Launch of a New BMW in the UK - Essay Example

?Marketing Plan for the Launch of a New, Electri Powered BMW In To the UK Market Table of Contents 0 Introduction to Organisation and the Product 3 2.0 Situation Analysis 4 2.1 Company Analysis 4 2.2 Competitors Analysis 4 2.3 PESTEL Analysis 5 2.4 Value Chain Analysis 8 2.5 SWOT Analysis 8 3.0 Appropriateness of the Product 10 4.0 Market Segmentation and Targeting 10 5.0 Marketing Strategy 11 5.1 Marketing Mix 12 6.0 Differentiation Strategy and Positioning 12 7.0 Pricing and Distribution Strategy 14 8.0 Integrated Marketing Communication Strategy 14 9.0 Gantt Chart 16 10.0 Evaluation and Control 17 References 18 1.0 Introduction to Organisation and the Product BMW stands for Bavarian Motor Works and was founded in the year 1916. It was originally founded as an aircraft engine manufacturer. However, it produced its first automobile in the year 1929. It established itself in the luxury/performance segment of the global automotive market by the year 1980. BMW can be categorised as being the fashion brand. Its future growth strategy has been focused upon achieving greater market share in luxury car market by providing its customers innumerable alternatives (BMW Films, n.d.). It has three brands namely BMW, MINI and Rolls-Royce Motor cars. The BMW Group has set its vision upon the premium sector of the international automobile markets. In order to achieve this aim the company is well equipped with the knowledge of deploying its strength along with the efficiency that is unmatched in the automotive industry. The company can be marked as the leader in providing the premium products and services for individual mobility (BMW Group, 2010). This marketing plan has been developed to launch the new i8 car of BMW in the UK. It will deal with the tactics and strategies that are required to launch a product in the UK market. The chosen vehicle is an electric car with zero emission. Therefore, it would be prudent to have a brief understanding on this product of BMW. It is to be noted that BMW’s i8 has been based upon the Vision EfficientDynamics concept. It’s a plug-in hybrid drive vehicle. It aims at offering high performance and low fuel consumption as well as low CO2 emission. It is worth mentioning that the term ‘i’ refers to sustainable vehicles and mobility solutions (Auto Sr. Reporter, 2011). 2.0 Situation Analysis 2.1 Company Analysis BMW has been a luxury and performance car manufacturer. The revenue of the company had been ?3.468 billion in the year 2008. There has been decline in revenue by ?0.7 billion from 2007. Its target market has been middle to upper class individuals and families and business users. It tries to maintain a competitive edge by relying on the ‘Efficient Dynamics’ strategy. It endeavours to adapt to the latest technology and focuses upon greater sustainability. It is majorly customer focused (Bai & Et. Al., 2009). 2.2 Competitors Analysis The major competitors of BMW in the UK are AUDI and Mercedes-Benz. However, the market share of BMW had been the highest in three consecutive years, i.e. 2006, 2007 and 2008. In the year 2006 the market share of BMW had been 6.45% while that of AUDI and Mercedes-Benz had been 3.6% and 3.31% respectively. The market share of BMW in the year 2007 had been 6.97% in comparison to 4.2% and 3.39% of Audi and Mercedes-Benz respectively. In the year 2008, there had been a slight decline in the market share of BMW by 0.63 points. It had been registered at 6.34% of BMW and 4.7% and 3.42% of AUDI and Mercedes-Benz respectively (Bai & Et. Al., 2009). It is essential to know about the competitors in order to launch the product. The understanding of the existing competitors can aid while considering the quality of a new product to be launched and will also aid in innovating new ideas that can be implemented in the products and services. Customer responsiveness will help the organisation to establish the needs and wants of the customers and develop the products that can be used to satisfy the needs of the customers (Bai & Et. Al., 2009). 2.3 PESTEL Analysis Political Environment The British political environment is headed by the monarchy. However, the power of the monarch as the head of the state is ceremonial. There are three arms of the state namely the executive, the legislature and the judiciary. The UK practices Scrappage schemes for cars is 10 years or older. Government provides funds to an organisation if needed. The CO2 emission target has been set in the UK at 130 g/km (Bai & Et. Al., 2009). Economic Environment After emerging from the recession there has been shift of people towards the sustainable life style. The increase in population and demand for more as well as larger homes has posed to be a threat to the UK security of the water supplies and the wildlife. Therefore, it can be said that the public concern about the green issue may decline since more people live in towns. Therefore, they won’t be able to experience the natural beauty (Meikle, 2010). If the cost of the oil goes up then this will severely affect the consumers buying. Moreover, the UK had experienced longer recession. The economic