BMW Brand Audit - Case Study Example

BMW Brand Audit Report Table of Content 1. Executive Summary……………………………………………………………………2 2. Introduction ……………………………………………………………………………3 3. Background of the Brand ………………………………………………………………4 3.1. Brand attributes…………………………………………………………… ………4 3.2 Brand portfolio……………………………………………………………………...4 3.3 Brand elements……………………………………………………………………...5 3.4 Marketing mix……………………………………………………………………….6 3.4.1 Product………………………………………………………………………... 6 3.4.2 Price……………………………………………………………………………7 3.4.3 Placing ………………………………………………………………………...8 3.4.4 Promotion ……………………………………………………………………...8 4. Brand Exploratory………………………………………………………………………..9 4.1Customer Knowledge…………………………………………………………………9 4.2Sources of Brand Equity……………………………………………………………..10 4.3 Competitiors……………………………………………………………………….....11 4.4Threats to Brand Equity………………………………………………………………12 5. Recommendations ………………………………………………………………………13 6. Conclusion………………………………………………………………………………14 7. References……………………………………………………………………………… 16 1. Executive Summary This report critically analyses the BMW brand at the product level. It examines BMW’s background particularly in relation to its brand attributes, portfolio, elements and marketing mix. Moreover, this report explores the nature of BMW as a brand with regards to customer knowledge of the brand, its sources of brand equity and threats to its brand equity. The findings of this report convey that the BMW brand has achieved remarkable success in its market segment and maintained itself as a global leader in the luxury car segment. This has been possible through effective branding techniques coupled with aggressive marketing strategies that are clear cut to suit each market segment. Furthermore, the brand’s prominence around the world can be attributed to its strong presence in the market since 1917. In addition, BMW’s prominence can be attributed to the company’s effective brand management and promotion strategies that have positioned the brand as a superior brand with unmatched qualities and functions. It is established in this report that, despite of these achievements, the BMW brand faces threats from the increasing competition in the luxury car industry and pressure to comply with environmental standards and green strategies. In order to address these challenges, this report recommends that BMW needs to expedite with its plan to begin production of hybrid cars. The company should also diversity its product portfolio by creating a brand segment that caters to middle and low income consumers. 2. Introduction Bayerische Motoren Werke AG (BMW) group or the Bavarian Motor Works (in English) was started in Germany in 1917 as an aircraft manufacturer but was later transformed to become one of the leading automobile, engine and motorcycle manufacturer in the world. Over the years, the BMW brand has managed to attain basic features of a successful brand such memorability, meaningfulness and adaptability. The BMW logo is one of the most recognised and well known brands in the automobile industry. Currently, some of the prominent BMW product brands include; BMW, Mini Marque and Rolls–Royce Motor Cars. The BMW brand is marketed as a brand that stands for “sheer driving pleasure, sporting and dynamic performance combined with superb design and exclusive quality" (BMW UK, 2011). The company has a personalised approach to marketing where it aims at linking its products with interesting and unique experiences in addition to emphasizing on their features and other benefits. Over the years, BMW as a brand has achieved remarkable success in its market segment and maintained itself as a global leader in the luxury car segment. However, despite these achievements, the increasing competition in the automobile industry poses a significant challenge to the brand (Vuskane, 2010; Aaker, 2004). The key aim of this report is to audit BMW as a brand at the product level. Foremost, this report will examine BMW’s background particularly in relation to its brand attributes, portfolio, elements and marketing mix. Secondly, this report will explore the nature of BMW as a brand with regards to customer knowledge of the brand, its sources of brand equity and threats to its brand equity. In addition, this report will provide recommendations on how BMW can enhance its brand equity and maintain its competitive edge in the market. 