Bmw case study reema iitm
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Transcript of Bmw case study reema iitm
“The truth is that innovation is a key element for BMW’s
success in the premium market and one of the key
motivations to buy a BMW”
----- BMW Group
THE ULTIMATE DRIVING MACHINE
MINI CASE ANALYSIS
CHAPTER 7: IDENTIFYING MARKET SEGMENTS AND TARGETS
MINI CASE: MARKET EXCELLENCE IN BMW
Evolution of BMW’s marketing strategies
BMW founded as Aero-engine
manufacturing company in 1917
Motorcycle and passengers cars
Restrictions b/o world war
Series of acquisitions & joint venture
First motorcycle model BMW R32 in 1923
4
Followed by…..
Dixi (1929)
315/1 (1934)
..success in international racing events b/o lightweight construction,
outstanding aerodynamics, high performance and elegance….
Company prestige crossed Germany
BMW 238 sports in 1936
Rainy Days……
In 1950’s despite sustained effort to emerge asmanufacturer of prestigious vehicle faced bankruptcy onaccount of decline in motorcycle market
With the help of an industrial financer, Herbert QuandtBMW was able to thwart takeover bid by Mercedes
Quandt exercised majority of BMW’s shares and initiatedrestructuring exercise to bring company back on track
BMW 700, a small car, came as the much needed boostboost and BMW regained its position in the market
As part of restructuring initiative, BMW focused on sports sedan leading tothe launch of its first of ‘New Range’ BMW’s in 1961
Greater emphasis on advertising & sales support, combined withimproving engineering and performance related aspects.
During 1970’s and 1980’s BMW expanded its operation in the USA Asia andAustralia… cars got perceived as more stylish brand than other Germanbrands like Volkswagen and Mercedes and became serious competitors tothese brands in the premium car business.
In 1989 BMW appointed Karl Gerlinger (master marketer) to leadmarketing division in the USA
Sales in the USA 1991…53,000 units. in 1992…. 66,000 units
Announced to set up new plant outside Germany … Spartanburg, SouthCarolina (US) in 1992
In 1992 succeeded in outselling Mercedes in Germany
Acquired “ROVER” in 1994, production capacity increased by 3% to503,526 units in 1995
By 2002 BMW significantly decreased the ‘time-to-market’ new products and linked its revenue to the introduction of leading-edge product
Focus on strengthening its position as market leader in the premium segment
Adopted product offensive strategy, increased R&D expenditure by 53%,
reduced time b/w idea generation and product development, complaints came down drastically, i-Drive technology, Active Steering
Revenue in 2002 $49.5 billion (9.9% increase compare to 2001), profit $2.36 billion (8.3% increase compare to 2001)
10
The result…..
The Result…..
$29,400
$75,600
Product
BMW 3Series : Sedan, Coupe, Convertible, Touring, Compact
BMW 5Series : Sedan, Touring
BMW 6Series : Coupe,
BMW 7Series : Sedan
BMW Z4 : Roadster
BMW X3
BMW X5
BMW M : Sedan
Mini One
Mini Cooper
Price
BMW price range are from £ 16,000 to £ 60,000
Place
Globally
Promotion
Same advertising company WCSR since 1979
James Bond film - The World Is Not Enough (Z8 before its launch)
Austin Power 3-Goldmember -( Mini cooper)
“VIRAL MARKETING”
BMW Films (e.g.. ‘The Hire’ - increased sales
by 12.5% in 2001 compare to 2000
Marketing campaign ‘The Ultimate Driving Machine’
Golden Eye: BMW Z 3
Tomorrow Never Dies: BMW 750iL, R1200 Motorbike
Geographic
Region Globally
Density of area Urban
Demographic
Age-above 30
Income-$ 25,000 and above annually
Occupational-professional, Businessmen
Psychological
Personality Extrovert, Novelty seeker
Learning involvement high
Perception low risk
Attitude positive
PsychographicLifestyle segmentation ---status
seekerSocioculture
Social class ---middle and upper
BehavioralBenefit ---safety,
elegance, technologyLoyalty status ---Readiness stage ---aware,
interested
What are the pros to BMW’s selective target marketing?
PROS:
Could give customers various types of designs, size, price and style choices.
Specific type cars for specific class people ex.1series for those who earlier avoided BMW for premium price and launched X5 to ”upper liberals” for their active life style and big famillies
What are the cons to BMW’s selective target marketing?
CONS:
Cars only for the ones who could afford
Sales Dipped During Recession.
What has the firm done well over the years and where could it improve ?
ATTENTION TO NEEDS:
After knowing customers desire of having cars of design, size, space and style choice immediately launched many new products x5,x3,x1 etc.
IMPROVEMENTS SUGGESTED :
It could have come up with Lower Segment of Cars where the Market is bigger with more opportunities especially in Developing Nations like India, Brazil , and south ASEAN countries.
BMW’S sales slipped during the worldwide recession in 2008 and 2009 . Is it its segmentation strategy too selective ? Why or why not?
The segmentation strategy of BMW is too selective, It’s target segments are mainly the “Modern
mainstream” & “Post moderns” high income group people.
The BMW is an epitome of Luxury, Loyalty , Success and High esteem hence the segmentation strategy has to be selective.
DISCLAIMER Created by Reema Mathew, IIT Madras, during a marketing internship by Prof. Sameer Mathur, IIM Lucknow.