Advertising plan for BMW 3-Series - Essay Example

Advertising Plan For BMW 3-Series I. Situation I-a. Company Profile BMW Group, one of the 10 largest automotive companies in the world today, started as a manufacturer of aircraft engines in World War I and began building a reputation for reliability and excellence on that undertaking. Initially known as Bayerische Flugzeug-Werke in 1916, the firm changed its name to Bavarian Motor Works in 1917 as it grew rapidly during the war years. In 1923, BMW put together its first motor vehicle, a motorcycle, followed by its first car in 1928, a version of Austin 7, which was built and commercially sold under license. There was no stopping the company since then. Today, the Group operates in 150 countries through 26 production-assembly plants, 35 subsidiary markets and 12 R&D networks. Its flagship products consist of three automotive brands - BMW, MINI and Rolls Royce. All three vehicles share the same configuration, which suggest luxury, premium class, top-of-the-line quality. This is precisely the corporate culture that animates BMW, which is expressed in its mission statement: "to be the most successful premium manufacturer in the industry." BMW built a solid reputation on this operational strategy. With this kind of philosophy underpinning all BMW's activities, the company produces nothing but premium-class vehicles, which are limited to exclusive sedans and luxury limousines. The side objectives are to set the industry standards for technology, environmental protection and safety, and providing outstanding customer services in the pre- and after-sale phases. These are enshrined in the firm's operations in its 10 R&D facilities worldwide (4 in Munich, 3 in the US and 1 each in Austria, Tokyo and Beijing), 15 production plants (1 in Berlin, 1 in Munich, 4 in UK, and 1 each in China, South Africa, US, Austria and Brazil), 5 assembly plants with local participation (1 each in Indonesia, Russia, Egypt, Malaysia and Thailand), and sales and marketing subsidiaries in 35 countries. In 2005, the company invested 2,597 million euros to boost its property, plant, equipment and other tangible assets, with emphasis on further expanding its production and sales networks. The amount was 81 percent higher than the 1,396 million euros sunk in the firm in 2004 as capital expenditures. A lion's share of this investment went to the company's R&D network, which has been tasked to come up with the BMW "cars of the future." This is part of an expansion plan that has preoccupied management from the start. In 1994, BMW acquired the Rover Group from British Aerospace in the hope that it could duplicate its earlier success with MINI, which used to be a British-owned firm too. For at least six years, some 1 million Rover vehicles were produced in UK yearly until the company suffered losses reaching $2 million per day as a result of the perceived lack of consumer confidence in the brand and the strengthening of the pound. BMW was then forced to sell Rover to the Ford group in 2000. As for the MINI, BMW hang on to the more successful brand, which is manufactured in its Oxford plant. Market demand for the MINI has never let up, such that at the time BMW was selling Rover, it was pouring in another 50 million euros to increase MINI production. BMW fosters the core values of technology, quality, performance and exclusivity, such that its activities from R&D to sales are committed to achieving the highest quality for products and services. The overall strategy of the company is first, identify areas with growth potential, understand what they represent, recognize where its strength lies, then make the best of every opportunity by pursuing a clear strategy. These considerations guide BMW's structure and how decisions are made, and from the evidence it works like a charm. In production, sales and market growth, 2005 was a banner year for BMW. Production of different BMW models during this year leaped 5.9 percent, from 904,335 units in 2001 and 1,059,978 in 2004 to 1,122,308 units. The same growth level was achieved for the MINI cars, which was placed at 5.6 percent. These compensated the lackluster production demand for Rolls Royces and motorcycles, two products that are historically sensitive to economic stresses. But in actual delivery to customers, 97,474 motorcycles were turned over to customers in 2005, better than the 92,266 deliveries made the previous year. There were also 796 Rolls Royces delivered in 2005, as compared to 792 in 2004. As for BMWs, the increase in deliveries was an impressive 10.1 percent, from 1,023,583 in 2004 to 1,126,768. The figures were even better in 2006 when monthly sales posted an all-time high of 144,000 units in July. In the first half of the year, sales growth was already recorded at 13.8 percent. The biggest markets for BMWs are the US (with a 23.1 percent market share), Germany (22.3 percent), UK (11.8 percent), Italy (6.8 percent), Japan (4.4 percent) and France (4.0 percent). I-b. Product Profile The immediate predecessors of the BMW 3-Series cars are the BMW 2002 cars, which were introduced when the company slowed down on its production of the previous BMW best sellers. BMW made