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UNIVERSITY OF BRADFORD

ADVANCED DIPLOMA IN BUSINESS MANAGEMENT

MODULE ASSIGNMENT

MARKETING MANAGEMENT

LECTURER: Mr. Roland Kiew

Huizhong bei

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CONTENTS

1. Executive Summary & Overview of company

2. Early history

3. STP Strategy

4. Markets of BMW

5. Marketing mix

6. Conclusion

7. Recommendation

8. Refrences

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OVERVIEW OF THE COMPANY & EXECUTIVE SUMMARY

This marketing report aims to examine and explain the marketing strategies of BMW , In this report I will be focusing on:

THE COMPANY

ITS HISTORY & PROUCTS

STP STRATEGY

BMW’S MARKETS

MARKETING MIX ANALYSIS

Gallery Selection BMW is an acronym for Bayerische Motoren Werke AG-- or, in English, Bavarian Motor Works. Whatever you call it, the German-based company is one of the world's most respected automakers, renowned for crafting luxury cars and SUVs that offer superior levels of driving enjoyment.

Founded in Munich, the company began in the early 1910s as an aircraft manufacturer. BMW's current logo, designed to represent white propeller blades against a blue sky, reflects these origins; its blue-and-white color scheme also references Bavaria's blue-and-white checkered flag.

It wasn't until 1928 that production began on the first BMW automobile, the Dixi. The car proved tremendously popular, and its success helped the manufacturer weather the Depression. BMW's best-known pre-World War II vehicle was the Type 328 roadster, a supple two-seater that racked up over 120 victories on the motorsport circuit between 1936 and 1940. Postwar BMW cars maintained this tradition, winning several racing, rallying and hill climb victories

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.

The early 1950s saw the launch of the BMW 501, a roomy, voluptuous sedan that was resplendent with all of the hopefulness of that era. It was soon followed by the 502 which was powered by the world's first light-alloy V8, foreshadowing BMW's ongoing commitment to developing new technology. The best-selling BMW of that decade was the Isetta, a petite two-seat "microcar" typically powered by a 12- or 13-horsepower engine. The mid-'50s also saw the debut of the limited production and breathtakingly beautiful 507 sports car which had an alloy body and used the 502's V8 for propulsion. In the 1960s, BMW sales strengthened significantly, thanks in part to the immense popularity of the 1500, a sporty family sedan.

By the 1970s, BMW was establishing itself as a full-fledged car company. It was a pioneer for many emerging technologies, including turbocharging and advanced vehicle electronics. This was also the period when BMW of North America was established and consumers, who coveted both sports and luxury cars, became loyal "Bimmer" owners. The '70s also saw the birth of BMW's three-tier sport sedan range consisting of the 3 Series, 5 Series and 7 Series cars and the creation of its performance M division.

More recently, the company has been expanding its reach worldwide. It opened its first U.S.

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manufacturing plant in the latter half of the 1990s and has expanded its brand empire to include Mini and Rolls-Royce. BMW also continues to build motorcycles, something it has done since the 1920s.

The automaker's famous advertising slogan describes each of its vehicles as "the ultimate driving machine," and it's not mere hyperbole. Over the past couple of decades, BMWs have become the standard for performance and luxury in most of the "over $30,000" segments. With family-friendly wagons, crisp sedans, distinctive coupes, nimble sports cars and spacious SUVs offered, BMW's model roster is diverse. But its luxury vehicles all share a common characteristic: the ability to make drivers feel gloriously connected to the road.

