Participant: Jean-Jacques Pisano

Mentor: Stéphanie Duchemin

How services can help BMW’s new electric brand to reach sufficient target audience to make business sense

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Questions and approach

Context

Market Research

Services Proposition

Scoring System

Go-to-market Strategy

• Getting in the mind of a consumer, what could be a services package around electric vehicles?

• How do you perceive the 360° electric approach mentioned on the BMW i website?

• What would you recommend to BMW i?

Question 1 Approach

1

2

3

4

5

• What could be target audiences as “early adopters” for BMW i?

• How can we reach them (media mix and other communication channels)?

Question 2

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ContextWhat is BMW i ?

BMW i is a range of high performance low-emission cars as well as innovative mobility solutions, supported by a venture capital company

Product line up Service line up

2013 2014 2015 2016

i3

i3i3

i8

i8

i5

i1

i5

i3

i8

BMW i Ventures

Premium car sharing

Intermodal travel solutions

Smart navigation

Better use of existing space

Source: Green Car Congress Feb 21 2011Source: Wikipedia

1

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Can BMW i brand be profitable?

ContextWhy launch BMW i ?

In the current context, Electric Vehicles seem like a proper product to launch, but car manufacturers still need to find the recipe for success

Urbanization(Congestion)

GenerationalNarcissism

OilScarcity

Climate Change(EC CO2 targets)

Sufficient BatteryEnergy

LightweightChassis

People Environment

Technology Business

Source: Wikipedia & Wikipedia Source: Wikipedia & European Commission

Source: BMW i website

1

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Private & Independent Customers

39%

61%

Market Research Scope

Belgium consists of 61% Private & Independent Customers vs. 39% Fleet Customers in terms of new car sales, both profiles should be investigated

Source: Febiac, Belgium New Car Sales 2011

Proportion of customer profiles

Fleet

2

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Market Research How do Private Customers react to a BMW EV*?

A great BMW EV proposition should combine the best of BMW’s DNA with a no-nonsense user-friendly product, at a decent price

What do you expect from a new BMW product?

• Sporty feeling / driving dynamics / driving pleasure

• Reliability / Premium after-sales

• Premium touch & feel

• Premium designBMW DNA

Electric CarValue Proposition

Expectations

What could refrain you from buying an Electric Vehicle?

• Range anxiety – What if travel distances are too high?

• Recharging woes – What if I don’t have a garage?

• High cost (perception) – purchase price & battery cost

• Style

Reasons for not buying

Source: Tech News Daily Nov 8 2010

Source: BMW Blog

2

*EV: Electric Vehicle

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Market ResearchHow do Fleet Customers see the future?

For Fleet Customers, the future will involve both car sharing and intermodal transportation

Mobility

D’Ieteren’s initiative for car sharing Interparking’s mobility card

Source: Fleet Business, May 2nd 2012Source: Keyzee Website

2

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• Clever dashboard warning and charging reminders are important tools to reduce range anxiety

• Thanks to low maintenance and energy cost, & high residual value of BMW, it’s key to communicate about TCO. A tool could compare the product with substitutes, & explain the benefit of intermodal. Financial Services further help reducing the perception of price

• Mobility solutions act as an enabler to BMW i. A Smart Traffic tool would tell you when you should depart to minimize traffic

Services PropositionPrivate & Fleet Customers

Range extension and cost perception tools are easy to implement and will help both Private & Fleet Customers to make the switch to EV

3

RationaleRange Extension

NewExisting(non exhaustive)

Battery depletion warnings

Battery charging reminder app/sms

Cost (Perception) Improvement

Financial Services

TCO/TCM* app/website

BMW i Ventures Services

Smart Traffic app/website

Mobility Solutions

*TCO: Total Cost of Ownership vs. TCM: Total Cost of Mobility

Hig

h v

alu

eL

ow

val

ue

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• Customers should be able to customize their cars themselves through and app/website. The result would be applied through stickers on the car to keep production costs low (also possible during lifecycle).

