Bmw Marketing Essay Example
Bmw Marketing Essay Example

Bmw Marketing Essay Example

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Bayerische Motoren Werke AG, also known as BMW, is a German company that was established in 1916. This company is renowned for manufacturing top-notch automobiles, motorcycles, and engines. BMW has become widely acclaimed for its opulent vehicles and outstanding performance capabilities. It holds a prominent position in the worldwide luxury car market (BMW, 2011). As a matter of fact, based on the BrandZ Top 100 survey conducted by Millward Brown in 2010, BMW outperformed Toyota and now stands as the most esteemed automobile brand globally.

BMW's business primarily focused on aircraft engines in 1918. The iconic circular blue and white BMW logo represents the movement of an aircraft propeller, symbolizing the flag of Bavaria. Today, the BMW group encompasses three famous brands: BMW, Mini, and Rolls-Royce Motor Cars. In 2010, the BMW group achieved a sales volume of 1,461,166 cars and generated over

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ˆ60,477 million in revenue. With subsidiaries and manufacturing plants across 150 countries, the company also operates its own financing business with a volume of ˆ66,233 million (BMW, 2011).

BMW's mission is derived from the article "Marketing Myopia" (Levitt 1960), which discusses how many companies are unsure of their business purposes and the industries they operate in. The article specifically highlights that Ford, a major automobile manufacturer, became excessively focused on its products and neglected customer needs. In light of this, BMW is determined not to make the same error, particularly in today's highly competitive automobile industry. Helmut Panke, former chairman of BMW, emphasized the importance of never creating a dull BMW.

This message has significant impact and unifies everyone on our mission" (Franzen 2004). Campbell and Yeung (1991) have created a model of mission tha

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encompasses four essential elements - purpose, strategy, behavior standards, and values. These values are exemplified in the Ashridge mission model, where valuables coexist. BMW's mission statement until 2020 is clearly defined: "the BMW Group is the world's top provider of premium products and services for individual mobility" (BMW Education Program, 2011). BMW's purpose is to become a leader in the automobile industry. BMW's strategy is based on their "Strategy Number ONE", representing 'New Opportunities' and 'New Efficiency', aiming to seize the best opportunities and enhance efficiency to secure BMW's leading position and achieve long-term sustainable growth (BMW, 2011). BMW's core values are quality, technology, performance, and exclusivity.

Research and development are crucial aspects for offering customers recognizable added value in BMW. The company allocates a larger percentage of profits towards R&D compared to its competitors (Franzen, 2004). Building and maintaining high skill expertise is one of BMW's key strategic corporate standards and behaviors. To achieve this, the E Change LIFE project was launched, which involves managers designing and organizing workshops for all employees involved in the development and change processes. The management's policies and behaviors prioritize long-term planning and foster new, positive marketing approaches. BMW also strives for ecological and social sustainability throughout its value-added chain (BMW, 2011). These core values are ingrained in every employee at BMW.

BMW in Germany is renowned for its strong team spirit and the high level of respect among its employees. This has resulted in BMW being acknowledged as one of the most desirable employers in the country, according to a 2009 Universum research. David's assessment in 1989 indicates that BMW's mission statement encompasses various aspects including customer care, product and

service quality, location, technology, survival philosophy, self-perception, public image, and employee satisfaction. It is these distinct qualities reflected in BMW's mission statement that contribute to its success. Furthermore, there has been a 22.2% growth in the global motor vehicle market since 47 due to the recovery of the worldwide economy after the financial crisis.

According to Euromonitor (2009), China is still the biggest car market globally, with 13.5 million vehicles. The number of vehicles in China is projected to rise from 3 million to 58.4 million, as stated by OICA in 2010.

It is projected that by 2020, approximately 4% of Chinese households will possess a vehicle. In China, luxury brands like BMW are seeing a substantial rise in profit and sales volume, with growth reaching 100%. Furthermore, emerging markets such as India and Brazil are also witnessing significant expansion within the automobile industry. An examination of strategic groups can aid in organizing the overall industry.

The strategic group in an industry refers to the group of firms that adopt the same or similar strategy along the strategic dimensions (Porter 1980). Below is a list of BMW's main competitors. Grant (2005) states that BMW has a higher quality and price compared to mass market vehicles and has a lower level of product diversification. BMW focuses on design and marketing to promote their products and differentiates their brand across multiple segments (BMW & Mini). The following SWOT analysis provides an overview of BMW. BMW is widely known as "The Ultimate Marketing Machine" as marketing plays a central role in their operations.