EARLY HISTORY

BMW Group, headquartered in Munich, Germany, is one of the most successful multi brand premium automobile manufacturers in the world. The company manufactures, distributes and sells passenger cars (including Sedans, Coupes, and Convertibles etc) and motorcycles. BMW operates three business segments namely: Automobiles, Motorcycles and Financial Services. BMW is the parent company of the Mini and Rolls-Royce car brands, and, formerly, Rover (car)/Rover. The company's slogans in English are "The Ultimate Driving Machine" and "Sheer Driving Pleasure". The company produces, and markets, a varied range of a higher end sporty cars and motorcycles. BMW has also manufactured the first passenger car running on hydrogen ready for common use, although the production figures are limited by the lack of a respective filling station net. In addition to cars and motorcycles, BMW operates an aircraft engine division under the brand name of Rolls Royce.

The company has worldwide subsidiaries and manufacturing plants in Germany, Austria, the UK, the USA, Mexico, Brazil, South Africa, Egypt, Thailand, Malaysia, Indonesia, the Philippines and Vietnam. BMW Group comprises of many segments within its vast portfolio, but I would be only concentrating on Automobiles. BMW group is focused on fabricating a variety of tangible products, and also the group has many intangible financial services. The BMW Group’s automotive which I am more interested in this easy is portioning of their portfolio consists of the three premium brands: BMW, MINI, and Rolls-Royce of which I would be more only looking at BMW and would also demonstrate their marketing. BMW is supported by 11 different model series which are: BMW C1, BMW 1 series, BMW 3 series, BMW 5 series, BMW 6 series, and BMW 7 series, BMW X 3, BMW X 5, BMW X 6 and the BMW Z4, BMW M5, BMW M6, and BMW Z4 M

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Well I agree with the below statement which is being provided by BMW group which states that the BMW offers emotional product to the customers this could be seen or felt with their current marketing strategies also with their SWOT analysis, PLC and as well as Research and Development."We offer our customers emotional products, which through the strength of the brand and the substance of the product fulfil the customer’s wish for individualisation and differentiations”.

BMW’s mission statement is clearly defined as “To be the most successful premium manufacturer in the industry”, (Reference- www.bmw.co.uk). The main reason of BMW’s success is recognized by the development of a steady marketing policy. The company has built its brand and continues to focus on the following core values which is shown in the below figure. BMW has always maintained this core values since the company’s inception. In addition to the message of these values, we can see it in advertising campaigns on television, press, magazine, trade fairs, motor shows, etc. We can also find company explicitly expresses one or more of these values in all BMW advertisements. However, we can also point out that BMW also bank’s on the sensitively to the environment, which we can see with the current advertising strategies of the company. BMW has always used a differentiated strategy, this means that they aim on specific automobile markets. This markets suit different people within the specific segmentation. The markets that BMW would normally or likes to target are Sports Convertibles (Z3, 3 series, and new Z4),

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Executive (3 series, 5 series), Super Executive (7 series), Touring / Estate (3 series, 5 series), Super sports (M series), and 4X4 (X5). Let have a look at BMW competitor analysis where we can find BMW is a provider of premium cars and primarily serves for customer as if life time experience for them. BMW ensures to have full satisfaction to their customers. Moreover, also we can find out the competitors as their segmented markets. List of few BMW Group’s series lines and brand names has to market specific competitors.

1 Series: Audi A3, Volkswagen Golf, Alfa Romeo 147,

3 Series: Audi A4, Jaguar X-Type, Mercedes C-Class, Lexus IS200,

5 Series: Audi A6, Mercedes E-Class, Saab 9-5, Jaguar S-Type, Volvo S80,

6 Series: Jaguar XK, Maserati 4200, Porsche 911,

7 Series: Audi A8 and S8, Jaguar XJ series, Lexus LS400, Mercedes S-Class,

X3: Land Rover Freelander, X5: Range Rover, Mercedes M-Class, Volvo XC90, Porshe Cayenne, VW Touareg, Acura MDX, Lexus GX 470,

Z4: Porsche Boxster, Audi TT, Chrysler Sebring Convertible, Toyota Camry Solara,

M Range: M3 Coupe - Mercedes C55, Audi RS4, M5 - Mercedes E55, Audi RS6,

MINI: Mercedes A Class, Peugeot 206 H/B, Volkswagen Polo, GTI, Golf, Renault Clio, Ford Focus RS, Vauxhall Corsa and Toyota Yaris,

Rolls-Royce Phantom: Mercedes Maybach, Bentley Arnage.

