Marketing Analysis of BMW Compact Cars - Case Study Example

Title: BMW Compact Cars Customer Inserts His/her Name Customer Inserts Name of Tutor Customer Inserts Grade/Course (Date) Table of Contents Table of Contents 2 BMW Compact Cars 3 Segmentation 5 Products and Services 7 Pricing Strategy 10 Distribution Strategy 11 Promotional Mix 12 Reference 15 Citehr, (January 27, 2013), CiteHR: How Branding is Advantageous to Customers, Society and Company, 15 BMW Compact Cars The BMW Company is a highly competitive car producing company which has been in the market for many years. The company is highly valued for its passion for enhancing the driving experience. Innovation Leaders (2013), the BMW Company was founded in the year 1917 and has currently risen to become the one of the top ten car manufacturers in the world. The company also enjoys a strong market position when it comes to the small car and motorcycle industry. The report will focus on the company’s product which is the s production of the BMW compact cars. These are the small cars which are highly efficient for individuals who are living in the city. These compact cars include the BMW 1 series and the BMW M135i. These cars are also one of the most economical yet vicious machines on the roads. This is because the cars possess the lowest fuel consumptions levels than any of the other competitor vehicles. When it comes to competition, the production of compact and utility vehicles is one of the most competitive markets. This is because most of the people are looking to minimize on their expenses and most companies are producing products which will fill this market gap and satisfy the customers. The main competitors of the BMW Company in the production of utility cars are the Mercedes Company and the Audi Company. They have all released competitors versions of compact cars in order to compete with the BMW compact cars. The Mercedes Company has produced the Mercedes CLA250 and the Audi Company has also produced the Audi A3. Motor Trend (2013), these are all attempts to compete with the BWM Company on the production of compact cars.Go Auto (2013), the companies’ are on a neck to neck competition on the production of the compact cars with the BMW Company reporting an increase of 7.1% as compared to their ach competitors, Audi Company at 6.7% and Mercedes Company at 5.6%. The company has several strengths that enable it to unearth opportunities and focus on them in order to increase sales and also its market share. The BMW Company has several satellites which are in the world and have been placed in strategic places in order to ensure that they identify new market trends. The company has many business opportunities because they also have a station that is filled with several engineers who are in constant production of state of the art technology and advances software and hardware. Luxury Auto Industry (2013), the other opportunity is that most of the older population tends to have a lot of disposable incomes and tend to purchase luxurious and expensive cars and products including the compact cars that are produced by the BMW Company. This is a market opportunity for the BMW Company. The main threat that is acting against the BMW Company and their compact cars is that they are still not expensive and if there are economic depressions and the public is unable to raise these funds, they will opt to buy the cheaper cars and will drive the company out of business. Segmentation Market segmentation entails the grouping of various and different customers into different segments who have common needs and usually respond to market actions similarly and in the same way. Toolkit (2012), each market segment usually reacts to different marketing mix strategies. When these reactions happen, they leave many opportunities that can be used to generate growth and profit. For the sale of the compact cars, the segmentation is always beneficial in that they company is able to use the different segments are easy to target and the company can be able to position itself properly in the market with the sale of the BMW compact cars. The BMW Company uses the psychographic segmentation strategy as they market their compact cars which are the BMW 1 series and the BMW M135i. For the psychographic segmentation, the BMW compact cars are known to bring with them social class and status from their looks, advertised performance and high cost of purchasing them. The people being targeted tend to prefer expensive cars that will bring them social status. This makes the car to be more demanded and admired by the public. The main customers for the BMW compact cars are the city living individuals and also the people who are into cheaper and smaller models of the BMW cars. The BMW Company uses geographic segmentation when it comes to the BMW compact cars. This is by done marketing the compact cars to the Porsche neighborhoods and basically telling the owners that the car belongs in their neighborhood. This is because the people being targeted mostly have higher levels of income and tend to like to be associated with expensive products and cars. When it comes to demographic segmentation, the company uses it in their sale of compact cars by targeting people between the ages of 35 and 50 with higher monthly incomes and white color jobs. This is because they tend to have more disposable incomes and the have the behavior to be competitive in terms of status. This makes it easy for the company to sell the compact cars to the target market. The selected market segments are mostly individuals over 35 years of age and have a good source of income. This is because the compact cars are mostly not as cheap and they are mostly for people with expensive tastes. It is also a selected market segment because the people in the market segment often have a lot of disposable incomes which they can easily spend to purchase the BMW compact cars models. James White (2013), the members of the selected market segment are characterized by their high levels of disposable income from their levels of investments and also savings. The individuals in the market segment have needs that include their desire and admire for expensive and flashy models which are also economical. These car models include the BMW compact cars. The people in the particular group tend to have buying behaviors that include making purchases on car models that are flashier and stylish. This gives them a sense of accomplishment. The company uses a differentiated marketing strategy when marketing the compact cars to the public. This is when the company uses a market mix that is designed to match the customers’ needs that are in the selected segment. This is a good marketing strategy in the sale of the compact cars because they tailor the products so that they meet the needs of the customers. This is also beneficial to the