C M R 2 - 5 6 6 I N T E R N A T I O N A L M A R K E T I N G

C A S E S U M M A R Y

B M W - M A R K E T I N G I N N OVAT I O N

S U B M I T T E D B Y C R I T I Q U E T E A M :

N U R A J A B A G I S A N A Z A M I N IR A M I K H O U R Y G O K C E S O M A Y

M A R C H 8 T H , 2 0 1 0

COMPANY HISTORY & BACKGROUND:

BMW (Bavarian Motor Works) was originally established in 1916 and has been traded publicly since 1969. Although the company is best known as a producer of higher-end-range sport-cars and motorcycles, BMW also operates an aircraft engine division under the brand name of Rolls Royce. With its headquarters located in Munich, Germany, BMW retains an extensive global presence through a number of worldwide subsidiaries and manufacturing plants located across the world (Germany, Austria, the United Kingdom, the United States, Mexico, Brazil, South Africa, Egypt, Japan, China Thailand, Malaysia, Indonesia, the Philippines and Vietnam). Finally, the company also operates its own financing company which offers financing for vehicles; in FY 2000, vehicle finance-leasing accounted for 18% of total revenues (in FY 2000, automobiles accounted for 78% of revenues)i.

Since its inception, BMW has been synonymous with Technology, Quality, Performance & Exclusivity. With its distinctive and recognizable logo emblazoned on the hood of each model, BMW’s strong brand-image as an elite, high-quality driving machine has made BMW one of the most admired and sought-after premium cars in history. Albeit BMW is undoubtedly a premium product offering, from a marketer’s perspective, much of BMW’s success in the automotive industry is the result of its successful IMC policies and the specific application of IMC as it pertains to 'market niche' strategies.

THE MARKETING PROBLEM

Since its birth almost 100 years ago, BMW has maintained Technology, Quality, Performance & Exclusivity as its four core values. With the help of various advertising agencies over the course of its existence, BMW has worked hard to develop and maintain a consistent advertising strategy in which these core values are not only depicted visually but are also verbally expressed within advertisements themselves. For BMW, consistent marketing at all levels has been a key factor in establishing its strong brand identity. Before proceeding, it is worth mentioning that although BMW relies on consistency in its marketing and advertising campaigns, this does not mean that BMW is so rigid in its visions that it runs the risk of at-times alienating its external environment. According to the case study, BMW’s sensitivity to outside factors is “clearly seen by how the company’s advertisements [have] evolved in response to economic, environmental and competitive changes [over the years].”ii

Unfortunately, despite BMWs unparalled success in the 80s, and the continued loyalties of its customers, by the late 90s, competing car manufacturers with bigger budgets were copying BMW’s advertising messages . By poaching BMW’s unique selling proposition of outstanding quality and emulating BMW’s characteristic style, BMW’s competitors were rapidly encroaching on the share-of-mind of BMW’s target market audience. By 1999, BMW began to lose its competitive advantage, and BMW needed to find a new way to reach the target audience. The urgency of this need was further amplified by rapidly changing demographics. As the world’s aging baby-boomers began to lose relevance within the sports-car industry (as well as in shaping of societal values) BMW was faced with a need to revamp its image to one that is consistent with Gen X‘ers and dot.comers.

The marketing challenge for BMW thus became two-fold:

1.) Find a new and unique image for BMW’s next generation of target consumers2.) Find the most efficient and effective way to reach this particular generation

BMW SWOT ANALYSIS

“Identifying potential and encouraging growth. Knowing what we represent. Recognizing where our strengths lie and making the best use of every opportunity. Following a clear strategy. Goals we have attained are in essence the point of departure for new challenges”iii. [BMW Group annual report 2005]

A few notes on the internal and external situation

BMW’s extensive global presence, commitment to quality and a diverse range of innovative products, strong production networks with high employee productivity and highly integrated marketing communications efforts have created a high brand equity that makes BMW a well-known and respected global contender in the high-performance automobile category. However, recent developments in this segment during the last ten years have significantly changed the landscape of competition within the automotive market. Most notably, the product cycle has shortened and manufacturers are struggling to reduce their costs while

Opportunities

Deepening of globalisation & associated benefits Moderate growth in the global new cars market New class of working women Asia represents a new key market for BMW

New products & technologies (such as hybrids) Innovations & Alliances (ie. Peugeot & Citroën in 2009)

Growing used-car market in the UK Growth in lease takeover deals Expansion of BMW dealers

‘Green’ concerns creating more demand for compact cars

Strengths

Extensive global presence (manufacturing & distribution) Several globally dispersed R&D centres

Diversification of risks across leading & developing markets Strong cash flow position Increase turnover and trading profits

Diverse range of products Strong production network Strong product innovation Higher employee productivity (compared to competitors)

Highly integrated, consistent marketing communications Internet-based ‘advertainment’ pioneer Well-recognized brand; high level of brand-equity

Weaknesses

Recent (FY 2008) sluggish performance of major operating divisions (automobile & motorcycles)

Competitors having exclusive dealerships

High-cost makes BMW product unaffordable to a wider market audience (repair costs are also a purchase barrier)

Customer disinterest, buyer sophistication and knowledgeExtended image life cycle

BMW lack scale (and thereby lack of financial resources) hinders BMWs ability to compete with industry titans

FY 2008, poor performance of BMW in major markets including Germany, Africa/Asia/Oceania & the UK offset many of gains witnessed in the U.S. & the rest of America

Threats

A global economic slowdown; particularly problematic is the most recent recession in the U.S. and Europe

New and existing competition for customers & resources Expansion of Far-East Asia automobile companies

Energy crisis; instability in oil prices Environmental concerns European Union vehicle regulations

Currency risk; BMW generates a significant portion of its revenues from outside the euro currency region. The procurement of material and funding are also organized on a worldwide basis

increasing their profit margins in this mature market. Fortunately, BMW’s strong production network allows the company to constantly improve its productivity, to evaluate opportunities, to reduce costs and to improve global processes as well as satisfying customer needs. Its extensive geographic spread of operations allows BMW to have a presence in leading and developing markets, hence spreading its risks across markets. Another advantage is that, as compared to its competitors, BMW is known to have the highest employee productivity. Its strong revenue per employee indicates the overall company’s strong levels of productivity and operational efficiencyiv.

