BMW FILMS

A case study by:Victoria Gnatoka

BMW IN YEARS1916 BMW was founded as an aircraft

engine manufacturer

1929 First automobile produced

1980s BMWs position in the luxury/performance segment had been firmly established

1990s BMW has 400 dealers in the US (106 sold BMW only) vs 150 dealers for Lexus and Infiniti

BMW IN NUMBERS$15 million Production costs of 5 BMW films

213,127 Total sales in units in 2001 vs 223.983 of Lexus

$ 62.4 million

Media expenditures in 2001 vs $ 187.3 million of Lexus espenditures

$ 9 million Logged on BMWfilms.com to see the films

$25,000 - $34,000

ENTRY LEVEL SEDAN cost with 50% of total sales

$37,000 -$44,000

MID RANGE SEDAN cost with 32% of total sales

$54,000-$70,000

FLAGSHIP SEDAN cost with 16% of total sales

BMW VS COMPETITORSENTRY LEVEL SEDANS

FLAGSHIP SEDANS

MID LEVEL SEDANS

BM

WA

CU

RA

INF

INIT

IL

EX

US

THE BMW MARKET SHARE

THE BMW CUSTOMERAGE: 46

INCOME: $150,000

SEX: 2/3 MALE

STATUS: MARRIED

CHILDREN: NO

EDUCATION: HIGH

CHARACTER: LEADER,HARD WORKING,ACTIVE,DEMANDING

INTERESTS: SPORT

BRAND LOYALITY: HIGH

BASIC MARKETING PROBLEM

Main problem: How to insure market share growth and become market leader in luxury cars’ category

Sub-problems:– How to win over new and old competitors? How to

increase brand loyalty?

– How to maintain high level of creativity and productivity of marketing campaigns?

SYMPTOMS Loosing shares to new Japan market players Only 44.7% of BMW who disposed of their BMW’s in the 4th quarter

of 2000 purchased new BMW; Out of the 100% of BMW customers who disposed of their BMWs

and purchased a non-BMW car in the luxury automobile category, 37% replaced their BMW with a Mercedes, whereas 12% replaced their BMW with a Lexus

Historically competitors tend to copy BMW creative marketing ideas so BMW should think twice before reapplying already once implemented ideas

Lexus being a bit cheaper with fresh luxury image penetrates market more aggressively

SWOTStrengths

•Superior quality, reliability, and service•Introduction of new models and series•Strong and recognized brand, unique brand positioning•Large buzz around the 5 movies•Positive media reaction•Customer loyalty•First mover in advertising in its industry•Professional and experienced marketing team

Weaknesses

•Higher price than

•Smaller advertising campaigns

•High costs to ensure product diversification

•Nearly niche product

•The historical ‘yuppie-car’ image

Opportunities•Market segment with lower income

•Such new products as small SUVs, pick-up trucks,

minivans

•Improving performance of vehicles

•Creating new films featuring more or new products

•New non-traditional marketing opportunities such as

games

•Traditional marketing

Threats

•Strong competitors

•Competitors will cat-copy the short film

idea

•Possibility not to increase sales

ALTERNATIVE 1Develop more BMW short films

Pros Appetite is there: 90% of the www.bmwfilms.com visitors asked for more Extension of the Momentum created by “The Hire” series Possibility to design “Collectors’ Set”- classic forever Internet communication would still be very appealing to the Internet-savvy

BMW customers

Cons Costs : five initial films’ estimated costs are 15M$, second edition could be

slightly cheaper but still expensive

ALTERNATIVE 2Develop a feature-length movie

Pros Demand from short film viewers for two-hour movie First-mover advantage. No car manufacturer has ever made a movie High revenue if movie is successful

Cons No experience in feature-length movie making Costs Time (6 months to 1 year) to produce Less successful product placement campaign in

Tomorrow Never Dies movie Unsuccessful movie can damage BMW brand reputation

ALTERNATIVE 3Make BMW short films more available and move on to the next thing – computer games + traditional marketingProsMaximum benefits from the short films squeezed out with minimum costsYounger audience than competitors’ target marketContinues the image of technology advanced and modern brandFirst mover imageStrengthen associations with excitement and speedInternet communication used

ConsDevelopment costs of the gamesRisk of failure that games are not so attracting as films

RECOMMENDATION:To go for the Alternative 3:

Continue with traditional marketing, Make out most of the existing 5 films, Make the existing films available to a wider

audience, Move on to the next thing:computer

games.

IMPLEMENTATION Screen the short films in the theatres before the feature films, Package the short films into a DVD format, Select different distribution channels for DVD to reach new

audiences: Through dealers free DVD both for customers, as well as for potential clients, Internet orders (free DVD available for the cost of shipment), Free DVD copy inserted in a prestige lifestyle magazine.

Invent a set of interactive computer games available for playing on BMW website: 5 games based on the story of the successful short films, 5 games co-created together with BMW fans through an open competition.

Nothing can replace the REAL driving

experience

TRY the ultimate BMW driving experience!