BMW still remains the world’s most successful premium car brand with 11, 85,088 units sold in 2006 which beat the record of 2005 by 5.2% level increase in the sales. Major Key markets for BMW group have approx. 68% sales in Italy, USA and Germany these three countries as in comparison to other countries. Furthermore, below in figures it shows to break down of sales figure for different segment in BMW cars

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This philosophy, which runs through every BMW car, has been communicated through a number of TV and print ads. The brand image has been built up by press advertisements, and more recently through different television commercials. Throughout this campaign, BMW has remained consistent to its beliefs of focusing on the substance of the cars themselves.

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STP STRATEGY

SEGMENTATION, TARGET MARKET, POSITIONING

BMW uses three steps to targeting which are market segmentation, target choice; product positioning. Let’s see how BMW uses segmentation to identify specific buying characteristics. To find more information BMW looks at the geographic, demographic, behavioural, socioeconomic, and beneficial characteristics of society which helps them to target the market more effective. Geographically, the main markets for BMW where they are doing more than 65% of sales are Europe & North America as these areas are both heavily industrialised locations which results into residents are financially positioned to buy upper market cars as they capita income is more. The demographics of people who are able to purchase a BMW are men and women aged 30 – 50 years old. Behaviourally these people have a successful image in their mind before buying the car; they also like to want a clean modern look or sports look, and the feel good factor of an established dealer network. The benefits required by these people are superiority, performance, reliability & quality.

The image that BMW has managed achieved over the years is to position its self on the customers mind is superiority, performance, technologically advanced, quality automobile

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producer. The market where BMW is position them is highly competitive. Reason being for the competitive is the number of other automobile manufacturers that produce cars of a similar quality, price, and image. The main manufacturers that BMW compete with are as discussed before to name a few are Mercedes, Jaguar, Audi, Ford, Range Rover, Porsche, and etc. Most of these are blue chip manufacturers use differentiated strategies to produce large ranges of cars and has similar product life cycle which BMW follows. The difference is that each of these companies relies on different brand images to sell their cars. E.g. Jaguar is seen as a luxury, reliable and quality producer that BMW does but on the other hand Alfa Romeo is renowned for being stylish and performance breed but unreliable car as per the research. The positioning of these companies and their brands has been built up over many years but BMW has impressed their mark upon the public in a positive way with the help of good public relation and innovative advertising campaigning. This has lead to continuing sales growth throughout the international car markets.

When we talk about Brand Recognition BMW is an instantly recognized brand name that has a reputation for its age-old tradition of quality. Also many of us identify its logo from a distance during travelling in cities, highways, etc. Unlike other lesser known luxury car manufacturers, this brand recognition allows BMW to redirect its resources from expensive advertising campaigns in a highly competitive market. The market in which BMW operates has being seen as good and loyal customers.

MARKETS OF BMW

The main markets for BMW automobiles have been in Europe, the USA, Japan and the Pacific region, with the markets of Germany and the US accounting for almost half the total car sales. Important markets have also been the fast-growing UK, and the Italian, French and Japanese markets. Sales in the USA market have been particularly successful, as they grew by over 8 per cent on the previous year to 277,000, becoming the biggest market for the group and overtaking the Lexus brand for the first time. At the end of 2003, the outlook for 2004 by group management and industry observers was upbeat. This view was supported by the successful launch of the new 5-series, the consolidation in Europe and Asia of the BMW Z4, the introduction of the BMW X3. The new BMW 1 Series and the BMW 6 Series cabriolet were launched early in 2004. By far the most successful models were the MINI, the 3-series and the 5-series, but the other models were also in significant demand. In the Chinese markets there was growing demand for the higher end models of the range, specifically for 7-series and 5-series.

