You are on page 1of 11

BMW MARKETING INNOVATION

Since the competition started to imitate BMW‘s advertising messages of outstanding quality,
BMW decided to come up with a unique way of reaching its target audience. The company did
so by hiring Fallon Worldwide, and advertisement agency based in Minneapolis, MN, to come up
with a new campaign. Fallon developed the concept ―The Hire‖ series. Fallon's responsibility
also included the way in which these movies were to be delivered to BMW's target audience. It
was also questionable whether the campaign should be the same throughout the world, or if it
should be localized to adapt to language and consumer taste differences. In order to attract highly
recognized directors, as well as actors, BMW was willing to spend a large amount of money.
In addition to coming up with a unique advertising campaign, BMW also wanted to
change their image. One of the goals was to make BMW look, not only cool, but likeable, which
the brand needs to do to combat negative perceptions some people have based on old associations
with the 80‘s style yuppie arrogance.

Company Profile
BMW (Bayerische Motoren Werke Aktiengesellschaft) was founded in 1916 and has been
publicly traded since 1969. The company produces, and markets, a varied range of 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. The company also operates its own financing company, which offers
financing for vehicles. Automobiles accounted for 78% of 2000 revenues; vehicle finance leasing,
18%; motorcycles, 3% and other, 1%.

This case was prepared by Martin Hellhake, Fabian Henault, and Josh Jacob of Temple
University under the supervision of Professor Masaaki Kotabe for class discussion rather
than to illustrate either effective or ineffective management of a situation described
(2002).
B-1

Coupled with WCRS (BMW‘s advertising agency since 1979). The company has built its brand on four core values. environmental and competitive changes. However. the 'market niche' strategy. B-2 . which is clearly seen by how the company‘s advertisements evolved in response to economic. the company has adopted a consistent advertising strategy. it is important to point out that BMW also relies on its sensitively to the environment. In addition to the message of these values being portrayed in advertising campaigns. the company explicitly expresses one or more of these values in all BMW advertisements. which are: Technology Quality Performance Exclusivity BMW has maintained these core values since the company‘s inception.BMW's Revenue Sources 80% 70% 60% 50% 40% 2000 Revenue 30% 20% 10% 0% Auto Motor Cycles Finance Leasing Other Marketing Overview The majority of BMW‘s success is attributed to the development of a consistent marketing policy.

price lists and dealership point-of-sale materials are made accessible through the corporate office. print ads as well as displays in BMW dealer showrooms.This design philosophy. which runs through every BMW. In over 15 countries there will be: TV spots Print advertisements Mega-posters Radio spots Events In all three James Bond films BMW. South Africa and the Middle East markets. BMW has embarked on a global advertising campaign. big-budget. It has been reviewed. Since its launch at BMWFilms. scrutinized. BMW ensures that all communications remain standardized as well as maintaining BMW‘s brand values. and more recently through a total of 64 different television commercials. Asia. The brand image has been built up by using over 300 color press advertisements. Additionally. Local press. celebrity-laden Internet marriage of advertising and entertainment. Providing the dealers with a central source for advertising. Throughout this campaign. ―The Hire‖ (a film series consisting of five different short films) has been singled out as the first high profile. are not playing at the local theater. has been communicated through a number of TV and print ads. brochures. In addition to the high profile national color press and television advertising. BMW encourages its dealers to make use of these services. as well as your local BMW dealership. deconstructed and B-3 . radio and bus advertisements are all available from BMW dealer marketing. Instead.com. This was accomplished worldwide with TV commercials. BMW Film The best new film series. USA. What differentiates this promotion is the fact that it remains consistent throughout the company‘s international campaign across the European. MGM and EON Productions Ltd worked together on a cross promotion project. by the most cutting-edge directors. these films are accessible through your home computer. BMW has remained consistent to its beliefs of focusing on the substance of the cars themselves. individual dealers are encouraged to run their own local campaigns.

