Purpose of the Marketing Plan
Маркетинг и реклама
Purpose of this project is to provide the basic information about the company BMW, analyze the contemporary situation, its place in the world automotive market, identify its marketing strategy, determine the company’s objectives and define the basic components of marketing mix.
Part 1: Purpose and Mission
Purpose of this project is to provide the basic information about the company BMW, analyze the contemporary situation, its place in the world automotive market, identify its marketing strategy, determine the companys objectives and define the basic components of marketing mix.
In addition, this plan was produced to review the industry and BMWs share in it, continue the growth of existing product and revenues and give some recommendations and my vision to the future.
Given information is useful for analyzing the automotive industry, research of advantages and disadvantages of BMW production, elimination of these problems and setting the targets to be achieved in the next year.
BMW is an acronym for Bayerische Motoren Werke AG or, in English, Bavarian Motor Works. Whatever you call it, the German-based company is one of the world's most respected automakers, renowned for crafting luxury cars that offer superior levels of driving enjoyment.
Founded in Munich, the company began in the early 1910s as an aircraft manufacturer. BMW's current logo, designed to represent white propeller blades against a blue sky, reflects these origins; its blue-and-white color scheme also references Bavaria's blue-and-white checkered flag.
It wasn't until 1928 that production began on the first BMW automobile, the Dixi. The car proved tremendously popular, and its success helped the manufacturer weather the Depression. BMW's best-known pre-World War II vehicle was the Type 328 roadster, a supple two-seater that racked up over 120 victories on the motorsport circuit between 1936 and 1940. Postwar BMW cars maintained this tradition, winning several racing, rallying and hill climb victories.
The early 1950s saw the launch of the BMW 501, a roomy, voluptuous sedan that was resplendent with all of the hopefulness of that era. It was soon followed by the 502 which was powered by the world's first light-alloy V8, foreshadowing BMW's ongoing commitment to developing new technology. The best-selling BMW of that decade was the Isetta, a petite two-seat "microcar" typically powered by a 12- or 13-horsepower engine. The mid-'50s also saw the debut of the limited production and breathtakingly beautiful 507 sports car which had an alloy body and used the 502's V8 for propulsion. In the 1960s, BMW sales strengthened significantly, thanks in part to the immense popularity of the 1500, a sporty family sedan.
By the 1970s, BMW was establishing itself as a full-fledged car company. It was a pioneer for many emerging technologies, including turbocharging and advanced vehicle electronics. This was also the period when BMW of North America was established and consumers, who coveted both sports and luxury cars, became loyal "Bimmer" owners. The '70s also saw the birth of BMW's three-tier sport sedan range consisting of the 3 Series, 5 Series and 7 Series cars and the creation of its performance M division.
More recently, the company has been expanding its reach worldwide. It opened its first U.S. manufacturing plant in the latter half of the 1990s and has expanded its brand empire to include Mini and Rolls-Royce. BMW also continues to build motorcycles, something it has done since the 1920s.
The BMW Group is one of the most successful makers of cars and motorcycles worldwide and among the largest industrial companies in Germany. With BMW, MINI and Rolls-Royce, the BMW Group owns three of the strongest premium brands in the automotive industry. The vehicles it manufactures set the highest standards in terms of aesthetics, dynamics, technology and quality, a fact borne out by the BMW Groups leading position in engineering and innovation. In addition to its strong position in the motorcycles market, the BMW Group also offers its customers a successful range of financial services. In recent years, the Group has also established itself as a leading provider of premium services for individual mobility.
Long-term thinking and responsible action have long been the cornerstones of our success. Striving for ecological and social sustainability along the entire value added chain, taking full responsibility for our products and giving an unequivocal commitment to preserving resources are prime objectives firmly embedded in our corporate strategy. Thanks to these endeavours, we have been among the most sustainable companies in the automobile industry for many years.
The automaker's famous advertising slogan describes each of its vehicles as "the ultimate driving machine," and it's not mere hyperbole. Over the past couple of decades, BMWs have become the standard for performance and luxury in most of the "over $30,000" segments. With family-friendly wagons, crisp sedans, distinctive coupes, nimble sports cars and spacious SUVs offered, BMW's model roster is diverse. But its luxury vehicles all share a common characteristic: the ability to make drivers feel gloriously connected to the road.
One of the main strategies employed by BMW is niche marketing. BMW protects its niche position by engineering, manufacturing, and developing advertisement campaigns. BMW offers a distinctive product and service and it developed differentiation between its products and the competitors.
BMW used frontal attacks in order to gain a competitive position in the automobile industry. The company employed a limited frontal attack, which focuses on specific customers. Another frontal attack that was employed by the company is through research and design. The company invested large amount of money in designing and differentiating its products and services. The company introduced improvements on the products and offered innovative features and designs in order to enhance the value of its products.
The detailed view on Strategies is as follows:
BMW is a company with well-executed strategies. The company recognizes its distinct capabilities and chooses the market and subsequently markets, which realized its full potential. Its dealings with its suppliers and distributors, its pricing approach, its branding and advertising strategies, are all built around that recognition and these choices. The company maintains a tight control over its distribution network. This control supports the brand image and aids market segmentation. BMW cars are positioned differently and priced very differently in the various national markets. The same tight control is reflected in BMWs relationships with suppliers, who mostly have continuing long associations with the company. BMWs activities are focused almost exclusively on two product ranges high-performance saloon cars and motorbikes which reflect its competitive strengths.
