Bayerische Motoren Werke Marketing - Case Study Example

BMW i Table of Contents Situation Analysis 3 Company Profile 3 Opportunities and Challenges 6 Outline Strategy 6 Marketing Plan 8 Target Market 8 Segmentation 8 Media Allocation 9 Budget Estimation 10 Tactics and Media Recommendation 11 Launching BMW i3 12 Metrics for Testing the Effectiveness of Marketing Campaign 13 Top Line Recommendation for BMW i3’s Marketing 14 References 16 Bibliography 20 Situation Analysis Company Profile Bayerische Motoren Werke (BMW) AG which was formed in the year 1917 is a German automobile, motorcycle as well as engine producing company. The company enjoys favourable brand image among the consumers and the brand has been successful at developing a unique heritage (Simms & Trott, 2006). BMW tends to focus upon ‘light weight construction’. It also utilises Carbon Fibre Reinforced Plastics (CFRP) in automobile production (Ploon & Olesen, 2010). It tends to focus upon zero emission and is presently working on a hydrogen hybrid drivetrain. It can be noted that most of the success of the BMW is derived from the entrepreneurial culture. BMW follows informal organisational culture which assists the employees in freely articulating the ideas and thereby assisting in innovation (BMW, 2012). The main objective of the company is to remain as one of the world’s primary providers of premium products as well as services for mobility of an individual. Collaborators BMW has been capable of maintaining good relation with its suppliers so that the goods can be delivered on time to the customers. The company mandates its suppliers to maintain the enhanced environmental as well as social standards that have been set by the BMW Group (BMW Education, 2010). It is because of this reason that the company makes use of the sustainability criteria in the optimum selection of its vendors and exaggerated supervision of its prevailing suppliers. It tends to train its suppliers in advance so that the company can guarantee accurate quality requirements as well as standards that have been set by the company right from the initiation of the production (The Economist, 2011). It has been found that in 2011, the UK car market was high by approximately 30% on a year-to-year basis which exceeded the expectation of the companies. In January, 2011, it was found that the car market rose by almost 29.8% thereby reaching 145479 units. It has been found that in the year 2011, an increase occurred of 8.78 percent in sales that rose from 153312 to 166780 vehicles in comparison to the year 2010, and against the market that sought decline in the sales by four percent (Boeriu, 2012). It has been evident that BMW makes use of three steps for the purpose of targeting such as market segmentation, target choices and product positioning. The company looks at behavioural, geographic, socioeconomic, beneficial and demographic features of the society that assist them in targeting the market effectively (Pearson, 2012). The company derives 65% of its sales from Europe as well as North America. These regions are industrialised locations with residents having sound financial position to purchase upper market cars since their per capita income is high. The demographics of the people capable of purchasing BMW are men and women who are aged 30-50 years old. Prior to purchasing BMW, people possess favourable image in their mind. They prefer cars that look sporty and modern. The benefits sought by these people are reliability, superiority, quality and performance (Slideshare, 2012). Competitor Analysis It has been found that the company faces direct competition for its each series ranges. The main competitors of the company are Mercedes, Audi, Volkswagen, Ford, Range Rover and Porsche among others. Among them, Ford Motor Company is found to be the main competitor of BMW, taking away high share of the automotive market. It has been observed that the overall balance sheet value of Ford Motor Company tends to surpass 7 times ‘correspondent value’ of BMW Group (BMW Limited, 2011). Climate In the present times, the political factors such as EU laws with regards to carbon emissions that are generated by the cars mandated BMW to review their cars along with engines for adhering to EU laws. The company had to invest in greener technologies (Competition Commission, 2011). One of the significant environmental factors that have an impact upon the company is the economic climate within which it operates. Hike in the prices of fuel tends to raise BMW’s own cost and also affects its profits. The hike in the price of the fuel has necessitated the companies to focus upon fuel-efficient cars because customers want to offset the increase in fuel prices as well as high road tax. New road tax imposed by the government which is generally dependent upon car emission has an impact on successive operation of BMW. The company has been successful at diversifying itself into numerous markets as well as countries and thus have been capable of dealing with numerous cultures, income and values of the customers. Technological advancements have viewed significant enhancements in terms of vehicle safety, fuel economy, environmental effects, versatility, performance and comfort while providing its customers with immense choices through expansion in the models. The UK car market is investing heavily in people as well as technology because the climatic alterations are demanding technological change, and the car industry in UK has embraced CO2 challenges (Scribd, 2012). Opportunities and Challenges The rise in the sales of the cars in the UK market offers an opportunity for BMW i3 to succeed in the UK market. Furthermore, the increasing demand for low carbon emission and fuel efficient car offers tremendous opportunity for new BMW i3 car to succeed in the UK market (Bauer Media Limited, 2012). Economical factors, cut throat competition and taxes tend to possess a significant threat upon the new car produced by BMW. Outline Strategy The main target of the company is to generate 5000 leads and 500 sales for its new BMW i3 