report of July-September 2009 showed a fall in the GDP by 0.4%. The lower interest rate, i.e. 0.5% that has been set by the Bank of England affects the consumer’s savings. However, there had been rise in the GDP in third quarter of 2010 by 0.7%. Moreover, there had been rise in the consumers spending by 0.3% in 2010 (Office for National Statistics, 2010). Social Environment There are around 58 billion inhabitants or 246 inhabitants per square kilometres in the UK. The rate of urbanisation has been 89, 5%. Moreover, the wealth of the elderly person is quite high in comparison to the younger people (Seniorwatch, n.d.). It has been estimated that the population of the UK will be 70 million by 2029 primarily as a consequence of future migration as well as birth of children to foreign nationals who live in the UK. There are more of older population in the UK and likely to grow in the coming years (Travis, 2009). Technology Along with the change in technology the business operation has undergone remarkable changes as well. Consumers can shop 24*7 hours a day from their homes itself. Internet has changed the way companies operate their business. The government seems to have realised the importance of technological innovations. Therefore, it is showing its interest to encourage the investment in research and technology. In the constantly changing environment the company’s EfficientDynamics Technology always tries to stay one step ahead (Bai & Et. Al., 2009). Environmental Factors The climate is constantly changing which is becoming an increasing concern among the people around the globe. Since the issue is quite serious everyone has a role to play in reducing the impact of the changes which includes the companies such as BMW as well. Since there has been lack of natural resources, the companies are shifting their preferences towards hybrid cars. Moreover, there has been global shift to cut CO2 emissions and the companies are focusing upon the greener lifestyle (Bai & Et. Al., 2009). Legal There are various road and safety regulations in the UK. Moreover, the country imposes Euro NCAP safety test on all the cars. The road tax bracket and the Insurance groups also affect the proper functioning of the company (Bai & Et. Al., 2009). 2.4 Value Chain Analysis The inbound logistics for the company is its intelligent cooperation and project related cooperation. BMW focuses upon the quality control which is one of its principles. It is the staffs’ responsibility to control the quality of the product. The outbound logistics for the company have been its 148 franchised dealership for BMW & MINI and the company also has 33 franchises for BMW motorcycles. The UK and Germany have experienced the highest sales volume and they apply various sales tactics such as sponsorship, product placement and others. The BMW services include quality, efficiency and innovation. The company adopts the flexible working hours and has a unique appraisal process. It applies advanced and unique technologies and innovations. It has been committed to sustainability. It has worldwide subsidiaries as well as manufacturing plants and also operates its own financing company (Bai & Et. Al., 2009). 2.5 SWOT Analysis Strengths The company has a diverse range of products such as BMW, MINI and Rolls-Royce. It has been successful at influencing the consumers through media and film industry. It has maintained its reputation by providing its customers with quality, reliable products and services (Bai & Et. Al., 2009). Weaknesses The cost of raw material is quite high because its base is in Germany. In addition, the plants which are located abroad perform the task of assembling (Bai & Et. Al., 2009). Opportunities The shift of the consumer’s preference towards the innovation and technology provides the company a chance to focus its attention towards innovation. The customers prefer internet shopping, which provides the company a chance to build its own customised bar (Bai & Et. Al., 2009). Threats There is volatility in the price of the fuel which affects the purchasing of the car. The new legislations also affect the demand for the car adversely. It has been noticed that the competitors of BMW are shifting their product development activities to lower cost countries which is a threat for the company. Moreover, in the UK there is extreme competition for the customers and the resources (Bai & Et. Al., 2009). 3.0 Appropriateness of the Product There are various reasons proving that the product is appropriate for the organisations. After conducting the PESTEL analysis it can be revealed that in the UK there is global shift towards cutting CO2 emission and the people are changing their lifestyle towards green. The product has been designed keeping into mind both the above factors, i.e. CO2 emissions and changing lifestyles. The product is zero emission and is an electric car. It can be estimated that the product will work well in the UK market. Moreover, the product is targeted towards elder age group. It has been evident from the PESTEL analysis that in the UK the elderly population has more wealth in comparison to the younger age group (Bai & Et. Al., 2009). 