9-502-046RE V: O CT O B E R 12, 2005 Y O UN G M E M OO NBMW FilmsIt was August 2001, and Jim McDowell, vice president of marketing for BMW North America, was reflecting on BMWs latest marketing campaign as he sat before his computer: People respond negatively to gratuitous commercialism. But in our films, the BMW vehicles are not gratuitous props; they are actors in a scene. There are no beauty shots of the cars. The cars get extensively beat up. Each car is there because it is a very important actor in the development of the plot. The cars definitely take their lumps along the way. Theres nothing gratuitous about it. McDowell bent forward, and hit the play button on the screen. On the computer monitor, a movie scene unfolded. The scene was part of BMWs latest marketing campaignfive short films created for the Internet. Directed by a cadre of internationally renowned directors, the films had gripping story lines and were generating tremendous industry-wide buzz. Two Tibetan monks, one barely eight years old, survey the icy lot of a shipping yard. A driver pulls up in a sleek BMW 540i. The younger monk is helped into the car. The driver adjusts his rear view mirror to monitor his passenger. Their breath is visible as they size each other up. Two more sets of headlights suddenly appear in the yard. A ballet of escape begins; a beefy Mercedes and a nimble Honda team up to trap the 540i. Automatic weapons erupt as Baroque music plays in the background, and a veritable midnight pas-de-trois plays out in the icy field of shipping containers. This is my favorite film, McDowell remarked as he turned from his computer. There was no question that the films were good, perhaps too good. The question is, what do we do for an encore?BMW: The Ultimate Driving Machine1Bayeriche Motoren Werke (AG) was originally founded in 1916 as an aircraft engine manufacturer. The Munich-based BMW produced its first automobile in 1929; by the 1980s, the companys position in the luxury/performance segment of the global automotive market had been firmly established. The core of the BMW product line was its sedans. The company offered three distinct Series:1 Some of the information in this section draws on Robert J. Dolan, Bayeriche Motoren Werke AG (BMW), HBS No. 593-082, (Boston: Harvard Business School Publishing, 1993), and Susan Fournier, Launching the BMW Roadster , HBS No. 597-002, (1997). ________________________________________________________________________________________________________________ Professor Youngme Moon and Research Associate Kerry Herman prepared this case HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management. Copyright 2002 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to http://www.hbsp.harvard.edu. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any meanselectronic, mechanical, photocopying, recording, or otherwisewithout the permission of Harvard Business School.Purchased by daniel jianu (djianu@yahoo.com) on April 11, 2012502-046BMW Films The 3 Series was BMWs entry-level sedan. Launched in 1975, it tended to attract upwardly mobile professionals; as McDowell put it, These are people who are achieving success early in life, people on their way up. In 1989, the 3 Series accounted for about half of BMW unit sales and was priced between $25,000 and $34,000. The 5 Series, launched in 1972, was BMWs mid-range sedan. In 1989, it accounted for about 32% of unit sales, with a price range of $37,000 to $44,000. The 7 Series, launched in 1977, was BMWs flagship sedan. In 1989, it accounted for about 16% of BMW unit sales, with a price range of $54,000 to $70,000. Before the mid-1970s, BMW had been regarded by most Americans as a niche foreign car manufacturer. However, in the late-1970s, BMW had emerged as one of the hottest luxury brands in North America. (See Exhibit 1 for unit sales in the U.S. over time.) BMWs Ultimate Driving Machine campaign had been widely credited for this surge in popularity. The campaigns ads had featured BMWs driving through country estates, parked in front of huge mansions, and pulling up to black-tie affairs. Other ads had focused on the superior performance of the BMW, emphasizing such factors as superb handling and German engineering. This dual positioning (prestige + performance) had appealed to young urban professionals whoin an era of conspicuous consumptionhad been looking for a car that conveyed a sense of affluence and style, without the stodgier, conservative image associated with Mercedes-Benz, Jaguar, and Cadillac. In the late 1980s, however, the North American luxury car market started experiencing a shift. A new pragmatism began replacing the conspicuous consumption patterns of the early 1980s, and BMW soon found itself saddled with an outdated image as a yuppie car manufacturer. The company also faced fresh competition from Japan. Honda had been the first to enter the luxury market with its introduction of the Acura in 1986; it had been