According to Slater and Narver (1994), a business is considered market-oriented (MO) when its culture is fully committed to

continuously creating superior customer values. BMW exemplifies this with three key elements of MO: integrated customer-driven, competitor-focused, and inter-functionally coordinated. Instead of solely purchasing cars, BMW customers seek meaningful value and the satisfaction of a manifest desire – a BMW lifestyle. BMW gathers customer information including customer value chains, brand attitudes, and brand experience, as well as specific details like the feeling of the steering wheel, instrument panel lighting, suspension, and engine reaction through their intelligent system (Franzen, 2007). This collected data is shared and analyzed within the organization to develop products and services that best suit BMW drivers.

BMW implemented extensive Customer Relationship Management (CRM) initiatives to improve communication with dealers and access customer data for data mining purposes (BMW, 2011). One example is the winter driver program offered by BMW Canada which allows drivers to experience and learn about BMW's Dynamic Stability Control System, ABS, and handling (Executive Oasis, 2011). This program enhances drivers' skills and confidence while also connecting local dealers with potential clients. Since its inception in 2001, over 11,000 participants have taken part in this program.

The automobile industry, which is focused on competitors, functions as a competitive game, and BMW closely monitors its competitors. In today's marketing strategy, it is not enough to solely focus on BMW's performance or brand heritage. The design of products and advertising strategies heavily rely on the actions of its competitors. One instance of this is the ongoing billboard war between BMW and Audi, which started in Los Angeles, CA in April 2010 (Auto, 2010).

Audi initially released an advertisement titled "Chess" before changing it to a caption that directly targeted BMW, reading "You move, BMW."

In response, BMW retaliated with a billboard across the street from Audi displaying the word "Checkmate." This billboard war between the two automotive giants is occurring on a global scale. To exemplify, BMW recently launched an aggressive advertisement in Central, Hong Kong that is strategically positioned just above Audi's local dealer shop. BMW's marketing intelligence team gathers and analyzes competitor information, allowing them to develop strategies and introduce products such as the BMW 3 series versus the Mercedes C Class to stay competitive and avoid losing in this competition.

According to BMW's Marketing Chief, Matthais Hoffmann, the strategic phase of product development involves input from all other disciplines, but it is the marketing manager who prioritizes marketing as the highest (Kiley, 2004). This demonstrates BMW's holistic marketing approach. The holistic marketing concept involves the development, design, and implementation of marketing programs, processes, and activities that recognize their breadth and interdependencies (Kotler and Keller, 2009). Internal marketing ensures that everyone in the organization embraces appropriate marketing principles (Kotler and Keller, 2009). In BMW, new product planning and development involves a matrix project with representatives from various departments including marketing, styling, engines, chassis, and suspension.

BMW has divided the process into four phases: the strategic phase, concept phase, initial phase, and series development (Kiley, 2004). During the strategic phase, the marketing team will determine the market segment and customer expectations. In the initial phase, design and technology ideas are explored, with the marketing team guiding the designers on customer preferences such as features, colors, and user experiences. The concept phase then refines these ideas into concepts, with at least three concepts launching simultaneously. Finally, the series phase involves approval

and examination by the management board, including the marketing director. The marketing team concludes by addressing the marketing plan and advertising strategy for the new launch of BMW.

To successfully execute all these processes, a strong level of coordination among different functions is needed. In BMW, the marketing team designs marketing activities and integrates them fully into marketing programs to offer and deliver superior value to customers. McCarthy (1960) categorized these activities into 4Ps - product, price, place, and promotion. Below sections illustrate an expanded marketing mix employed by BMW. Additionally, BMW utilizes an integrated marketing communication strategy that reinforces and complements each other.

Integrated marketing communication (IMC) is a marketing communications planning concept that recognizes the additional value provided by a comprehensive plan (Kotler and Keller, 2009). For instance, marketing research indicates that 85% of BMW buyers extensively research on the Web before visiting a showroom (Hespos, 2002). In response to this customer behavior, BMW has developed a virtual showroom where visitors can customize their own BMW with various colors and features. Additionally, to expand their reach, BMW also utilizes direct mailing and publishes BMW Magazine and BMW TV to update buyers on the latest news and technology (BMW, 2011). Moreover, BMW has created the BMW apps specifically for iPad. IMC ensures that all communication channels are highly integrated to deliver value-added messages to target audiences. Performance Marketing incorporates the business returns from marketing activities and programs while also addressing wider concerns such as legal, ethical, social, and environmental effects (Kotler and Keller, 2009).

BMW publishes annual reports to provide stakeholders with insights into their corporate financial strength and values. The company places special emphasis on its

societal and ethical responsibilities. According to BMW (2010), the company is committed to ecological and social sustainability throughout its value chain, taking full responsibility for its products and demonstrating a clear commitment to resource preservation.