Part of the companys overall strategy is to market its products as prestigious. The company was able to develop an image of quality, reliability and consumer aspiration. Advertising images can create strong differentiation in the customers eyes. BMW has spent millions of dollars on advertising to create an image of performance and prestige for the automobile buyer.
Branding is also an important strategy of BMW. BMW was able to develop premium brands. In the development of premium brands, BMW subjects its products in a process of continuous evolution and development. The company established a Brand Academy.
The BMW Group has optimized its internal processes to such extent that wishes expressed by the customer to modify the power unit, the color, upholstery and special equipment of the car he has ordered may be taken into account just six days prior to the start of assembly without any affection on the delivery date of the car.
Differentiation is the act of designing a set of meaningful differences to distinguish the companys offering from competitors offerings. The five dimensions of Differentiation are:
The automobile manufacturer uses differentiation strategies to differentiate its products from its competitors. By introducing innovations in engineering and design, the products of BMW gained an image of prestige. This image is strengthened by the company advertisement campaigns.
Part 2: Situational Analysis
2.1. Internal Environment:
After a careful investigation of BMW market we have divided BMW customers into 3 major segments: Individuals, Businesses and Government (which includes Police, Administration and Army).
BMW Group is the leading premium car manufacturer in the world. In recent years BMW Group has been closely marked by its competitors. List of few BMW Groups series lines and brand names has to market specific competitors.
1 Series: Audi A3, Volkswagen Golf, Alfa Romeo 147,
3 Series: Audi A4, Jaguar X-Type, Mercedes C-Class, Lexus IS200,
5 Series: Audi A7, Mercedes E-Class, Saab 9-5, Jaguar XF, Volvo S80,
6 Series: Jaguar XK, Maserati 4200, Porsche 911,
7 Series: Audi A8 and S8, Jaguar XJ series, Lexus LS400, Mercedes S-Class,
X3: Land Rover Freelander, X5: Range Rover, Mercedes M-Class, Volvo XC90, Porshe Cayenne, VW Touareg, Acura MDX, Lexus GX 470,
Z4: Porsche Boxster, Audi TT, Chrysler Sebring Convertible, Toyota Camry Solara,
M Range: M3 Coupe - Mercedes C55, Audi RS4, M5 - Mercedes E55, Audi RS6,
MINI: Mercedes A Class, Peugeot 206 H/B, Volkswagen Polo, GTI, Golf, Renault Clio, Ford Focus RS, Vauxhall Corsa and Toyota Yaris,
Rolls-Royce Phantom: Mercedes Maybach, Bentley Arnage.
Now let us compare BMW with its most specific competitors in the sphere of business class automobiles. For this, we have chosen the BMW 535i X Drive (The BMW 5 Series), Audi A7 and Jaguar XF.
The 5-Series is available in rear-wheel drive or all-wheel drive (X drive). The BMW 535i X Drive has 300 horsepower 3.0-liter 6-cylinder engine. It gets 14 l/100 km in the city and 11 l/100 km on the highway. The price is near $86,000.
The Jaguar XF runs about $1800 cheaper, base price. It gets 17 l/100 km in the city (3 more than BWM) and 12 l/100 km on the highway (2 more than BMW). BMW is obviously the GREEN CHOICE, which gives us an upper hand on the competition.
Audi A7 costs $4,400 more on average at the base price. It gets 15 l/100 km in the city (1 more than BWM) and 11 l/100 km on the highway (the same as BMW). BMW is still slightly more fuel-efficient and saves money for fuel.
BMW lacks slightly with horsepower, in comparison to its biggest competitors. BMW 535 x-drive has 300 horsepower which is a very powerful car. Audis A7 has 310 horsepower which really isnt noticeable. Jaguar, however, has 385 horsepower which is significantly more. That is also what is causing the Jaguar to get poor mileage. Our eye on the market leads us to believe our customers want a fast car, one that can pass other cars quickly when desired, but that is also eco-friendly and safe for traveling with the whole family.
The BMW and the Jaguar seat 5 persons where the Audi only seats 4. BMW also provides more comfort space overall than the competition. This means that our car, the BMW, is designed to fit you and your family comfortably. Further, Jaguar beats BMW and Audi in the matter of having some additional standard equipment including a DVD player and a navigation system. We offer those items as upgrades. Moreover, BMW happens to weigh more, but has better fuel economy. In addition, our BMW is shorter in length and is also narrower in width so it makes it easier to park, especially in smaller parking spaces. This will also help protect/prevent your car from others unintentional door dings and butt bumps. All the other equipment listed are pretty much standard between all 3 cars.
In this situation BMW Group has to maintain a strategy in which BMW Group has advantage over its competitors in the long run: “to provide quality products and services to customers by charging an extra premium showing high production costs.”
BMW Group should look for ways of improving their supply chain management. By doing this they can reduce the costs of their cars and could gain more advantage over their competitors.