Exhibit 4 shows the details of automobile deliveries in 2003.

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Exhibit 4: Automobiles delivered by the BMW Group in 2003 (1000 units)

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Rolls R

oyce

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BMW

7 Serie

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X5

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Z4

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3 Serie

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Total

Delive

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In 2002, Helmut Panke, a nuclear physicist, had become the new Group's CEO, and started a strategy of internal growth through market and product development. In 2003, BMW was planning to launch a new model every three months through to 2005, providing a range of premium automobiles that ranged from the Mini to the Rolls Royce. The aim was to raise sales by 40 per cent a year for the next five years, and to achieve sales of 1.4 million vehicles. Mercedes-Benz would then become number two producer of premium cars, and BMW's long term ambition of being number one would be finally realized.

Exhibit 5: BMW’s top ten markets

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Germ

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UKIta

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To achieve the targets it had set itself, the company was pushing hard in the US and Asian markets to find buyers for the high-end models that they had found difficult to sell in the flat saturated European market. Difficulties in dealing with labor cost control in the European political climate had also led BMW to expand its production facilities in the US, where the Spartanburg plant was not running at full potential, and China where a well qualified labor force cost much less than in the West. It was an ambitious plan that if successful, as well as giving the group greater prominence and profitability would also effectively cure the problem of vulnerability to acquisition. If H. Panke was mulling over any of these concerns, he did not show it at the Annual Accounts of Press Conference on 17 March 2004, when he said:

We offer our customers emotional products, which, through the strength of the brand and the substance of the product, fulfill the customer's wish for individualization and differentiation. The BMW Group will never build boring products.

THE MARKETING MIX

Lets considered within the marketing mix can be put under four headings, often referred to as the 4 'P's: Products; Promotions; Price; Place. 'Mix' is an important term because each element of a plan cannot be considered in isolation. There is limited time and resources and decisions in one area will likely have an impact elsewhere.

1. Product : The most important element in the marketing mix is the company’s product because this provides the useful requirements required by customers. For example: a car that does not start in the morning will not be liked by consumers. Marketing managers develop their products into brands that help to create a single position in the minds of customers. The present models are:

BMW 3 Series – Sedan, Coupe, Convertible, Touring, Compact

BMW 5 Series – Sedan, Touring

BMW 6 Series – Coupe, Convertible

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BMW 7 Series – Sedan

BMW Z4 – Roadster

BMW X3 – SUV

BMW X5 – SUV

BMW M –Convertible, Coupe

Each product goes through what is known as a life cycle process. When exploring what mix is best suited to the product, we need to consider where in the life-cycle your products lie which is shown in the below figure and then depending decide if there is need to make changes in the product and re-launch.

Although it is attractive to have all the products within a portfolio at the peak of their sales at the same time, this does create problems. BMW knows the importance of making sure that not all of its products are at maturity at once, as this might result in the products beginning to decline at the same time normally the life cycle has a particular year when the car lunches and after certain years it on matured level where the company has to get something new in that series to lunch where customers can enjoy the product to the fullest and with few new features in the car. For example BMW X5 launched at 2000 and then company lunched the higher or new version of X5 in 2006, for 3 series its 7 years lifecycle and for 7 series is 7-years only for the 1’st model life cycle was for 9years. It is clear that BMW has spread over a period of time the lifecycles of three products. These are the 3, 5, and 7 Series saloons. This PLC system not only helps to ensure a more constant income, but also allows for the development of replacement products on a consistent basis.BMW has also been expanding its portfolio recently and this can be seen

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by the presence of some new product launches in the last few years. The above products are all fairly settled. Many of them have been being manufactured for many years now with several re-designs and re-launches

2. Price : BMW price ranges are from approximately £16,000 to £60,000 plus. There are many factors that can affect their car prices such as engine size, motor sport versions, etc. Let’s take an example of the pricing strategy that has been used by BMW for the 3-series is competition-orientated pricing. Most of the Research shows that all other competitor such as VW, Audi, Alfa Romeo and etc. in the 3-series market is based around the same price. This is because the car industry is large and production costs are not so important and creating the largest profit is not as necessary as it would be for a smaller company.