for the year 2013. The company already has 1.5m retail, approved-used car and ‘lapsed customers’ along with 400000 prospects. In order to obtain the objective, it is significant that the company tries to approach its present customers who purchased other series of BMW possessing conventional combustion engines. In order to make them migrate from conventional combustion engines to this new sort of vehicles, the current customers will be sent e-mails and brochures with complete description regarding the new product and its benefits (BMW, 2012). They will as well be informed about the new products via telephone calls. Trade shows will be organised for the new customers as well as the old customers. People visiting the trade shows will have to register the following factors in the form that has been demonstrated below. This database will be of great help for the company. Name Address Contact Number Car Possessed (Yes/ No) Family Size Income Trade shows will help to generate significant amount of leads. If the stipulated number of leads is not attained then in such circumstances, it can take help of the social networking sites such as Facebook and Twitter. Such social networking sites falls among the most significant marketing communication tools in the present times. It will offer the opportunity to generate huge number of leads in less time. Page will be created in Facebook which will offer the customers with detailed information regarding the new products. The current customers will be offered with the opportunity to earn extra points by giving at least 20 leads. The customers can earn 1 point on providing 20 leads and after having collected 50 points the customers will be capable of shopping online games and music. This strategy will entice large number of customers. In order to increase the sales of the product, test drive will be offered to the customers so that they can experience the car. Management will hire certain personnel who will be trained regarding the new products. The main role of these management trainees will be to educate the customers regarding the benefits offered by the new car and the negative impacts of combustion engine cars. Marketing Plan Target Market BMW i3 will target the premium segment of upper class people. BMW i3 is developed for those customers who prefer reliable vehicle without compromising the style and performance. People with high interest in experiencing new technology and equipment are probably attracted with the concept of BMW i3, because it not only provides new outlook, but also gives customers the freedom to enjoy several smartphone functions. As BMW i3 is an electric vehicle, therefore it will target the environment friendly people. BMW i3 will cause less pollution and less Carbon Di-Oxide (CO2) emission. Furthermore, the new BMW i3 will also target the non-premium products customers of other competing organisations such as Ford or Nissan. The price of the product is developed in such a way so that it can target the high class people with family size of three to five members. The objective of developing this model is basically to stay at a leading position in the market of electric vehicle (BMW i, n.d.). Segmentation Segmentation Variables Geographic Segmentation Region UK Density Urban Area 244820 Sq. km Demographic Segmentation Primary Segment Age 25-35 Years Gender Male and Female Income £25000 to £30000 Secondary Segment Age Above 35 Gender Male or Female Income Above £30000 Psychographic Segmentation Personality Brand Conscious Lifestyle Modern Lifestyle Behavioral Segmentation Benefits Psychological Benefits Impressive Appearance Functional Benefits Electric Engine Cutting Edge Technology Smart Phone Functions Permanent Benefits Premium Cost Social Reputation Habit of Driving Regularly and Occasionally Loyalty Medium and High Source: (Texas A&M University, n.d.). Media Allocation The marketing campaign for BMW i3 will participate in all media content that can draw the attention of potential audience. Considering this aspect, the media strategy for BMW i3 has been laid out to involve maximum people to become a part of this marketing campaign. Phase 1: The Gathering In the first phase of media allocation, a team will be developed to create hoardings and banners of BMW i3 in major cities of the UK which includes Glasgow, Manchester, Liverpool, Cardiff, London, Bristol and Edinburgh among others so that whenever people would go to work they can find a glimpse of the astonishing new car of BMW Group. It would help to build the brand awareness (R-mark, 2011). Phase 2: Call for Action After the successful creation of adequate awareness in the mind of customers, the first media activity will be on newspaper and magazine. It will help to fulfil the objective of reaching large audience within age group of 25 to 35 and above 35 in a single exposure (R-mark, 2011). Phase 3: Stimulating the Screen After inserting images and information on numerous publications of newspapers and magazines, BMW i3 will appear in the television screen as the final step. Developing advertisements in television will ultimately help to reach the mass population in the UK. Blend of print advertisements and television advertisements will reveal the BMW i3 in front of the public (R-mark, 2011). Budget Estimation Launching of new product requires huge amount of money in order to successfully break into a market. In the automobile industry of the UK, the competitors are much active in advertising and sales promotion. Therefore, in order to successfully launch the BMW i3 there is a need to match the marketing expenditures with the competitors’ expenditures, by considering the marketing objectives. The total budget allocated for media is approximately 38,0000 Pounds. The following table will describe the budget estimation of media allocation for BMW i3: Marketing Campaign Amounts (in Pounds) Media Allocation Advertisement Hoarding and Banner 20000 Television Advertisement 350000 Magazine and Newspaper 10000 380000 Launch Market Research 15000 Print & Direct Mail 5000 Trade Show 200000 220000 Total 