rock superstars. (according to Web measurement. firm Nielsen/Net Ratings) This tremendous leap made BMWFilms one of the Internet‘s fastest growing sites. Installing this player allows the user to download and view the video on the full computer screen while offline. to another episode that has an arrogant superstar diva (played by Madonna) desperately wanting to escape the swarm of the paparazzi.‖ BMWFilms is simply the latest and possibly the hippest Web site to make use of streaming video in order to lure prospective customers.000 unique visitors compared to only 138. Each episode features a ―driver‖ (in a BMW. New York Times film critic (Elvis Mitchell) called the series ―a marriage of commerce and creativity. BMW also offers trailers for those customers with slower modem connections. These trailers allow viewers the ability to have a ―quick peek‖ at the films.000 the previous week. While he is certainly a smooth operator behind the wheel (very ―James Bond‖ like). The car is definitely the star of the show. which are presented in installments by some of Hollywood‘s top directors. the difference is that instead of the catch phrase ―coming soon to a theater near you. naturally) who is on a mysterious nighttime mission along with a mysterious passenger. The numbers of viewers to the site are souring each week.‖ Actor Clive Owen (star of the acclaimed British film "Croupier" and. which turns the computer screen into a miniature personal theater complete with ―DVD quality‖ pictures and sound. thrill seekers. Filmgoers. These films are being advertised on television the same way that movie trailers are advertised.‖ this catch phrase reads ―see it only on BMWFilms. however one thing that they all hold in common: the majority of the action takes place in a BMW while the participants are in the middle of a car B-4 .cited as evidence of the perilous future for traditional advertising. Examples include one incident where the driver is on the run with a small Buddhist boy. the next James Bond) is ―The Hire‖ in the series title.com. traffic to the site was up 55% to 214. straddling the everdwindling line between arts and merchandising. it is always the Ultimate Driving Machine that saves the day. In addition to the full-length videos. One week following the advertising blitz of the web site films. The films all have differentiating styles. Another option is to download the BMW Film Player. Fast cars. a fairly simple process offered through the BMW web site. and sinister enemies are all part of the film series. a skilled mercenary driver who seems to specialize in risky assignments. in the opinion of his growing legion of fans. mysterious passengers. and potential customers have the option of watching the video using Real Video or QuickTime video players. Buddhist monks.

had recently completed a project for Timex with director Tim Burton. under extreme conditions and circumstances. and the second was how to exploit the popularity of the Internet. the company‘s decision to design a classy film series. BMW was growing more concerned with its ability to reach its core market via traditional methods such as network TV. which can be viewed on a high-speed Internet connection by an upscale. Therefore. mostly male audience. BMW wanted to come up with an entirely new branding campaign. This site gives consumers basic information about the car(s) as well as the location and phone number of the local dealerships. without a few hundred disclaimers. The company clearly did its homework. B-5 . the company needed to do something different to distinguish itself. one. screeching around corners. On a more basic level. This marketing campaign incorporated an Internet portion that featured short videos specifically shot for the Web. A concept was born – a longer film that would be shot in segments and distributed via the Internet as a series. two. This series would combine product placement with entertainment. something not only entertaining but also cinematic. two factors were on the table at BMW. The Internet would allow the company to show what a BMW can do when pushed to the limits. Given that the average BMW automobile starts at approximately $30. The simple concept of these films – BMW wants to sell cars! Film concept In the spring of 2000. The first was concerns over TV effectiveness. There is no limit to the actual number of BMWs that you will see. The executives at BMW saw this as a way to differentiate the company from other manufacturers. BMW would not be able to convey this type of advertising through traditional TV ads. BMW wanted something done exclusively for the Internet.chase. The creative team of writer David Carter and art director Joe Sweet. BMW did not randomly decide to initiate a web based advertising campaign.000. BMW has made it convenient for shoppers by adding a link to their film site to BMWUSA. too many competitors were copying the ―look and feel‖ of the BMW. it would allow BMW to push the envelope when it came to scripting the series. It is a well known among advertising firms that over 85% of potential car buyers will conduct most (if not all) of their initial research on the Internet before they make a final decision on a purchase.com. three. is clearly targeted. even more Beemers are seen speeding down alleyways and streets. Most importantly.

This was important to BMW. senior Internet analyst at NetRatings.‖ ―We thought maybe instead of doing advertising we should be doing entertainment and doing something fun and interesting on the Web. BMW‘s guess was that their central tendency would have been 25-year olds. and hopefully remember it and share it with others. as well as several scripts. A fact that was not prominently mentioned in much of the coverage of ―The Hire‖ was the core creative concept along with key strategic thinking.‖ said Jim McDowell. reliable access to the web. What if you do not have a computer. B-6 . vice president of marketing for BMW of North America. ―We think that a lot of the time when people view traditional advertising they view it through a filter of disbelief. Web development. Most important. 85% of buyers had researched the vehicle on the web before stepping into a showroom. Mr. Target Audience Initially. BMW has already begun buying infomercial time on the Bravo and Speedvision channels to showcase their ―Hire‖ series. ―When people watch entertainment or a movie. all came from one source: Publicis Troupe‘s Fallon Worldwide in Minneapolis. BMW and Fallon research indicated that many were tech-savvy.‖ added Mak. BMW executives knew they would have everyone from high school students to 7-Series owners as viewers. and had fast.‖ McDowell said. without the old association with the 1980‘s style of yuppie arrogance. ―The site combines Hollywood‘s intense car chase scenes and Internet video to deliver a new spin on product showcasing. then they‘re watching in an entirely different way where they enjoy the fantasy. since one of its goals was to make the BMW look cool.000. or if your computer is not hooked to a T1 connection? Never fear.‖ said Jarvis Mak. with a median income of $100. as though this is what advertising is [going to be]. Lubars added ―We‘re not looking to make this a template.‖ ―BMWFilms. BMW had no real idea to whom the films would appeal. Fallon president and executive creative director. and this was really right for this client.com is a good example of blurring the lines between entertainment and advertising.‖ said David Lubars. ―I think we‘re reinventing advertising. the most important being the tremendous buzz in both the entertainment and business press.BMWFilms has accomplished several objectives. I think what technology affords you is that every client can get their own customized media approach.