this decision after product research showed that the actions of its competitors were impinging into its own business. Its main competitors Infiniti, Audi, Lexus and Mercedes were going for the bigger liter-capacity engines and were also building longer, roomier and taller cars. As part of the response to this challenge, BMW abandoned the 2.5-liter engines, with the 3 Series starting at 3 full liters. The new series are also taller, wider and longer, with more passenger room. Although the smaller 2 Series were laid to rest, the new series retained much of the old styling, which was the firm's way of acknowledging that this car make had accounted for nearly 40 percent of all company sales since 1975. The new models are also of the same basic configuration: entry-level luxury and compact executive cars. They are only distinguished by their platforms and body styles, such as the E90 3 Series sedans, E91 3 Series wagons, E92 3 Series coupe, E93 3 Series convertible. The first five models in the 3-Series consist of the 325i 215-hp rear-drive, the 325ixi 215-hp AWD, 325xi 215-hp wagon, 330i 255-hp rear-drive, and 330xi 255-hp AWD. For an idea on their unit price, the 325i rear-drive initially cost $29,995 and was tagged $32,070 in 2005. The series features various engines ranging from 4-cylinder 2.0-liter capacity to the more powerful V-8 4.0-liter engines for the M3 version. There are also 4-wheel-drive options and all feature a "beautifully balanced steering and suspension setup combined with excellent brakes for when stopping becomes more important than going." These new-generation cars were developed mostly with the US market in mind, together with the sporting and yuppie crowd, which is guided by regular research on demographic, social and economic profile. The decision proved to be well taken when the new models promptly became commonplace among these crowds in America, Europe and even Asia. Other events that served as testimonials to the desirability of the products came one after another. Among these accomplishments were the series' inclusion in the 10 Best list of the Car and Driver magazine, its winning in the Andy Priaux and 2005 World Touring Car Championship, and its being named as the 2006 Canadian Car of the Year and World Car of the Year at the New York Auto Show in April 2006. When the BMW 3-Series coupe was introduced at the Motor Trend show in January 2006, it elicited the most oohs and aahs from the crowd such that it was described as the "more important new product launches of the year." The 3-Series convertible will debut at the 2007 Los Angeles Auto Show starting December 2006 and will be up for sale in early 2007. II. Objectives 1) Build both the company and brand images with respect to the BMW 3-Series. 2) Communicate specific messages such as the January 2007 product launch of the 3-Series convertible at the prestigious Los Angeles Auto Show. 3) Generate direct sales for the BMW 3-Series in support of the firm's retail target of 1.4 million vehicles in 2007 and 1.6 million vehicles in 2010. 4) Counter in a subliminal way competitor activity and any negative publicity that may come up during the specified campaign period. III. Media Plan III.1. Selection The campaign will use a wide mix of publicity modules to include TV commercials, radio ads, print ads, outdoor ads, online advertising, public relations and sales promotion. TV will be the primary medium for the regular company and brand campaigns, as well as the occasional product launches. At least three of the leading national TV networks will be picked for the TV ad campaign, and the choices of programs will be based on ratings and types of audience. The proposed radio ads will focus on the same concerns but this medium will be used sparingly, for the simple reason that radio listeners are identified more with the working class than the leisure crowd. When we do use radio, regional outlets will be preferred over the national stations because provincial stations have the more loyal and identifiable and less scattered audience profile than the latter. As for the print ads, the suggested outlets for the color press include Tatler, Vogue, lifestyle magazines, motoring publications, largest-circulation broadsheets and tabloid weekend color supplements. The black and white ads will be arranged for placement in national dailies. But for the tactical campaigns, such as countering negative publicity or blunting the effects of competitors' gains, regional publications will be used extensively. In the use of outdoor ads, priority will be given to the high-impact, high-awareness billboards for brand campaign and car launches. The billboards will be put up along major thoroughfares connecting commercial centers to plush villages in the suburbs. These types of strategically placed ads are useful for targeting specific target markets. All these activities will be supplemented by online advertising, which will be placed on selected third-party sites that can deliver AB audiences, together with public relations and sales promotion. PR lays the groundwork for advertising to work, while sales promotion gives the campaign a more personal touch by going direct to the target