Suppliers could directly influence our marketing strategy in a number of ways. First of all, if there is a shortage of raw materials, our suppliers might be unable to produce the items we buy from them to add to the car. Perhaps it is the plastic molding for the trim of the bumpers. There is no way we would ever sell a car that was not 100% built and we would not heavily and financially promote car sales if we couldnt keep up with demand. We would have to delay the introduction of the strategy a few weeks or months so that our suppliers could catch up. Supply management might want to consider alternatives. There could be a worker strike that seizes production. Tornados, tsunamis, earthquakes, and the breakout of war could also impact production.
Channel Members could certainly impact the way the customer centers receive the cars. Channel members mainly consist of transportation forms from where the car is put together to the sales lot. Luckily, there is not really a distributorship and the primary storage facility is located on each sales lot in front of public view. There could certainly still be delays in shipping as well as at customs. Since BMW cars are made overseas, each car sent to the US gets loaded onto a ship and transported. Each car must go through customs, which is not a channel member but more of a hurdle to cross. Inclement weather, natural disasters, war, a truck-jacking, and breakdowns could also impact the delivery dates of the cars to the sales lots. Unfortunately, it would be too late to postpone the strategy implementation if many of these issues occurred. Plus, some of these issues may only impact one sales lot or just a small portion of their inventory for a limited time.
In order to have the whole image of the trends in the industry, it is necessary to have the understanding of consumer buying habits, which are as follows:
BMW is a vast organization and thus a vast majority of external factors affect the running of the company which are discussed below.
In the recent past the EU laws have recognized the fact that the car industry is a major contributor to the emission of CO2 in the environment, recent studies have shown that 22% of the overall CO2 emissions have been caused by road transport of which 92% are from cars. This has had an immediate impact on BMWs automobile industry. The pressure of governments for greener technologies and environmental friendly cars has led BMW to invest in such technologies, although this has raised the manufacturing costs for BMW, it has also created a positive image in the minds of its customers by reducing the carbon foot prints which is created on the environment.
This has led to BMW launching its first car running on hydrogen in 2007, which produced very less CO2 emissions. This greener image is also being made prominent by the new engine technology called the Efficient Dynamics, which BMW launched recently.
The recent financial crisis has had a huge impact on all businesses throughout the EU, consumer purchasing power has fallen significantly this is the reason why in 2008 BMW had a profit before tax of 351 million Euros whereas in 2011 the profits have increased to 7.3 Billion Euros.
The second major factor regarding BMW economical climate is that of rising oil prices, last month a barrel of crude oil had soared up to $122. This has raised the cost of sales for the company as it has risen by 9.5% when comparing the 2010 and 2011 financial statements. However it is worth mentioning that profits for BMW automobiles has increased by 75% in comparison with 2010.
The EU population is expected to be increase by 100-200 million by the year 2029 when in comparison to 2012. The breakdown of this increase shows that the population is shifting towards more life expectancy and thus to an older generation. This shift will cause BMW to ponder upon its green technologies as the consumer will likely prefer a greener environment.
Technology has driven many aspects of social development, business and marketing over the centuries, however the technological revolutions of the last 100 years have also led to the demise of various industries..
BMW has to constantly look after these changing environments, the BMW efficient dynamics is doing well in the markets but the organization should always be ready for change and one step ahead of its competitors.
Recently Mercedes Benz launched an advert of its invisible car, which emits zero emission and Mercedes equipped one side of the car with sheets of LEDs that show streaming images captured by a Canon 5D Mark II camera attached to the other side of the car. The car blends into the background, making it nearly invisible. Although the car will not go in production until 2014 but his promotional campaign has caught attention of consumers throughout the world. BMW should critically analyze this situation and improve its efficient dynamics and hydrogen fuelled cars to respond to this technological advancement.
The BMW Group experienced the best year of its corporate history in 2013, selling 1,668,982 BMW, MINI and Rolls-Royce brand cars (+ 14.2 %); this was more than ever before in an annual period. With this performance, the BMW Group retains the pole position in the premium segment of the worlds car markets.
Sales volumes grew dynamically for all three car brands, each of them recording their best levels ever. Sales of BMW brand cars alone rose by 12.8 % to 1,380,384 units. A total of 285,060 units of the MINI brand were handed over to their new owners (+ 21.7 %). At 3,538 units, Rolls-Royce set a new sales volume record, posting an increase of 30.5 % on the previous year.
The Motorcycles segment put in another highly stable performance despite persistently unfavourable market conditions. In total, we handed over 113,572 BMW and Husqvarna brand motorcycles to customers during the year under report, 3.1 % more than in 2010.
Financial Services business also made an important contribution to the success of the BMW Group. With a portfolio of 3,592,093 contracts in place with dealers and retail customers at the end of the year, the segment recorded growth of 12.6 %.
New records set for revenues and earnings
Group revenues and earnings broke all existing records on the back of dynamic car sales volume growth and flourishing financial services business. Revenues in 2013 totalled € 68,821 million, 13.8 % higher than in the previous year. Earnings were also strong, with profit before financial result (EBIT) up by 56.9 % to € 8,018 million and profit before tax up by 52.1% to € 7,383 million.