BMW's commitment to sustainability is consistently highlighted in its annual reports, magazines, and TV broadcasts, as well as through partnerships such as the one with National Geographic. In fact, National Geographic filmed BMW's "Ultimate Factories" to showcase the company's advanced technology for clean production (National Geographic, 2008).

BMW has successfully capitalized on every opportunity to enhance its core corporate responsibilities, resulting in increased brand value and customer perception. Relationship marketing plays a crucial role in this aspect as acquiring a new customer is five times more expensive compared to retaining an existing one (Kotler and Keller 2009). With intense competition in the automobile market and low switching costs for users, BMW recognizes the significance of retaining their current buyers. To achieve this goal, BMW has implemented various programs with the aim of cultivating mutually satisfying long-term relationships with drivers.

BMW has a range of initiatives that aim to enhance the entire ownership experience for customers. These initiatives include a welcome kit, newsletter, BMW magazine, and multiple owner programs. Moreover, BMW sponsors various sports events such as the PGA European Tour (Golf Today, 2011). In addition to this, BMW has created several groups on popular social networks like Facebook and Twitter. Their efforts in building relationships with target market audiences are innovative and creative. An example of this is the hosting of the "BMW Culture Night" event, which celebrates the bond between China and Germany (BMW-Brilliant, 2009).

This event serves as an extremely successful tactic

for promoting their brands in emerging markets such as China, where there is a heavy reliance on central government controls. BMW's market orientation has evolved over time, as revealed in a study conducted by Hooley, G.J. and Lynch, J.E.

According to Shepherd et al. (1990), companies are categorized into four orientation clusters: Marketing philosophers, Sale supporters, Departmental marketers, and Unsures. Levitt (1960) mentioned that in the early stages of the automobile industry, organizations focused primarily on production. Consequently, marketing efforts were centered around sales and promotional support for new models. Post World War II, the industry saw an influx of new brands and models like Volkswagen.

BMW recognized the pressing need to distinguish their products in a wider range of markets. They shifted their focus to marketing clusters within different departments in order to identify and fulfill customer needs. During the economic boom in America and Europe from 1946 to 1980, the demand for luxury cars increased, and BMW successfully positioned itself as the "Ultimate Driving Machine." However, traditional marketing strategies used before the 1980s in the automobile industry no longer provide sufficient customer value. This is due to the standardized tactics of functional management hierarchies, which lack diversity and flexibility to meet the demands of modern customers (Maklan and Knox, 1997).

The luxury car market is currently going through a social change, as luxury brands become less distant, less distinctive, and less exclusive due to an improvement in the quality of life. In order to maintain its position as a leader, BMW must develop attributes and values that reflect changing social values, which have an emotional influence on buyers. This requires a high level of integration of

marketing philosophy throughout the entire organization, from research and development to customer services. Other popular marketing strategies include brand extension, globalization, mergers, and acquisitions. A decade ago, BMW primarily focused on three main products - the 3 Series, 5 Series, and 7 Series cars. CEO Helmut Panke referred to them as "three differently sized slices of the same sausage." Recent research suggests that mergers and acquisitions can stimulate innovation and result in higher firm and brand value. Brand extension plays a crucial role in this context.

Since 1994, BMW has acquired the Mini brand (Wagner, 2000) and has expanded their core models into various segments. These segments include the 1 Series (Economic), X Series (SUV), Z Series (Sport), and M Series (High Performance). BMW has made efforts to diversify their brands, while also aiming to maintain the integrity of their brand heritage and avoid "brand corrosion". According to Strach and Evertt (2006), mergers and acquisitions can result in the loss of distinctive features and a diminished luxury image. Luxury cars cannot be seen as mass market goods, as their target audience is far from "average" consumers.

In 1990, BMW marketing primarily emphasized performance, but competitors soon copied their advertising for exceptional quality. Traditional TV and magazine ads no longer set BMW apart. With the rise of the internet, BMW introduced the "The Hire" film campaign by Fallon. These eight short films, directed by acclaimed Hollywood filmmakers, radically transformed interactive entertainment and demonstrated BMW's unmatched automotive high-performance. With over 100 million film views and multiple awards, this campaign proved BMW's forward-thinking marketing strategy (Hespos, 2002).

