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BMW Full Assignment 1
BMW Full Assignment 1
The main objectives of this report are to identify the existing marketing strategy of a branded
car company and to suggest an alternative strategic approach for increasing its market share
and profitability.
BMW Car Company has been chosen for this report as it is one of the most successful and
leading car brands in the automotive industry, manufacturing luxury cars for the customers all
over the world. BMW cars are well known for its high standards, luxury performance and
features.
The report consists of two parts. The first part is aimed to identify existing marketing strategy
of BMW and its value creation process by using appropriate sources. Moreover, it includes
the research, analysis and evaluation of key strengths and weaknesses of BMWs existing
marketing strategy. Analyses in this part include situational analysis of current strategies,
segmentation targeting and positioning, as well as differential advantages and weaknesses of
BMW.
The aim of second part of this report is to suggest an alternative strategic approach for
increasing the profitability of BMW, its market share, value creation and sustainability. The
second part includes the recommended objectives and goals for the next two years, as well as
recommended marketing strategies and programmes to achieve those goals and objectives.
Table of Contents:
1.0 Introduction...4
2.0 Methodology.5
3.0 Differential advantages and weaknesses of BMW...6
3.1 SWOT Analysis.6
3.2 PESTLE Analysis......7
3.3 Porters Five Forces...8
3.4 Unique Selling Point (USP).11
4.0 Situational Analysis.12
4.1 BCG Matrix.12
4.2 Porters Generic Strategies..14
4.3 Organizational Chart of BMW....15
4.4 Porters Value Chain Analysis.....15
4.5 Competitors Analysis...17
5.0 Segmentation Targeting and Positioning.....18
5.1 Segmentation Targeting...18
5.2 Positioning...19
5.3 Perception map.20
6.0 Recommended short-term goals and objectives...21
7.0 Recommended marketing strategy and programs (4 Ps)....21
7.1 Product.21
7.2 Place.22
7.3 Price..23
7.4 Promotion.23
8.0 Conclusion24
9.0 References25
1.0 Introduction
BMW AG (an abbreviation of Bayerische Motoren Werke AG, in English translation Bavarian Motor Works) is German car manufacturer. BMW Group is the company that owns
a controlling stake in the manufacturer of car brands Mini and Rolls-Royce.
BMW was founded by Karl Friedrich Rapp in October 1913, initially as an aircraft engine
manufacturer - Bayerische Flugzeug-Werke. District of Munich - Milbertshofen was chosen
because it was located close to the factory Flugmaschinen of Gustav Otto - German aircraft
manufacturer. White and blue circular BMW logo is still in use, it's a stylized image of
spinning propeller aircraft, and is dated since that period in the history of the company. The
design also points to a blue and white checkered flag of Bavaria.
The history of the BMW as a car manufacturer is associated with year 1928, when Germany
had 25 vehicles manufacturing companies. Only seven of them managed to survive until
today and they are the most successful and experienced, those who managed to survive two
world wars and the post-war crises. Towards the turn of the millennium, BMW had to
produce almost everything from kitchen supplies to aircraft engines, which is associated with
one of the crises of the famous vehicles manufacturer. Survival in many difficult situations
was very tough, but, nevertheless, today BMW along with Porsche and Daimler-Benz
symbolizes the high quality products of the German automotive industry.
The BMW cars are the symbol of a good vehicle for a secured nation, designed and produced
for the reliability, comfort and excellent service for the benefit of the owner.
The mission statement of BMW up to the year 2020 is clearly defined:
The BMW Group is the worlds leading provider of premium products and premium services
for individual mobility.
Nowadays BMW AG is a German manufacturer of automobiles, motorcycles, engines, and
bicycles. Chairman of the company is Norbert Reithofer and chief designer is Karim Habib.
The slogans of the company are The Ultimate Driving Machine and Sheer Driving
Pleasure.
Dated on July 25, 2011 Stefan Quandt holds 17.4% market share of automaker, his sister
Susanne Klatten - 12.6%, and their mother Johanna Quandt - 16.7%. The market traded 53.3
percent stake of the company.
The BMW in 2008, produced 1,203,482 cars (the drop was 7.6% compared to the same
period of 2007).
The main competitor of the BMW in the car market is Mercedes-Benz. Also competing
companies are Audi and Lexus.
BMW is a member of the Association of European Automobile Manufacturers.
The main production facilities are located in Germany (Dingolfing, Regensburg, Leipzig,
Munich). Also, production facilities are situated in Thailand, Malaysia, India, Egypt, South
Africa, Vietnam, Russia and the United States (Spartanberg). Also in China, the company
cooperates with Huachen Auto Holding (Huacheng Auto Holding), which produces cars
under the brand Brilliance.