The Automotive segment recorded a 16.8 % increase in revenues to € 63,229 million, with EBIT soaring to €7,477 million (+ 71.7 %) and segment profit before tax reaching € 6,823 million (+ 75.5 %).
Motorcycle segment revenues grew by 10.1 % to € 1,436 million on the back of good sales volume performance. EBIT fell by 36.6 % to € 45 million, primarily due to restructuring measures taken at the level of Husqvarna. These measures also caused segment profit before tax to drop to € 41 million ( 36.9 %).
The Financial Services segment also performed extremely well, posting a 5.4 % increase in revenues to € 17,510 million. In earnings terms, segment EBIT rose by 46.8 % to € 1,763 million and segment profit before tax by 47.4 % to € 1,790 million.
For any organization to be successful the company has to identify its own strengths and rectify its weaknesses, as both of them are internal to the company. Opportunities and threats are external to the company and necessary steps should be taken to counter these external factors. For any marketing plan to succeed a SWOT analysis is quite important, for BMW it is below.
1. There is an increasing number of duplicate spare parts of BMW and MINI Cooper.
2. The manufacturing costs of BMW cars are very high as compared to its competitors. This is also a reason for high pricing of BMW cars.
3. Not a mass-market company like Toyota and their volumes are small.
Once an organization has established its strengths, weaknesses, opportunities and threats, it can develop the SWOT further through matching and conversion.
In the case of BMW the company can match its strengths against its opportunities, for example as previously mentioned that BMW spends a huge chunk of its revenues on research, what the company can do is to direct most of its research into how to make smaller and more efficient cars for the middle class society as most of the consumers are not able to afford the current premium prices of BMW cars. If the company can in some way accomplish this, it will result in elevated sales in the EU and globally as well.
BMW recognizes the threat of volatility in the oil and fuel prices and has thus launched its Active Hybrid 5 car which is better than the previous hybrid cars and has a better fuel-electric consumption than its predecessors. The car can accelerate on electricity alone. Over here it can be seen that BMW has countered this threat by its biggest strength which is its diversity and product development.
Part 3: Marketing Programs
3.1. Target Markets
The main markets for BMW automobiles have been in Europe, the USA, Japan and the Pacific region, with the markets of Germany and the US accounting for almost half the total car sales. Important markets have also been the fast-growing UK, and the Italian, French and Japanese markets.
Singles who want this car should make approx. $125,000 per year based on a 5-year loan. He or she should spend up to 15% of income covering transportation costs (car loan, fuel, maintenance, etc.).
Income $125,000 per year or more
Marital status Any
Household size Any
Education Bachelor degree and higher
Occupation Manager or professional, technology specialist
Geographic North America, Asia, & much of Europe
Select the Possible Segment and Niche
Young Digerati: We have decided to select the Young Digerati as our target market for several reasons. First of all, they are wealthy enough to afford the BMW of all series. Also, they care about technology, and the BMW is very technologically advanced. Furthermore, they care about image and status, and the car is a hip, trendy status symbol. Lastly, we want to get customers while they are young, so they will become lifelong BMW customers. Hopefully, the Young Digerati will purchase pricier BMW cars like the 6 Series and 7 Series as they age.
Lifestyle: Full time employee, full time dad. Very active lifestyle
Activities: often attends sporting events, opera and theater, business parties, networking events. Active in community and church, coaches kids sports
Interests: Driving, Reading, stock trading, attending plays and sporting events, watching CNBC and ESPN, exercising often, eating at fine restaurants, and drinking only the best import red wine.
Rate of usage: Drive everywhere… to work, the kids schools and sports, groceries, church, dinner, parties, date night, short family trips.
User Status: Powerful, important, upper-class, demands respect, someone to know
Technological orientation: customers will want the best… a BMW. BMW will offer the best; most advanced technology in cars including increased fuel economy, collision impact safety devices, seat comfort design with heating and cooling, music and sound, engine and sound, transmission shifting and options, and hundreds of extra accessories that could make their car fit their every need.
Price sensitivity: Not the cheapest car line, but not our most expensive car line either. Our customers are willing to pay more for perceived personal status. They want status, prestige, luxury, reliability, and everything else that is associated with our brand.
3.2. Product (PLC, BCG)
The most important element in the marketing mix is the companys product because this provides the useful requirements required by customers. For example: a car that does not start in the morning will not be liked by consumers. Marketing managers develop their products into brands that help to create a single position in the minds of customers.
Current models of BMW:
The 1 Series, originally launched in 2004, is BMW's smallest car. Currently available are the second generation hatchback (F20) and first generation coupe/convertible (E82/E88). The 3 Series, a compact executive car manufactured since model year 1975, is currently in its sixth generation (F30); models include the sport sedan (F30), and fourth generation station wagon (F30), and convertible (E93), and theGran Turismo. In 2014, the 4 Series has been released and replaced the 3 Series Coupe and Convertible. The 5 Series is a mid-sizeexecutive car, available in sedan (F10) and station wagon (F11) forms. The 5 Series Gran Turismo (F07), which debuted in 2010, created a segment between station wagons and crossover SUV.