followed by Toyota (Lexus) in 1989 and Nissan (Infiniti) that same year. The Japanese cars offered superior quality, reliability, and service at lower price points than BMW. They also had competitive feature sets; in fact, many of the high-end features touted by BMW in its advertising (such as ABS brakes and air bags) were standard in these other brands. Making matters worse, the Japanese brands were sold by a relatively small number of exclusive dealerships that were able to provide excellent service levels while maintaining high sales volumes. Furthermore, they were promoted in large-scale advertising campaigns that dwarfed those of BMW. (See Exhibit 2 for a comparison of 2001 media budgets, Exhibit 3 for a comparison of approximate retail prices, and Exhibit 4 for a comparison of sales over time.) By 1992, Lexus had taken over as the number-one luxury import in the country. BMW, on the other hand, had seen its sales tumble and its customer satisfaction ratings fall below Lexus, Infiniti, Acura and Mercedes. In fact, U.S. sales had bottomed out to the point that industry rumors 2 suggested BMW would withdraw from the U.S. altogether. Instead, BMW took a number of actions to reinvigorate itself in North America. These included: 1. The introduction of a number of new models in its core Series . Most notably, the 325i Sedan was introduced in 1992; it represented a complete, bumper-to-bumper redesign. The following year, BMW introduced a 740i sedan with a V-8 engine.2 Based on the influential J.D. Power Customer Satisfaction survey. Lexus and Infiniti topped the list in 1992. BMWs score not only placed it behind Lexus, Infiniti, Mercedes, and Acurabut also behind Toyota, Audi, Cadillac, Honda, and Buick.2Purchased by daniel jianu (djianu@yahoo.com) on April 11, 2012BMW Films502-0462. An aggressive pricing strategy . The new 325i was priced under $30,000, while the new 740i was priced under $55,000. These prices retained the premium that BMW believed was warranted for its brand over its Japanese competitors, but kept the models within 10% to 15% of a comparably equipped Lexus. 3. The reorganization of its dealer network . In the early 1990s, BMW had almost 400 dealers in the U.S. (only 106 of which sold BMW exclusively), compared with fewer than 150 dealers for Lexus and Infiniti, respectively. Dealer frustration with BMW was high, and the quality of customer service at BMW dealerships was mixed. To address these problems, BMW restructured its account management approach and reconceptualized its dealer operating system (DOS) to ensure greater consistency in the customer experience across dealerships. 4. The introduction of several new Series . 1995 saw the launch of the Z3 roadster ($31,000 $38,000), a car that was designed to embody the ideal of the thoroughbred open-air sports car. This was followed in 1997 with the launch of the M roadster ($45,000), and in 1999 with the launch of the Z8 roadster ($131,500). Near the end of the 1990s, BMW also launched a sports utility vehicle, the X5 ($40,000$67,000). At the same time, the company worked hard to make the BMW more suitable for the North American market. McDowell recalled, It was simple things, like one-touch windows and cup holders. These were important to North American consumers, but theyd never been part of the design specifications for our cars before. Steadily, a new brand image was formulated. The companys DNA still revolved around the idea that BMW produced the worlds most exciting luxury cars, and the Ultimate Driving Machine tagline remained. But BMWs advertisements became edgier and more youthful. They celebrated the pleasure of driving a BMW, showing hairpin turns on mountain roads with copy that read, Happiness isnt around the corner. It is the corner. McDowell remarked, They were aimed at the type of individual who has since become the core of our customer base: That highly-educated, bright, affluent person who wants to have a great driving experience. These efforts paid off. During the period from 1996 to 2001, BMW sales rebounded, eventually reaching record levels in the U.S. By 2001, the company was delivering over 800,000 cars and 74,000 motorcycles annually to customers worldwide. The company had just under 2% market share in the U.S., about 7% market share in Germany, and about 5% market share in the rest of Europe. Moreover, analysts were reporting that, over the next several years, BMW was planning to increase U.S. sales by 40%, to 300,000 cars a year. The company was also reportedly planning a number of new product introductions. Expected to hit the market in 2002 were a completely redesigned 7 Series; a new Z4 roadster to replace the Z3; and a $20,000 subcompact Mini Cooper (without the BMW brand label). In addition, three new engine series were apparently in the pipeline: a smaller X3 SUV to complement the X5; a 1 Series to target younger buyers; and a new 6 Series to provide a sportier complement to the 7 