Marketing Planning and Strategy for BMW Company - Assignment Example

Marketing Planning and Strategy (BMW Company) Marketing Planning and Strategy (BMW Company) Executive Summary BMW is a popular and high value brand with a wide range of diversity in its product portfolio. The company experiences numerous forms of competition, both internal and external, and this has been a major reason for the companys constant efforts in enhancing its competitiveness and profitability in the market. For instance, the high competition in the automotive industry means the company had to devise more enduring marketing strategies to overcome the obstacles within the market. Apart from competition, the BMW faces other multiple threats in the market. On the other hand, the company enjoys other opportunities which it has been able to make good use of to make BMW among the most powerful market share holders in the world. In analyzing both the strengths and weaknesses within the marketing strategy of the company, proposals are made on the possible ideal practices that would improve the quality of products and expand the market of the companys products. 2. Introduction BMW is among the leading producers of cars of premium standards within the automotive industry. The company is distinguished from the rest by its unique design, luxurious and high quality approach of its products (Curnow, 2007). The company has been subjected to a healthy competition from other market actors, especially in the form of low-price substitutes, which is the biggest threat to the company’s products. However, BMW has often demonstrated strength in the financial results hence retaining much of its shares in the market. This paper aims at analyzing the BMW marketing strategy, the strengths and weaknesses of such practices in its quest to maintain relevance in the flooded automotive market (Evans, 2008). In addition to this, the paper proposes the probable changes that could enhance the efficiency of the company as far as adapting to the current market dynamicity is concerned, as evident through the current mix in the market. 3. Situation Analysis BMW is one of the most coveted and strong manufacturers of cars in the world. The company boasts of a strong financial performance as compared to its competitors, which has undoubtedly enhanced the loyalty level among its customers (Papasolomou and Kitchen, 2011). It is on this basis that the company has been often ranked as one of the companies with high customer satisfaction indexes in the world. While many large manufacturers of cars struggle with the unstable market, which has led to fall in the sales, profit and market shares, BMW continues to enjoy expansion and growth in its motor production (Gabrielsson, Gabrielsson and Seppäl, 2012). The BMW group is among the ten biggest manufacturers of cars in the world with the possession of very strong motor brands namely, the BMW, Rolls-Royce and Mini, with the three considered as among the absolute brands in the world, on the basis of their strength (Kurt and Hulland, 2013). In addition to this, the BMW group commands a strong position in the motorcycle sector on the market, where major focus has been put in the financial service area. Today, BMW produces cars in different types of segments. On the other hand, the company is a renowned larger manufacturer of motorbikes. The unifying factor of all the products from the BMW is the high purchase prices and high quality. The BMW’s program of cars are among others, coupes, sedans, convertibles as well as the sport wagons, which are one, three, five, six, and seven series. Apart from these, there are other models, the SUVs known as X3 and X5, together with the roadster referred to as Z$ (Tuten, 2009). The company provides M-models in the form of 3, 5, 6, and Z4 series, where M symbolizes Motorsport, the high performance cars equivalent to the race cars. Competitive Analysis BMW is currently facing numerous challenges, amongst which is the external competition from other manufacturers, and overcapacity within the company. Generally, manufacturers may be categorized into those that concentrate on exclusiveness and emotional values, and they are referred to as premium brands (Curnow, 2007). In this category lie the Mercedes-Benz, BMW and Audi. On the other hand, certain companies focus on quantity, and they include Ford and Opel. The problem of overcapacity has been a recurrent phenomenon in many companies, who have managed to handle this in various ways. In the BMW Company, however, this issue has been overlooked as a major concern, and the company has moved to invest in product-driven production and new products as a way of expanding the capacity of production in the company (Evans, 2008). On the other hand, the companys high pricing has previously resulted in piling up of produced vehicles, and the company has not been forced to initiate strategy changes to reduce the high prices in order to get rid of the stock. In this case, therefore, BMW has retained both its price levels as well as a premium brand (Tuten, 2009). There has been a host of complex corporations and structures of owners within the market of automobiles. Essentially, BMW brand is very highly valued and very popular in the global market. In this case, therefore, the premium segment market provides the company with an advantage in terms of the prices of its cars. For instance, the prices for their products are significantly high due to the well establishment of the brand, which ultimately develops legitimacy as well as justifying the purchase of the BMW cars by the customers. A better example for this is the BMW 3-series, which falls within the premium middle class segment of cars. Regardless of the prices of the product, the