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BMW Brand AuditBy: Nik Jain Moe AbusaadCassi WhiteOmar Ismail Giovanna Walden Chad CosiminAlong with performance, class, and style, BMW has been a leading premium brand in the automobile industry since 1917, and continues to appeal to a wide host of target groups around the world with over 11 million Facebook fans, more than almost any other auto brand out there. ?The key success factors are BMW’s design, handling and performance characteristics, and innovative thrust of continually building the brand. ?A big recent step for BMW was capturing the title of being the official automotive partner of the London 2012 Summer Olympics, which BMW provided more than 3,000 vehicles to the games, successfully demonstrating its advanced level of global brand management and further extending their positioning worldwide. ?BMW strives to set new goals in the dealership experience, opening brand stores in London and Paris this past year as part of BMW’s “Future Retail” program. ?The stores represent the first step toward a new generation of brand experiences. ?Never short on innovation, BMW is also planning to introduce the “I” series, which promises to bring new excitement and attention to the electric vehicle market. ?Aimed to be fuel efficient and environmentally friendly and to compete with the smart car and other hybrids, BMW hopes to reach that new market while keeping the performance and luxury always promised by BMW. ?BMW, the bestselling luxury car in the US in 2011, once again claimed the title of the bestselling luxury car in 2012. Compared to the 305,418 vehicles sold in 2011, BMW registered 347,583 vehicles for the year, an increase of 13.8 percent. ?For BMW, 2012 will be recorded as its best ever year of sales in the U.S. to date. ?Brand Top 100 global survey is one of the best ways to determine the brand value of a company. ?After losing to Toyota last year, Millward Brown, a market research firm who conducts the survey, placed BMW back at first place for the year with the numbers as follows: (in millions)Building ResonanceBMW has built its brand resonance based on its consistency of producing top quality luxury products and by targeting the right market. ?The user demographics are one of the essential building blocks on how BMW has created the customer loyalty. ?Since BMW is part of the luxury class, they target middle aged males who can afford it. ?On average, BMW customers are approximately 46 years old, two-thirds of which are male, and are usually married with no kids pulling in around $150,000 a year. ?BMW also has loyal customers because of the quality of performance and style they pursue. ?Comparing BMW to their top competitors, Toyota focuses on keeping their cars affordable, which leads to not being leading edge in technology and usually cut corners. ?Striving for top quality and newest technology is what BMW is about and is why their cheapest car starts at over $30,000. ?Also, BMW is widely known not only for its luxury, but its performance, as reminded by their slogan, “The Ultimate Driving Machine”. ?Mercedes, another top competitor, also offers top luxury cars with top notch performance; however, they are all about numbers, horsepower, torque, etc. ?BMW’s performance not only comes from what’s under the hood, but their handling, balance, and just overall complete performance package. ?This is what differentiates them from everyone else and keeps their customers pleased, and coming back for more, and is a key tool to building resonance. ?Compared to the rest of the industry, BMW has a relatively high resonance from their customers to the brand name. ?When compared to the industries averages, BWM claims one of the best customer retention ratings pulling in 4th place at 59%, only 5% behind the leading Hyundai and a full 10% ahead of the industry averages. ?Although not by much, BMW was also able to pull off better ratings than its top competitors, Toyota and Mercedes.In characterizing the positioning of BMW one must look at how aggressive the brand is to attract sales, for example in market share alone BMW has moved up in market share from just 9% in 2006 to 42% in 2011 and took over as the top selling luxury car. The brand positioning for BMW is characterized by a car that is driven but seems as if it is chauffeur driven. ?After all the tagline “The Best Or Nothing” and “The Ultimate Driving Machine” does not come without responsibility and sustainability. A key component to what BMW keeps intact is the ability to stay new and innovative as well as introducing new product lines and models over time. BMW is not a fan of having a product in the decline stage of the life cycle and if the product is on the decline than they prefer to have that product completely withdrawn from its market. BMW is one of the most prominent luxury manufacturers in Europe, North America, and the world today with the ability to attract the consumers with its 3 series, 5 series, and 7 series, giving the consumers the preference of a smaller model, medium model, and larger model to be able to pick from.To keep products in the introductory and growth stages BMW introduces new models for each of its new series, for example the 3 series might have the option of also being a sedan one year, a coupe the next, and a convertible in another or maybe even