company because they are able to spread the risks when they are selling the compact cars. In case the sales of the compact cars in the selected segment reduce, the company is not affected greatly. Products and Services Products and services are closely related concepts. It is difficult to separate them at times. This is because most of the time when there are products being sold there are services that are offered during the sale. They include the after sales services.Mcurphey (2013), a product is a tangible item that is produced by a company or an organization. A service on the other hand is the production of an intangible item. After some form of exchange mostly money, there are some needs that end up being satisfied. There are times at which it is difficult to identify services especially if there are some products accompanying the services. The product offer is how the product has been positioned and has been represented in the market. This usually entails the feature, the advantages and also the benefits of the potential prospects product organization. Product offering is very beneficial to the company because it will help in the positioning of the company into the market. This enables the company to also have knowledge on the target market which they will use when marketing and also when choosing the marketing procedure and strategy to use. Branding is the having a symbol, logo or even a name in the market to produce and make the products produced to be distinguished from others in the market. Once a company has established and created a positive brand in the market, the company is said to have achieved brand equity. BMW by itself is the company’s brand and because the brand is legally protected, the brand name can also be called a trademark. The brand is important because it confirms the company’s credibility and also motivates the buyers. It also creates consumer loyalty. The branding strategy that the company has adopted is the use of the company name. This is where a product is made and advertised using the name of the company because the company is already well known. In this case, the company name is the BMW Company. This is because the company already has a large level of publicity and makes it easy for the company to make sales on the compact cars. This is also known as the family branding strategy. The branding strategy that is used by the BMW Company for their compact cars is the family branding strategy. The branding strategy is also beneficial to the customers. This is because the customers can easily make purchases on the brands that they know when they are faced with challenges before they buy commodities and in this case, the compact cars. Once the customers are faced with problems on what type of compact car to buy, once they see a brand that they know which is the BMW Company logo or brand, it helps them in the purchase and eases their frustrations. Branding also helps the customers who have made previous purchases of products with the same brand or the same producer. In this case, the customers who are looking and willing to buy cars such as the BMW compact and have made previous purchases of cars that are produced by the BMW Company, the customer will have some familiarity of the product that they are about to buy and also they will know what to expect from their purchase of products of the same brand such as previous BMW cars. These are some of the benefits of branding to a customer. The brand name and branding in general is very important because it helps to show the customers that you are a true company and can be trusted. It also helps the company to give information to the customers about what products the company is selling and in this case the customer will automatically know it is an automobile when they see the logo and brand name BMW. The company’s brand name offers the customers a brand value where the customers are told what quality of compact cars to expect. This is established by the company when they offer high quality compact cars that are also best rated in the market. The product life cycle is a concept that is used by companies to know the stage that a product is in its life cycle. The product life cycle describes the stages that a product goes through from the time it is introduced in the market to the time it is removed from the market. However, not all products reach the last stage of the product life cycle. Some products just continue to grow without being removed in the market. There are three main stages of a product in the product life cycle. These stages include the introduction stage, where the product is introduced in the market. The second one is the growth stage. This is when the sales of the product are increasing rapidly. The third stage is the maturity stage. This is when the product sales are almost at the highest but not increasing as before. The final stage is the decline. This is where the sales begin to fall and is the last stage of the life cycle. At the moment, the compact cars produced by the BMW Company have positioned itself in the Australian market and at the moment is still at its growth rate. This is because the compact cars are still making sales in the market. This makes the product have a long life cycle still ahead of it. Pricing Strategy The market price of a product is the amount of money that an individual has to pay in order to receive and get possession of a product. The Economist (2013), the market price of a commodity is where the supply and demand forces meet. This makes the market price. When setting the price, there are many factors that are considered and this process is known as the pricing strategy. The pricing strategy is very important and all companies should know the importance of understanding it. For the BMW Company and its production in the BMW compact cars, it is important to know how to price their product because, when a products price is reduced by just 10% it means that the company will have to make an extra 25% sales in order to compensate for the reduced levels of income. The most important thing to know is that the way BMW Company prices it products will affect the view of both the customers and also the competitors on their products. The lack of the pricing skills leads to a losing margins. The main pricing objective that the BMW Company is using the BMW compact cars is the profit objective. When the BMW Company is pricing its compact cars, they tend to make the price to be as high as possible in order to make the highest sales but also to ensure that they also make sales. The company makes the profits from these compact cars by making the price in a way to ensure that they make most finances from the sales but ensure that the price of the compact cars price is not too high to scare away customers. The pricing strategy are mostly adopted when the company is almost