Series. Meanwhile, the companys success had begun to spawn imitators. McDowell explained: I remember one advertising campaign in particular in which we focused on the responsive performance theme. In the campaign, our ads provided viewers with the perspective that they were directly behind the wheel of a car. Pretty soon, a bunch of other companiesAudi, Mitsubishi, Pontiacall started running campaigns that were similar to ours. It was clear that everyone was trying to become more BMW-like in their ads.3Purchased by daniel jianu (djianu@yahoo.com) on April 11, 2012502-046BMW FilmsThe BMW CustomerIn 2001, BMW faced competition from a variety of competitors in the luxury/performance category (Mercedes Benz, Jaguar, Lexus, Infiniti, Volvo, Porsche, Audi, Saab, and Ferrari). All of the vehicles in these categories touted elegant design, high performance, and up-to-date technological features for driving and safety; however, each manufacturer sought to establish a unique positioning in the market. (See Exhibit 5 for short descriptions of BMWs competitors. See Exhibit 6 for data about BMWs image versus the competitions.) Despite the increasingly crowded luxury market, BMW believed that its target customer was fundamentally different from that of its competitors. As McDowell put it: We dont think anyone else serves the particular psychographic we do. Take Mercedes, for example. People buy Mercedes because they care about status, and the Mercedes says, Ive arrived. Volvo is another example: People buy a Volvo because they think of it as being very sensible and practical and they are very impressed by the concept of safety. BMW is targeting a different psychographic than they are. No ones really playing in our field. Porsche comes close, but theyre much more niche than us. The average BMW customer was about 46 years old, with a median income of about $150,000. Most BMW customers were well-educated, married, and had no children. Two-thirds were male. (See Exhibit 7 for demographic information about BMWs customer base versus the competition.) Beyond this, BMW constantly conducted market research to track the tastes, personalities, and lifestyles of its core customer base. Based on this research, the company knew that BMW appealed to people who tended to be leaders, who worked hard, played hard, and achieved a lot very early in life. They tended to be very active, and engaged in sports as part of their daily regime. McDowell elaborated: They tend to be as demanding of the people around them as they are of themselves. Because they work hard, their free time is extremely valuable and they are very particular about what they surround themselves with in their free time. These are people who typically have an eye for detail. They care about how things are assembled. They are willing to pay more to get an absolutely perfect product, as opposed to just a very good product. Their feelings about driving were very specific. Many of these people look at the hour or two they spend driving as some of the most pleasurable time in their day, said McDowell. Its when they are completely in control. For them, driving is a form of personal expression. Technology was important to the BMW customer. In fact, BMW was tops among car brands in terms of frequency of buyers who used the Internet, and approximately 85% of BMW purchasers were on the Internet before they bought their BMW. McDowell noted, Considering that they tend to be time-pressured and they travel a lot, its no wonder they use the Internet so frequently. Finally, BMW customers tended to be very loyal to the brand, buying several different BMWs over the course of a lifetime (see Exhibit 8 for additional loyalty information). MacDowell explained: A lot of people are immediately drawn to BMW through the 3 Series and have a wonderful love affair with that car. Their next car after the 3 Series will either be a new 3 Series, or a non- 3 BMW. When we lose customers to another brand at this stage, its typically because theyre at3 In 2001, BMW sold about 103,000 3 Series in the U.S., compared with fewer than 20,000 7 Series.4Purchased by daniel jianu (djianu@yahoo.com) on April 11, 2012BMW Films502-046a point in their lives where they are looking for a different kind of cara pick-up truck, a minivan, or a small SUVthings that we dont build. Once that life stage has passed, we try to get the customer back for either a new 3 Series, an M3, a 5 Series, or an X5. We dont know exactly where theyll land in our product portfolio, but we think we can bring them back. And then when someone has gone from a 3 Series to a 5 Series, theyre a very good candidate to go from a 5 Series to a 7 Series. Thats a person who has stayed with the basic sedan concept throughout. The 7 Series is obviously very profitable per unit, so these are our most profitable individual customers.BMWs Marketing ApproachBecause of the companys size and limited marketing budget, every BMW marketing campaign had to have