BMW's full-size flagship executive sedan is the 7 Series. Typically, BMW introduces many of their innovations first in the 7 Series, such as the iDrive system. The 7 Series Hydrogen, having one of the world's first hydrogen fueled internal combustion engines, is fueled by liquid hydrogen and emits only clean water vapor. The latest generation (F01) debuted in 2009. Based on the 5 Series' platform, the 6 Series is BMW's grand touring luxury sport coupe/convertible (F12/F13). A 2-seater roadster and coupe which succeeded the Z3, the Z4 has been sold since 2002.
The X3 (F25), BMW's second crossover SUV (called SAV or "Sports Activity Vehicle" by BMW) debuted in 2010 and replaced the X3 (E83), which was based on the E46 3 Series' platform, and had been in production since 2003. Marketed in Europe as an off-roader, it benefits from BMW's xDrive all-wheel drive system. The all-wheel drive X5 (E53) was BMW's first crossover SUV (SAV), based on the 5 Series, and is a mid-size luxury SUV (SAV) sold by BMW since 2000. A 4-seat crossover SUV released by BMW in December 2007, the X6 is marketed as a "Sports Activity Coupe" (SAC) by BMW. The X1 extends the BMW Sports Activity Series model lineup.
In 2013, the company announced that it was to launch its first fully electric car range. This would begin with the launch of the BMW i3 in the second quarter of 2014.
M-series models (fifth column in the table): based on the 3 Series, the M3 defined an entirely new market for BMW: a race-ready production vehicle. Since its debut, the M3 is heralded in enthusiast circles, in large part due to its unique geometry and award winning engines. The newest V8-powered platform became available the autumn of 2007 in Europe, and second quarter of 2008 for the U.S. in coupe (E92), and later the cabriolet (E93), and sedan (E90) variants. Based on the 5 Series, the M5 is the M division's V10-powered version of the E60 5 Series. The M6 is the M division's version of the 6 Series, and shares its drive-train with the M5. The Z4 M, or M Couple/M Roadster, is the M division's version of the Z4. The X5M is the M division's version of the X5, and the X6M is the M division's version of the X6. Both the X5M and X6M share the same V8 twin scroll twin turbo.
BMW Motorrad produced 82,631 motorcycles in 2009, compared with 104,220 in 2008, a fall of 20.7% The most popular model is theR1200GS and its sibling R1200GS Adventure, which sold 24,467 units accounting for 28% of BMW's annual production. Current production includes a variety of shaft, chain, and belt driven models, with engines from 650 cc to 1,649 cc; and models designed for off-road, dual-purpose, sport, and touring activities.
In 2008, BMW introduced the DOHC Boxer HP2 Sport, and entered the serious off-road competition motorcycle market with the release of the BMW G450X motorcycle.
BMW Motorrad motorcycles are categorized into product families, and each family is assigned a different letter prefix. The current families are:
Like all vehicles produced by the BMW Group, the 2014 bicycle collection meets top standards in quality and design. The design of this new third-generation frame gives the bicycles functional geometric shape a stylish and dynamic look. The signature feature of the bikes in the collection is the “bull neck” on the front of the top tube. The frame is reminiscent of a motorbike, tracing the outline of the tank. Another enhancement is the third generation bikes seamless design. The welding lines are smooth and all cables run inside the frame.
The 2014 collection is not just innovative in terms of its design, it also includes a range of new technical features. Alongside innovations by BMW itself, the new models are fitted with components by top manufacturers like Shimano and Suntour. The hydroformed frame is robust and light, guaranteeing optimal efficiency by ensuring maximum power transfer with minimum effort.
The new bike collection includes the BMW Cruise Bike, a new sporty version of the M Bike, the Cruise e-bike, and the comfortable and functional all-rounder, the BMW Trekking Bike.
Key Product features in the marketing mix of BMW
BMW has a number of successful and unsuccessful cars within their automobiles section. The most famous and long running is the BMW 3 series. Since 1975 when it was first launched, it has been produced in six different generations and in no fewer than five different body styles. It is BMW's best-selling model, accounting for around 30% of the BMW brand's annual total sales.
To analyze the portfolio of cars that BMW has to offer in the world, the best way is to use the Boston Consulting Group Matrix.
According to this matrix business and its products can be classified as high or low according to their industry growth rate and relative market share.
BMW BCG matrix shows that Star product for the company is the BMW 3 series and the 4 series. The new BMW 3 series is highly successful in the world market. Its market share growing from 15% to 28% in 2014(High Market Share). This market segment in which 3 series belongs to is the major segment of the world luxury car industry (High market growth).
The Cash cows are the evergreen products of BMW, the 5 series and the X series. The 5 series accounting for the major chunk of the BMW world revenue approx 30% (High Market Share). However the market which this car belongs to does not show signs of growing.
Finally the Dog is the 6 series, which has failed to achieve the targets for which it was produced. The reason being that their competitors car like the Porsche 911 is much better in performance and design in comparison with the BMW 6 series.
Product life cycle
BMW 3 series, 7 series, 1 series, 5 series, 6 series, X1, X3, X5, X6 and Z4, out of these models the best in running is the BMW 3 series; the car has collected the greatest chunk of revenue for BMW over the years. But the thing to consider while keeping these models in mind is the product life cycle. It shows the sales of the product through their useful life during different stages of their lifecycle. The stages include Introduction, Growth, Maturity and Decline.