600000 Source: (R-mark, 2011). Tactics and Media Recommendation The marketing campaign of BMWi3 will be enormous. In the first three months of campaign, almost 30,000 Pounds will be spend for understanding the automobile market of the UK and building the awareness of people. Nearly, 58% of the total budget will be spent on television advertisement. In general, majority of people within age group of 25 to 35 years prefer to watch sports during leisure time. The advertising campaign will simultaneously display advertisements of BMW i3 in different sports channels. BMW will also use print, outdoor, and direct mail media in order to support the launch of i3. Any usual leading automobile brand expends almost half of the marketing campaign budget on television advertisement in order to accomplish average frequency of television programme. The following table will describe the timeline for marketing campaign: Activities Time (in Months) Situation Analysis (Market Research) 2 Development of Strategy for Marketing Campaign 1.5 Outlining Marketing Plan 1 Accumulation Phase 1.5 Television Advertisement 5 Trade Show 1 Television is a very effective media, however unlike other media such as magazine and online advertisement, television is expensive. However, in order to reach to the enormous viewers across the UK, it is recommended that BMW should allocate maximum amount of the budgeted expenditure on television advertisements. The media planning of BMW must carefully expand the advertising mix to concurrently transfer media while exploring and determining other tactics for buying television time in order to improve price worth ratio. It is recommended that BMW must continue to explore and investigate with new methods to make television advertisements smarter (Briggs & et. al., 2004). Launching BMW i3 The launching of BMWi3 will be conducted in three phases which are as follows: Phase 1: Planning At the first phase of launching BMWi3, the positioning strategy will be planned and analysed. Successful positioning can enhance early sales and help to generate profits. Then the estimated volume of sales will be examined and later the budget and timeline for launching procedure will be examined (Frost & Sullivan, n.d.). Phase 2: Implementation In the second phase, brand awareness campaign will be developed in order to push the demand for BMWi3 in the mind of potential customers. After that, the trade show will be organised in different cities of the UK as a process of introducing BMWi3 in front of public (Frost & Sullivan, n.d.). Phase 3: Observation The final phase of launch procedure is observation of the impact of trade show. The observation will be conducted by two phases, one is internal observation to monitor and track the sales and external observation to scrutinise the market of automobile industry (Frost & Sullivan, n.d.). Metrics for Testing the Effectiveness of Marketing Campaign In order to test if the marketing campaign is successful or not here is need to measure the effectiveness though appropriate metrics. It can help BMW to understand if any pitfall or gap occurs for not generating adequate leads. The following table will describe the metrics which can be used to measure the performance of marketing camping for launching BMWi3: Marketing Campaign Effectiveness Key Metrics Sales Performance Increase in Revenue Total Sales per Annum Market Share Shortage/Excess Inventory Volume of Transactions Marketing Campaign Performance Number of Complaints Client Attrition Number of Requests Shortage/Surplus in Budget Media Performance Brand Awareness Covering of Major Cities Source: (Frost & Sullivan, n.d.). Top Line Recommendation for BMW i3’s Marketing Activities Recommendation for Successful Marketing Launching process BMW Should ensure proper planning before launching. The company can gather and analyse market intelligence, assess the current situation and then determine the success factors of launching BMWi3. Raising Awareness In order to raise the awareness of people about the new product, BMWi3 can use the digital media apart from traditional media such as print or television. It will be an innovative method to reach larger audience base. Confirming Appropriate Elements of Success It is recommended that BMW should manage all unexpected issues such as delays or obstructions in production before launching the product. Otherwise, it will face difficulties to satisfy the demand of customers. Furthermore, BMW should make adequate budget and resources along with maintaining effective relationships with all members such as media and sales departments among others. Appropriate Public Relations Strategy The media allocation must be capable of capturing enough attention of the target customers. Once BMW i3 gains adequate recognition from the public, it will gain credibility in the automobile market place. Conduct Best Marketing Practices It will be profitable for BMW to provide proper education to the employees and communicate the plans along with the goals and objectives of launching BMWi3. In this way, the launching can develop confidence and unite the team members though a common reason of success. Source: (LinkedIn Marketing Solutions, 2011). References BMW i, No Date. BMWi3 Concept: The Megacity Vehicle. The International BMW i Website. [Online] Available at: http://www.bmw-i.com/en_ww/bmw-i3/ [Accessed February 03, 2012]. Briggs, R. & et. al., 2004. Integrated Multi-Channel Communication Strategies: Evaluating the Return on Marketing Objectives - The Case of the 2004 Ford F-150 Launch. Marketing Evolution. [Online] Available at: http://www.marketingevolution.com/downloads/industry_related/me_multichannel_communication.pdf [Accessed February 03, 2012]. BMW, 2012. About BMW. Financial Services. [Online] Available at: http://www.bmw.co.uk/bmwuk/dealer_event/?requestsource=banner [Accessed February 03, 2012]. BMW Limited, 2011. Company Facts. Home. [Online] Available at: http://www.bmweducation.co.uk/coFacts/view.asp?docID=76 [Accessed February 03, 2012]. BMW, 2012. 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