BMW 3-series brand remains the best selling amongst the premium competitors together with the other segment of common cars (Dawar, 2013). BMW has a diverse product portfolio where many car versions are offered in different segments. Additionally, the various cars made available by the company exhibit homogeneity in different markets hence, regardless of where the car is bought, the identity is maintained in terms of after sales services and performances, and this helps in the creation of creditability among the company’s customers. The other strength for the BMW, which gives it a competitive advantage over other players in the market are the sales it commands on the American market. However, Audi has particularly had very strong sales that have increased all over its markets, and this strength needs to be well observed by the BMW Company. Similarly, it is of great importance that BMW considers the possibility of Audi launching several other new models, which could surpass the abilities of manufacturing exhibited by other premium car manufacturers. In the past, BMW has had a higher number of sales compared to its competitors, who include Mercedes-Benz, and has equally registered significantly high margin of profit from its car sales, and this is part of the market strength enjoyed by the company (Dawar, 2013). The company has been shielded from the frequent problems that other rivals like Mercedes-Benz have encountered mostly due to the high quality of the BMW products. It is such quality that has maintained the company’s loyal customers due to the high customer satisfaction index. Market and customer analysis The major objective of the company has always been to ensure continuous profit growth process through focusing on segments with high profit markets. It is for this reason that the company uses its brand BMW to pursue more success through exploitation of the global market. The BMW Group productions are aimed at satisfying different types of customers in line with their variable needs, and this is done through providing many model varieties for low, middle, and luxury market segment (Mangram, 2012). The company is in constant pursuit of more market opportunities through new decisions that are majorly technology-based, and this significantly improves the production standards by setting new product standards that comply with the dynamic market for the products. BMW boasts of having achieved the move to ensure fulfillment of the customer individual requests, and it currently focuses on the ambiguous objective of providing its customers with personalized, individual car on the agreed dates through advanced ordering (Curnow, 2007). In addition to this, BMW Company has set a new benchmark in reduction of maximum production time for its in-demand products to enable prompt deliveries of products as demanded by the customers. In this way, the company enhances convenience in its services, which gives is a competitive advantage over other players in the market. The companys plan to develop the engine automobiles based on hydrogen is among the loge-term marketing strategies, and through this, the company is bound to dominate the future market of automotive, considering the natural resources deficit foreseen in the near future (Evans, 2008). The company currently has experimental hydrogen engine automotive in existence. BMW Company relies significantly on the future big project in E-commerce, which has been thought to enhance the employees and customers’ number as the company seeks to expand its production and markets all over the world. The company additionally seeks to create a platform for use in supporting the whole chain of process from the buying all through the sales for the manufacturing industry. The company has initiated a personnel policy that is well defined, which makes the employees receive treatment of the standard befitting important parties for success as opposed to mere corporate funds (Papasolomou and Kitchen, 2011). With such level of employee motivation, the company is less likely to lose its productive human resource personnel to the competitors, and this enables the company operates on a relatively lower cost but with high economic growth. Opportunities and threats The BMW Company enjoys numerous opportunities as far as the marketing of the company products is concerned. For instance, the company enjoys relatively low interest rates on most of its raw materials and the finished products as imposed by the government (Palmer, Simmons and Mason, 2014). On the other hand, the company has realized an increasing number of product sale regardless of the economic downturn experienced in the unstable global market. In addition to this, the company has been successful in the exploitation of the technological advancements in maximizing their sales and marketing opportunities in the market. Technology-based modes of product advertisement have been key to the company’s widespread market and by extension, good product sale. BMW has other marketing opportunities in the majority of the world’s developing countries such as china and India, where the company enjoys popularity advantage over the other manufacturing companies (Papasolomou and Kitchen, 2011). Another opportunity that has favored the company’s prosperity is the flexibility with which it has been able to manufacture and develop its products. The company faces numerous threats in its operations, among which are the threats of a new entrance in the market. In the automobile industry especially, the threat of new entrants in the industry may be comparatively low owing to the high capital required in the setting up of the manufacturing plant together with the assembly liner (Curnow, 2007). However, other multinational