Table of Contents
Executive Summary ................................................ Error! Bookmark not defined.
Assignment ........................................................................................................................ 2
Part 1...................................................................................................................................... 2
Introduction ................................................................................................................................... 2
Company Overview ..................................................................................................................... 2
Current Marketing Strategy............................................................................................ 3
Brand Image .................................................................................................................................. 4
SEGMENTATION, TARGETING AND POSITIONING .................................................... 4
Segmentation for BMW .............................................................................................................. 4
BMW Targeting Strategy .......................................................................................................... 5
BMW Positioning.......................................................................................................................... 5
Marketing Mix............................................................................................................................... 5
Product............................................................................................................................................. 5
Price .................................................................................................................................................. 6
Place & Distribution .................................................................................................................... 6
Promotion ....................................................................................................................................... 7
Key Strength and Weakness of the BMW Marketing Strategy ..................................... 8
Appendix 1.1. ............................................................................ Error! Bookmark not defined.
Segment wise revenue ........................................................ Error! Bookmark not defined.
Appendix 1.2 ............................................................................. Error! Bookmark not defined.
Region Wise Revenue .......................................................... Error! Bookmark not defined.
Appendix 1.3 ............................................................................. Error! Bookmark not defined.
The BMW Group’s Competitor landscape ................ Error! Bookmark not defined.
Appendix 1.3.1 ......................................................................... Error! Bookmark not defined.
BMW Competitive advantage......................................... Error! Bookmark not defined.
Appendix 1.3.2 ......................................................................... Error! Bookmark not defined.
Appendix 1.5 ............................................................................. Error! Bookmark not defined.
BMW Brand Performance in........................................... Error! Bookmark not defined.
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Assignment
Part 1
Introduction
The paper analyses the current marketing strategy adopted by BMW Group to
operate within UK market, the strength and weaknesses of the strategy has and how
the company creates value for its customers. On the other hand in second part of the
assignment is made recommendations how BMW Group can increase its UK market
share, profitability within this market, sustainability and strengthen value creation
process. Consequently work is finalized with conclusion.
Company Overview
BMW is an abbreviator of “Bavarian Motor Works Group” and is the commanding
luxury car and motorbike manufacturer. The corporation performs under the name
of BMW Group and owns three main car brands such as BMW, MINI and Rolls
Royce.
BMW Group was established in Germany, in 1913 by Karl Friedrich Rapp, who finally
left the business in 1917 due to faced difficulties derived from group’s over
enlargement. In the same year proprietorship of the Group went on to Franz Josef, an
Austrian entrepreneur. The HQs of the corporation is in Munich, Germany, the wellknown four-cylinder structure that was built in 1971.
The corporation has workforce with more than one hundred-thousands personnel
across 40 countries within which BMW Group functions. The Group has widereaching divisions and engineering plants across Germany, UK, Russia, USA, Brazil
etc.
2013 sales figures shows that demand in EU fluctuates, but should be noted that the
company performs well in UK despite the fact of very fiercely competitive market in
EU, which is proved by the below given graph.
Should be also stressed the importance on the roles of marketing and advertising
strategy in attaining company’s long-term success, which will be examined below.
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Segment and region wise revenue please see in appendix 1.3 and 1.4
Competitive Landscape
UK market structure of premium cars
Based on the chart above BMW enjoys with dominance on UK market, with its 21% market
share while its competitors have no higher than 10% of market share. Last year in UK BMW
sold highest number of cars and acquired highest revenue while all other competitors
performed relatively worse. Details in Appendix 1.0, 1.1, 1.2.
Current Marketing Strategy
“We offer our customers emotional products, which through the strength of the
brand and the substance of the product fulfil the customer’s wish for
individualisation and differentiations” (BMW Group)
BMW has retained its core values of delivering premium quality sports-cars since the
Group’s foundation. The values are continuously messaged through the advertising
campaigns in commercials, billboards, printed ads etc. Moreover BMW also set's on
the thoughtfully to the environment that shall be seen throughout the advertising
strategies. The company has adopted a differentiated strategy, with emphasizes on
specific car markets. The market is for customers within the certain segmentation.
