In 1897, Austrian businessman Emil Jellinek, travelled from his home in Nice, France to purchase a car from the Daimler factory in Cannstatt, Germany. On his return to the French Riviera, his sporting Daimler Phoenix caused such a sensation that he decided to enter it into a local touring competition, under the name of "Mercedes" after his favourite 9 year old daughter.
Realising the business potential for the new car, he not only placed an order for 36 more, but also secured the franchise for selling them in several countries. Gottlieb Daimler also agreed to having them sold under the name of "Mercedes."
The Mercedes trade name was registered after Daimler's death in 1900 and the 3-pointed star became the trade mark. Daimler had once drawn the emblem on a postcard to his wife, the star symbolising the growth of the business into transport on land, sea and air.
For Karl Benz, a name for his automobile was simple: he enclosed his name in a cogwheel to exemplify the solidness of his engineering works at Mannheim. The cogwheel later became a laurel wreath. After the First World War the Daimler and Benz companies worked closer together, generally advertising on the same posters. They amalgamated in 1926, combining the laurel wreath and 3-pointed star as their trade mark.
Interestingly, although Gottlieb Daimler and Karl Benz were two of the major pioneers in the automotive industry, they probably never met, even though they lived only 100km (60 miles) from each other in Germany. Daimler passed away in 1900. Daimler-Benz amalgamated in 1926.
So now you know.