In 1994, BMW bought the British industrial group Rover, which owns the brands Rover,
Land Rover and MG. This purchase allows the company to increase its market share of SUVs
and compact cars. Four years later, the Germans go to the British premium brand Rolls
Royce.
The number of produced cars is constantly growing. Today, BMW is a prestigious brand, so
the German company cars often used by employees of embassies, consulates, travel and
insurance companies.
Since 1929, white and blue circular emblem of BMW was used for the convenience of the
airplane starts to be treated as a screw against the blue sky. BMW Group asserts that the
white and blue colours of the logo were taken from the flag of Bavaria.
In 1916 the company signed a contract for the production of V12 engines for AustroHungary. Needing extra financing, Rapp gets support of Camillo Castiglioni and Max Friz,
the company recreated as the Bayerische Motoren Werke GmbH. Super Extended caused
difficulties Rapp left the company, and the management of the company was made by the
Austrian industrialist Franz Josef Popp in 1917, the company was named BMW AG in 1918.
In 1919, Franz Diemer set the first world record for BMW, rising to a height of 9760 meters
on an airplane with the engine BMW.
After World War I, the Treaty of Versailles in 1919 banned the production of aircraft in
Germany. Otto closed his factory and BMW switched to the production of brakes for trains.
In 1922, BMW builds its current main building east of Munich airport Oberwiesenfeld (now
the city Olympic Center).
In 1923 the first BMW motorcycle produced in a factory in Munich.
In 1924, the first intercontinental flight to Persia by plane equipped with engines of BMW.
In 1926, the seaplane Rohrbach Ro VII with engines BMW VI sets five world records.
1927 - This year it was established 87 world records in aviation. 29 of them are on airplanes
with engines of BMW.
In 1928, BMW acquires car factory in Eisenach (Thuringia), and with it a license to produce
a small car called the Dixi. The Company enters into a licensing agreement to build radial
engines with American aircraft engine manufacturer Pratt & Whitney.
1929 - Dixi is the name of the first car of BMW. It was developed in Munich, as well as all
subsequent products of BMW; however cars produced in Eisenach until the forties. Ernst
Henne becomes the fastest rider in the world on the motor BMW.
By 1951 BMW produces more than 18 thousand of motorcycles a year that brought profits
and enabled the development of a new model - R51 has a 2-cylinder boxer engine.
1951 - BMW produces its first post-war car - 501.
1954 - BMW became the world champion in the races motorcycles with sidecars and holds
the world championship the next twenty years.
1955 - Branch BMW Triebwerk GmbH back to life. The company focuses on the traditions of
production of aircraft engines. The next step in the right direction was the change in policy of
the company BMW in order to promote their products in the middle class. And the first mass
car in the post-war years was the BMW Isetta. The idea to create a miniature car belonged to
an Italian company Iso, and it created a prototype body was bought by Germans.
1956 - Sports Cars 503 and 507 models.
1959 - Model 700 was the first big success for the serial car BMW. BMW has put up for sale.
1975 First three units appeared in the history of BMW, it was released in the body E21.
1994 - Launched the BMW factory in Spartanburg. Opened 16th Branch BMW de Mexico
SA, established a sales office in Beijing.
1995 - Presentation of the legendary BMW Z8. The car becomes the star of cinema and
starred in the James Bond film.
1999 - At the Detroit Motor Show was held presentation of the new all-wheel drive SUV
BMW X5.
2013 The company hosted the presentation of electric BMW i3 and i8.
2.0 Methodology
The main purpose of this report is to identify the current marketing strategies of BMW using
appropriate sources, as well as to research, analyze and evaluate their key strengths and
weaknesses. The purpose of second part of this report is to set the new goals and objectives
for BMW for the next two years and to suggest an alternative strategic approach to achieve
these objectives. The new goals and objectives have been recommended with a view to
increase companys market share, profitability, value creation and sustainability.
To provide the background of BMW Company and introduce the main object of the report
www.allbest.ru website was used.
To research and analyze the existing data the official BMW websites were used
www.bmw.co.uk and www.bmwgroup.com. Most of the data, statements and companys
details were obtained from these websites.