BMW targets on the following markets: Sports Convertibles, Executive, Super
Executive, Touring / Estate, Super sports, and 4X4 (X5).
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Brand Image
The brands of the Group comprises of BMW, MINI Cooper and Rolls Royce. All
brands themselves are benchmark of premium cars. Even though all three share
great novelty capability and deliver pleasure of driving, their brand images differ
from one another. If BMW has a brand image of “Sheer Driving Pleasure” MINI has
an image of distinctive; demonstrative, extemporaneous and outstanding, perfect for
a young and unconventional society. On other hand Rolls Royce, which turn out to be
a part of BMW Group since 2003 is the most mesmerizing and admired brand
amongst customers, “the luxury motor car par excellence”. (BMW Group)
Maintaining exceptional brand image amongst consumers always has been the main
purpose of the BMW business strategy. BMW’s successful brand has been
conditioned by excellent advertising strategy. The company in every advertisement
stresses the importance on the values of each brand possesses and even advertises
the materials used in the cars themselves.
Given graph shows BMW brand performance between 2010-2012
dealer-communications.com
SEGMENTATION, TARGETING AND POSITIONING
The company practices following steps of targeting: market segmentation, target
choice and product positioning that will be described below in order to further
understand the Group’s marketing strategy.
Segmentation for BMW
The group adopts segmentation to recognize exact purchasing characteristics. Into
more details BMW targets the market by segmenting according to the geographic,
demographic, behavioural and socioeconomic characters of customers.
Geographically, the key markets for the Group are highly industrialized countries
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populated with high earning customers. Such markets mainly provide Europe and N.
America (appendix 1.1)
Based on demographics BMW has customers of a both sex, male and female
between their late-twenties and fortieth. On the other hand behaviourally these
customers have a set of prosperous image before purchasing the automobiles; like
sports cars, which deliver quality, trustworthiness and benefit of excellence in
performance.
BMW Targeting Strategy
BMW Group concentrates on being famous as a “premium car” and “an extraneous
or intercontinental car”, which means BMW Group targets internationally, rather
than on one concrete ethnic or citizen group of customers, aged in their late twentieth
and fortieth. However targeting strategy implemented by the German group shall be
described as concentrated targeted strategy as the group directs its marketing effort
towards only high-income customers who want to own the most chick car with sleek,
up-to-the-minute look and a luxury feel factor. The main factor BMW Group
emphasizes on targeting is being customers with at least income of 33,000 Pounds a
year.
BMW Positioning
“Positioning is what image is created in the minds of the targeted consumers” (sally
Debb), in other words what the buyers trust about the product’s value, characteristics
and advantages compared to rival’s products available on the market. These trusts
and assumption is grounded on buyers’ experiences, rather than cognizance built by
advertising campaign.
Over the past 9 decades BMW Group has achieved to position itself on the buyers
mind as an exclusive, high performer, quality and technologically cutting-edge carmanufacturer in the world, moreover the markets where BMW positions itself are
fiercely competitive due to powerful competitors operating side by.
Majority of the BMW car consumers appreciate “a feeling of security” provided by
the BMW automobiles that positions BMW products as a highly reliable and the
German Group itself as a highly competitive manufacturer in attaining customer
satisfaction.
Marketing Mix
Under this topic will be considered BMW Group’s marketing to broaden
investigation the group’s marketing strategy.
Product
The key component in the marketing mix is the product, derived from its ability to
provide the relevant necessities demanded by customers. The German Group tends
providing an efficient and vibrant look to their cars. The main accent is placed on
product innovation and improvement.
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The current versions of BMW Group comprises of BMW series ranged from 1 to 7,
BMW Z4-Roadster etc. The newest model of MINI comprises the “MINI
Countryman”.
Due to increased competition and demand on innovation, BMW Group has come up
with state-of-the-art small and convertible cars. Other innovative models include
green cars, which later in 2009 has brought awards of the “Greenest Premium
Manufacturer” and “Fleet news awards 2009” for friendship with environment.
Should be noted that the Group’s marketers successfully use PLC concept in order to
avoid having all products at the same time on maturity phase, but is used for further
progress and continuously replacement.