maximum impact. McDowell explained: BMW introduces many more new products every year than we could ever hope to support. Were a funny little company. We have a strong brand image, we have relatively small market share, and to earn that relatively small share, we have a huge number of models. So our marketing budgets are relatively modest, but we have a lot of new products to introduce. In recent years, BMW had devoted an increasing amount of attention to non-traditional advertising campaigns. Its first non-traditional campaign had accompanied the launch of the Z3 roadster, the first BMW manufactured outside of Germany. It was this absolutely gorgeous-looking vehicle in a premium segment where no one was actively participating at the time, McDowell remembered, We knew it would be a success, so we asked ourselves, do we do a normal introduction, or do we take this opportunity to try and build the brand into something that much bolder, that much bigger, that much more vital? The result had been a high-profile product placementa virtual cameo appearancein a James Bond film, GoldenEye . The movie cameo had been supported by a series of traditional advertisements featuring scenes from the movie. As McDowell explained, You want to achieve a balance, to create a synergy across a bunch of different media. He continued, That was a big turning point for the company. It came at exactly the time that our sales started to surge. When we overtook Mercedes for the first timea very important internal goalthat accomplishment was attributa ble to BMWs bra nd momentum. The success of the Z3 campaign had led to several copycat movie placements by other car manufacturers. BMW itself had followed the GoldenEye campaign with a second Bond film placement, this time for the 7 Series in Tomorrow Never Dies . McDowell admitted that this second campaign had lacked the impact of the first: As with so many things in life, theres a first-mover advantage. Whoever has the opportunity to do it first gets all the attention, and its never the same the second or third time that someone tries to do it. Nonetheless, the company had become a believer in the non-traditional advertising approach. McDowell summa rized: Today, every time we have a new initiative coming up, we ask ourselves, is this something that needs a traditional approach, or is it something that needs a non-traditional approach? Keep in mind, well never stop doing traditional advertising; for some purposes, nothing is as effective. On the other hand, we recognize that there are some times where a non-traditional5Purchased by daniel jianu (djianu@yahoo.com) on April 11, 2012502-046BMW Filmsapproach is going to have much higher impact. In these cases, the real challenge for us is to come up with a good non-traditional idea. There just arent that many good ideas out there.The Development of BMW FilmsIn early 2000, an interesting window of opportunity emerged for BMW. Sales of BMW were the highest ever in the U.S. and the brand had never been stronger (see Exhibit 9 ). McDowell recalled: With no new products being launched over the next six months, we had this unbelievable luxury; this period of time where we didnt have to tell people about a new product . Normally, when were launching a product, we have a responsibility to tell people about the new product and reinforce the BMW brand message in the same communication. Of course, the more things we try to do in an ad, the more diluted the message becomes. But now we had this opportunity to do some absolutely pure branding. We had the luxury of simply focusing on, how can we better show people what makes a BMW a BMW? We knew that the solution wasnt simply changing creative. That would have been like trying to climb a mountain on the wrong side. Instead, we asked ourselves, What if we were to throw out some of our core assumptions about how to do brand image advertising? After a series of brainstorming sessions, a couple of non-traditional advertising ideas began to emerge. One idea was to produce a series of short films. Another was to incorporate the Internet into an advertising campaign. Before long, the two ideas had merged into the idea of producing a series of short films for the Internet. McDowell recalled: What excited us about the idea was that we knew we were dealing with an entirely new genre, an entirely new way of communicating our brand to the world. We also knew that if we produced a bunch of short films for the Internet, they wouldnt be seen by as many people as, say, a series of ads we aired on television. But we believed that what we lost in terms of audience size could be made up for in terms of involvement. In other words, our goal was to produce the most exciting, fun thing people had ever seen come out of their computer. We convinced ourselves that we could create something so involving that people would remember the experience 10 years down the road. Once the decision was made to create the short