a hatchback. That would be 4 products for 6 years of the product life cycle. BMW usually sees its production after 6 or 7 years after the product is introduced to the consumers resulting in a positive outturn in sales growth from year to year. In the global market alone BMW has a revenue of 69 billion compared to Mercedes which is at 57 billion and has unit sales of 1.67 million to 1.26 million for Mercedes. ?The position for BMW in China is number 2 but its position in the U.S. is at number 1 compared to Mercedes which is 3rd in China and 2nd in the U.S. behind none other than BMW. The global aspect of BMW is what has driven the brand into a whole new aspect and is the backbone in keep the success for their entire strategy.Some of the major key points to the marketing of BMW results in the ability to be global. Globalization plays a major role with the ability of BMW having overseas facilities and mergers between automakers. The mergers including General Motors, Ford, Toyota, and Honda have each helped BMW in operating in a global market place. Partnerships is always a good thing and BMW knows how to get the most out of its mergers with going directly towards what is being needed and asked for. Sustainability is what BMW is known for and prided on so they have to feel as if they are secure and comfortable for working with other major companies. The key to the strategy that BMW uses for the marketing is they know how the relationship works and knows that many companies that merge come to a quick stop this is why they get what is needed from the other companies but know that the other companies are going to want to move on and expand. In regards to globalization and marketing, BMW’s main key component is still innovation. Innovation is what keeps the brand successful and perceived as one of the best companies not only in the U.S. but also internationally. In 2002 BMW received the OCI award a prestigious award standing for “Outstanding Corporate Innovator”. BMW were the first enterprise to ever win such an award and was known as an “Oscar” for innovation management. It is not a coincidence that BMW is number one throughout the U.S. because the brand always keeps innovating from year to year and has the drive that wants to keep the consumers coming back forever. Innovation and globalization serve as the major keys for BMW and nothing is going to change in that aspect as the brand as a whole will keep pushing to stay successful and keep those two pieces as the core.The ways to expand in the positioning of those two aspects would be to keep the engineering of BMW as the main component, for instance BMW has a high quality of engineering than usual production cars. While most other cars use robots or workers from low economies of scale BMW uses the skill German labor force in enduring the safety and motor sustainability of the vehicle which keeps the engine in a different type of class than other types of makes and models. The company benefits from an educational system which gives basic technical skills to a high proportion of the population. The relationship between BMW and its suppliers is what has kept the long associations with the company, BMW really just has to keep the repetition in strategy of quality engineering and enhancing that aspect for maintaining the quality and sustainably of enhancing in that area to maintain the success already established.How well has the Brand expanded into new markets or channels? How would you judge its growth strategy?Brand ExpansionAll over the world, businesses are striving to globalize their market. BMW has easily continued to internationally reach more customers with high quality and performance automobiles by articulating global marketing strategies.To expand a business globally and succeed in any foreign market, it is essential for a company to conduct extensive research and analysis on many elements including: economy, demographics, the cultural and sociological climate, market conditions, technological environment, and the competitive market. The company must cater to the country’s needs and be aware of the business environment in order to succeed internationally and achieve the best results. A tool to utilize would consist of the marketing mix, and identifying strengths, weaknesses, opportunities and threats. The price strategy, promotions, distribution channels and products must all match with the targeted consumers.BMW demonstrates leadership in their global marketing strategy by catering to the premium markets through innovation. It concentrates on these premium segments to define their luxury brand, selling well to customers with high standards for quality and performance, as BMW stresses these attributes in their automobiles. Along with premium markets, it also implements emotional marketing communication to directly affect the consumer purchase behavior. Combining both of the premium marketing and emotional marketing strategies constitute their advertising and global marketing strategy.“Brand loyalty can only be established if a brand is able to connect with its customers on an emotional level. From a brand management perspective, we see ourselves not only as a car manufacturer, but also as a creator of emotion."???????