If considering the product life cycle against the portfolio of cars that BMW has to offer then it can be said that most of the BMW cars are on the maturity stage, even though the BMW 3 Series has high market share but the market which it belongs to does not show signs of growing as previously mentioned in the analysis of the BCG matrix. BMW has realized this and has launched the new version the BMW 3 Series in 2011.
BMW has to consider and place its products accordingly into the market, if most of the products of the company are going to be in the maturity stage then there will be serious problems for the company as all of them will be going into decline together. Thus constant and increased improvement into research and development has to be made in order for BMW cars enter into the growth stage of the product life cycle.
In 2007 BMW launched a clip on the internet about its GINA Light visionary model, it is a fabric skinned shape shifting sports car concept built by BMW. The car is enclosed with flexible, stretchable water resistant translucent man-made fabric skin polyurethane-coated Spandex, is resilient and durable. It resists high or low temperatures, does not swell or shrink and the movement does not slacken or damage the fabric. Though the car is not for sale and thus hasnt been introduced into the markets and is kept at the Munich museum it has caught the attention of the world when it was premiered in 2007.
BMW should launch this car in the markets now using outdoor campaign and digital marketing as such mediums should be used for high value impact products. The BMW Gina can give competition to the Mercedes invisible car as both of them are new and innovative technologies and consumers are willing to pay higher prices for such innovations.
2012 saw BMW ranked as the worlds most reputable company by Forbes.com. Criteria included peoples willingness to buy, recommend and to work for the company. Interestingly, the answers were driven 60% by perception of the company, and 40% by perception of the companys actual products. We marketers know that to build a positive brand perception, it takes years and the same has happened with BMW. BMW has been promoting itself with the most amazing television commercials, print advertisement, out of home advertisement and now through online advertising.
Key promotional features in the marketing mix of BMW:
BMW has always focused entirely on their cars with same advertising company, WCRS being the used since 1979. A broad range of advertising is used by this agency such as television for branding campaigns and new car launches, the press with Tabloid weekend colour supplements, regional publications and magazines, Outdoor campaigns, Sales literature, brochures, etc. Advertising Campaigns/Slogans used by the company in the past .
1.Positioned itself as the brand with the unique benefit of a luxury car that provides an exhilarating driving experience with advertising.
2. The Ultimate Driving Machine
3. The New 7 Series: Designed for Peace of Mind, Not Just Peace and Quiet
4. BMW core values at more attainable price5. BMW The Smart Choice
1. Established itself over time from its introduction in the US market in 1974 (the First Great Opportunity)
2. Ran for 15 years Overall brand focus on prestige
3. Focus on the 7 Series
4. Focus on the 3 Series
5. New strategy with a focus on brand & product, franchise, and organization.
BMW association is the James Bond films from 1983, 1994, 1997 and 1999. E.g. In The World in not Enough James Bond drove the new Z8 before the car had been launched and in Austin Powers 3 Goldmember the Mini Cooper was used. This kind of move has helped BMW to position its Car and the brand in front of vast audience across global also this also indicated that the car was fast, more technologically advanced and had created an image in mind of future customers that have best quality, safety, they are different from others.
Sales promotion involves offering short-term incentives for potential customers to commit to the purchase of products and services. BMW Group is recommended to use sales promotion in the world market in an occasional manner in order to increase the levels of revenues for short-term perspectives.
For example, 100th anniversary of BMW on March 7, 2013 was specified as an appropriate occasion to announce 10% sales promotion for all BMW models. However, it is important to note that BMW needs to engage in sales promotions in the world market only in an occasional manner, no more than once a year, because using sales promotion more frequently may cause depreciation of BMW premium brand value.
Effective public relations need to play an integral part in BMW marketing strategy. It is important for BMW to maintain regular contact with all organisational stakeholders with the use of various marketing communication channels. Specifically, communication channels used in public relations include, but not limited to online press releases, annual reports, speeches, and seminars.
As part of their corporate social responsibility initiatives BMW management is also recommended to increase the level of its association with local charities in the countries.
Moreover, BMW management can initiate the development of identity magazine of the BMW Group which can cover the latest trends and news in local and global automobile industry and at the same time serve as an effective channel to communicate the marketing message to the target customer segment.
BMW can engage in celebrity endorsement by attracting celebrities that are respected by the majority of BMW target customer segment. Real-life examples of celebrity endorsements in automobile manufacturing industry include singer Heidi Klum associating herself with Volkswagen Beetle, Australian pop-singer Kylie Minogue advertising StreetKA, Victoria Bekcham associating herself with Range Rover, Uma Thurman serving as the face of Range Rover etc.
Celebrity endorsements can be done in relation to BMW brand in general, or in relation to specific car models within BMW portfolio. Effective engagement in celebrity endorsement can offer BMW the advantages of increasing the levels of credibility, enhancing the level of brand recall, enhancing the appeal of BMW brand to the masses, and others.