companies continue to exploit the market hence exploiting the markets initially dominated by the BMW Company. On the other hand, the company faces the substitute’s threat. BMW is recognized for its luxurious and powerful brand image. However, its position in the in the exclusive range of cars makes it vulnerable to other competing options like the GM, Toyota and Mercedes (Research and Markets, 2013). This makes the substitutes’ threat for BMW significantly high. Another threat that the company has had to overcome in its operations is the power of bargaining by the buyers. The bargaining power of the consumers is raised due to the consumers right to decide on products based on the ranges of prices and their choice to buy the products accordingly (Borth, 2013). The issues concerning environment that affect the industry means the buyers have a significant influence on the available sample substitutes. There is also the high bargaining power exhibited by the suppliers of the company, and this is a great threat on the marketing of the company. The suppliers can, therefore, dictate the raw material price tag (Calkins, 2009). The BMW Company has also had to overcome the competitive rivalry posed by other companies in the automotive industry. There are many companies on the market, all targeting a similar segment. Competitive rivalry has been high particularly in the European and US markets where stiff competition from the Asian market has grown greater. Proposed new marketing objectives As far as the corporate strategy is concerned, the company has been determined in identification of encouraging and potential growths, together with comprehensive knowledge regarding what it represents as far as the market is concerned (Mangram, 2012). In addition to this, the company has a proper recognition of where its strength is, and it is on this basis that it makes the best use of the available opportunities. The company has made clear its intention to embrace new challenges through attaining of the set goals. United States remains the largest BMW product market, and it is also the most prosperous premium car manufacturer from Europe within the US market. The European market had been the most impressive for the company in 2995, with Germany constituting the largest market of the manufactured cars. On the other hand, the Hungarian market has proven quite impressive for the BMW group in the recent past (Borth, 2013). The company’s future plans are significantly influenced by the oil reserve depletion, which the company aims at counteracting, together with the aim to reduce atmospheric carbon dioxide. In this response, BMW has set up the development of the BMW CleanEnergy, which uses the basic natural cycles such as the water cycle, as the central concept for the CleanEnergy. There is the generation of liquid hydrogen from water and energy (Research and Markets, 2013). Another approach for an environmental friendly vehicle has been initiated by the company through their collaboration with Daimler-Chrysler and GM, and this is focused on enhancing the speedy production of hybrid cars. 4. Financials Sales Forecast and Profit targets This year, BMW registered first quarter revenue of 3.9%, which was an equivalent value of EUR18.2bn from the previous EUR17.54bn obtained within the similar period the previous year. Accordingly, the forecast group sales are expected to hit the 2 million mark for the first time in the company’s history (Palmer, Simmons & Mason, 2014). With the launching of 16 new and revised vehicle models by the company this year, the company expects to realize a record profit prior to tax. For instance, there will be launch of the i8 plug-in hybrid sports car together with the 4 series Gran Coupé in the course of this year, followed by launching of the X4 model later in the year. Therefore, there will be the sale of the 2 series Tourer during the fourth quarter. In addition, there has been a 2.6 percent increase in the groups earning before tax and interest amounting to EUR2.09bn this year. In the automotive division, on the other hand, the revenue within the first quarter increased by 4.1% to EUR16.5bn, which was above that of a rival company Mercedes-Benz. Despite the great profits the company has enjoyed this year, there are high likelihood of great pressure to be felt by the BMW coming from the S-Class and C-Class Mercedes, together with the Range Rover Sport, Mercedes CLA and Tesla S, the Audi A3, and the Mercedes GLA and Porsche Macan. Even with such threats in the market, the company still anticipates for a slight increase in margin of auto profit from the previous 9.0 percent realized in 2014 to a figure within 9.2 per cent by 2016. According to the International Strategy and Investment analysis, a significant growth in the BMW sales is expected in the next three years while the spending on R&D is expected to fall. With the expected launch of BMW X7 manufacturing in the US, the SUV range is expected to expand and enable it to compete effectively with several other behemoths, which include the Cadillac Escalade, Lincoln Navigator, and the Audi Q9. The superiority of the BMWs product momentum over Audi and Mercedes Benz, all of which are Germany based, is expected to continue for the next five years. It is understood that model lines of high profile, which include the C-Class and the S-Class, are expected to offer stiff competition for the BMW products (Palmer, Simmons & Mason, 2014). However, a critical analysis of the available data suggests that the incremental niche model aggregates of the BMW are of high significance. On the other hand, a negative earning trend is foreseen for the 2015 and 2016 periods, mostly, as a result, of the general product portfolio that is aging, together