3. Placement :

BMW use superior market Dealerships & Imports for non-dealer networked countries they have four car manufacturing plants in the UK. There are more than 156 dealers in the UK who are franchised to sell BMW cars, additionally 148 dealers are franchised to sell Minis. Worldwide BMW operate in more than 100 different countries with approximately 4,000 plus dealers which are authorised to sell both new and used cars, parts and after sales service products.

`Pattern of distribution for BMW is shown below in the diagram which is followed by the company: - Manufacturer >>>>> Dealers >>>>> Consumers

4. Promotion : BMW has always focused entirely on their cars with same advertising company, WCRS being the used since 1979. A broad range of advertising is used by this agency such as television for branding campaigns and new car launches, the press with Tabloid weekend colour supplements, regional publications and magazines, Outdoor campaigns, Sales literature, brochures, etc. Advertising Campaigns/Slogans used by the company in the past

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Slogans Used Time Frame

1.Positioned itself as the brand with the unique benefit of ‘a luxury car that provides an exhilarating driving experience with advertising.

2. The Ultimate Driving Machine

3. The New 7 Series: Designed for Peace of Mind, Not Just Peace and Quiet

4. BMW core values at more attainable price5. BMW – The Smart Choice

1. Established itself over time from its introduction in the US market in 1974 (the First Great Opportunity)

2. Ran for 15 years – Overall brand – focus on prestige

3. Focus on the 7 Series

4. Focus on the 3 Series

5. New strategy with a focus on brand & product, franchise, and organization.

BMW association is the ‘James Bond’ films from 1983, 1994, 1997 and 1999. E.g. In ‘The World in not Enough’ James Bond drove the new Z8 before the car had been launched and in ‘Austin Powers 3 – Goldmember’ the Mini Cooper was used. This kind of move has helped BMW to position its Car and the brand in front of vast audience across global also this also indicated that the car was fast, more technologically advanced and had created an image in mind of future customers that have best quality, safety, they are different from others. With BMW viral Marketing started developing BMW Films was the driving force of BMW's successful interactive marketing campaign, the "Ultimate Driving Machine" (ref- Hespos, 2002). In 2001, BMW released film called "The Hire", a series few feature-quality short films for the Internet to support the release of new vehicles during launch. Each short film

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featured a central character called The Driver who "helped people through difficult circumstances using deft driving skills-in a prominent BMW" (ref- Hespos, 2002). BMW Films series the promotional campaign consisted of TV spots that which showed trailers, and print and online advertising. "BMW Films was a non-traditional concept to show consumers what makes a BMW a BMW" (Ref- Hespos, 2002). But it was much successful concept it increased the BMW sales in 2001 by 12.5% as compared to 2000. "During the 1’st four month of the promotion, the films were viewed more than 11 million times, initially drawing more visits than the site could handle" (Ref -http://www.pmalink.org/awards/reggie/2002reggiewinners3.asp, 3 October 2005). The short films were recommended by 94%. It proved to be so immensely popular that BMW produced a free DVD of the series, which included extra features (ref -Hespos, 2002). With this kind of massive promotional activities BMW was able to achieve in mind of costumers wish of for individualisation and emotional product as these promotional activities somewhere or other make costumers feel like that.

THE FOUR C’S

1. Customer solution : BMW strives hard to find out what their customers needs are and works hard towards fulfilling them .They believe that it is important to satisfy customer needs to keep customers happy and satisfied

2. Customer cost : BMW also realizes that all the costs taken to design their cars are also to be included in the cost of the car. They have retailers selling their cars in different regions/countries at different prices based on the acceptable customer cost for that region.