-Dr. Uwe Ellinghaus-Director of Brand Management, BMWThis marketing strategy of premium and emotional marketing made its mark in superior performance, high quality and strong leadership positioning in the automobile industry. This has led them to establish the core competencies of their leadership in the global market, as well as integrating Corporate Social Responsibility through economic benefits. CSR activities include science and engineering education, as well as concentrating on preserving the environment. For the past several years, The BMW Group has been ranked industry leader in the Dow Jones Sustainability Indexes.Expanding to more than 130 markets around the world in 2011, this held an astonishing 73% increase from 2010. Their global marketing strategy is continuing to succeed. One of the larger and impactful places BMW has expanded to is China. Opening a plant in China is said to be a wise move in that it was one of the largest markets worldwide with sales of over 35% vehicles. It also expanded dealerships by 80 over the course of one year in 2011, setting it at 290 dealerships. BMW has 29 plant locations in 14 countries, and has a global sales network in more than 140 countries. Not only has BMW expanded globally, but it exported 70% of its vehicles, leading it to be named the largest automotive exporter to the non-NAFTA countries.Growth StrategyThe global strategy of BMW is driven by building resonance and maintaining global brand identity. It considers many aspects of its target consumers, broadening its consumer range, and caters to the market on a stronger level. It is supported that the brand must be managed with different priorities in each market it targets. This involves organizational structures to implement resources for brand building, while supporting each market. To ensure the brand is positioned as a premium brand globally, management must cater to the consumer differences while preserving and representing the consistency of the global brand appearance. Since not all markets are the same, and customer behaviors may vary between markets, it is agreed that concentrating on each segment while representing the brand will specifically meet a market’s needs on a more emotional and relatable level. The emotional marketing strategy BMW uses as well as the premium marketing strategy enables it to take the lead in building essential consumer relationships and resonance with the brand. This strategy is well thought out in that it caters to the individual market, reaching more consumers in a stronger way.PositioningThe BMW group is one of the most successful car and motorcycle manufacturers in the world. BMW’s group activities will remain firmly focused on the premium segments of the international automobile markets.BMW’s mission statement: “the BMW Group is the world’s leading provider of premium products and premium services for individual mobility.”BMW’s focus on engineering excellence allied to leading-edge design continues to drive successful, profitable expansion.The key success factors are BMW’s handling characteristics, design, and innovative thrust of the brand. As the official automotive partner of the London 2012 Summer Olympics, BMW provided over 3,000 vehicles to the games, successfully demonstrating its mastery of global brand management and further unifying its positioning worldwide.BMW is also poised to introduce, the i series, which promises to bring new excitement and attention to the electric vehicle market.BMW is a strong player in the luxury car market. Some key competitors include; Audi, Mercedes Benz, Infiniti, and Porshe. BMW’s highly innovative engineering and ability to make that strong connection with consumers has made them outperform many of these companies. In the chart below, we see that BMW is highly ranked in luxury and performance.Key Marketing ActivitiesAt BMW, emotional connection seems to be the biggest marketing tool they use. "Brand loyalty can only be established if a brand is able to connect with its customers on an emotional level. From a brand management perspective, we see ourselves not only as a car manufacturer, but also as a creator of emotion.“-Dr.Uwe Ellinghaus (Director of Brand Management BMW).A big marketing tool many companies use in today’s market is social media. BMW introduced their own YouTube page and BMW TV, which displays numerous BMW television ads and racing and driving videos of all of the company’s models. Many of their videos have over a million views. BMW’s current page has over 13 million likes on Facebook. Their current Facebook page display’s a lot of information about the mechanics of their automobiles as well as reinforcement of the prestige of their product. BMW’s official Motorrad site gets very specific: it’s a page and community dedicated to those who love riding high-priced motorcycles. This is a blogging community for users of their motorcycle products. This is a great online marketing tool for BMW because it creates a sense of community and creates a higher level of brand loyalty for years to come.In 2010 BMW embarked on one of its biggest branding campaigns to date. A new theme, "The Joy of Driving," was integrated into every television, digital and print ad as well as event and team sponsorships.The "ultimate driving machine" slogan still appears in the ads, but the shift in emphasis was apparent with copy in one of its print ads that read "At BMW we don't make cars, we make Joy." This marketing campaign