customers. If it isn't broke, why fix it With this in mind, we will continue the BMW tradition of putting out April Fools Day ads, the tongue-in-check ads run in broadsheets on April 1 to highlight any revolutionary piece of technology from BMW. The idea is to make intelligent BMW owners feel that they are part of the grand BMW tradition by dropping their guard for once and have a laugh at themselves. The agency will also participate in the observance of Earth Day and other world celebrations on economic sustainability by running full-page broadsheet ads projecting BMW's full commitment to the environment. The ads will emphasize BMW's product development strategy of reducing fuel consumption, vehicle space, exhaust emissions and waste, along with efforts to develop alternative driving concepts. We will also arrange to have BMW 3-Series featured in appropriate films, TV documentaries and police drama serials. In sum, the bulk of the proposed advertising budget will be allotted to TV advertising, followed by radio, print ads, outdoor advertising, online ads, public relations and sales promotion, in that order. Taken together, these modules will serve to reinforce each other. In carrying out the advertising blitz, we shall give more weight to reach over frequency. What matters is less the frequency of the ads than the extent of the audience reached by the fewer ads. III.2. Execution The mother ads for the cars in the 3-Series will emphasize the four BMW core values of technology, quality, performance and exclusivity. As such, the ad graphics will highlight the cars' exterior and interior design, levels of customer service, signage and typefaces. They will also project the BMW brand values of joy, dynamism, culture and challenge. The sustaining TV ads will feature the same values but will be expanded to include BMW's commitment to safety and economic sustainability. On the safety concerns, the emphasis will be on the crash tests the company regularly conducts with the use of crash test dummies. The focus on environmental issues will be on the efforts to reduce fuel consumption, exhaust emissions, and waste. For example, we will play up the BMW 750h L-saloon, the world's first hydrogen-powered car whose exhaust emission is vaporized water, and the growing number of components that are now recyclable. In the case of the print ads, these will be executed in such a way that appeal to the emotion, with strong and positive heads. The agency is aware that, unlike TV and radio, the audience impact is lessened as print ads are repeated. Thus, a few high-impact ads will be placed near the front news sections, right hand pages, and top-right of the newspaper pages. These ad spaces cost about 20 percent more than the other newspaper spaces, but the extra investment is worth it because they are the first items that readers see. For radio ads, the agency will base the strategy on the RAJAR measurement system to gauge which specific audiences we want to reach as to age, gender, income, etc. and when they are tuned in. Radio advertising is about repetition. It is not a conversational medium, such that presenters don't shout and neither should ratio advertising. The agency will thus device one clear message so as not to confuse listeners. The radio stations that play classy music will be selected, based on observations that pop music stations cater to the type of audience not suitable for BMW. Specialists and celebrities will also be chosen as voice-over talents, along with accomplished car racers, because they attract more attention. In the spirit of principled competition, will not make any overt reference to other competitor brands, such as the Mercedes A, Audi A3, Volkswagen Golf and Ford Focus for BMW Series 1, and Audi 4, Jaguar X, Mercedes C and Lexus 15200 for Series 3. If reference is made at all, it will be in a subliminal way. The same strategy and ad contents will characterize the full-page print ads that will be placed at least twice a month in the four leading broadsheets that enjoy the largest national circulation. During the launch of any car in the 3-Series, a full-spread, full-color supplement will be taken out in these newspapers to attract the interest of car owners. ________________________________________________________ Sample script of TVC Video Audio A BMW 3-Series coupe speeds BMW 3-Series coupe. away smoothly, soundlessly A new driving experience. on an S-shaped highway. Video Audio The coupe up close. It's the last word in luxury. Brute strength. A high-class act in design. Function. Economy. Video Audio Interior shots of the car We made the car of the future. while on the go. Active steering. i-Drive. DVD navigation. Video Audio Coupe speeds away, fades BMW 3-Series. The ultimate out driving machine for people on the go and on the way up. Video Company and Brand logos ________________________________________________________ The TV ads will be placed as 60-second commercials for the first four weeks. In the succeeding period, they will be edited and reduced to 30-seconder ads in such a way that their message and impact are not diminished. The idea is that TV audiences would have committed to memory all the details after frequent