To understand and identify the current marketing strategies of BMW and to give explanations
on the analysis used in Part 1, as well as to give brief definitions on analysis, the several
books were used, such as: Fundamentals of Strategy by Johnson et al. (2009), Strategic
such
as
www.allbest.ru,
www.menzo.ucoz.ru,
www.ru.wikipedia.org,
www.proname.ru.
strengths,
weaknesses,
opportunities
method includes
defining organizational goals and determining of the internal and external factors that
contribute to achieving them or complicate them. (Leraned et.al., 1965)
Internal
Environment
Strengths
Weaknesses
Strong brand image
High cost of raw materials
Diverse ranges of products
Declining production and
Strong product innovation
deliveries
Strong
influence
on
Lack of scale compared to
consumers through media
competitors
Good
reputation
for
Too less strategic alliances
quality,
reliability
and
service
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External
Environment
High
productivity
High quality suppliers
Opportunities
Innovation
employee
Threats
and
Rivalry in the automotive
Technology
Move towards
shopping
Automotive industry on
internet
in UK
Moderate growth in cars
development activities to
regulations
Volatility in price of fuel
New legislations
Extremely
high
competition for customers
and resources
market
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Political
Scrappage scheme
Economic
Increasing cost of oil
Social
Estimated UK
population of 70
older (UK)
Government
buying behaviour
Lowering interest rates,
million by 2029
Population shift to an
funding available on
increasing older
request
Emissions target of
England, affects
generation
People have a more
consumer savings
active lifestyle,
related to improved
life expectancy
Environmental
Technological
Constantly changing
Legislation
Health and safety (Euro
environment (BMW
resources, hence
Efficient Dynamics
cars)
Road tax brackets
Insurance groups
Technology try to
stay one step ahead
(BMW iDrive))
Strong Research and
Development
Lack of natural
agreement
More Greener
lifestyle
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risks and challenges that company may face. In addition, the Porters model can help to find a
competitive advantage, allowing the company to take a more advantageous position. (Porter,
1979)
Porter identified five forces that affect the company in the industry and its profit:
Threat of New
Entrants
Bargaining Power
of Suppliers
Bargaining Power of
Buyers
Threat of
Substitutes
Substitutes (Medium)
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suppliers
Existing trends
fixed costs
Customer loyalty
Suppliers (High)
some cases
knows
costs
to
about
the
switching
alternative suppliers
importance to customer
High
It is simple to switch to an
JIT production
alternative product
analysis is an effective method for monitoring the status of the company in a competitive
market and benefits towards planning and marketing management.
To determine the situational analysis of the company, specially developed technologies and
analysis are used, such as Porters Generic Strategies, BCG Matrix, Value Chain Analysis,
Competitors Analysis, etc.
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Stars:
Question Marks:
X3
1 Series
X5
Cash Cows:
7 Series
Dogs:
3 Series
Z4
5 Series
Mini
Rolls-Royce
The stars are those products of BMW, which have a leading market share in highly growing
market. They are in highly competitive market. They need lot of resources to maintain lead
and may become cash cows when market matures.
Most of the BMW products are classified as cash cows. It means that they have a large
market share in car industry. Growth is relatively slow in these markets and cash generated by
these products can be used in business growth in other areas.
The question marks are those particular products, which have low market share in high
growth industry and need huge resources to gain market share. Analysis need to be done for
feasibility to grow or sell.
The dogs are those products of BMW, which have weak market share in less growth market.
The first priority for liquidation as high cost, poor quality and ineffective marketing is
hampering it.
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BMW has implemented a corporate financial structure with a global focus to decrease its
exposure to local and foreign capital market oscillation. One of the key operations from the
BMW through centre production activities have assisted in obtaining funding from the open
capital fiscal markets using its low risk profile. As a result of a shift to support a worldwide
balance, BMW has performed a foreign currency management process to decrease the impact
of global exchange rate oscillation particularly in countries where production facilities are
located.
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There are four main direct competitors of BMW in the car market: Lexus, Audi, Porsche and
Toyota. According to the graph below, BMW has the biggest amount of sales volume for the
year 2011 among its competitors, with 1,280,000 cars sold in that period. However, the sales
of Audi are not much far from BMW (1,183,000 cars), thus Audi can be considered as the
main competitor of BMW in the car industry.
5.2 Positioning
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Positioning is the definition of the position of the brand, its complete image among the
different categories of brands in the minds of the target audience.
There are six main approaches to Positioning:
By Attribute or Benefit
BMW uses continuous innovation. For example, an innovation of a completely redesign the
3-series model with even better power than ever before, a stiffer suspension and taillight
lenses.
By Usage Occasions or Application
BMW luxury cars are usually driven by young urban professionals. It is a question of a status
and is associated with it.
By Product User
The leadership brand positioning has been supported by BMW for many years. Success of the
company is the result of a consistent strategy and is oriented towards meeting the needs of
customers.
By Product or Service Class
There are very important differences, which helps BMW to discern itself from other
competitors, such as brand image, quality of products and unique design.
By Price or Quality
BMW is manufacturer of luxury level products and it offers its customers relatively
expensive cars and therefore their customers are usually well off people.