• Charging is mainly a problem for Private Customers as EV initially address people living in the city, but with the convenience of a garage. Charging your car through the road itself allows virtually everyone to use EV. A major breakthrough, but it requires government funding.

Services PropositionFor Private Customers

Individualization could be a great differentiator, but without a practical charging solution, Private Customers will remain a niche

3

Design Improvement

NewExisting(non exhaustive)

Body Individualization

Quick charging stations

Public charging stations

Induction charging

Charging Solutions

Rationale

Hig

h v

alu

e

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• Companies do not wish to handle the hassle related to fleet ownership. BMW should handle tires, fines, damage, energy and keys; especially in the case of a pool.

• Instead of buying a car, customers could subscribe to an intermodal card, allowing them to benefit from any transportation at a monthly cost. This formula would include an EV, but with the possibility to rent a conventional car for holidays. Your green footprint gives your rewards, such as free upgrade at car rental’s. (also possible for Private Customers)

Services PropositionFor Fleet Customers

Fleet customers can more quickly adapt to EV, as they use this opportunity to reduce costs & improve their image, especially if someone handles the admin

3

Services

Hig

h v

alu

e

NewExisting(non exhaustive)

Fleet Management

Green mileage-based intermodal service

Rationale

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Scoring SystemHow to approach the market?

BMW should start with Fleet Customers as a first priority. In parallel, lobby for induction charging to open up the Private Customers market.

Scoring system Phasing

# Service

Ease of Implementation

Impact on business

A Fleet Management 3 5

B Individualization 2 5

C Intermodal 3 3

D Charging status 5 5

E Depletion warning 4 5

F Quick charging 4 4

G Public charging 3 3

H Induction charging 1 5

I TCO/TCM tool 3 4

J Financial Services 4 4

K Smart traffic tool 2 2

L i Venture Services 5 1

Value

HIGH

LOW

HIGHLOW

Second priority

First priority

Forget

Evaluate

Ease of implementation

AB

C

DE

F

G

H

I J

K

L

• Initiatives H & K should be supported by government funding to make business sense

• Initiative B has a high value because design consistently comes as a key reason for purchasing a car in NCBS studies, in particular for Premium cars

(Mostly) for Private Cust.

(Mostly) forFleet Cust.

4

For both Customers

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Go-to-market Strategy

Target large companies for Fleet and use as example, partner with rental companies as a catalyzer, target high revenues & women among Privates

5

• The early adopters will consist of those who can afford the EV as a second car in the household or those who don’t car-travel (e.g. retirees); living close to/in the city and owning a garage (and likely women more than men).

• The message is “mobility is the luxury of convenience”.

• Consider showcasing the car during sports shows, e.g. golf.

• Use social medias and BMW i Ventures services, to spread the news on mobility services.

• Target only companies with parking

• Start with larger corporations (e.g. European Commission), as they are more likely to have the budget for charging stations; but consider also offering charging stations as part of large fleet deals. Use those companies as examples.

• Organize fleet manager roadshows to present the product (touch & feel) and the associated services.

• Consider partnership with rental companies to offer car sharing programs without heavy investment.

Fleet Customers Private Customers

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• EV can’t be profitable unless supported by the proper range of services.

• As the brand will be introduced with the i3, a full EV car, its first Private Customers might be restricted to those with a garage, provided they would not be keen on car travelling or if they can afford the car as a 2nd car in their household.

• When induction charging sees the day, it will really open the doors for full EV cars, and help penetration of hybrid cars to a market whish still represents 61% of total new car sales in Belgium.

• In the meantime, it seems more promising to start on the Fleet side, especially in a context of crisis, in the form of car sharing programs, and in a world where Total Cost of Mobility is the new Total Cost of Ownership. We might not like it, but this is the future of cars, the same way as I used to have my own desk at work, and now all desks are shared.

• It is fair to assume that the ceiling of new passenger car sales will soon be reached in Europe due to congestions/limitations. The sales of those EV might then cannibalize those of other brands in the group. It is therefore important to rethink the positioning of traditional brands & exploit all possible profits generated by the services sold with bmw i brand.

Conclusions – Recommendations