows, The cost increases from ATC1 to ATC2 meaning the cost increased. However, the marginal revenue increased from MR1 to MR2. Since the company always produces at the point where MC crosses MR, the company will produce at a larger quantity. The increase in demand also causes an increase in the price of each Smart Car sold. A higher quantity and a higher price results in a higher total revenue. Therefore, the decision of advertising the Smart Car with the help of Kobe Bryant is a great decision that will maximize the company's profits, and increase its total revenue.