BMWs revenue per employee: $782,388.20 General Motors revenue per employee: $633,953.20 Daimler/Chrysler revenue per employee: $516,301.40 Volkswagen revenue per employee: $452,656.50 Fiat revenue per employee: $440,479.40

Rising awareness among today’s customers with respect to environmental issues has meant an increase in the demand for low emission cars and has intensified competition among manufacturers to cater to these new markets. BMW can exploit this market tendency to overcome its competitors and consider it as an opportunity for its future developments. Taking advantage of these opportunities however may not be that simple. The European Union Commission and Parliament have been and will continue to be implementing increasingly stringent guidelines for emissions. This means that all car makers will need to continuously develop according to these regulations put in to play. However, BMW already aware of these had set up in 1990 the BMW Group’s Recycling and Dismantling Center. BMW showing that it is ahead of the game, in 2002 the EU brought the guidelines that 95% of car parts are re-usablev.

The large recession in the world economy (coupled with the actual and perceived high cost of BMWs) has had a negative influence on BMW sales all over the world, especially in those developed markets. Fortunately, with the recession economy seemingly over, there is growth forecasted in the global new cars market (the global market shrank by 0.5% in 2008 to reach a volume of 41.9 million units. In 2013, the market is forecast to reach a volume of 51 million units, an increase of 21.7% since 2008vi).

Conversely, given the instability of the world economy, BMW is wise to align itself with the trend towards used cars. Given that interest rates are currently high (thus reducing sales figures since large percent of the purchased BMWs are financed by BMW financial services) BMW is wise to continue targeting the used car market. The print ad displayed to right is part of an advertising campaign promoting the BMW used car segment.

THE SOLUTION TO THE MARKETING PROBLEM

As previously mentioned, with the world’s baby-boomers getting older, BMW has been forced to the next relevant

demographic: those consumers in the Generation X and dot.com age-cohort. As any marketer knows, despite the

fact that the process of rebranding a company is complicated and extremely risky, it is necessary when the target

audience changes significantly. In order to ensure a successful rebranding and associated marketing campaign,

BMW needed to understand the characteristics of their new target audience prior to making any efforts to rebrand.

Market research produced the following consumer profile for BMW’s target audience :

Highly-educated, affluent men between the ages of twenty-five to thirty-five;

Generally high-achieving, working professionals facing severe time poverty;

These consumers are spending increasingly less time with traditional media;

Conversely they are highly reliant on the internet as a source of information and entertainment;

With respect to car purchases, research found that 85 percent of the target market studied BMW’s cars

online before even stepping into a showroomvii; this is a new consumer trend that is here to stay.

Consumers are increasingly looking to the internet for information and comparison, especially within the

automotive industry. The internet offers shoppers transparency in pricing and vehicle specs as well as the

benefits of consumer word-of-mouth).

According to the Borrell Associates’ 2007 automotive report, 80% of in-market vehicle shoppers go on-line

at some point in time; those same prospective on-line buyers also spend more than 60% of their time

looking at photos and videos of new carsviii

BMW-specific research showed that the majority of in-market BMW consumers were broadband-

connected, tech-savvy males; Interestingly, according to a Nielsen analyst those “people with high-speed

(broadband) access spend more hours online, [and] go to many more sites”ix

Further research demonstrated that “the majority of broadband surfers [fell within] the income brackets

of $75,000k + [range]”x

With this information, it was clear that BMW’s next goal was to target those customers between the ages of 25

and 44 who were new to the luxury car market. Nonetheless, implicit in this objective was that targeting this

demographic needed to be done without alienating their current customer base (46-year-old male, married with

no children with an average income of about $150,000)xi. Thus BMW recruited Fallon Worldwide (a Minnesota-

based ad-agency) to transform this information into a new and unique image for BMW’s next generation of target

consumers (that would still retain brand salience with its current customer base) and to find the most efficient and

effective way to reach this new revised target audience with the new message.

THE STRATEGY

To be able to reach this target segment, BMW needed to create and offer a new experience, an experience

that would effectively break through the clutter by daring to go beyond the borders and limitations of

traditional media planning and its archaic associated messages. Furthermore, BMW needed to find a way to

not only engage their target audience but to interact with them. In a new media age, where TV ads, print

ads, local newspaper and radio spots continue to lose their reach and impact, online strategies (especially

those which make extensive use of social media strategies such as viral marketing) have become paramount

to success.

THE IDEA

Fallon’s idea was to create and broadcast (over the internet) a series of short-films which captured the

‘exhilaration of a Hollywood car-chase.’ By broadcasting these short-films exclusively on the internet

(through the BMW website) the thought was that BMW’S target audience would actively seek out these

sensational films, and therefore the films would effectively drive consumer traffic to the BMW website.