films, BMWs advertising partner, Minneapolisbased Fallon, recommended that Anonymous Productions be brought in as a partner. Together, the team worked to produce a total of 15 scripts ranging in length from 6 to 12 minutes. The central character in each of the films was a professional driver who helped people out of difficult circumstances. Anonymous Productions, which was well-connected within the Hollywood community, then began approaching individuals to direct the short films. McDowell remembered: We approached people who we thought would be superb a nd open-minded. As it turns out, it was much easier lining up directors than one might have thought. Our value proposition to them was pretty simple: Here was a chance to work in an entirely new genre for a patron that was synonymous with quality. We wanted A-list everything: A-list directors, A-list actors, A-list production values. The fina l line-up of directors included some of the biggest up-and-comers in Hollywood: John Frankenheimer, Ang Lee, Wong Kar-Wai, Guy Ritchie, and Alejandro Gonzlez Irritu. Each of the directors was permitted to choose one script to turn into a six-minute short film. The directors were6Purchased by daniel jianu (djianu@yahoo.com) on April 11, 2012BMW Films502-046then given complete creative control over content a nd direction. As McDowell explained, this wasnt an easy thing to do: It went against every instinct we had. Normally when were producing an advertisement, we are so precise about everything; we will discard footage for the slightest reasonfor example, because the driver got too close to the center line, or because you cant see that the driver was wearing the shoulder belt, or because it wasnt the most flattering shot of the vehicle. But in this case, we let the directors do things that we would have never permitted if this had been an advertisement because we decided that it had to be about entertainment, not advertising. The BMWs in the films were shown dirty, banged up, and shot full of holes. The end result was a series of five films collectively titled, The Hire. Altogether, they cost the company about $15 million to produce, and each starred the British actor Clive Owen as a 4 professional driver hired to help someone out of a difficult situation. They were released one at a time at two-week intervals, and varied significantly in terms of mood and tone. The films featured a variety of BMW models, along with a number of well-known actors including Mickey Rourke, Madonna, and Stellan Skarsgaard. (See Appendix A for descriptions of the five films.) About three months before the films premiered, a low-profile public relations campaign seeded news of the project at Internet movie rumor sites. Stories were also planted in chat rooms and fan sites about what type of talent would appear in the shorts. The films themselves could only be accessed at www.BMWfilms.com (see Exhibit 10 ). This website was supported with print ads and street posters designed to look like advertisements for a movie. The print ads were placed in the film sections of newspapers, and the movie posters were placed in hip, urban venues. In addition, 30-second trailers were prepared for television audiences. To unsuspecting 5 television viewers, these trailers looked just like previews for regular moviesi.e., theatrical releases. The key difference: the word BMW Films was prominently displayed as the title of the movies production company, and the trailer ended by directing viewers to the BMW Films website. The publicity was strategic, McDowell explained: The whole process depended on a certain amount of disruption. That was part of the beauty of the name BMW Films; it was such a disruptive name. So the advertisements were disruptive in the sense that they were done in the style of movie trailers, but then the joke was that if you got interested in what you were seeing, you would come to the end and realize it was not playing at a theatre near you. You had to go to the website to be able to see it. This was what made it so provocative; it was a call to action. In the end it all tied back to how the BMW brand works. We are such a polarizing brand. Regardless of whether people love us or reject us, weve got a very definite place in their mind. This gives us the flexibility to be a little more provocative, a little more interesting in terms of some of the things we do. If a viewer decided to visit the website to watch the film in its entirety, he or she had to (1) log in to the site and register; (2) download the appropriate media viewer (QuickTime or RealPlayer) if he or she did not already have it; and (3) stream the film on the computer (a broadband connection delivered the best viewing experience; viewing the film over a dial-up modem resulted in significant time lags that often interrupted the continuous streaming of the film). For a higher-quality viewing4 Casewriter estimate. A traditional advertising campaign typically cost BMW about $1.5 million to develop the creative. 