4.0 Market Segmentation and Targeting It makes use of the specific marketing tools for cars. The car is suitable for the individuals, the families and the businesses predominantly the males among the age group of 35-60 years. This group has been chosen on the basis that they will be able to afford the new vehicle since they are more financially secure and are more likely to afford a new car. It focuses upon the new users. For psychographic segmentation it believes that its younger target market is physically active or are social, young minded and energetic. It has based its target market on the basis of two parameters such as existing customers and new customers. In terms of existing customers it targets the middle to upper class individual, families and the business houses. It also focuses its attention upon the new customers who are middle to upper class individuals, families and also businesses. The business houses will include the car rental companies, large public or private corporations and public sector organisations (Bai & Et. Al., 2009). 5.0 Marketing Strategy The marketing strategy that has been adopted in this research paper is launching up of the new product in the markets of the UK. Launching up of the new product in order to market them quickly can be said as a prerequisite for gaining a competitive advantage. The product development managers of recent times face problem to bring the world class products to the market. The factors that are responsible for the problem or pressure include the acceleration in the rate of the technological development, fierce competition, improved mass communication, shorter product life cycles and disintegration of the market place because of the changing demographics and the rising cost of the R&D. Therefore, it is because of this reason there is a need to develop new products in order to ensure the timely introduction of the product life cycle. The launching up of the product can be expensive, least well-managed of the overall product development process and quite risky as well. The commercial success and the failure of the new product do not rest solely upon the product itself. The strategy for launching the product also determines if a product will succeed or fail. If the companies want to succeed in the launch process then they need to pay due attention towards the finding of proper strategies (Chiu & Et. Al., 2005). 5.1 Marketing Mix Product The product that has been chosen is i8 having various features such as zero emission and fuel efficient. It is also an electric car. Price The price of the product is quite high which may even be out of certain people’s price range. It follows value added pricing. Place The marketing plan has been developed taking into account the UK market. The internet is used by the customers and the companies to a greater extent. The products are placed at car showrooms for demonstration purpose. Promotion It focuses upon the product placement and continuously advertises at events which reflect the brand image of BMW. 6.0 Differentiation Strategy and Positioning The companies’ uniqueness differentiates it from that of its competitors. The strengths of the company have been its quality, efficiency and innovation. Since the company’s target group is middle to upper class people and the elderly people who are wealthy, the adoption of the differentiation strategy makes sense. BMW’s i8 is quite unique in comparison to other products. It is an electric car with zero emission which is demanded by the customers today. The differentiation strategy can be achieved through several features such as warranties, brand image, technology, features, service, and quality and dealers network. BMW’s i8 encompasses all the necessary features that make it unique from others. A major apprehension that the potential customers will have with the i8 of BMW is the belief that it would be more expensive. These issues need to be addressed in future communication and the i8 must invoke new perception among the potential customers. The car has been designed with two things in mind, enhancing the experience of the driving and making it more pleasurable. 7.0 Pricing and Distribution Strategy The product will be targeted towards the 35-60 years age group. However, utmost attention will be provided to attract the younger age group as well. In order to do so, the company needs to price its products accordingly. It can focus upon penetration pricing for the younger age group. The pricing may be different for the old age population since it has been evident from the PESTEL analysis that the wealth of the elderly population is increasing in comparison to the younger generation. Distribution often provides the marketers a number of opportunities that can be associated with the elements of the marketing mix. One of the opportunities involves parallel distribution. In this case the products are sold either through conventional channels or through internet and factory outlet stores (Perner, 2008). 