Price
The prices of BMW cars ranges between £16000-£60000 and are centred on a
differentiated strategy and first-class quality. High differences in price ranges are due
to diverse engine size, models, gear and fuel utilization. By looking at prices in the
graph, charged by BMW for the 3-series, we will understand that price strategy is
competition-based pricing. All other rivals such as Mercedes, Audi, etc. in the 3 series
charge same level prices. This can be explained by following: car industry is great and
production costs and incomes are secondary to rival’s prices, while it could be
primarily for a smaller business.
3 Series
Sedan
Couple
Convertible
Touring
Priced from
£21,035
25,955
30,915
22,215
Place & Distribution
The German group has 156 dealers in the United Kingdom that are licensed to trade
and wholesale BMW models; moreover there are 148 dealers licensed to trade MINI
Cooper. Across the world BMW Group operates in hundred republics with over 400
brokers who are contracted to trade brand new and secondhand automobiles and carparts.
The model of distribution channel used by BMW is very simple.
Producer
Dealer
Customer
The central purpose of this distribution channel is to expand accessibility to the
customers and add value though dealers. Dealers are in charge of providing
additional expenditure of promotional purposes on top of ad campaigns that BMW
carries out. Handling delicate showrooms in order to deliver unforgettable buying
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experience and provide after-sales services are some of the values dealers add on
BMW cars.
Graph shows the distribution of the media the dealers choose in promotional
campaigns.
Promotion
BMW uses numerous promotional techniques and mediums in order to promote its
products. But unlikely to other car-manufacturers which importance on ‘model-led’
advertisements, BMW similar to Audi accentuates on branding and spends 55% of its
media budget on ‘branding-strengthen’ promotional campaigns according to e-90
post.
 There are TV commercials used to attract a number of viewers. It benefits to
carry the message with vision, sound and gesticulation that attaches BMW
cars immediate credibility.

Internet is chosen to reach customers nevertheless of geographical
boundaries. Similarly it allows swift communiqué between BMW buyer and
co and transfers sales into close interaction.

Printed media promotion is implemented to ensure reliable readerships and
exact target readers.

The group regularly sponsors popular events like BMW MOTOSPORTS,
BMW GOLF SPORTS and BMW YATCH SPORTS. This technique is adopted
to emphasize BMW’s sportiness and promote product as a premium brand
that customers want to be linked with.

Product placement is a technique that increased BMW sales in 2009 by 12%,
thanks to the 8 series of short films, called HIRE, which was targeted mostly
on male audience. Likewise BMW cars are placed in James Bond, Fast&
Furious and many other movies, that brings out BMW cars sportiness and
coolness.
Value Creation and Sustainability Process
The meaning of the “Value” is subjective and the value-creation process also varies
from car-manufacturer-to car-manufacturer. BMW re-established the meaning of the
‘value’ for its customers and provides it in three general ways;
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Cutting-edge engineering and technology built-in every car; safety &
reliability and achieved sustainable performance.
The research conducted by BMW Group showed that British consumers value “
Safety and comfort “ they feel while driving BMW cars, likewise BMW brand image
and quality were another factors why consumers preferred BMW over competitor’s
cars. On the other hand the research from Berlin's Institute for Futures Studies and
Technology reveled that BMW creates more values to customers and environment
than any other luxury car-manufacturer in UK. Using its financial, environmental
and social assets efficiently and developing sustainable performance BMW managed
to decrease emissions, work-place misfortunes, waste and water use in UK.
The research ranked car-manufacturers according the amount of "sustainable value"
they provide conditioned by their social, financial and environmental capitals. The
research believes that as better organized a manufacturer uses these capitals, the
more value they provide for customers and create sustainability for a business.
Additionally the company’s future strategy comprises of investing more into
technologies in order prevent CO2 emissions in manufacturing process. (BMW 2013).