5 CMR News (TNS Media Intelligence) estimated that the short films were backed by a total of about $14 million in media.7Purchased by daniel jianu (djianu@yahoo.com) on April 11, 2012502-046BMW Filmsexperience, viewers could also download a free version of the BMW Film Player, along with copies of the five films. Viewers could then watch the downloaded versions on the computer off-line, using the Player application.Early ResultsBy August, BMW had logged over nine million film views on its BMWfilms.com website (see Exhibit 11 for additional information about BMWfilm.com visitors). Comments registered by visitors on the website had been universally positive: BMW cold rocks the party! Absolutely fantastic! Wow. Very, very cool. Clearly sets BMW apart from its competitors. Excellent marketing tool; excellent choice of directors! and My next car will be a BMW, so help me God. Others had elaborated in depth: Please pass this message on to the marketing folks: The film series has gotten this devoted Audi-phile to actually consider BMW for my next purchase. It single-handedly eliminated much of the stigma I previously associated with BMW (status symbol, yuppie-machine, etc.). In terms of wooing a younger audience, Benz is dead in the water compared to you guys (and Audi, of course). I will actually root for you at Le Mans this year. Another fan had written: Awesome!! Ive told a bunch of my friends to check out the site. WOW! What an awesome way to demonstrate what a BMW can doI never knew they were such amazing performance machines. Im seeing BMW in a whole new light. GREAT STUFF. I will definitely consider a BMW for my next car purchase. Keep up the FANTASTIC work and redefining the automotive experience. BRAVO!! And: I am very impressed! What a way to market a great line of automobiles. I have been captivated by not only the films but also the vehicles. The films give the viewer(s) the chance to see the BMW really put to a test. I am currently in the market for a new car, and I was caught between the Lexus IS300, the Acura TL S-Type, and the BMW 330. I think that Ive made my mind upthanks to John Frankenheimer, Ang Lee and BMW! One 20-year-old respondent from New York had written: I think the whole Hire series is a great idea. BMW lets the directors do whatever they want and theyre not consta ntly shoving the BMW logo in your face or anything! . . . Overall, I think The Hire series is great and its something I would like to see happen again in the future, maybe with different directors or a whole new company. Perhaps the most convincing response had come from the fan who wrote, Made me put money down on an M3. The BMW marketing team had even screened The Hire for film critics at major media publications. As a result, The New York Times , Time , Entertainment Weekly , and Variety had ended up publishing critical reviews of the BMW Films series in their entertainment sections. These reviews had been overwhelmingly positive:8Purchased by daniel jianu (djianu@yahoo.com) on April 11, 2012BMW Films502-046 The New York Times : Startlingly effective, Graceful, and The Hire is what movies might be like if someone decided to give James Bond a soul. 6 Time : The ultimate in new-media, high-end branding has arrived. Variety : **** Thrilling. 87(See Exhibit 12 for additional excerpts from sample media responses.) As McDowell described it: It surpassed anything we had originally anticipated on so many different dimensions. The level of press activity was 10 times what we had anticipated. We also started getting tons of what we call pass-alongs. It turns out that once someone downloads a film to their computer, theyll show it to someone else. We have incredible anecdotal information that this is whats going on; people are inviting other people to come by their computer and watch it.An Encore Performance?Looking ahead, the key question for McDowell was whether to continue to build on the BMW Films idea, or start looking for new ideas for the next BMW campaign. McDowell considered his various options: 1. The first option was to simply milk the existing five films by making them available to a wider audience: The films are really amazing works of art, and its almost a shame that a lot of people havent seen them yet. For example, the company could distribute the short films to theatres; the films could then air alongside trailers for other coming attractions, before the feature presentation. In addition, some of the films had been edited down for Internet viewing so there was an opportunity to make the full-length versions available in the form of a DVD. As far as distribution, McDowell explained, We could make the DVDs available in our dealerships, as well as inserting them in selected magazines. This way, we could make the films a vailable to people who might not have high-speed access to the Internet. 