In the spring of 2000, BMW launched ‘The Hire’ (which consisted of five different short films) available for

view at BMWFilms.com. With a star-studded cast and high-profile Hollywood directors and writers, each

episode featured a ‘driver’ (in a BMW vehicle) who was on a surreptitious night-mission and is accompanied

by a mysterious passenger. While the films all had different cinematic styles, the films are to some extent

prescribed, with the greater part of the action always taking place in a BMW in the midst of a bona-fide

Hollywood car chase. The consistent, unifying theme: BMW (and not the debonair driver) saves the day.

In the case of BMW, the use of the internet was logical (given the media profile of the target market) as a way

to differentiate themselves from the competition, to create buzz or word-of-mouth and to create the more

interactive and new experience necessitated by the target audience. “Singled out as the first high-profile, big-

budget, celebrity-laden Internet marriage of advertising and entertainment”xii BMWFilms has done an

exemplary job of employing streaming video (in a manner that was compatible and accessible to all types of

internet users) in order to lure prospective customers to its website. By blurring the line between art and

advertising (product placement), BMW created a new concept known as ‘advertainment’. In addition to the

films, within this strategic campaign, BMW website provided further information about each vehicle used in

the film and the locations of the nearest local BMW dealership.

It is worth noting that a major concern in the world of advertising is believability and knowing how much the

target audience believes or trust an advertisement. According to Jim McDowell (vice president of marketing

for BMW of North America) there is a notion that when “people view traditional advertising they view it

through a filter of disbelief.”xiii Similarly, although less traditional media such as brand websites score highly

amongst Internet consumers, interestingly enough, surveys show that other forms of digital advertising are

trusted less than ads appearing in traditional media such as TV billboards, radio, magazines and newspapers.

Despite the huge increase in the size of the world’s Internet population and the sheer amount of time being

spent online, industries will need to balance their traditional methods with on-line medias. The table below at

the left demonstrates the level of trust in online advertising worldwide. It is interesting to note the

differences between regions, as their level of trust will determine the relative success of internet/Online ad

campaigns and therefore will dictate the direction of local marketing policies.

xiv Source: EmarketerArticle - What Advertising Do Consumers Trust?

The table above at the right readily demonstrates that second only to ‘recommendations from people I know’, branded websites remain among the most trusted form of advertising (though it should be noted that the survey specifically polled internet users, as such the figures may be biased). The table also shows the dwindling levels of confidence among these consumers for other forms of digital advertising (including online video ads, online banner ads and text ads by mobile phones).

BMW’s short-film series intelligently avoids the issue of trust amongst its viewers by blending art/entertainment with advertising. According to Dowell, this works because “when people watch entertainment or a movie…they’re watching in an entirely different way where they enjoy the fantasy, and

hopefully remember it and share it with others….We thought maybe instead of doing advertising we should be doing entertainment and doing something fun and interesting on the Web.”xv

Before proceeding, it is worth re-interating that the choice of the internet as the primary media for BMW’s new campaign was a carefully deliberated strategy. In fact, ‘The Hire’ film-series could have been executed on television or distributed by DVD, similarly print could have been used to create a comic-strip or graphic adult action series in an equally artistic way. A brief situational, comparative overview of potential media channels available to BMW in the execution its marketing campaign provides a thorough understanding of the choice of the internet as the main media as explained in the BMW case study.

Television:

High production costs; in 1999 the average cost of a 30-second national commercial was $389,000xvi

Audience fragmentation; for BMW, their target market represents only a fifth of TV viewers for vehicles such as MSNBC and Bravoxvii

Given that BMWs target market is not using the TV as often as other media (such as the internet) the relative CPM becomes even steeper

High amount of communication clutter, zapping and the rise of new cable channels, satellites and other technologies that allow us to watch commercial-free television.

Unlike TV, the internet offered an element of interactivity to viewers Also, unlike TV, viewers could watch the film-ad as many times as they wanted, and they could

recommend it to friends thus increasing the effects (buzz and word of mouth) of the campaign.

Print:

High cost; $250,000 mono to $360,000 for a full-page color adxviii

The average age of a Time Magazine subscriber is 45 and they have a median income of $69,000 xix. This audience is of twice the age and half the income of BMW’s intended target market

Although some creative adjustments would have been necessitated the interactive experience would have been completely lost in a print execution.

Interestingly, in a 2008 study, BIGresearch cited spending rates on newspapers among the lowest levels (second only to the internet) relative to other media, but with relatively high returns on influence to purchasesxx.

US Advertising Spending vs. Influence to Purchase among Leading Automotive Advertisers, by Media, 2007 xxi

Magazines Newspapers Outdoor TV Radio Internet

General Motors

% share of ad budget 12.20% 6.70% 1.20% 40.30% 3.00% 3.60%

% of respondents who said the medium influences their auto purchases 16.90% 17.00% 10.20% 17.50% 6.40% 8.70%

Ford Motor Co.

% share of ad budget 13.10% 5.90% 0.80% 40.90% 1.50% 3.90%

% of respondents who said the medium influences their auto purchases 17.00% 16.50% 11.90% 18.00% 6.70% 8.40%

Toyota

% share of ad budget 13.00% 2.60% 1.10% 39.50% 1.40% 2.80%

% of respondents who said the medium influences their auto purchases 19.00% 15.80% 10.50% 16.80% 5.30% 8.60%

In light of the table on the previous page, BMW should continue to place analogous print ads in newspapers and specific magazines which have a readership comprising of their target audience since print seems to continue to carry more weight than many other media in the automotive industry with respect to influence. This is perhaps due to the fact that print can communicate lots of information which is greatly needed for hard sells, as is the case for cars and other durable goods as well as to the fact that newspapers carry a high level of trust among its readers.