3. Convenience : BMW doesn’t have online purchase systems but due to the high price of their products BUT they have an online test drive appointment system for the 7 series using which doesn’t need to go to the store to test drive the car, hence making it more convenient.

4. Communication : BMW has 24hour hotline numbers to help in communication with the company exclusively for certain model customers.They have a website for online communication . They believe in listening to customers when they are “with” you.

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CONCLUSION

It has taken a lot of referencing and researching for me to write this report and I have learnt a lot from this report too ,I started off with very littler knowledge about this topic and worked my way through the assignment and I would conclude that BMW is a very powerful name in the automobile industry due to its reputation of providing high quality products and services. BMW, an individual actor, has yearly shown strong financial results and has retained its market shares .This becomes of interest to study more profoundly, in order to find the factors behind a successful company and a strong brand. Purpose: The purpose of this thesis is to analyse the development of BMW during the past five years. Not only are the financial statements taken into consideration. In addition, a comparison to competitors and the market situation is also made .The thesis is based on the assumption that BMW is the most successful automotive manufacturer in the premium segment.

Methodology: In the study of BMW both primary and secondary data are used. The primary data consists of an interview and secondary data is collected from annual reports. Results and Conclusion: BMW is a well known and highly valued brand and has high diversity in the product portfolio. BMW possesses high internal competence and the company develop a large part of the car by themselves. The emerging markets in South East Asia , Russia, Eastern Europe and South America have shown evident growth developments. Eminent production, transportation and raw material costs have both dampened margins and affected the buying power of consumers likewise as high oil prices.

RECOMMENDATIONS

Most of the people argue that there is always a chance to learn new thing or no matter. How big is the company and how successful they are companies needed to think about the future and make few plans for them? For the future marketing strategies, I would like to recommend few points. The BMW cars are considered to be as the luxury cars, of which most products are applied to rich people but not the poor people. Can enter the market with Small ‘Lifestyle’ Car which can apply to the middle-class people, its market share can be expanded. On the other hand, its accessories and parts of cars are expensive for maintenance, which can reduce the desire of people purchasing its cars. In addition, for this can get few new models in BMW Mini this could help then to target few different segments and also can target females, Middle-class or upper middle class people. BMW can also create good relationship with female buyers they

need to do more of promotional strategies to attract more of female consumers with like of limited edition specially for females in their existing models or for new models in this edition just by giving few simples thing which females like in the car for example- pink

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colour, soft-toys, trendy seat covers, etc. Furthermore, The Asia Pacific region is becoming increasingly crucial to global automotive sales. Although it has been overshadowed by China's rapid growth in recent years, emerging markets is set for steady growth where BMW is already there but needs to concentrate more and needs to adaptive marketing strategies to get success out there. These markets are going to be huge as there is more population in these countries as in comparison to US and UK market. In addition, BMW needs to come with few more BMW Films interactive marketing campaigns, the "Ultimate Driving Machine". As it is had very successful and showed good promise in it for the selling point. These kinds of advertising are creating very good brand value for the company and company portrayed itself how they want to be in front of customers.

References

Hespos, T. (2002) “BMW Films: The Ultimate Marketing Scheme, retrieved October 3,

2005, from http://www.imediaconnection.com/content/546.asp

Giardina, C. and Lehane, S. (2002) "The Driver Returns," retrieved October 3, 2005, from

http://www.dtvprofessional.com/2002/12_dec/features/bmw_returns.htm

(2002) "BMW Films," retrieved October 3, 2005, from

http://www.pmalink.org/awards/reggie/2002reggiewinners3.asp

www.bmweducation.co.uk/company history

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look-before-you-leap/ http://www.bmw.co.uk/bmwuk/modelselector/0,,1156___sit-

bmwuk,00.html#

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http://www.supercarworld.com/cgi-bin/overview.cgi?BMW