2. The second option was to develop more short films, all featuring The Hire, actor Clive Owen. As McDowell pointed out, almost 90% of the visitors to the BMW Films website were requesting additional films: There is no question that the appetite is there for far more than five films. If we did another five films relatively quickly, I dont think it would feel like were repeating ourselves; rather, the momentum behind this campaign would just continue to build. If we took this option, we could continue to produce short films indefinitely, or we could stop after we built a portfolio of 10 or 12 films. The series could then be a Collectors Set, something that would ha ve the critical mass to become a classic forever.6 Elvis Mitchell, Critics Notebook: Honk If Youve Seen These Online Films; BMW Hopes That Its Mini-Movies by Master Filmmakers Will Sell Cars, The New York Times, 26 June 2001, E1. 7 Richard Corliss, Log On A Drive-In Movie: Top directors make spiffy films for the Internetand the real hero is a German luxury sedan, Time, May 7, 2001, 66. 8 Marc Graser, BMWFilms.com, Variety, 3 May 2001.9Purchased by daniel jianu (djianu@yahoo.com) on April 11, 2012502-046BMW Films3. The third option under consideration was perhaps the most radical: The development of a feature-length movie that would air in theatres a round the country. McDowell explained the rationale behind this option: What has really surprised us about this campaign is how invested people have become with the character (Clive Owen) and the personalities in the films. Millions of people have an emotional connection with this guy, the driver. So weve had a lot of viewers beg us to produce a two-hour movie, to tell the whole story, from beginning to end. 4. The final option wa s to do nothing, i.e., to simply move on to the next thing, whatever that might be. Already, McDowell had heard rumors that some of his competitors were pursuing their own film projects which meant that the genre could start to get crowded with copycat efforts. The GoldenEye experience had taught the company that repeat performances were rarely as compelling as premiere performances: The last thing we want to do is go back and try to repeat history. Part of me tells me that we have to do something significantly different the next time around or were going to get diminishing returns. McDowell concluded, Weve always believed that the future belongs to the nimble. You see this in our cars, and you see this in our marketing. The challenge, of course, is in identifying what that radical new thing is going to be. Thats the kind of stuff you dont necessarily learn in Marketing 101.10Purchased by daniel jianu (djianu@yahoo.com) on April 11, 2012BMW Films502-046Exhibit 1 19682000 U.S. BMW Unit Sales (in thousands)200.0 180.0 160.0 140.0 120.0 100.0 80.0 60.0 40.0 20.0 0.0Source: Casewriter research, adapted from Autodata, andWard's Automotive Yearbook , various editions.Exhibit 2 Luxury Brands: Media Expenditures (2001)Total Sales Media Expenditures (units) Lexus 223,983 $187.3 BMW 213,127 62.4 Mercedes-Benz 206,719 134.2 Cadillac 172,073 137.3 Acura 170,469 215.6 Lincoln 158,914 37.3 Volvo 125,710 93.4 Audi 83,283 88.4 Infiniti 71,365 108.9 Jaguar 44,532 58.8Source: Casewriter research, adapted from Wards Automotive Yearbook (sales), CMR News (Media).(millions)11Purchased by daniel jianu (djianu@yahoo.com) on April 11, 2012502-046BMW FilmsExhibit 3 Approximate 2001 Base PricesBrand Entry-Level Sedans Mid-Level Sedans Flagship Sedans BMW 325i 530i 740iL $27,635 $40,045 $67,545 Acura Integra Sedan TL 3.2 RL 3.5 $22,080 $29,030 $42,630 Infiniti G20 I30 Q45 $21,940 30,260 $49,440 Lexus IS 300 GS 300 LS430 $31,350 $39,150 $54,750 Mercedes C-240 E320 S430 $30,595 $48,495 $71,445 Porsche Boxster 911 Carrera 911Carrera 4 Turbo AWD $42,865 $67,265 $111,765 Audi A4 (1.8L 4 cyl.) A6 (2.8L) A8 L $25,115 $34,975 $68,475 Saab 9-3 9-5 SE V6 $27,995 $39,225 Volvo S40 S (1.9L 4 cyl.) S60 T5 S80 T6 (Executive) $24,175 $32,475 $49,375 Jagu ar X-Type (2.5) S-Type (3.0) XJ8 (VDP) $30,595 $44,250 $69,345Source: Casewriter research, adapted from Edmunds.com. a Non-sedans b 2002 modelb a12Purchased by daniel jianu (djianu@yahoo.com) on April 11, 2012502-046-13-Exhibit 4 BMW vs. Select Competition Unit Sales in United States (in thousands)BRAND 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001a b c d eAcura 52.9 109.5 128.2 142.1 138.4 143.7 120.1 108.3 112.1 97.3 108 108.1 200.4 118 142.7 170.5 Infiniti Lexus 1.7 24.0 34.9 44.4 50.5 51.4 58.6 55.9 65.5 63.5 72.6 78.3 71.4 16.3 63.5 71.2 92.9 94.7 87.4 79.3 81.5 97.5 156.2 185.9 106.0 224.0BMW 87.9 96.8 87.8 73.4 64.9 63.6 53.3 65.7 78.0 84.5 93.3 105.6 122.4 131.5 153.6 189.4 213.1 Mercedes 86.9 99.3 89.9 83.7 75.7 78.4 58.9 63.3 61.9 73.0 76.8 90.8 122.2 170.2 189.4 205.6 206.7 Porsche 25.3 30.5 23.6 15.7 9.5 9.1 4.4 4.1 3.7 5.8 5.8 7.2 13.0 17.2 20.9 22.4 23.0 Audi 74.2 59.8 41.3 22.9 21.3 21.1 12.3 14.8 12.5 12.6 18.1 27.4 34.2 47.5 66.0 80.4 83.3 Saab 39.3 48.3 45.1 38.5 31.6 26.4 26.1 26.5 18.8 21.7 