Key Strength and Weakness of the BMW Marketing Strategy
Strengths
It’s obvious that the Company has strong marketing strategy. BMW concentrates on
being ‘the best” that is feasible through current marketing strategy. Company has
successfully positioned itself as “Premium & Classy” car-manufacturer in its targeted
customer’s minds. The Group executed a strategy that incorporated supportive
marketing programs and created very strong brand and similarly positive brand
images like BMW, MINI Cooper and Rolls Royce. Product invention on the core
platforms enabled BMW to maintain its brands distinctive. On the other hand new
product development in every 3 years based on continuous innovation avoids of
being all products in maturity stage.
And finally widespread distribution channels allow the Group to operate in various
markets and extent customer reach.
Weakness
The current marketing strategy created perception of BMW products to be luxury,
but it has created perception as well that products are affordable only for Upper
Class, that reduces the size of potential customers. Also if company wants to appeal
wider range then marketing strategy disappoints derived from the pricing of cars. On
other hand there isn’t mass-market campaign compared to Lexus, or Mercedes and
distribution channel despite the fact of being extensive, it lacks exclusive dealership.
Other than that targeting strategy seems to be correct as BMW targets customers
aged 20-40, derived from sportiness of the BMW, but if you look from demographic
perspective than the company’ s current strategy seems weak. In UK the customers
who can really afford to buy luxury cars are in 45-60 aged group, which means that
BMW has to target on those group of people too and provide differentiated product
from its product portfolio, something new, or at least modified that would match
such aged group’s requirements.
Part 2
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Recommendations
In this section based on our findings of current BMW marketing strategy I will be
recommending alternative approaches required by the company to take in order to
help increase its market share, lucrativeness, value creation, and sustainability in EU.
Alternative approaches of how BMW can increase market share and
profitability in UK.
There are a few ways that shall be recommended for BMW in order to increase UK
market share. One option is product development strategy from growth strategy. Due
to increased current demand for economy cars gives opportunity BMW to develop
new product for UK market, relatively less expensive models with low maintenance
cost required, which on the other hand would allow the company target customers
with medium range income and use opportunity to increase local market share. The
graph created by Trend Tracker shows how purchase priorities have changed due to
economic recession in EU and proves that BMW can use this chance to increase
market share.
Other recommendation shall be made based on again new product development in
brand BMW MINI. Developing new feminine models in BMW Mini might help the
company to target different segment such as women aged 18-25. In order to further
influence on new targeted customer group shall be emphasized on psychological
factors, for example cars targeted for them should have more female features added,
such as even their preferred pink color, trendy sit-covers, space for make-up bags and
many more. Currently nor Mercedes, Audi, Toyota or Lexus offers special models for
females, which means there is a gap on the market that needs to fill.
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On the other hand my recommendation is to be reviewed current targeted strategy.
The thing is that BMW targets customer group aged between 20-40, derived from
sporty features of the cars, while those aged 45-60 can afford buying premium
automobiles more than their younger fellows. Targeting on elder segments of
customers with brand new models would also allow BMW to increase market share.
Besides all recommendations made above, attention should be accentuated BMW
customer’s “extensive decision-making” buying behavior, which affects on demand
and hence determines the market share. As the purchase of a car is high
involvement, particularly for those utilizing unfamiliar and innovative energy
solutions would be appropriate to use something that would motivate them to take
purchasing decision faster. That shall be achieved by using advanced techniques of
visual demonstration such as installation of 3D video-walls in the showrooms, which
would stream 3D live videos and images of cars and that enable customers to ‘feel’
and ‘touch’ the products. This technique would possibly inspire customers about the
product, create the image and show how this car might fit into their lives. Almost very
similar walls have been installed in Burberry’s stores throughout the London and has
affected on sales too.
Increased sales and market share on the other hand lead to profit boost. Why any
car-manufacturer would want to increase market share, if doesn’t find profit rise?
Strong sales conditions profit rose, however there are other factors that affect on
margins. My recommendation to BMW how to increase profitability is based on
strategic position that stresses the importance of cost reduction. The company itself
came to such decision, which it has outlined in its mission statement. According to
the statement, BMW has decided to cut the cost by reducing the size of its workforce
and R&D expenditures (BMW 2013). However, cutting funds in R&D will likely lead
to losing BMW’s competitive advantage of providing cutting-edge design and quality
cars based on R&D development, whereas AUDI and Mercedes Benz already decided
to increase investment in R&D by 2013 in order to invent “something special that just
needs to drive”. (Bloomberg 2013).