DVD Promotions/Freebies: With the cost of producing a DVD master ranging between $50,000 and $100,000xxii (as well as the costs of producing any additional bonus materials) in comparison to releasing a high-quality video on the internet, DVD promotions are less appealing. Although DVD player penetration is on the rise in the U.S., the main appeal of the internet-based streaming video is a level of interactivity that is not offered by most conventional DVDs. Furthermore, viewers of the DVD are less likely to visit the website from further information than are those consumers who are viewing the video directly from the website. As is the case for TV and Print, the internet dissemination has an advantage over a DVD release because it offers a customized media approach and most importantly it facilitates the building of an extensive customer database, which enhances CRM activities.

DID IT WORK?

As an image-based branding campaign, the enormous success of the series was not anticipated, nor was it expected to directly increase BMWs sales overnight. Rather, the goal of the campaign was to present a new and exciting image for BMW (with returns expected in the long-run) and to drive the target audience to the BMW website. According to Nielsen/Net ratings, only one short week following the “advertising blitz of the web site films, traffic to the site was up 55% to 214,000 unique visitors compared to only 138,000 the previous week [making] BMW one of the Internet’s fastest growing sites”xxiii. By October 2001, only 9 months after the first film premiered, BMWFilms.com had attracted over 11 million film views by over 2 million peoplexxiv. Furthermore, and quite unexpected, “after the series began, BMW saw their 2001 sales numbers go up 12% from the previous year.”xxv

As a note, when the internet was initially exploited by traditional marketers it was viewed primarily as a direct marketing tool, where measurement was dominated by click-throughs and cost per conversionxxvi. Today, as the predominance of internet marketing continues to expand, market analysts are employing new ways of defining the effectiveness of internet-based campaigns. Aside from pure site traffic and unique visitor data, marketers are frequently making use of a combination of tangible impacts (sales generation, sales satisfaction and loyalty) and intangible impacts (such as strengthened customer-brand relationships, improved brand reputation and increased brand awareness) to gauge the effectiveness of online branding activities.

In the case of BMW, the results of the campaign were directly measureable, which added to the success of the campaign. One such quantifiable measure of effectiveness used to evaluate the BMW campaign is known as the ‘brand minute’ metric; a measure of the amount of money that a company must spend to expose a potential consumer (its target audience) to one minute of television advertising. In the case of BMW, when the number of brand minutes delivered by ‘The Hire’ campaign was equivalent to the number of minutes delivered by their conventional TV campaign, at this point ‘The Hire’ campaign would be successful. For the two years between 2001 and 2003, the total production and media costs of the BMW films’ necessitated to achieving an equivalent one minute of TV brand exposure was 44 percent less than the cost of a conventional media buy; in other words the ‘The Hire’ was considered a very successful and cost-effective strategy.

However, “not all impressions are created equal [and] it doesn’t take a big leap of faith to believe that the longer a person is exposed to a brand, the greater the branding impact is on that individual .”xxvii Another quantifiable measure of effectiveness for branding campaigns is known as Brand Exposure Duration (BXD); it is defined as “the length of time an individual is exposed to a given advertisement.” xxviii Astonishingly, within four months of launching its films, the BMWfilm site reported 6 million downloads. “Given the average film lasts about seven minutes, the math reveals that in a relatively short period of time, BMW garnered a total brand exposure of 42 million minutes.”xxix Much like Gross Rating Points (GRPs) which are used frequently for TV and radio media vehicles, BXD provides another way for marketers to compare cost effectiveness across different media vehicles.

Finally, given the enormous reach and frequency that was achieved by the internet-based campaign, this strategy provided a relative ROI superior to other media forms. In fact, although BMWs ‘The Hire’ campaign was relatively expensive as compared to other consumer-based social-media sites such as YouTube and other free or low cost vehicles, when compared to the cost of large-scale product-placement advertising that BMW had done with the James Bond films, ‘The Hire’ series had a significantly lower costs. According to Jim MacDowell, the vice president of marketing for BMW-North America, the series was cost-effective since the higher ratio of production costs were offset by the lower ratio of distribution costs associated with the internet.xxx

With respect to softer metrics, a pre- and post-study was conducted to see whether the exposure to the films raised the level of interest among BMW owners and owners of competitive makes. The results from this study were also positive, and although quantitative metrics are frequently referred to as the bottom line for measuring the success of a marketing campaign, the measurement of intangibles (such as buzz) is equally important. Nonetheless a holistic approach which incorporates both quantitative and qualitative measures of effectiveness provides the best strategy for companies pursuing online marketing activities.

BMW IN A GLOCAL CONTEXT

In this extensive summary of the BMW case study, there remains one fundamental subject that has not yet been discussed. In the beginning of the case study, the author mentions that within Fallon’s marketing mandate, there was question as to “whether the campaign should be the same throughout the world, or if it should be localized to adapt to language and consumer taste differences.”xxxi This question is actually an