To outrun its competition, BMW has incorporated the internet to its overall marketing strategies. Because about 85% of its customers conduct internet research before purchasing, BMW has invested on internet through website, online applications and television, and social networks to conduct e-marketing. BMW uses internet for online advertising, marketing public relations, promotions, direct marketing and improving customer relations. With its establishment on internet, BMW provides its customers with rich marketing information quickly, on-time and at low costs through e-newsletters, e-magazines, online broadcast, emails and text messages.
BMW e-marketing strategy incorporates social networks such as Facebook, Twitter and Youtube due to the potential of reaching a great number of people at relatively low cost. BMW uses social networks as they allow multimedia and interactive communication with a large number of consumers enabling to conduct viral, communal and influenced marketing campaigns. Additionally, the company uses the platforms for satisfied customers to easily recommend their products to others and also as a medium to conduct customer-product conversations and brand blogging. The official BMW Facebook page has 13,396,064 likes and more than 100 thousand followers on Twitter. With such a great number of fans compared to its competitors, BMW is able to deliver its advertisements to a large number of people at an instant and easily draw them to its websites at a relatively low cost.
“Story of Joy” campaign
BMWs 2010 “Story of Joy” advertising campaign was intended to attract customers who were not necessarily driving enthusiasts as the “Ultimate Driving Machine”.
The campaign associated social networks, dedicated website , games and interactive ads, collectively integrated with traditional marketing channels. An industry-specific intelligent social media listening tool was used to determine the impact of the campaign; and was noted that the brand conversations by females had increased by 20% signaling a definite demographic shift (J.D.Power, 2010). The impact of the campaign was easily understood through internet compare to traditional channels due to the rich user information such as age, gender and location. The overall joy campaign was very successful resulting in a rapid recovery of company net profit.
BMW Films Campaign
The 2001 “BMW Films” promotional campaign through online short films was designed explicitly to direct consumers to the BMW Films website. Web visitors were required to registration in order to watch the films, hence BMW was able to both spread the message and obtain consumer information. The campaign was supported by TV adverts, prints, billboards and online advertisement that all directed to the same BMW Films website thus collectively increase traffic. The campaign results were historical to the automotive industries at that time with more than 10 million views, 2 million registrations with 60% opting to receive more information, all at a cost of around only $1.20 per person (Hespos, 2002).. Additionally, 94% of the registrants recommended films to others which resulted in a viral campaign and website traffic increase by 55% to 214,000 unique visitors compared to the weekly 138,000 enabling BMW to increase yearly sales by 12.5% in 2002 and later reported to have reached 74% (Pareek, 2009; Strauss, et al., 2006).
Distribution includes all of the business activities involved in making the product available to target customers. BMW sells its cars through a number of showrooms in each country and as well as from an extensive network of dealers who are provided with far-reaching expertise and knowledge from BMW. B sales services to their customers.
There are more than 16 dealers in Ukraine who are franchised to sell BMW cars. Worldwide BMW operate in more than 100 different countries with approximately 4,000 plus dealers which are authorised to sell both new and used cars, parts and after sales service products.
Pattern of distribution for BMW is shown below in the diagram which is followed by the company: Manufacturer Dealers Consumers.
Proportional flow performance of channel member:
Manufacturer performs mostly in Promotion, Negotiation, Financing, and Risking, and Payment - as these are the most important parts of the business.
Dealer is mostly involved in Physical possession, Negotiation, Risking as it deals with warehousing and transporting the cars and Ordering, as it needs to deal with customers directly.
Consumers' performance is in Physical possession, Ownership, Promotion. Financing, and Payment, as it is the customer who makes the whole system working.
The cost added by each member is as follows:
Major Channel for segments
In order to satisfy various customers needs, BMW uses the following channels.
Individuals make orders through the web site and in dealer offices.
Businesses as well make their orders in dealers but they also can order the cars directly from BMW manufactures.
Government Structures, obviously, order cars from BMW manufactures.
BMW dealers in Ukraine:
• AWT Bavaria (Lepse) - Kiev
• AWT Bavaria (Parus) - Kiev
• AWT Bavaria (Podol) - Kiev
• AWT Bavaria - Dnepropetrovsk
• AFZ Bavaria - Zaporizhia
• Car-Alliance - Poltava
• Emerald Motors - Odessa
• Impulse - Donetsk
• Bavaria Motors - Kharkiv
• Avtodel - Simferopil
• Christina - Lviv
• Aria Motors - Lviv
• M AUTO - Mikolaiv
• Car Alliance - Kremenchug
• Automobile House "Victoria" - Lugansk
• Bayern Zahid - Khmelnitsky
• Valerie M - Rivne
• Center Kherson Kherson
On the Ukrainian market BMW uses only exclusive distribution. This type of distribution is usually seen with high end and luxury products, which is absolutely suitable for BMW cars.
The structure of an exclusive distribution favors both the manufacturer and the distributor: All dealers receive cars and auto accessories without mark up, they have unlimited dealer agreement and are provided with all necessary corporate identity elements. The headquarters on the other hand have complete market coverage and a total control over the quality of front office, which is especially important for luxury products.