8.0 Integrated Marketing Communication Strategy Promotion plays a vital role while launching up a new product. The informational as well as the relational messages provide greater support for the new products. Message clarity and integration of the communication channel tend to demonstrate positive moderating effects upon the messages (Chen & Et. Al., 2007). Nowadays, the usage of the new media such as the internet and the mobile phones has exploded. Mobile phones have been one of the most popular modes of promotion in Europe. It has been found that more than 90 percent of the mobile phone owners, who are between the age group of 15 to 44 use SMS. While in European countries the digital television is not widely available, the exception is that in the UK nearly 8 million homes already have access to it. Internet can be one of the other tools that can be utilized for communication. The internet can be utilized to send the message, transfer the data, search and browse, monitor news and opinions, and post, host and present the information. Internet can be utilized for direct sales and distribution channel. In order to launch i8, internet will be utilized in order to inform the customers regarding the product, create brand loyalty, build relationship with the customers and reach the customers daily (Kitchen & Pelsmacker, 2004). Various media can be used to promote and campaigns can also be conducted in order to make people aware of the product. Demonstration of the car in major showrooms of London will be conducted prior to the launch in order to make the people view the product. The database can be utilized that the BMW already has. This database will not only aid in the proposed campaign but it will also be important in future communication for other campaigns. The major objective here will be to increase the awareness of the product among the customers. It would be to show that i8 is an electric car having zero emission which is demanded by the customers nowadays. Conclusively, the major objective of the promotion strategy would be to turn the somewhat skeptical non-users into optimistic users of the future. The promotional activities will be directed towards making people believe that i8 is the car that can serve their purpose and is the best among other cars available. Through promotion activities a greater affinity towards the brand will be created. 9.0 Gantt Chart Activity Predecessors Times Estimates Expected time Optimistic time Normal Pessimistic Planning(A) ---------------- 90 days 93 days 96 days 93 PEST Analysis(B) A 30 days 33days 36 33 Prelaunch Promotion(C ) A and B 15 17 19 17 Identification of Resources Required (D) A 10 12 14 12 Setting Press Material(E) A and B 15 17 19 17 Sales Training(F) A 30 days 33 36 33 Demonstration through Live Presentations(G) E 10 12 14 12 Test Drive(H) G 15 17 19 17 Customers Feedback(I) G and H 30 32 34 32 Alteration and Modifications(J) I 45 47 49 47 Final Launch(K) J 15 17 19 17 Therefore, after developing the Gantt chart it can be revealed that the expected time that will be required to launch the product will be one year. Utmost care needs to be taken to execute each of the activities that have been mentioned above. All the activities should not be executed at the same time in order to save the cost. In fact they need to be executed one after the other in order to gain better results and avoid the bottlenecks and any kind of dilemmas. 10.0 Evaluation and Control If yearly or quarterly benchmarks are set in order to know the performance of the car then BMW will be able to set and track the quantifiable goals. As the time passes by and the effects of these new marketing tactics are witnessed, the company can easily adapt itself to the changes and make necessary changes when required. It would be essential to track the performance of the car frequently via the sales database. If it is found that the sales of the car have been unsatisfactory, then it would be prudent to revise the marketing strategy and make the desired changes. References Auto Sr. Reporter, 2011. BMW I3 And I8 Cars Under New ‘i’ Sub-Brand Soon. DWS. [Online] Available at: http://www.dancewithshadows.com/autoindia/bmw-i3-and-i8-cars-under-new-i-sub-brand-soon/ [Accessed March 08, 2011]. BMW Films, No Date. 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[Online] Available at: http://mcdm.ntcu.edu.tw/tzeng/publication/An%20Evaluation%20Model%20of%20New%20Product%20Launch%20Strategy.pdf [Accessed March 08, 2011]. Chen, C. & Et. Al, 2007. ‘Marketing Communication Strategies In Support Of Product Launch: An Empirical Study of Taiwanese High-Tech Firms”, Industrial Marketing Management. Vol: 36, Iss: 8, Pp: 1046-1056. Kitchen, P. J. & Pelsmacker, P. D., 2004. Integrated Marketing Communications: A Primer. Routledge Meikle, J., 2010. UK Economic Recovery 'Poses Threat To Environment'. Environment. [Online] Available at: http://www.guardian.co.uk/environment/2010/nov/30/uk-economic-recovery-environment-eu [Accessed March 08, 2011]. Office for National Statistics, 2010. Brief Analysis. Consumer Spending. [Online] Available at: http://www.statistics.gov.uk/default.asp [Accessed March 08, 2011]. Perner, L., 2008. Channels of Distribution. University of Southern California. 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