Business Communications Pitch for BMW - Case Study Example

BMW UK’S MARKETING COMMUNICATIONS PLAN By Location i. Introduction Bayerische Motoren Werke AG or Bavarian Motor Works in English (BMW) is a German engineering manufacturing company specializing in motorcycle and automobile production. The success of the giant corporation is attributed to responsible actions and long-term thinking that have acted as the cornerstones for the integration of the companies activities in the global market. The prime objectives of the corporation include providing an unequivocal commitment to resources preservation, full responsibility for products and endeavoring to provide social and ecological sustainability along the whole value addition chain. These objectives are the drivers of the company’s corporate strategy where they are firmly embedded. This strategy recognizes that the global market shifts at a fast pace. This shift requires that the automobile producers provide mobility solutions that are in line with the shifts. This has seen BMW formulate strategies that aim to make the make the company profitable and enhance the long term value addition that is in line with change. However, for the successful integration of the company’s business through the organizational strategies, it needs develop awareness of the brand (Isobel and Robin 1999 p. 55). This is because perceptions on a product that consumers develop depend on the information available to them on the product. This means that the company needs to have a plan of how the products’ information is to be passed to the consumers. This is described as the marketing communications plan (Fill 2009, p. 8). A marketing communications plan is a strategy of how an organization is to utilize messages and media in the deployment of communication of product information in a market. BMW utilized a communication’s account that involved communication agencies to create pitches and campaigns on the products. This paper seeks to pitch a business communications pitch for BMW on a 27 million pound budget. ii. Context analysis a) The consumer context BMW’s largest market surprisingly exists in the USA. In 2005 alone, the company sold around 328,925 cars. 307,395 of these comprised of BMWs with the rest consisting of Rolls Royce and Mini brands. Compared to other European car manufacturers, this was the highest number of vehicles sold by a European firm in the US market making the corporation the most successful premium car manufacturer from Europe in the world’s largest economy (BMW 2005). This fact does not seem to change anytime soon as the volumes of sales within this market for BMW had an increase of 4.1% from the previous year’s value. This market segment needs incorporation of marketing communication as the units seem to lack appeal to women and the young generation who also comprise a significant portion of the automobile market. However, the figures do not mean that the BMWs European capitalization falls short of the American market. In fact the figures of the same year (2005) show that the group saw greater success in Europe than the US. The group had sales of 802,891 automobiles within Europe alone in 2005. The sales had shown great improvement as they were up by 10.2 % from those of 2004. Out of the 802,891 vehicles, 295,885 were sold domestically in Germany, the group’s home market (Larsson and Falkemark 2006, p. 11). This made the market the largest for BMW in Europe. UK comes in second in the European market. Since 2001, BMW has established itself as a leader in luxury car provision. It is also important to note the potential that the group possesses within this market where it has not fully integrated its businesses. This is because, currently, the UK branch of the company uses aggressive advertising that targets males of around 35 to 45 years with an annual income of around 150,000 pounds. The marketing negates from reaching out to the women and young to influence them into buying the brand. This is mainly to blame for the low volumes of sales to these segments of the population. This begs the question of whether better communication to these unexploited segments could help increase the volumes of sales. Level of awareness, attitude and perceptions The BMW brand is ranked at number 15 on the global brand ranking in terms of equity (Businessweek 2009, n.p.). The perception and attitudes that consumers share for a brand depends on the pricing and value accrued that is determined by the interactions with the brand. BMW has established itself as a household name in the luxury vehicle industry by producing quality and pricey automobiles. With the industry full of fierce rivals like Audi, Mercedes, Porsche and Jaguar, BMW has enabled the consumer base to develop good perceptions on its product due to the high value addition in relation to the price. This has seen consumers in the sector have high regard for the product that has seen it positioned high in the luxury vehicle pecking order. Since the consumers are able to choose the brand over others in a sector that lacks product loyalty, consumers show that they have a generally positive attitude to wards the brand. The numbers also show that there is increased awareness of the brand in this market which has enabled the purchase of the cars. However, they also show that the company is seeking to increase awareness in countries like Hungary, where the effect has been the increase in sales. It is also important to note the brand perceptions are fuelled by slogan of “The Ultimate Driving Machine” that does not really appeal to the young and women. Specific marketing