3. Background 3.1 Brand Attributes Franzen & Moriarty (2008, p.241) describe brand attributes as the building stones of a brand’s image and the values and qualities associated with a brand. In essence, brand attributes are the emotional and functions associations that are attributed to a brand by consumers. As a brand, BMW is often associated with attributes such as fast, classy, cool and reliable. The company has established its brand identity by clearly setting out unique values for its brand which is clearly resonated through the company logo, aligning itself with the fact that has a German background and reinforcing its brand image of providing a unique and unmatched driving experience. As a result, BMW is perceived as a superior brand with unmatched qualities and functions. Furthermore, BMW brand is also associated with being expensive and overpriced. Basically, BMW uses a premium pricing strategy as a way of guaranteeing its consumers a degree of quality engineered products which march and maintain their success and high standing in the society. Thus BMW is often associated as a product for the affluent. 3.2 Brand Portfolio BMW is generally known for producing engines, automobiles and motorcycles. Nevertheless, the company’s product portfolio is highly diversified. Some of the prominent BMW product brands include; BMW car models, Mini Marque and Rolls–Royce Motor Cars. Since the formation of BMW, the company has manufactured a wide range of automobile models in a bid to meet the demands, preferences and styles of consumers in various market segments. For instance some of the well known car models produced by the company include; 1 series, BMW’s smallest car, 3 series a compact executive model, 5 series mid-size executive model, 6 series a convertible model and the 7 series which is a full-size executive sedan. Furthermore, the company has a M-model car line comprising of car models such as M3-E90 Sedan, M6, M5 F10 Salon, X5M and X6M among many other models.BMW’s Mini Marque brand incorporates small unconventional stylish cars that mainly target consumers with strong lifestyles and status preferences. On the other hand, Rolls Royce is one of BMW’s most popular car brand that incorporates luxury car models. Additionally, BMW manufactures motorcycles under the brand names, Husqvarna and BMW Motorrad (Maguire, 2004; BMW, 2012; Haig, 2004). 3.3 Brand Elements According to Kotler & Pfoertsch (2006, p.92), brand elements are the physical and visual aspects of a brand that help to identify and differentiate a company’s product or brand. These elements include; the brand name, the brand story, logo and slogan. BMW brand elements play an important role in building brand equity and therefore the company has effectively used these elements to build a strong brand image. For instance, the BMW logo is one of the most recognised and well known brands in the automobile industry. It is characterized by a background comprising of blue and white colours which are synonymous with the Bavarian flag. The Logo is simple and easy to remember. This fact was underscored by a research study conducted by Maguire (2004) which confirmed that many of the people surveyed recognised and easily identified the BMW name and logo. In addition, 80% of the individuals sampled knew the company was in the luxury car business. Moreover, the BMW slogan, “the ultimate driving machine” plays an important role in reinforcing its brand image, function, quality and relevance. This slogan portrays BMW as a superior brand with unmatched qualities and functions (Maguire, 2004). Based on the six criteria of brand elements namely; memorability, meaningfulness, protectability, likeability, transferability and adaptability (Chitale, 2011), one can argue that BMW has strong brand elements. For instance, the name of brand consists of three letters therefore making it very easy for consumers to remember and memorize. Secondly, the letters BMW are an abbreviation of the company’s full formal name; “Bavarian Motor Works” this creates a meaningful impression on consumers. Thirdly, the uniqueness of the abbreviated letters “BMW” has prompted the company to ensure the name remains protected as a trademark thus any individual purporting to use the three letter name are violating trademark agreements. Moreover, based on a survey conducted by Maguire (2004) it was established that the BMW brand is very likeable, well-known and admired due to its brand elements. Maguire’s survey also established that the BMW brand is very adaptable. The survey results indicated that 90% of the respondents viewed BMW to be ‘up to date’ with engineering technology, 84% rated it as durable and 70% considered their products stylish (Maguire, 2004). 3.4 Marketing Mix 3.4. 