‘eternal dilemma for brands’ and the brand-managers and, within the current context of the pervasive globalism movement, the question of whether a company should ‘maintain a global business strategy or try to keep a local appeal in regional markets’ remains more pertinent than ever. According to Tom Blackett, deputy group chairman of Interbrand Corporation says: "The world has become over-subscribed with brands as it becomes increasingly democratised. There needs to be a real point of difference to gain consumer interest."xxxii It is in fact this need for a balance of local marketing strategies that brought about the portmanteau word ‘glocal’ (an amalgamation of the two words globalization and localization). “By definition,

i Hellhake, Martin et al. Case 17: BMW Marketing Innovation. pp. 714Available at: http://bcs.wiley.com/he-bcs/Books?action=resource&bcsId=3514&itemId=0471755273&resourceId=9817

ii Hellhake, Martin et al. Case 17: BMW Marketing Innovation. pp. 714Available at: http://bcs.wiley.com/he-bcs/Books?action=resource&bcsId=3514&itemId=0471755273&resourceId=9817

iii BMW Group annual report 2005. Available at: http://www.bmwgroup.com/e/nav/index.html?http://www.bmwgroup.com /e/0_0_www_bmwgroup_com/investor_relations/finanzberichte/geschaeftsberichte/2005/geschaeftsbericht.shtml

iv Datamonitor, Bayerische Motoren Werke AG-Company Profile. 29 May 2009. P 15.v Datamonitor, Bayerische Motoren Werke AG-Company Profile. 29 May 2009. P 20.vi Datamonitor, Bayerische Motoren Werke AG-Company Profile. 29 May 2009. P 18.vii Hespos, Tom. BMW Films: The Ultimate Marketing Scheme. July 10, 2002.

Available at: http://www.imediaconnection.com/content/546.imc

viii Unknown Author. Emarketer. Automotive Marketing Online: Negotiating the Curves. June 2008. Available at: http://totalaccess.emarketer.com/Reports/Viewer.aspx?R=2000661&page=3&xsrc=page3_reportx

ix Unknown Author. The Hire Campaign. Available at: http://marketing-case-studies.blogspot.com/2008/03/hire-campaign.html x

? Mariano, Gwendolyn.  Films drive Web surfers to BMW site. June 2001Available at: http://news.cnet.com/Films-drive-Web-surfers-to-BMW-site/2100-1023_3-267725.html

xi Guillermo, Donnabel. Wiki-media. Viral Marketing: BMW a Case StudyAvailable at: http://wiki.media-culture.org.au/index.php/Viral_Marketing_-_Case_Study_-_BMW_Films 

xii Hellhake, Martin et al. Case 17: BMW Marketing Innovation. pp. 714Available at: http://bcs.wiley.com/he-bcs/Books?action=resource&bcsId=3514&itemId=0471755273&resourceId=9817

xiii Hellhake, Martin et al. Case 17: BMW Marketing Innovation. pp. 714Available at: http://bcs.wiley.com/he-bcs/Books?action=resource&bcsId=3514&itemId=0471755273&resourceId=9817

xiv Unknown Author. What Advertising Do Consumers Trust? (AUGUST 3, 2009) Available at: http://www.emarketer.com/Article.aspx?R=1007206

xv Hellhake, Martin et al. Case 17: BMW Marketing Innovation. pp. 716Available at: http://bcs.wiley.com/he-bcs/Books?action=resource&bcsId=3514&itemId=0471755273&resourceId=9817

xvi Hellhake, Martin et al. Case 17: BMW Marketing Innovation. pp. 716Available at: http://bcs.wiley.com/he-bcs/Books?action=resource&bcsId=3514&itemId=0471755273&resourceId=9817

xvii Hellhake, Martin et al. Case 17: BMW Marketing Innovation. pp. 716Available at: http://bcs.wiley.com/he-bcs/Books?action=resource&bcsId=3514&itemId=0471755273&resourceId=9817

xviii Hellhake, Martin et al. Case 17: BMW Marketing Innovation. pp. 716Available at: http://bcs.wiley.com/he-bcs/Books?action=resource&bcsId=3514&itemId=0471755273&resourceId=9817

xix Hellhake, Martin et al. Case 17: BMW Marketing Innovation. pp. 716Available at: http://bcs.wiley.com/he-bcs/Books?action=resource&bcsId=3514&itemId=0471755273&resourceId=9817

the term ‘glocal’ refers to the individual, group, division, unit, organisation, [or] community that is willing and able to ‘think globally and act locally’.”xxxiii

In a recent study conducted on the influences of globalization on brand marketing, researchers found that it is simply not sufficient for brands to simply adopt explicit local-positioning in the hopes of preventing consumers from feeling as though they were purchasing homogenized ‘one size-fits-all’ goods. Rather, the research gathered demonstrated that countries fall into four distinct groups (as reproduced in the matrix below) and that each individual country market needs to have its own brand strategy and that different nations actually necessitate varying degrees of localization.

The notion that brands must adapt their fundamental values is very important. In order to do so, companies need to refer to their basic brand strategy and to systematically evaluate which elements best fit with the respective targeted population. This evaluation will depend on an in-depth exploration of cultural tastes and preferences in space, form and appearance whereby the marketing strategy of the product with respect to its price-points, its style, functionality and finally its distribution will need to be tailored to fit local markets. xx Unknown Author. Emarketer. Automotive Marketing Online: Negotiating the Curves. June

2008. Available at: http://totalaccess.emarketer.com/Reports/Viewer.aspx?R=2000661&page=3&xsrc=page3_reportxxxi Unknown Author. Emarketer. Automotive Marketing Online: Negotiating the Curves. June

2008. Available at: http://totalaccess.emarketer.com/Reports/Viewer.aspx?R=2000661&page=3&xsrc=page3_reportxxxii

? Hellhake, Martin et al. Case 17: BMW Marketing Innovation. pp. 716Available at: http://bcs.wiley.com/he-bcs/Books?action=resource&bcsId=3514&itemId=0471755273&resourceId=9817

xxiii Hellhake, Martin et al. Case 17: BMW Marketing Innovation. pp. 716

Available at: http://bcs.wiley.com/he-bcs/Books?action=resource&bcsId=3514&itemId=0471755273&resourceId=9817 xxiv Hespos, Tom. BMW Films: The Ultimate Marketing Scheme. July 10, 2002.