communications campaigns are necessary to raise top of mind awareness (TOMA) (Rood 2012, n.p.). Level of involvement One of the key marketing points for the BMW group’s products is the guaranteed high quality of its products (BMW AG 2014, n.p.). This means that it has to ensure that all along the value addition chain, from production to supply, the company has to play a vital role. The effect is that the company oversees the production of most of its vehicles in production lines designed by its professionals. At the same time, wherever the market is big enough, the company opens shops to sell the units. In the UK, BMW produces its vehicles in the four production plants that it owns. However, some are sourced from the headquarters in Munich. b) Internal context Financial constraints BMWs marketing and profit maximization seeks to produce quality and pricey cars as a means of market capitalization. This has seen the group have a turnover over the years that can be described as healthy. The result is that the group has had enough capital to reinvest into the business for innovation development and marketing which has enabled the aggressive marketing and advertising associated with the brand. However, over time there are a few issues that have constrained the financials of the group. The first was the rise in value of the British pound in 1997 (Gallagher et al. 2011, p. 9). The effect of this development was the increase in general production costs which mounted increasing pressure on the already declining sales due to the coming up of stronger competitors. The strengthening also meant a reduction in revenues from units sold abroad in a significant margin especially the Rover brand that was under the umbrella group at the time. Cheaper imports from competitors like Volkswagen resulted in the group having over 700 million pound losses in one year for the Rover alone. In the end the brand was sold at a loss of around 3.2 billion pounds which greatly the firm’s financials (Gallagher et al. 2011, p. 10). The global financial crisis is also a reason for the changes in BMWs financial aspect. The 2008 GFC caused the group to change it practices to efficient capital investing. This saw the reduction of the fixed costs and implementation of temporary short-time working. Then there is the issue of replication of BMWs innovations by competitors. This has meant that a large portion of the profits accrued by the group has to go into the research and development of more innovative products that give the company a competitive edge which has strained the group’s budget. Organizational identity, culture, values and beliefs The core driver of BMW and the development of its strategies is the notion that it wants to become the global leader of automobiles production (Isobel and Robin 1999 p. 17). It endeavors to do this by producing quality and innovative products that centre on the needs of the consumer. The idea is to produce a product that is “the ultimate driving machine” which “goes beyond being just metal” that will bring joy to the customer on various platforms including performance, fuel efficiency and safety. The culture of an organization depends on the internal structures and frameworks governing the operations of the organization (Naranjo-Valencia 2011, p. 58). In BMW, the frameworks allow for the reduction with hierarchy to enable the increment of generation of ideas and sharing of knowledge between all levels of the organization. The idea is that the top management only provides a helicopter perspective aimed at facilitating initiatives that are in line with the BMWs goals with an open mind on ideas brought forward as a strategy of improving innovation. The belief is that everyone is capable of coming up with a valid idea for innovation which the organization fully believes in (Birkinshaw and Duke 2013, p. 34). The existence of BMW for over a century has enabled it to witness and survive some of the worst and best economic times in history (BMW Group 2014, n.p.). It has seen competition rise and fall and has been able to negotiate the pitfalls of the investment world and understand the shortcomings of almost every angle. In the end, the group has developed into a conglomerate of expertise on the automobile industry evidenced by the creation of its own financial institution that enabled its survival of the 2008 GFC. c) Business context BMWs strategy negates from making it a cost leader. Instead it has a history of providing premium products in a market of premium automobiles. The illustration is in the group’s key brands; the Roll-Royce, Mini and of course BMW. The group produces luxury vehicles at a somewhat pricey cost to the consumer. The strategy also goes into the production with the group estimated to have spent over 3 billion pounds in labor, research and development costs in Germany and the US in 2010. However, the brand recognizes that achievement and sustaining of brand differentiation results in uniqueness and superior brand performance that are important in attainment of customer benefit in wide segments and maintenance of premium pricing (Samli, Still and Hill 1993, p. 83). This has seen the organizational strategy focus on differentiation of products by innovations as a measure of creation of sustainable competitive advantages. These strategies have seen the organization adopt a devolved structure with a number of subsidiaries spread out across the globe to enable the full integration into the markets. These subsidiaries act as production and assembly plants as well as sales companies for the corporation. However, the brand faces a lot