viewing and cutting the ads' playing time would not make any big difference. In the process, we save a considerable sum in placement costs. ________________________________________________________ Sample copy of print ad Head: The legend continues. Copy: BMW 3-Series upholds the tradition of exclusivity. Technology. Environmental care. Excellence in pre- and after-sales services. The 3-Series looks the same, drives the same, feels the same. But it goes from best of 3 to best of 10. If it's a Bimmer, it is always good. Always a class act. A cut above the rest. Graphics: Exterior, interior shots of car. Logo: Company/brand logo __________________________________________ IV. Sales Promotion In this effort, the agency will use the two proven techniques of sales promotion to coincide with the separate launches of the BMW 3-Series: the trial and loyalty techniques. The idea in a trial technique is to get customers to sample the product in the hope that they would take a liking to it. In our case, such sampling means allowing car owners to test-drive the cars from selected showrooms. We then try to earn their "loyalty" by seeing to it that nothing goes amiss while they test-drive the 3-Series cars so that this increases the probability of the customer using the product again. Sales promotion is effective if you offer customers something extra and of value like free product samples, gifts or prizes. The goal is to identify a specific market need and generate interest for the company and the brand. Of course, the gifts and prizes will sport the company and brand names, which are expected to generate goodwill for the firm. The branded gifts that immediately come to mind are give-away items like ballpoint pens, key chains and umbrellas with the BMW 3-Series logo on them. These giveaways will be distributed to all guests at the car launches, and among newspapermen. As for prizes, these could be anything of value that will be placed at stake in occasional contests and raffles that will be conducted to promote consumers' interests and sales. From time to time, we will strike an arrangement with TV and radio programs to squeeze in a portion for us to conduct such raffles. The sales promotion activities to be undertaken as part of this campaign will consist of direct marketing and the printing and distribution of supply sales literature, brochures, price lists, and point of sale materials. This will go with the direct mail campaign, public relations and sponsorship campaigns. For the direct mail campaign, we will draw a list of suitable customers to receive the sales materials that we will farm out on a regular basis. In public relations, the activities will include putting out relevant press releases and scheduling events in which all motoring editors in town will be given a chance to drive a BMW 3-Series. We will also arrange for BMW sponsorship of car races and other sporting events. Such sponsorship costs very little but yields handsome PR dividends since the promotional banners posted at the background of big sporting events are noticed by millions of people, especially if the events are immensely popular like soccer and the Le Mans races. All the sales promotion activities mentioned above will be carried out at the pre-, current and post-launch stages for all the 10 3-Series models. V. Budget Plan The estimated cost of the entire advertising campaign is at least 40 million euros, of which 70 percent will be set aside for media placement and 30 percent for production of the publicity materials. This amount is based on the industry standard that pegs the advertising budget at 5 percent of the company's annual sales and 3 percent of its operational budget. The cost estimate also covers the requirements of the advertising mix discussed in the Media Plan. An itemized accounting of the budget plan will be submitted later once the advertising plan is approved in principle. Production cost for a TV commercial is estimated at 1.2 million euros. Let us say the placement cost for a 60-second spot in a prime-time show at station XYZ is 1,000 euros, the total amount is 4,000 euros for a 1-hour show that features 4 commercial spots for its duration. That means an expense of 1.6 million euros per month for TV placement. In one year, this adds up to 19.2 million. Together with the 1.2-million production cost, our total annual expense will come up to 27 million euros. This excludes the production cost for other TV ads that will be produced for the campaign. The proposal is that once the advertising contract is signed, the company will provide the agency 20 percent of the estimated budget, and the balance to be paid as the campaign goes along. References Arellano, J. (2006). "Shot! 2007 BMW 3-Series Convertible with Top Down." Miscellaneous, BMW 3-Series; Posted September 9, 2006. BMW Group. "The Company." http://www.bmwgroup.com Cammisa, J. (2006). "2007 BMW 335i Dynamometer Run." Automobile Magazine. http://www.automobilemag.com/featureI dynammometer/ Motor Trend (2006). "Spied: 2007 BMW 3-Series Coupe." January 2006. 2006 BMW 3-Series Reviews (2006). http://www.automotive.com/2006/12/bmw/3-series/reviews/index.html Wikipedia. The free encyclopedia. Read More