Available at: http://www.imediaconnection.com/content/546.imc

xxv Unknown Author. Wikipedia (Redirected from BMW Films). The Hire. Available at: http://en.wikipedia.org/wiki/BMW_Films

xxvi Daniel, Chris. Digital Marketing. Big Brands Make their Mark Online (Round table discussion)Toronto, Apr 2002. Pg 10. Available through ProQuest Databases

xxvii Young-Bean Song. Atlas Institute. Metrics Brand Advertisers Care About — Introducing Brand Exposure Duration (BXD) Available at: http://www.atlassolutions.com/uploadedFiles/Atlas/Atlas_Institute/Published_Content/BXD.pdf

xxviii Young-Bean Song. Atlas Institute. Metrics Brand Advertisers Care About — Introducing Brand Exposure Duration (BXD) Available at: http://www.atlassolutions.com/uploadedFiles/Atlas/Atlas_Institute/Published_Content/BXD.pdf

xxix Young-Bean Song. Atlas Institute. Metrics Brand Advertisers Care About — Introducing Brand Exposure Duration (BXD) Available at: http://www.atlassolutions.com/uploadedFiles/Atlas/Atlas_Institute/Published_Content/BXD.pdf

xxx Hellhake, Martin et al. Case 17: BMW Marketing Innovation. pp. 715Available at: http://bcs.wiley.com/he-bcs/Books?action=resource&bcsId=3514&itemId=0471755273&resourceId=9817

xxxi Hellhake, Martin et al. Case 17: BMW Marketing Innovation. pp. 714Available at: http://bcs.wiley.com/he-bcs/Books?action=resource&bcsId=3514&itemId=0471755273&resourceId=9817

xxxii Unknown Author. Goliath site. Global, Local or Glocal. December 01, 2002Available at: http://goliath.ecnext.com/coms2/gi_0199-886430/Global-local-or-glocal-Research.html

xxxiii Unknown Author. Glocalization. Available at: http://en.wikipedia.org/wiki/Glocalisation

Furthermore, the marketing communications used to sell these products will also need to be adjusted accordingly.

Cultural Individualist nations:

UK, US, France and Austria. Very high pride in their own native culture.

This pride is combined with strong individualist feelings.

Although brands do need to adopt a localized positioning in these nations, it is the individual personalization of brands that appeals most to consumers.

Global Individualist countries:

Germany, Japan, Hong Kong and Italy. These nations have a weaker sense of pride in

their own culture and an ‘openness’ to influences from elsewhere in the world.

This means that there is a much lower need to localize products in these regions. But individuality and personalization remains important.

Cultural Sensitives:

Greece, China, Turkey and India. These are collectivist societies where the

availability of global brands is often more important than any pride in regional cultures.

Localization in these regions is often related to translation rather than fundamental concept adaptation. The origin of the brand is important to consumers.

Global Sensitives:

Argentina, Hungary, Costa Rica and Ghana. These countries have a very strong sense of

local culture. It is important for brands to fully adapt to

respect regional values. Localization must be adapted not only in

terms of language, but also in terms of concept and presentation.

So how does all of this relate to BMW given its extensive global presence over a wide range of markets and different

cultural contexts? Earlier in this paper, BMW’s consistent marketing policy has been said to be one of the reasons of

BMW’s success. However, it was also stated that although BMW relies on consistency in its marketing and advertising

campaigns, BMW’s sensitivity to outside factors is has also played in its success. While a complete discussion of BMWs

global and local marketing tactics is well-beyond the scope of this case summary, it is well-worth re-examining the

success of BMW’s ‘The Hire’ campaign strictly from the Japanese perspective. As previously mentioned in the SWOT

analysis, Asia is emerging as a very important market in the global automobile market. Japan in particular has

become a key participant as one of the world’s most important vehicle exporters; Japanese vehicle manufacturers are

global leaders in the field of green technology for vehicles, with particular strengths in hybrid engine technology. Most

recently however, foreign vehicle manufacturers are actively trying to increase their presence in the Japanese market.

Although U.S. vehicle manufacturers have not been very successful in Japan (mainly due to the large size of many of

their vehicles - which makes them unsuitable for Japan’s often narrow roads - and a poor reputation for reliability) xxxiv,

German vehicle manufacturers have performed extremely well in Japan. According to the 2009 Automotive Industry

Report, Germany is the leading foreign exporter of passenger vehicles to Japan; in fact, car manufacturers Volkswagen,

Daimler-Chrysler and BMW are Japan’s three best-selling foreign brands. More importantly, of these three German

competitors, BMW actually holds the highest sales volume in Japan. A part of BMW success within the Japanese

market may be attributed to BMW’s bold decision to aggressively penetrate the Japanese market by establishing local

subsidiary in Japan in 1981, making it the first European car company to do this in Japan. In the early 1980s, BMW

complemented its market penetration with the launch of an “extensive advertising campaign [that] molded the image of

success and quality for BMW in the minds of Japanese; [BMW] also sweetened the cars' high prices by reducing the

interest rates on its auto loans.”xxxv Marketing experts have actually described BMW's actual success as “a casebook

study in how, with patience and the proper strategy, a foreign company can penetrate the allegedly impenetrable

Japanese market.”xxxvi

Shifting the focus to BMWs more recent film-series campaign, which had a very specific and bottlenecked target market;