with the rates of hedge currency that are not favorable. Controls Recommendations on marketing strategy Product Positioning and Differentiation Differentiation involves incorporation of qualities as price or quality into the product to enhance the customers perception of the product as desirable and different. On the other hand, positioning is the manner in which the product is provided to the customers, together with the identification of service brand on the market (Palmer, Simmons and Mason, 2014). BMW has to ensure constant examination of its products as a measure of ensuring conformity of their products with the most current demands of the customers. It must be understood that the profitable strategies applied in the past may fail to work in the present market (Dawar, 2013). Therefore, positioning and differentiation of the products is important in maintaining the company ahead of the competition. This must be accompanied with the spirit of innovativeness and proficient analysis of the market. Product strategy This is the vision of the manufactured product, and it states the ultimate end of the product. In this respect, the BMW should set up a product strategy through which it can make a determination regarding the direction of the product efforts (Borth, 2013). Developing a product strategy requires both the destination and routs of the product. It is important in the execution of roadmap for the product. In addition, it facilitates the company’s ability to focus on particular market target and sets of features, as opposed to being everywhere simultaneously. The product strategy must be able to explain what is being sold, the value the company provides to the customers, the mode of product pricing, and how the product is contributed towards (Calkins, 2009). Development of this strategy requires BMW to identify the existing market threats to be solves, as well as knowing the competitive landscape of the market. Pricing Strategy Pricing has a significant influence on the elements of marketing among which are channel decisions, promotions and product features. Pricing of the product should be influenced by factors such as the marketing strategy, marketing mix decision, the estimated demand curve, environmental factors, the calculated cost, price objectives, and price determination protocols (Kurt & Hulland, 2013). The product pricing must also be influenced by the pricing objectives, which include the current maximization of profit, current maximization of revenue, maximization of quantity, profit margin maximization, quality leadership, and partial recovery of cost. The pricing must equally consider the company survival as well as maintaining the status quo should the firm finds it necessary. Distribution Strategies Distribution is the process by which the company products are made available to the customers, through direct or indirect channels. The important components of the process include the intermediaries and channels, and the use of both of the two is very beneficial since it widens the coverage area of customer base (Kurt & Hulland, 2013). The strategies of distribution are greatly variable, and the BMW Company would have to pick on the preferred choice based on the market demands. For instance, it would be recommended that the company embraces both the selective and exclusive distribution strategies, to ensure all targeted customer populations are accessed with ease. Promotion Strategy BMW Company should diversify its promotion strategies further to ensure the product advertisements reach all targeted populations. For instance, the company should invest more in the technology-based advertisement, which is more convenient in reaching the targeted population of customers (Dawar, 2013). On the other hand, the BMW should venture more in other unexploited markets in the world, which include the Asian and African markets where the products have been less popular. Conclusion Automotive industry is among the most competitive industries as far as the market is concerned, and this has prompted significant struggle among the players in the industry. For instance, the actors have had to cope with high production costs, as well as the expensive development and maturation of the market. This market is predominantly within the countries of the west, amongst which are European nations and the Northern America. In respect to this, producers have had to cope with the challenge of making the best decisions in the in the move to manage their business operation continuity and profitability. Different companies have thus put in place different strategies of marketing to maintain or enhance their competitiveness in the regional and global markets. BMW generally has much potential to capitalize on the numerous internal strengths and opportunities to handle the growing threats and competition from other players in the market. The company faces the threat of a recurrent recession as well as instability of the political climates. In this respect, the company must demonstrate resilience in reacting on the threats, through evaluation of their impacts and using the available and created opportunities to ensure high profitability for the company. References Borth, K. (2013). Plan for success. Smart Business Columbus, 21(12), p5-5. Buttell, A. (2009). 4 Steps to an Effective Marketing Plan. Journal of Financial Planning. Practice Management, p6-8. Calkins, T. (2009). A marketing plan for turbulent times. Ivey Business Journal, 73(2), p3-3. Curnow, R. (2007). A Marketing Plan: Like It or Not, You Already Have One. Physician Executive, 33(4), p34-36. Dawar, N. (2013). When marketing is strategy. Harvard Business Review, 91(12), p100-108. 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