1.Product BMW has a diversified product portfolio. The company manufactures engines, automobiles and motorcycles. BMW is known for manufacturing high-quality, trendy and stylish automobile and motorcycles. Some of the well known BMW brands include; BMW car models, Mini Marque, Rolls–Royce, Husqvarna and BMW Motorrad. Its products come in a wide range of designs and styles geared towards meeting the specific needs of consumers in various market segments. For instance, the company manufactures small cars, large executive cars, convertibles and different variety of motorcycles. Examples of car models produced BMW include ;1 series, BMW’s smallest car, 3 series a compact executive model, 5 series mid-size executive model, 6 series a convertible model and the 7 series which is a full-size executive sedan. The company also has a M-model car line comprising of car models such as M3-E90 Sedan, M6, M5 F10 Salon, X5M and X6M among many other models. The sporty, classy and sleek appearance in BMW vehicle models and motorcycles has propelled BMW’s position in the market especially in the luxury car industry. Additionally, BMW’s diversified products portfolio helps to meet the diversified needs and preferences of consumers in various market segments (Maguire, 2004; BMW, 2012; Haig, 2004). 3.4.2 Price BMW uses a premium pricing strategy as a way of guaranteeing its consumers a degree of quality engineered products. The company sets its product prices higher than the price of similar brands and products. BMW uses a premium pricing strategy so as to develop an exceptional reputation and favourable perceptions among consumers. As a result, of its pricing strategy BMW is often associated with an up market and affluent market segment. This pricing strategy has also helped to position BMW as a high-quality brand (Haig, 2004; Simms, 2007). 3.4.3Placing BMW has large network of licensed distributors in various geographical locations. Over time, the company has developed solid manufacturer-dealer communication systems that have helped to enhance effective manufacturer –dealer relations thus promoting efficiency in the distribution process and other related services (Klein, 2007). The company strategically places its various automobile and motorcycle models based on the income level, preferences, lifestyle and needs of consumers in different market. Generally, the company’s key target market focuses on individuals in middle and high income levels. BMW market target comprises of affluent people in the society including both men and women within the age bracket of 25 and 40 years of age. Initially, a lot of focus had been laid on men but the company has adjusted its marketing strategies to include women since the male segment is nearing saturation (Maguire, 2004; BMW, 2012; Haig, 2004). 3.4.4 Promotion BMW has a personalized approach to marketing where it aims to link its products with interesting and unique experiences in addition to emphasising their features and other benefits. For example, the company’s tagline and advertisement dubbed ‘Ultimate Driving Machine’ is aimed at showing the connection between the driver, the car and the road in order to enhance a great driving experience. In this case, car is highlighted as more than just a means of transportation but as offering a thrilling and exciting driving experience. BMW also offers test drives to help the customer connect and have a taste of the ultimate driving experience (Maguire, 2004; Vuskane, 2010; Haig, 2004). The company also uses media platforms such as TV, films, Radio, the internet, news papers, advertorials, brochures and other media platforms to showcase, create awareness and promote its wide range of products. BMW sponsor sports events such as car racing, Car rallies and Olympics. The company uses these sporting events as platform of enhancing its brand awareness and equity. Moreover, BMW promotes its brand using Corporate Social Responsibility strategies (CSR). The company’s CSR activities aim at meeting the needs by sponsoring and supporting education programs, environmental sustainability initiatives, cultural awareness programs, health promotion and other community based development projects (BMW Group, 2010). To strengthen the brand further and reinforce customer loyalty, BMW also engages in after sales marketing where BMW logoed products such as clothing, skating board, business accessories, bikes and sunglasses are sold to customer’s family members and therefore creating a sense of ownership to the BMW brand (Maguire, 2004; Vuskane, 2010; Haig, 2004). 4. Brand Exploratory 4.1 Customer Knowledge BMW is one of the world’s most well known automobile brands. The brand’s prominence around the world can be attributed to its strong presence in the market since 1917. In addition, BMW’s prominence can be attributed to the company’s effective brand management and promotion strategies that have positioned the brand as a superior brand with unmatched qualities and functions. The brand value of BMW is a key indicator of customer knowledge on the brand. In 2011, the brand value for BMW group stood at $20,157 million having gained a $3,541 million increment from the previous year and was ranked at position 23 by The Brand Finance® Global 500. This was also an improvement from the previous year’s ranking of position 29th (Branddirectory, 2012). In addition, in 2012 BMW was ranked position one by the Millward Brown BrandZ Top 100 Most Valuable Global Brands survey in the automotive category beating Toyota which emerged in the second position. This survey also showed that the brand value for BMW had grown to $24.6 billion, gaining an approximately 10% increment from the previous year’s. This is a clear indicator that BMW remains the leading brand in the industry with consumer perception increasing in its favour (Vijayenthiran, 2012; Brown, 2012). 