“well-to-do, high achieving men aged 25 to 35 who usually researched purchases using the Internet and lacked the time

to watch network television”xxxvii however shows a slightly different story than two decades prior. In a 2003 industry

xxxiv Industry Report: Automotive. The Economist Intelligence Unit Limited 2009. February 2009 , (Japan Automotive report ) Available at: www.eiu.com/viewswire 

xxxv Hillenbrand, Barry. Time On-line. Saying Hello to BMW. May 1987

Available at: http://www.time.com/time/magazine/article/0,9171,964461-2,00.html

xxxvi Hillenbrand, Barry. Time On-line. Saying Hello to BMW. May 1987

Available at: http://www.time.com/time/magazine/article/0,9171,964461-2,00.html

xxxvii Japan-Imported Passenger Cars. Datamonitor- Market Profile. 01 January 2003. P 7.

report of Japan’s imported cars, research that showed 82% of the Japanese car market was dominated by the family

cars sectorxxxviii. As per the case study, this was not the target market that BMW was pursuing, especially with respect to

its fast-paced, Hollywood-inspired, sexy-sleek and dangerous film series ad-campaign. As Japan is classified as a ‘Global

Individualist country’, individuality and personalization remain important; inn the case of BMW, Japan serves as a prime

example of the importance of aligning a global product to local needs in order to avoid alienating local (targeted)

audiences. Furthermore, the Japanese situation implies that with respect to measuring the effectiveness of marketing

campaigns, it is necessary to distinguish the effectiveness (especially with respect to intangibles) between different

countries and cultures.

COMPETITIVE ANALYSIS OF ADVERTISING STRATEGIES WITHIN THE PREMIUM AUTOMOBILE MARKET

As previously elaborated, in addition to pioneering the ‘advertainment’ trend, BMW has been at the forefront of the Web 2.0 battlefield. How competitors are now responding to the rise of online marketing online within the automobile industry is worth noting. The following section will briefly highlight some of the changes adapted by BMW’s three biggest competitors as discussed within the case study.

Mercedes is a German manufacturer of luxury automobiles, buses/coaches and trucks with a reputation for refinement in quality and durability. Mercedes was actually the first competitor to respond to BMW’s ‘The Hire’ ad campaign. Whereas in the past Mercedes ad campaigns have been typically “subdued and low-key”xxxix, following ‘The Hire’, Mercedes immediately rethought their strategy, and the response was a blatant take-off from the BMW concept. Mercedes filmed a mock-trailer for an upcoming movie called ‘Lucky Star’ which also boasted a Hollywood celebrity cast and award-winning directors and featured the SL class sport car at its centre-stage xl. “Recognizing the power of the Internet for delivering effective and precise marketing campaigns…Mercedes has delegated 25 per cent of its annual marketing budget to innovative Internet strategies.”xli

Lexus is a part of the luxury vehicle division of Japanese automaker Toyota Motor Corporation. Lexus is renowned for reliability and customer service. With its slogan: “Pursuit of Perfection” Lexus’ strong brand identity has made it a serious contender in the luxury car market, despite the struggle to shake off the not-so-sexy ‘Cheap but reliable’ image synonymous with its parent company, Toyota . In early 2000, Lexus began shifting its “targeting [efforts to] its youngest buyers ever with the [new] IS 300; [these individuals are] roughly 75% male, between the ages of 35 and 40, married, highly educated with annual household incomes of $100,000.”xlii However, conversely to what would be expected given

xxxviii Japan-Imported Passenger Cars. Datamonitor- Market Profile. 01 January 2003. P 8.

xxxix Hellhake, Martin et al. Case 17: BMW Marketing Innovation. pp. 717Available at: http://bcs.wiley.com/he-bcs/Books?action=resource&bcsId=3514&itemId=0471755273&resourceId=9817

xl Unknown Author. The Hire Campaign. Available at: http://marketing-case-studies.blogspot.com/2008/03/hire-campaign.html

xli Hellhake, Martin et al. Case 17: BMW Marketing Innovation. pp. 717Available at: http://bcs.wiley.com/he-bcs/Books?action=resource&bcsId=3514&itemId=0471755273&resourceId=9817

the media usage profile of younger buyers, and the current trends towards on-line advertising, Lexus’ online presence remain limited at the time. With an overall decrease in its ad spending, Lexus resisted the wave of ‘advertainment’; rather, for the 2000 launch of the IS 300, the ad agency representing Lexus chose to create billboards and six commercials that were to be projected on buildings in three major metropolitan cities. More recently however, Lexus has been busy launching a rich-media campaign on the Excite Network, which includes WebCrawler and Classifieds 2000xliii.

Audi is another example of a well-known German automobile manufacturer, perhaps best known for their poignant slogan of “Everyone dreams of an Audi.” In 2002, as part of the high-budget $25 million inauguration of the redesigned Audi A4 sedan, Audi launched its most ambitious online-marketing effort ever. Known as the ‘Double Take’ ‘advertainment’ online sweepstakes, the strategy involved the production of three short episodes involving the A4. On-line visitors to the Audi site were then able to view the short films and to try to solve the mysteries after viewing clues presented in the short-films. The highly-interactive campaign also allowed users to register to win prizes while learning about the car and its features. According to Steve Glauberman, the creator of the site and sweepstakes, “the main thing is to educate and entice users to go to dealerships,"xliv which was the primary goal of this campaign.

xlii Hellhake, Martin et al. Case 17: BMW Marketing Innovation. pp. 717Available at: http://bcs.wiley.com/he-bcs/Books?action=resource&bcsId=3514&itemId=0471755273&resourceId=9817

xliii Hellhake, Martin et al. Case 17: BMW Marketing Innovation. pp. 717Available at: http://bcs.wiley.com/he-bcs/Books?action=resource&bcsId=3514&itemId=0471755273&resourceId=9817

xliv Hellhake, Martin et al. Case 17: BMW Marketing Innovation. pp. 717Available at: http://bcs.wiley.com/he-bcs/Books?action=resource&bcsId=3514&itemId=0471755273&resourceId=9817

CONCLUDING REMARKS

The automotive industry is the largest advertiser in the world and car manufacturers spend sizeable amounts

of money every year on their advertising campaigns. In a sea of information that is literally drowning out the

voices of advertisers competing for consumers’ share of mind, traditional media such as the 30-second TV

commercial doesn’t cut it anymore. Additionally, fragmented markets have every brand convinced that their

audience is not paying attention to their advertising, and these brands are willing to try anything to get

their attention.