Profitability wise would be appropriate to cut production cost by using
groundbreaking and improved technology in UK manufacturing process and which
shall be invented through continuous funding research and development department.
Example shall be taken form Toyota, which is the one who emphasizes on the cost
reduction based on creating progressed technology.
Alternative approaches of how BMW can strengthen its Value creationprocess and Sustainable development.
“Innovation is significant if it is creating a value for a customer. At the end of the
day, it is not about how the innovative company thinks it is, customers are the
ones who decide the worth of innovation. (Sawhney et al.2006)
Finding a gap between customers’ expectations and supply on the market shall
reinforce BMW value creation process. Due to intense competition in the carmanufacturing industry and available variety, consumers are expecting to have
some extra values to satisfy their ego. They want to enjoy new offerings even if
their needs are stable. (Elliot and Percy 2007). Progressed engineering, quality
and reliability and comfort of driving are already package of values that
customers are treat for a long time by BMW. Maybe worth to concentrate on
promotional offers and improved service rather than the just product and
innovation itself. BMW is very expensive not only in terms of price, but in terms
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of maintenance cost required. Providing warranty for car-parts and offer free car
examination service for 2-3 years of after sales, which non of BMW’s competitors
offer would add value on BMW product.
However greater competition is not the only reason that influence on consumer
buying behavior, but social and environmental alarms have become an
increasingly significant for them. At the end buyers’ such concerns can impact on
their and BMW relationship. Research conducted (Jobber 2009) proved that
70% of buyers are concerned about CSR in their purchasing decisions. Similarly
20% of customers are willing to pay premium price for a product if they know
that some percentage of the price is used for social and environmental purposes.
Based on the outcome of the research I will be recommending BMW to team up
and become corporate partner of charities involved in donations for community
and environment. There are many charities operating worldwide and providing
emergency help for communities affected by natural disasters and wars. At the
end BMW can expand its value-creation process via proving value for social and
corporal environment.
Conversely, when there is a critical level of CO2 emission and natural resource
depletion conditioned by massive industrialization, for a large group of customer
sustainable approach of development implied by companies and reducing energy
consumption is more valuable than anything else. So what shall be done to
strengthen BMW sustainability? BMW future approach to increase sustainability
of the business is based on funding in emission reduction technologies in order
to further improve its sustainable performance and decrease green gas emission,
which already is a progressive feature of the BMW future strategy. However
there shall be alternative approach recommended. It will be appropriate for the
company to stress the importance not only on emission reduction, but to work
towards recoverability and using recyclable materials in its cars. Apart from that,
I will be recommending to target on using 100% renewable energy in
manufacturing and production process, which also will strengthen BMW
sustainable performance.
On the other hand collaboration with other key manufacturer to invent car that
consumes just renewable energy shall be expensive, but alternative way.
However it’s not easy and will take time to come up with such product, but at
least gathered power and finance will be helpful aspects.
Conclusion
BMW Group is the premium car and autobike manufacturer and provider in UK
and in the world. The number of cars sold in UK rises continuously. Then again
the company is facing very intense competition in the car-manufacturing
industry. Currently main competitors of the BMW in the industry are, Lexus,
Mercedes-Benz and Audi as shown in the appendix 1.3.
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Even though the company’s future targeting strategy includes emerging markets,
as they has been great attraction for the car-manufacturing companies, happens
that US and EU markets, especially UK are the most profitable ones.
On the other hand can be said that BMW Group differs from its competitors by
pursuing differentiated and highly expensive advertising and marketing
campaigns and especially by its powerful and established brand image. The
ability to continuously provide innovation, differentiated marketing strategy,
engineering advancement and buyers’ gratification are the main drivers of the
BMW triumph in the premium car-market.
“We just don’t make cars, we make joy” new slogan of BMW commercial
perfectly mirrors the company’s mission.
Looking on a past 2 years sales of BMW and competitive landscape BMW has
been effective in exposing a high quality and professional image in the
customers’ Eye for delivering premium cars.
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