BMW is facing upcoming barriers and challenges in maintaining its success. The company's consistent

marketing and advertising campaigns have been crucial to their achievements. However, today, BMW's competitors are imitating their unique selling proposition of high performance and mimicking their characteristic style. The Vice-President of Marketing, Jack Pitney, acknowledges that BMW has potentially placed excessive emphasis on being the ultimate performance driving brand. This poses a problem for BMW's overall brand image (Bloomberg Businessweek 2006). Marketing research reveals that BMW's customers typically consist of hardworking individuals who also enjoy an active lifestyle. They have an average age of 46 years old and a median income of approximately $150,000.

According to Hespos (2002), two-thirds of the population mentioned in the study were male, married, and did not have any children. Andolina (2002) states that the aging baby-boomer generation is influencing societal values, causing BMW to face new challenges and rebrand its image for its upcoming target buyers: Generation X and Dot-comers. As BMW started to lose its competitive advantage, they had to find innovative ways to reach their target audience. To maintain a competitive position in the marketplace, BMW needs to explore a new and unique image for its next generation of target consumers and determine the most effective method to reach this segment. BMW's marketing research activities will play a crucial role in solving this marketing problem. Marketing research involves the systematic design, collection, analysis, and reporting of data and findings to address specific marketing problems (Kotler and Keller 2009).

According to Malhotra and Peterson (2001), marketing research has become increasingly important in the new millennium as a result of the faster pace of business, advances in technology, and globalization. To maintain its position as a leader, BMW's management board has

adopted a comprehensive approach to marketing research. The following sections will examine the company's research activities. One example is BMW's collaboration with professional research companies like J. D. Power & Associates, who conducted primary research on topics such as Dealer Financing Satisfaction and the Premium Car Market Study (BMW, 2011).

BMW also has an internal research department that conducts research in various areas. One example is conducting telephone interviews with drivers who have made a purchase or service at BMW dealers to record their satisfaction level. The data from these interviews is then transferred to the CRM system for analysis by the marketing department. The objective is to uphold the highest standard of services for BMW customers. Additionally, BMW provides online surveys and feedback options on their website.

BMW utilizes various social media platforms, such as Facebook, Twitter, and BMW Blog, as valuable tools to gain a better understanding of its customers. These platforms help BMW gather important insights about its target market and designs. Moreover, in-depth marketing research, including focus group discussions and observational studies, is conducted throughout the product development process. For instance, a focus group was held prior to the creation of the X6 to gather input from current BMW owners regarding desired features (Spinelli 2008).

Experimental research is used by BMW to bridge the relationship between the company and its customers. According to Ryals and Wilson (2005), this research helps to create a dynamic system in which managerial response to customer insight can be traced and evaluated. BMW conducts experimental research such as the ActiveE system, which aims to research electro mobility for everyday operation and determine the feasibility of producing electric cars on

a large-scale (BMW, 2011). During test drives, BMW sales representatives record feedback, which is then analyzed in Germany. In addition to experimental research, secondary data sources such as industry reports and government census data are used by BMW researchers. These sources help develop the company's marketing strategy by integrating demographics like sex, lifestyle, and customer perceptions with primary data. This approach is used in all areas of BMW's business, from car design and development to advertising. For example, the BMW X Models are targeted towards modern families, with 50%-60% of these households having at least one child.

Female customers have a preference for open driving, as seen in their preference for the BMW 3 Series Convertible and BMW Z4 (BMW Education, 2011). BMW Marketing Research should consider developing a research evaluation to assess the quality of their research, as it is a costly endeavor despite their holistic research approach encompassing various methods (BMW Education, 2011).

The evaluation will assist BMW in enhancing the quality of their research and data. In addition to traditional methods, BMW can employ more innovative approaches to conduct research. For instance, they can utilize mystery shoppers who visit local dealerships to observe service quality. They can also develop online driving simulations for potential buyers to record their preferences on features and color selections. Furthermore, they can offer incentives such as free gifts (BMW lifestyle wears, etc.) through lotteries or paid interviews to increase participation rates. Lastly, BMW can expand the coverage of their research by utilizing secondary media channels such as digital TV and magazines (Car and Drivers, etc.).

5) GPS Data Mining – BMW utilizes GPS installed in its vehicles to track driver

travel patterns. It is crucial for BMW to prioritize privacy considerations in all research approaches. In conclusion, Hooley, Lynch, and Shepherd's (1989) research indicates that marketing should be seen not just as a departmental function, but as a guiding principle for the entire organization. BMW clearly embraces this philosophy, incorporating marketing into all aspects of its operations. To maintain its leadership position, BMW must continuously conduct brand audits and adapt its holistic marketing strategies to the rapidly evolving automotive industry.

References:
1. Bloomberg Businessweek. (2003). BMW is consistently introducing a new model every three months as it strives to become the leading premium car manufacturer.

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