4.2 Sources of Brand Equity BMW has established its brand equity by clearly setting out unique values for its brand which is clearly resonated through the company logo. The white colour in the logo stands for purity, technical brilliance and emotion enriched content of its products (Interbrand, 2012). These are the brand values that BMW seeks to establish for its wide range of products. BMW also gets its brand equity from aligning itself with the fact that it has a German background. The company has taken advantage of this fact to market itself as a brand with great engineering expertise (Dahlen, 2010). Germany is known worldwide as a country with rich engineering expertise therefore BMW has also maintained a firm identity of its brand to the great expertise of the German people. It has take advantage of the consumer’s perception and believes in German’s well known engineering expertise and built a unique, strong and superior brand name based on this. The company has always been quick to highlight this point of difference in its marketing campaign as a way of edging out its competitors (Maguire, 2004; Khan, 2011). BMW’s products enhance its brand equity by reinforcing its brand image of providing a unique and unmatched driving experience especially for the premium market segment (Doyle, 2000). They communicate the fact that although any car can get an individual to his destination, only a BMW car can take them there in style. This therefore, reinforces the customer’s confidence in the product and generates a sense of satisfaction and prestige for being identified with a BMW car or product. For this reason, a BMW car is meant to appeal to customers in the middle and upper segments of the market who are willing and able to spend on high performing luxury cars, which will reinforce their status and standing in society. By reinforcing such a brand image, the company’s products have been treated with esteem and associated with the affluent in the society (Maguire, 2004; Cocoran, 2012). BMW Group brands such as MINI, Rolls-Royce and BMW are also act as key sources of brand equity. These brands are characterised by an aesthetic appeal and dynamic performance features. The BMW brand is marketed as a brand that stands for “sheer driving pleasure sporting and dynamic performance combined with superb design and exclusive quality" while the MINI brand is marketed as one that "wins hearts and turns heads’’ (BMW UK, 2011). MINI is further highlighted as “refreshingly different, extroverted, spontaneous and in every respect something out of the ordinary." (BMW UK, 2011). True to its description, the MINI, has become one of the strongest brands in the automotive market. Though the car’s actual value is 14,000 US dollars, it comfortably sells at 20,000 US dollars without any discounting and buyers have been known to queue in order to place their order for the car. It is a good example of a brand which has both tangible and intangible qualities of a successful brand (Kapferer, 2008).The Rolls–Royce Motor cars brand on the other hand is associated with superior quality luxury cars engineered to provide reliability and top quality performance. 4.3 Competitors BMW’s direct global competitors in the luxury car market include Mercedes Benz from German, European based Jaguar and Audi, America’s Ford, Chrysler, Cardillac, Buick and Lincoln. Others competitors include Lexus, Toyota and Honda from Japan. However, Mercedes Benz and Toyota are the fiercest competitors with the companies going head to head in most of the market segments. In addition, Mercedes Benz has a rival car for each BMW segment (BMW UK, 2011b; Maguire, 2005).The threat posed by new entrants is quite minimal since the entry requirements are quite enormous. New entrants need to marshal a high level of technical expertise and experience backed up by heavy capital investments. This kind of economies of scale is almost impossible for new entrants to meet in today’s world and therefore it becomes an effective deterrent for new ventures (Maguire, 2005). In order to differentiate itself from the existing competitors in the market, BMW has continuously strived to produce high-tech automobile designs that meet the specific needs of consumers in various market segments (Kiley, 2011). 