25.6 28.4 28.4 30.8 39.5 39.5 37.5 Volvo 104.3 113.3 106.5 98.5 102.6 89.9 67.7 67.9 73.0 81.8 88.5 88.6 90.9 101.2 116.7 123.2 125.7 Jaguar 20.5 24.5 22.9 20.7 18.7 18.7 9.4 8.7 12.7 15.2 18.1 17.9 19.5 22.5 35.0 43.7 44.5 Source: Casewriter research, adapted from Autodata, and Wards Automotive Yearbook, various editions. a Acura sales combine car and truck for 19952001. b Infiniti, Lexus sales combine car and truck for 19962001. c Mercedes sales combine car and truck for 19972001. d BMW sales combine car and truck for 19992001. e Volvo sales combine car and truck for 20002001.Purchased by daniel jianu (djianu@yahoo.com) on April 11, 2012502-046BMW FilmsExhibit 5 Short Descriptions of Select Competitors Mercedes-Benz . Mercedes had a long-standing image of classic prestige and status. Each of the Mercedes classes had long histories; the SL was launched in 1954; the E Series was first launched in 1958. With four classes in 2000 (the C-Class, E-Class, M-Class (SUV) and S-Class sedans), Mercedes cars were considered more comfortable, but more conservative, than BMWs. Mercedes advertising was traditionally prestige-oriented, focusing on luxury first and performance second. However, by the mid-1990s, the company was experimenting with younger, hipper themes and music to promote its cars to a younger demographic. By 2000, Mercedes was promoting its relaunched C-class with the tagline, Enjoy yourself, its later than you think. Jaguar: Jaguar sought to promote a timeless shape and classic heritage with its cars. Traditionally distinguished by luxurious interiors and attention to stylistic details, Jaguars appealed to an older, conservative demographic. However, by 2001, the company was promoting an all-new, luxury compact sport sedan (the X-Type) to a younger demographic. Priced at approximately $30,000, the car was being promoted in TV ads featuring music stars like Sting, Shirley Bassey, and the Propellerheads. Volvo: Volvo competed on its perception of safety and comfort. Sturdy boxy design reinforced its practical brand image. More recently, Volvo had added more affordable lines to its model lineup (the S40 and V40) to attract less affluent customers to its brand. Volvo advertising consistently highlighted quality of life, safety for families with children, and comfortable travel in all weathers and on all terrains. Porsche : The first Porsche 911 was introduced in 1963, launching this classic sports car brand. Porsche made only two carsthe 911 and the Boxsterbut a commitment to classic, eye-catching design and high performance had secured the company a strong niche as the Everypersons race car for the daily commute. Fun, passion, excitement, and exclusivity were central to the brand. Two new additions to the model lineup were being planned: the Porsche Cayenne, a sport utility developed with Volkswagen, was being readied for dealers in 2003; and an all-wheel drive Carrera GT concept, which if built would ca rry a $300,000 price tag. Audi : Founded in Cologne, Germany in 1899, Audi had a long tradition of innovative technology in automobile manufacturing. Their entry performance sedan, the A4, newly designed for launch in 2000, had been hailed as the gold standard among entry luxury vehicles by some. The launch of a the TT in 1998 (and the Roadster in 1999), and the redesign of the entire Audi model line, with chrome detailing and retro lines, boosted the perception of this car as a high-performing, stylish, luxury car. Saab : Like Audi, Saab emphasized sportiness and handling, but at a more economical price. In addition, Saabs Swedish heritage and the unique styling of its cars created a more individualistic image for this brand. The classic Saab 900 sedan was first launched in 1978; the more spacious 9000 followed in 1984. More recent models had upheld the companys reputation for quality, performance and safety, while maintaining Saabs quirkier image.Source: Casewriter research. a Edmunds.com.14Purchased by daniel jianu (djianu@yahoo.com) on April 11, 2012BMW Films502-046Exhibit 6a Image Strength/Weaknesses: BMW vs. Mercedes Benz (Q2, 2001)Source: BMW records; 2001 Image Barometer, Allison-Fisher International, LLC. Note: A mean difference of .3 is significant.15Purchased by daniel jianu (djianu@yahoo.com) on April 11, 2012502-046BMW FilmsExhibit 6b Image Strength/Weaknesses: BMW vs. Lexus (Q2, 2001)Source: BMW records; 2001 Image Barometer, Allison-Fisher International, LLC. Note: A mean difference of .3 is significant.16Purchased by daniel jianu (djianu@yahoo.com) on April 11, 2012502-046-17-Exhibit 7 BMWs Customer Base vs. the CompetitionLexus Infiniti Gender Male Female Marital Status Married Single Other Acura Audi BMW Jaguar Mercedes Porsche Saab Volvo Total58% 57% 57% 63% 63% 63% 62% 85% 56% 48% 60% 42% 43% 43% 37% 37% 37% 38% 15% 44% 52% 40%78% 73% 71% 67% 71% 78% 79% 74% 74% 78% 74% 19% 22% 26% 29% 26% 17% 18% 24% 24% 19% 22% 3% 5% 2% 4% 3% 5% 3% 2% 2% 3% 3%Lifestyle No Children/Age