All Customer Segments are covered: those customers who are aware of the BMW products are able to buy very easily what they are intended to buy; those who dont know what they need but want to buy some BMW car, receive high quality consultancy so that they can make a decision whether to buy a car and choose the specific package that absolutely suits the customers needs.
In order to communicate to those potential customers who dont have the intention of purchasing BMW, the company uses TV, Internet, wire advertising, product placement and screening short films dedicated to BMW cars, so that potential customers become interested in this brand.
The prices of BMW Group are based on a differentiated strategy. This means that they charge extra for premium quality. This difference in prices is due to each cars different engine size, gear levels, fuel consumption, sports version.
Lets take an example of the pricing strategy that has been used by BMW for the 3-series is competition-orientated pricing. Most of the Research shows that all other competitor such as VW, Audi, Alfa Romeo and etc. in the 3-series market is based around the same price. This is because the car industry is large and production costs are not so important and creating the largest profit is not as necessary as it would be for a smaller company.
BMW could be either dynamic or negotiated pricing depending on the sales person. Dynamic because the car can fluctuate between prices or negotiated because the buyer and seller can come up with a reasonable price for both parties.
Value based pricing
BMW is definitely a value-based product brand. Cost can be an issue if it is priced unrealistically against the cars of close competition, but overall most of our customers are not concerned with price as a contribution factor. BMWs are luxury cars and are elastic expenses. But when the economy is weak, our car becomes a hot pick as a secondary choice for BMW customers who buy the higher luxury cars. BMW customers are not only purchasing their car due to legroom, high technology, and comfort nor just for the reasons of high horsepower and great fuel mileage. They are buying BMWs because of the brand name and the quality and reliability the brand name stands for.
BMW uses segment pricing in their pricing strategy by offering programs for recent college graduates. With a recent degree or diploma and a letter from a current or future employer, graduates that qualify can receive the best pricing and financial offers that BMW has. This is particularly good for the demographic chosen because of their young age. Many may have already graduated from college, but many more may be going to law school or going back to get their Masters. BMW wants to hook a younger market so they can be life-long customers. By helping graduates, they are making that possible.
BMW offers several different discounts depending on what and how the customer is purchasing. For example, in a lease, BMW offers a $1,500 dollar credit and a reduced interest rate of 2.9% for 36 months. Leasing, especially starting out, is a good idea for a young person like those in the target demographic. BMW offers discounts because, to a buyer, it is enticing. A good deal has the potential to persuade a customer to choose BMW over, say, Mercedes-Benz.
Part 4: Conclusions and Recommendations
It has taken a lot of referencing and researching for me to write this report and I have learnt a lot from this report too, I started off with very little knowledge about this topic and worked my way through the assignment and I would conclude that BMW is a very powerful name in the automobile industry due to its reputation of providing high quality products and services.
BMW Group is the leading premium car manufacturer and seller in the world. The sales of BMW Group are rising day by day. But one great threat for BMW Group is the increasing competition in the automobile market. BMW Group has got fiercing competitors like Audi, Mercedes-Benz being the two nearest to BMW Group in competition in the premium car industry.
BMW Group is now trying to target the emerging markets of the world. The sales of BMW Group in different markets of the world tell that the European and the US markets are the best markets for BMW Group in terms of sales. In recent years, however, the Chinese market has been a great attraction for the BMW Group and sales have been increasing every month for the BMW Group.
In the end it may be said that the BMW Group distinguishes from its customers by its great advertising and marketing campaigns and mostly by their great brand image. The innovation of the company, diversification in new markets, technological advancement and customer satisfaction are the key to BMW success in the luxury car market.
The latest TV-Ad of BMW Group is a great description of BMW Group as an automobile leader in which they say, “we just dont make cars, we make joy”. BMW Group should also remain careful to the changing trends in demographics, society, thinking of people and remain a diversified company.
Most of the people argue that there is always a chance to learn new thing or no matter. How big is the company and how successful they are companies needed to think about the future and make few plans for them? For the future marketing strategies, I would like to recommend few points.
The BMW cars are considered to be as the luxury cars, of which most products are applied to rich people but not the poor people. BMW can enter the market with Small Lifestyle Car which can apply to the middle-class people, its market share can be expanded.
On the other hand, its accessories and parts of cars are expensive for maintenance, which can reduce the desire of people purchasing its cars.
In addition, for this can get few new models in BMW Mini this could help then to target few different segments and also can target females, Middle-class or upper middle class people. BMW can also create good relationship with female buyers, they need to do more of promotional strategies to attract more of female consumers in their existing models or for new models in this edition just by giving few simples thing which females like in the car, for example- pink colour, soft-toys, trendy seat covers, etc.
Furthermore, The Asia Pacific region is becoming increasingly crucial to global automotive sales. Although it has been overshadowed by China's rapid growth in recent years, emerging markets is set for steady growth where BMW is already there but needs to concentrate more and needs to adaptive marketing strategies to get success out there. These markets are going to be huge as there is more population in these countries as in comparison to US and UK market.
In addition, BMW needs to come with few more BMW Films interactive marketing campaigns, the "Ultimate Driving Machine". As it is had very successful and showed good promise in it for the selling point. These kinds of advertising are creating very good brand value for the company and company portrayed itself how they want to be in front of customers.
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