5 .Threats to Brand Equity The extensive line extension of BMW brand threatens its brand equity. For instance, the extension of the 3-series line to incorporate other models such as 3series (F30 Sedan), 3 series (F90 Sedans) and 3 series (E92 Coupe) may threaten the brand’s equity by diluting the uniqueness and reputation of each model. It is worth noting that each car model comes with its unique features and attributes that consumers attach a certain level of familiarity and allegiance. However, when the line of a particular model is extended, the uniqueness of the model is bound to wane thus affecting the attachment of consumers to this particular model. Therefore, an extensive line extension of the BMW brand threatens its brand equity (Kapferer 2008; Klein, 2007). The increasing competition in the luxury car industry is also a major threat to BMW’s brand equity. Currently, BMW faces still competition from luxury car brands such as Mercedes Benz Audi, Chrysler, Cardillac, Buick and Lincoln (BMW UK, 2011b; Maguire, 2005). The competition in the luxury car industry is intensified as each car company attempts to out-do the other by producing more superior and high-tech car models that resonate with the needs of consumers in various market segments. For instance, in the US market, Audi has managed to outdo BMW in its overall brand equity. It is predicted that the volume growth of Audi in the US market is bound to steer the brand’s position in the global market thus posing a great threat to BMW’s brand equity (Audi, 2012). Another major threat to BMW’s brand equity revolves around its compliance to environmental standards and green strategy. Companies in the automobile industry are increasingly under pressure to produce hybrid car models that would help minimise fuel consumption. In response to these pressures, car brands such as Lexus and Toyota have launched hybrid car models that utilise electricity and fuel. Hybrid car models significantly help to minimise fuel consumption. Currently, BMW falls behind its rivals Toyota and Lexus who have already started the production of hybrid car models (Motavalli, 2010). Nevertheless, despite of BMW’s resolve to launch hybrid car models that will promote low consumption of fuel, this initiative could easily have a negative effect on the company’s brand equity especially considering the fact that these cars are being sold under the BMW brand name. Affluent clients could easily get turned off by this move and decide to switch to another brand that exclusively serves the high end market segment (Motavalli, 2010; Kapferer 2008; Klein, 2007; BMW Group, 2010). Recommendations In order to for BMW to enhance its competitive edge in the market amidst increasing competition in the market from luxury car brands such as Mercedes Benz, Audi, Chrysler, Cardillac, Buick and Lincoln among many others. The company should constantly focus on producing high-tech automobile designs that meet the specific needs of consumers in various market segments (Kiley, 2011). The company should diversity its product portfolio by creating a brand segment that caters to middle and low income consumers. The company’s key target market mainly focuses on high income level consumers. By focusing on only high income level consumers, a potential market niche among middle and low income consumers is left unexploited or effectively attended to . Therefore, BMW should exploit this market niche by creating a brand segment that caters to middle and low income consumers (Haig, 2004; Kiley, 2011). Due to the rising fuel costs affecting many consumers, BMW should direct its efforts towards developing a product line incorporating hybrid or low fuel car models, so as to address issues affecting consumers especially in relation to rising fuel costs. Conclusion BMW as a brand has achieved remarkable success in its market segment and maintained itself as a global leader in the luxury car segment. This has been possible through effective branding techniques coupled with aggressive marketing strategies that are clear cut to suit each market segment where the company has a competing product. As a result the company has established a strong brand admiration among existing and aspiring customers and therefore paving way for a strong grip of the future market. However, despite of these achievements, the BMW brand faces threats from the increasing competition in the luxury car industry and pressure to comply with environmental standards and green strategy. In order to address these challenges, company needs to expedite with its plan to begin production of hybrid cars. The company should also diversity its product portfolio by creating a brand segment that caters to middle and low income consumers. References Aaker, D. (2004). Brand Portfolio Strategy: Creating Relevance, Differentiation, Energy, Leverage and Clarity. New York: Simon and Schuster. Audi (2012). 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