of competition from other premium car providers like Porsche, Mercedes-Benz and Audi. At the same time it remains a key leader in the industry with the strong networks established enabling it to continue its successful run. d) The external context BMWs key stakeholders include the shareholders, governments, suppliers and consumers (BMW automobiles 2013, n.p.). The shareholders are important to the whole marketing and value addition process as they are the determiners of the directions of the group. Through votes, they decide whether to approve certain steps. The suppliers determine the overall quality of the company’s product as poor quality inputs will most definitely result in defective products. The consumers are the most important part of the external environment. This is because the product is always intended for them (BMW Group 2014, n.p.). As such, marketing communications needs to focus on them. Finally, the UK government plays a vital role in the integration of the corporation’s businesses. Other than regulating the integration through reforms, they may also protect businesses. This was the case when the Rover plant almost collapsed and the UK government had to step in and save it (Gallagher et al. 2011, p. 7). e) PEST The UK is a capitalist nation where the society is generally open to investments. The capitalist culture allows for the full integration of businesses. There is readily available capital with the economic environment favoring the expansion of the BMWs operations as evidenced by the high volumes of sales already experienced. In terms of technology utilization and development, the UK is among the global leaders. The technological levels allow for full integration and smooth running of operations as well as enabling a good marketing network. This means that there are reduced restraints in this market with opportunities coming out as being big. However, BMW will need to unseat some of the major brands in the nation if it sis to fully integrate its operations and become a market leader. iii. Communication objectives The marketing communications plan seeks to achieve the following objectives for the BMW brand in the United Kingdom within five years: 1) Appeal to the young generation and the female gender so that they make up at least half of the sales instead of the current 2/3 2) Unseat the existing dominant brands in the respective countries so as to become a leader in the automobile sector and not a challenger By the end of five years, BMW should have become the market leader in UK and the preferred brand for not only older males but the general consumer base. The attainment of these milestones is to be attempted through the strategies outlined below. iv. Marketing communications strategy This marketing plan will incorporate the pull and profile communication strategies. The idea is to target the specific audience for the plan with the focus being on the product with the endgame being the stimulation of purchase of the product. All this will happen concurrently with the aggressive advertising and campaigning in place by BMW. Brand reputation and awareness improvement comprise a major portion of the campaign’s profile strategy. Although the brand is highly reputable in the nation with awareness levels also being high, the communication profile strategy will be the improvement of the reputation with a purpose of developing awareness among the target demographic with the purpose of attaining the goals. The main method utilized in the conveying the message to the consumers will be the mass media marketing as well as films distributed online and in theaters. The key is the eliciting of emotional responses from the campaign’s focus demographic made of women, young adults and teens. v. Integrated promotional mix Sponsorship In the UK, sports and specifically football are an important part of the society. With the football following existing like a religion or cult, communicating with the target market needs to allow the incorporation of the section into its strategies. The UK’s premier league is one of the most watched leagues in the world. This has seen organizations sponsor some of the teams to create publicity. With the close relationship between sports and performance vehicles, a proper marketing communications strategy should involve the sponsoring of the team kit of one or two top flight clubs in the league. This will create awareness of the brand in the spectators especially the young adults who make up a big portion of the fans. The strategy could go further and sponsor a women’s league team. This will go a long way in improving BMW’s PR as will highlight that the group supports the shift towards gender recognition equity in sports. The effect will be a general increase in sales due to the improved valuing of the brand by consumers as well as increasing the sales among women. Advertising Current BMW UK advertisement campaigns highlight the performance of the cars which mostly relates to middle class older male demographic that is the largest consumer base for the products (Weiler 2004, p. 17). At the same time, minivans and station wagons of other are depicted as vehicles fit for mothers and women. This has skyrocketed sales of these cars to this demographic. This means that if BMW produces ads showing the suitability of a series of vehicles to women the volumes of sales would increase. This requires a strong media campaign with the audience being informed on the cars suitability. Nevertheless the duration and expenditure requirement for this strategy are not major cons with the reputation of the brand being improved. At the