By Competitor
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There is a sign of a little comparison between BMW and its competitors but the ads dont
usually show it. It is only in minds of customers who tend to compare two cars quite often.
Most of the customers of BMW have a very clear understanding of what they expect from
BMW, it is luxurious performance. Thats why the company is very successful in this market
and has one of the strongest positions today. BMW position itself as a status symbol,
according to the buyers perception. Since company has produced its first luxury sport car in
1960s, its main target became the wealthy customers who care about performance of the car
as much as about luxury features.
There are several proposed goals and objectives for BMW for the next two years. These
recommendations are based on the short-term period and should be achieved by the end of
financial year 2015. The aim of these recommendations is to increase companys profitability,
market share, value creation and sustainability.
Recommended goals and objectives:
1) Increase sales volume by 10% in Europe, 15% in USA and 25% in Asia
2) Reduce the CO2 emissions of newly sold cars and meet EU CO2 emission goal of
130g/km.
3) Recover market share to 10%
4) Achieve the Star position in the BCG matrix for the most of BMW products
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7.2 Place
The key markets of BMW are Europe and USA, which have the most of their sales volume.
However, in order to achieve a real increase in sales volume and thereafter an increase in
profits, BMW should globally expand its markets. Mainly BMW should focus on Asian
regions, as it may provide the good opportunity to increase the sales volume. Opening of
more branches and dealerships in Asia, as well as more efficient advertising and marketing,
will help BMW to achieve the increase in sales volume by 25% in Asia by 2015.
Moreover, in order to lower the production costs and thereby the cost of sales, BMW should
build new production facilities in Asia, as it might be a lot cheaper in terms of facilities,
materials and labor wages.
The focus on 2nd and 3rd world countries would also benefit BMW in terms of sales and
profits. Thus, BMW should expand its markets to developing countries by opening its
branches and showrooms, and promote their brand worldwide.
Also, BMW should improve their internet-shopping facilities (design your own car), as
nowadays more and more customers prefer to make purchases online, so effective and
comfortable internet-shopping might benefit the company a lot.
7.3 Price
BMW cars are considered as luxury products and targeted on the people with high income
and have relatively high price. Despite this fact, the customers of BMW are mostly choosing
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this brand for its quality and performance, so the price is not the most important factor, when
choosing these cars.
Also, for many customers the brand name is very important factor, when making a choice.
BMW has a very strong brand name, and many customers would buy these cars just because
it is BMW despite its price, so any minor changes in pricing of its products will not affect the
companys sales and profits.
BMW should also improve and increase their lease and credit options, as it will make easier
the process of buying the desired car for many potential customers.
7.4 Promotion
When it comes to promotion, there are many different ways to attract more customers. One of
the most effective tools is advertising through social media, car launches, outdoor campaigns,
publications, etc. Advertising has a very huge influence on consumers perception, so it
should not be neglected in order to attract more customers.
In addition to this, in order to achieve its goals, BMW should sponsor the big sporting
activities and events, as it is also known as very effective marketing course.
8.0 Conclusion
Currently, BMW, which started with a small aircraft engine factory, produces its products at
five factories in Germany and twenty-two subsidiaries spread across the globe. It is one of the
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few car companies that do not use robots in factories. The entire assembly on the line is done
manually. The only computer diagnosis of the main parameters of the car is done on the way
out.
In the last 30 years, only BMW and Toyota companies manage to work with annually
increasing profits. The empire of BMW, three times in its history, was on the verge of
collapse, and each time it rose and reached success. For the whole world concern BMW is a
synonym of high standards in the field of automotive comfort, safety, technology and quality.
9.0 References:
Book Sources:
1) Boddy, D., (2011). Management: an introduction. Harlow: Prentice-Hall. Fifth Edition
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Internet Sources:
1) Anton Gladchenko. (2008-2011). 5 . [online].
BizTimes. Available at: http://www.biztimes.ru/index.php?artid=434 [20 April 2013].
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http://www.fastpad.ru/page/sov_mark_33.html [20 April 2013].
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from: http://ru.wikipedia.org/wiki/%D0%9C
%D0%B0%D1%82%D1%80%D0%B8%D1%86%D0%B0_%D0%91%D0%9A
%D0%93 [20 April 2013].
4) No author. (2002-2012). WHAT IS PORTER'S GENERIC STRATEGIES ANALYSIS?
[online]. Papers4you. Available from: http://www.coursework4you.co.uk/essays-anddissertations/porter-generic-strategies.php [20 April 2013].
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%D0%B8%D0%B7 [20 April 2013].
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%D0%B8%D0%B7 [20 April 2013].
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www.bmw.co.uk [23 April 2013].
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