sticks true to what they are trying to accomplish; a sense of high emotion between the product and the customer. They are trying to portray that driving a BMW will bring you that joy you are missing.This is a very general view of BMW brand architecture. This is a simple representation of BMW groups brand elements and the levels of brand hierarchy. First of all, you see the BMW group as the corporate brand followed by its family brands BMW, Rolls Royce, and MINI. Below those you can see the individual brands for the following family brands and those include:BMW: 1,2,3,5,6,&7 series (Sedans), Z series (Coupe sports car), M series (Coupe Sports), and X series (SUV’s)MINI: Cooper, Clubman, Hardtop, Paceman, Roadster, and CountrymanRolls Royce: Ghost and PhantomTo step back and look at the BMW Group's brand hierarchy, Rolls Royce and BMW’s are clearly sold as prestige brand high end products. Rolls-Royce is a very good example of vertical brand extension. Rolls Royce is sold at a much more expensive price compared to BMW’s and they are considered to be very classy vehicles. They are to serve the “elite” customer base.MINI on the other hand is the opposite. MINI is a small economy class vehicle originally made by British Motor Company. MINI is sold as a low-end product and BMW always keeps a fine line between its low end products and the high-end by never affiliating the two. They don’t match in design, color, or even upgrades.Just as it appears on the brand architecture above, BMW Group has its hand in the low-end automobile industry and also the high-end. With that in mind, what would be a good direction for BMW Group to go? What can they do to further penetrate markets?Changing the current architecture by adding a new vehicle family brand would not be a good idea considering BMW group is already targeting the middle, high, and low class consumer. In fact, adding a new family brand of vehicles could actually cannibalize from its current sales no matter how which category it could be added to. Marketers say that low fit extension always fail, but BMW is an exception. Years ago, BMW Group launched BMW skateboards and kitchen sinks, which have proven themselves successful. By adding low fit extensions BMW can increase revenue and at the same time not affect its current brand equity for its other brands. BMW Group can also benefit by higher brand awareness with these low fit extensions. When BMW Group decides to release these products, as it did with the skateboard and the kitchen sinks, they are to be sold at an expensive price compared to products in that category. With a low fit extension BMW can keep its top of the line and high end product reputation even with “cheap” products.New low fit extensions for BMW Group could include Rolls Royce Yacht product line and sold as high-end Yachts. Yes, BMW Group has made marine engines in the past, but a yacht could allow BMW to enter a whole new market in which it can do some severe market penetration. The boat industry could open up BMW to a prosperous high end market. If BMW group chooses to add a low fit extension, watches could make BMW lots of profits. Watches are known to have a heavy profit margin and BMW Group could generate serious revenue through this low fit extension. Though it is a low fit extension a BMW watch with a BMW dial has the potential to raise brand awareness and to build equity. It will send a message to BMW Group’s consumers that BMW has spanned its wings to different product categories and lines. The watches would be sold alongside high end watches such as Citizen, Burberry, or Fossil watches.To adjust its current architecture, BMW Group needs to add a selection of BMW X series Hybrids. BMW is the only car brand that can handle a modification such as a hybrid. Rolls-Royce is too prestige of a brand for a hybrid engine to even affect its sales. MINI is too cheap of a vehicle for consumers to afford a hybrid engine and that leaves us with only BMW. Currently BMW has its hands on hybrid 3, 5, and 7 series. Those are the only vehicles that BMW offers with an option for a hybrid engine. By adding a line of hybrid SUV’s BMW can compete with the popular escalade SUV hybrids and many others. Another down side to BMW Group’s brand architecture is that BMW does not offer enough Product categories. BMW needs to have many different products in precisely selected markets to build higher equity. RecommendationsTo build and manage equity for BMW, it is agreed that focusing on long-term strategic objectives will make a difference. As the Director of Brand Management had noted, it is the consumers that ultimately set the bar. These three factors are agreed to be the most important in building and managing brand equity for BMW.· ?Reinforcing the brand’s performance and high quality in the context of its rapidly expanding product lines· ?Develop and maintain its marketing competencies to compete effectively· ?Concentrating on the premium and emotional niche marketing to pursue the markets on a more focused and targeted level BMW is a prestigious brand that will continue to grow exponentially in sales and brand loyalty. Their Joy campaign had a very high success rate. Perhaps maybe doing a new campaign with a different positive emotion could be beneficial.References ................
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