During recent years, marketers have been increasingly looking to exploit and integrate the efficiencies of

online campaigns with their off-line campaigns. Currently, the automotive industry ranks among the fastest

growing users of Internet advertising. The driving force behind the increase in online advertising is the

changing behavior of auto buyers. Media-usage research points to the Internet as the most used research

tool for those looking to purchase a car; around 4 out of 5 consumers consult the Internet at least once during

the car-buying processxlv. This change in the purchase behavior of consumers is not a fad, and it has prompted

many car dealers to not only accept that the purchase process increasingly begins with the internet and

sometimes even effectively ends, on the internet, but more importantly that the buying experience must be

nurtured (with the goal of conversion) through the company’s internet presence. By consequence,

automotive companies have been significantly increasing their online advertising expenditures.

BMWs ‘The Hire’ campaign is the perfect example of the application of a new on-line, interactive experience

used to break through the clutter by daring to go beyond the borders and limitations of traditional media

planning and its archaic associated messages. In a new media age, where TV ads, print ads, local newspaper

and radio spots continue to lose their reach and impact, creative and interactive online strategies have

become paramount to success. In light of growing concerns over the effectiveness of television, the BMW

website has become an integrated part of the overall marketing strategy and BMW has continued to improve

its website in order to attract more customer and offer unique benefits to them. Through the BMW website,

customers can learn about the particular models, e-mail questions, and request literature or test-drives from

their local BMW dealership. However, what really sets BMW's website apart from other car manufacturers is

xlv Legatt, Helen. Auto Industry Online Ad Spending in Overdrive. June , 2008Available at: http://www.bizreport.com/2008/06/auto_industry_online_ad_spending_in_overdrive.html

the ability for customers to configure a car to their own specifications (interior choices, exterior choices,

engine, packages, and options) and then transfer that information to their local dealer.

Moreover, an interesting subject pertaining to internet-based marketing campaigns is the use of social

media vehicles such as Facebook, Twitter, blogs or Youtube. As the BMW case study clearly demonstrates,

word-of-mouth and generated buzz can greatly impact brand-awareness and bolster brand reputation while

increasing website traffic, lead generation and sales revenue. Therefore another lesson to be learned is that

the impact of social media, when used intelligently, can greatly benefit companies. In fact, customers today

are increasingly expecting businesses to make use of social networks which allow them to interact directly

with the brand. However, a word of caution on two important subjects:

1.) Despite the preconceived notion among many companies, that social media is either free or extremely

low-cost, social media can in fact be quite expensive (as demonstrated by BMWs blockbuster film

series). Content creation, execution and post-campaign measurement can be quite costly, and

therefore social marketing strategies require clear strategies with measureable objectivesxlvi.

2.) Studies have shown that social media is most effective when aligned with other marketing

strategiesxlvii. Moreover, these aligning marketing strategies must be consistent across the board if

they are to build foster a healthy brand building environment. “When brand experience is consistent

off- and online, the potential for strengthening a brand’s relationship with customers is

considerable.”xlviii By increasing the number and quality of ‘touch points’ between the brand and the

customer, there’s an increased opportunity for loyalty and share of wallet. BMW has built an

internationally recognized brand by establishing consistency across all marketing media – both

nationally and internationally. According to Randy March (e-business manager at BMW Canada)

“whatever we do, it must reflect [the essence] of what BMW stands for: It must be dynamic,

innovative, inspirational, engaging and reliable, with the ability to capture the imagination.” xlix

Therefore, while BMWs online presence allows BMW to touch new customers in a new, meaningful,

xlvi Verna, Paul. Emarketer. Five Reasons why Marketers Need to Have a Social Media Strategy. Feb 2010. Available at: http://totalaccess.emarketer.com/Reports/Viewer.aspx?R=2000661&page=3&xsrc=page3_reportx

and informative way, and entirely at the discretion of the consumer, BMW must continue to reach its

target audience through other supportive marketing activities.

Finally, and most importantly, in the current age of mass globalization, marketers must not forget the

importance of thinking and acting ‘glocally’. Those companies that do extensive research to understand

their customers and their cultural contexts will see more success in their brands ability to reach and connect

with their target audience.

xlvii Verna, Paul. Emarketer. Five Reasons why Marketers Need to Have a Social Media Strategy. Feb 2010. Available at: http://totalaccess.emarketer.com/Reports/Viewer.aspx?R=2000661&page=3&xsrc=page3_reportx

xlviii Daniel, Chris. Digital Marketing. Big Brands Make their Mark Online (Round table discussion)Toronto, Apr 2002. Pg 11. Available through ProQuest Databases

xlix Daniel, Chris. Digital Marketing. Big Brands Make their Mark Online (Round table discussion)Toronto, Apr 2002. Pg 11. Available through ProQuest Databases

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