same time the company could negate from using male “superhero” as the only models for their cars and show the applicability of the cars to women and the young generation. This would seek to alleviate the thinking that minivan is best suited for a mom just because she has to take her kids to soccer practice. This change could also be adopted in the mainstream media with the catch phrase “the ultimate driving experience” changed to “the ultimate driving experience that brings for everyone”. The joy is in terms of not only performance, but reliability, fuel efficiency, driving pleasure and convenience. Pictures of family settings could act as major influencers of this direction. This will appeal to the campaign’s target audience. Direct marketing The direct marketing strategy will incorporate the social media networks and video game setting. A majority of the millenials population does not time to check the regular media for advertising features. This means that there is a high possibility that the campaign will not reach a larger part of them. The solution is to fully integrate the brand in social media networks. If possible a social media division may be set up to communicate current issues an marketing strategies. Trivia and sponsored hashtags could be used to further conversations and spread the word with the mini films also being spread through the networks. The development of video and computer games could also further the knowledge of series among the millenials which could enable young digetia to make up a significant portion of the purchases in the nation. Personal selling In business, perception is everything. Brand perception depends on the interaction with the products. With premium prices, a customer will not purchase a BMW brand if he or she is not sure of the performance and functionality. At the same time, it is important to recognize that not all marketing strategies will reach the lower levels of small consumers. This may be countered by the brand providing test drives and test drive vehicles at the low level, closer to the consumer at cheaper rates with potential customers allowed to push the cars. The idea is to utilize individual sales people to market the brand. This will involve the creation of a division of sales that will focus on going to the grassroots to sell the cars. The idea is to take the brand to the customer and not wait for them to come to BMW. The sales will focus on big events and concerts where there is a large crowd with the audience given chances to test the cars in an attempt to sway them into buying. The effect will be improved awareness and perception of the brands that will definitely increase sales among women and millenials (Hoyer and Brown 1990, p.65). vi. Scheduling and implementation The direct selling module is to be implemented as soon as the structures are in place with the deadline for its launch being May 1st 2015. The project should start small with big publicity in major cities of the nation at a $100 million budget, before revenues increase and the project is furthered. In order to have the direct marketing occurring at good speed, the company should give bonuses for every unit sold to women and millenials. The group that is also able should reach the largest number of participants for the test drives should also get a reward. A series of these activities at football games is necessary. The company should identify teams in both the men and women’s football leagues to be sponsored and act brand marketers. The deals should have a possible budget around $50 million for kit sponsorship for each year. The first team to wear the brand on its kits should have done so by the start of the 2015/ 2016 season. For the next 5 years, teams should enjoy BMW’s sponsorship with a series of ads showing the company’s support for sports being included. The budget of the campaign is to be determined at the going rate of the ads at the time. As soon as the wheels of the campaign start rolling, the social media campaign should hint at the population of developments so as to keep them guessing. In the event that two of the mini films are successful, the company should contact a computer games developer like PlayStation for the development of a BMW based game that will have almost every series developed in this century. The deal should be a partnership that will generate revenue for both parties. vii. Evaluation and control To ensure that the personal selling is working, the company will record the list of participants and countercheck them on the list of buyers at the end of the year. It will also check the changes in the number of women and millenials participation to see whether there is improvement in sales within the demographics. The figures will also be used to test that the advertising will have on the consumerbase. In the case of the sponsorship, the number of jerseys bought will show the awareness of the brand. The changes in the volumes of sales will also highlight the effect on the population. This also applies for the major films. The social media division should conduct moknthly checks on the conversations and tweets that involved the brand. However, the main evaluation procedure will be the comparison of the annual volumes of sales to analyze the changes brought by the campaign. The general expectation is that there will be a gradual growth of the volumes of sales among the women and young adults in the next five years which will in culminate in the BMW brand making it up to the top 3 automobiles producers. Bibliography BMW Group Annual Report 2005. 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