about to release the product into the market and have to make the product price. These pricing strategies help the BMW Company to reach their company objectives and increase the sales and also the amount of revenue that is generated by the company from the sale of the BMW compact cars. In order for the price for the compact cars to be set, the company had to consider the prices that the target market was willing to part with in exchange for the product. The company has also to make sure that they make the price high enough to make enough profit in order for the company to grow. The pricing strategy is usually implemented when the company is targeting to make profits in the market from the sale of the compact cars. This is mostly when the company wishes to grow. Distribution Strategy In every company, there must be the location from where their products are distributed from to either wholesalers, retailers or even to customers. Mike Moffatt (2012), the place is where the customers will meet with the buyers when they are buying the products. For huge companies like BMW and when it comes to distributing cars such as the BMW compact cars, the best way of distributing their product is by opening or owning a car show room. For a business, location is everything. Demand Media (2102), it is very essential when it comes to the success of the business. It is important to understand the location strategy because wrong decisions made on the location makes it very expensive to overcome the problems of distribution of the compact cars. There are several things to consider when making the decision on the location of the business. These include the customer profile, what they love and how your product will add or benefit them. The transportation costs for transporting products to the customer and also the neighborhood and security of your products. When it comes to choosing the channels of distribution, the producer has to choose the most convenient means for the product to reach the customers. There are both direct and indirect distribution channels. Edward (2013), the indirect channel of distribution involves distributing the BMW compact cars to an intermediary like wholesalers who will then sell the cars to the customers. The direct method of distribution involves the selling of the BMW compact cars to the customers directly. When the customers wish to purchase the compact cars they go directly to the manufacturer which is the BMW Company. This is the distribution strategy that has been adopted by the BMW Company. For customers that would like to purchase the compact cars they are producing they will go to either the BMW Company or one of their licensed outlets. The distribution strategy that the BMW Company has adopted when distributing the compact cars is a suitable strategy because it will also be used if the company decided to reposition their offers. The company uses this distribution strategybecause they have total and complete control of the sales of their compact cars and also they have a connection with the customers to enable them to provide the best sales services to them. Promotional Mix When it comes to marketing of products and services that are produced by a company, promotion is a very strong tool. Product promotion is advertising a product to the public. Susan Ward (2013), it can also be described as the advancement of a particular product by means of advertising or publicity. Rick Suttle (2013), there is very many activities that marketers and producer undertake in order to increase the sale of the product. There are very many ways of promoting products. These may include the use of social media, television, radio, billboards flyers and even personal sales through sales people. There are very many advantages of having a marketing strategy when it comes to the sale of the compact cars by BMW Company. These are because they will help in achieving many goals and objectives that were set by the company. This is because marketing often increases and makes a stronger company image. This has worked well for the BMW Company because the company is well known by almost everybody. The marketing will also bring forth outside investors and funding from the private and the public sector. There are also increased chances of partnerships being formed from the marketing and market awareness. There are three main promotional objectives in the sale of most products. The first one is to increased demand. This strategy is usually used at the moment of the product life cycle so that the sales can be increased. It will however reach a point when the product cannot increase in demand levels and at this time investments in sales decrease. The company will have to focus its attention on introducing a new product. The other objective is to present information about the product. In order for the customers to be able to demand for the products, they will need to know and understand what the products and services are about. They will also need to know he benefits of the products and how they will help them in their life. The amount of information in the market about the product will however differ and change depending on the market that is being targeted. The other final objective is to differentiate the product from others in the market. This will be important when there are many other identical competitors in one market. In order for a market to accept and buy product in the market they will also need to know how to use it and what they will get from it and how will the product better their life. The BMW Company has adopted the differentiating a product objective when it comes to the sale of the compact cars. In this they have tried to differentiate their products from other competitors such as the Mercedes Company and the Audi Company. This way they gain a greater market share when they show and advertise how their product is different from the others. The main promotional tools that BMW Company has adopted and is using are the advertising and the public relations in order to increase the sales of their compact cars. This has been possible by using the media such as the television, newspapers and radio in order to let the public get knowledge about the product. The other form of promotion that they use is public relations. This is where they communicate and give information to the public through the media but without paying for it. These tools are effective to the BMW Company and also to the sale of the compact cars because they are very cheap and have been beneficial to the company. This is due to the fact that there has been an increase in the levels of awareness and also in the sales. They have also been beneficial because the general public is aware of the products that they company is producing and in this case the compact cars. 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