and anti-drug campaigns will remain dominant issues up until the end of the decade. Members of the dot-com generation. In the end. This 30-something Generation X cohort will be recognized for its entrepreneurial instinct since its members are starting businesses at unprecedented rates. and customer satisfaction through the internet. is the optimal strategy for the use of scarce resources. now entering their 20s. Self-reliance because the traditional safety platforms such as Social Security and pensions will no longer exist. They are economically conservative. It is more than cash that they want. "as prices fall to commodity levels and online stores can list virtually every product and brand in their industry without significant overhead. are proving to be even more business-oriented. and seek the shallow information skimmed from a CNN or a USA Today rather than absorb in-depth reporting. Family issues such as long-term health care. in turn. Consumerism is still growing rapidly. Society will increasingly take its cue from Generation X'ers and dot-comers rather than the baby boomers who have dominated its thinking for most of four decades. Twice as many say they would prefer to own a business rather than be a top executive. Associated with that demographic shift will be a return to the appreciation of selfreliance and cooperation. and cooperation because it involves group action that. begin saving at an earlier age. fixed pricing will fall out of favor as goods and services are sold through online auctioning. service is the only field left in which marketers can compete effectively. the consumer marketing battle will see a halt in the decline of prices and a counter-prevailing shift to service improvement and salesmanship.Characteristics of the typical BMW Target Audience Societal values are changing rapidly. Because consumers will increasingly have access to and information about pricing. Generation X and dot-com will have major effects in the future. however. To quote the report. In addition. delivery time. services. they will demand even more advanced telecommunications and net-based transactions. day care. the corporate and business culture of the baby boomers is a mismatch for these advancing generations that thrive on challenge and opportunity. The proponents of the need for improved customer service will be proved right. They understand the need for lifelong learning because that is the way life has always been for them. In summary. they would rather own a business than hold a key position in politics or government. as both customers and employees." B-7 . By a factor of 5 to 1.

or placing a full-page ad in "Time" magazine. meaning. these types of ads build name recognition for the company and establish it as a major force in the industry. it is surprising how quickly innovative becomes ordinary. However. Specifically.25% to 2%. Advertising rates for 468x60 ad banners are computed on a cost-per-thousand (CPM) impression basis and are currently priced at US $10 to $15 CPM. or Yahoo. they will appear on every search results page and on an equal rotating basis with other advertisers' banners. and what it offers in terms of a marketing message and call to action. branded items with dominant reputations will remain powerful and in demand. Television The 1999 American Association of Advertising Agencies Commercial Production Costs Survey revealed that the average cost of a 30 second national commercial for an automobile was a B-8 . Flashing banners and other methods cost slightly more based on the website and technology involved. For online ads. chews it up and spits it out. when consumers are ready to buy. Whereas a web-based process which guides the consumer through a systematic process is to make a purchase more likely. the director of planning in charge of Levi's trendy Silvertab line explained. In addition. how many click-throughs were achieved. including how many impressions were served. flash animation. ZD Net. It eyeballs it a mile away. 468x60 banners are sold on a run-of-site (ROS) basis. Just like running a television commercial during prime time. for sites like CNN. contests have become so common that the possibility of winning a free car may not be enough to hold a viewer for more than a few minutes. each advertiser is given password-protected access to Real-Time advertising statistics. and surround video are now commonplace on most manufacturer‘s sites. The industry standard for the click through rate is anywhere from 0. Then." As expected.Lorraine Ketch. Slide shows. Marketing Channels Internet Auto manufacturers have taken some innovative approaches to draw Internet users to their web sites. your company will come to mind. and what click-through rate was achieved. these ads do not necessarily cause people to pick up the phone and order a product at that very moment. "This audience hates marketing that's in your face. Your actual click-through rate will depend on the appearance of your ad.

B-9 . The percentages of viewers of MSNBC and Bravo who are in BMW‘s target income bracket constitute 20.whopping $389.000 units.000. Print The advertising rates in a periodical like Time Magazine ranges from $250.000 and $100.000 for a full-page mono to $360.600. This audience is of twice the age and half the income of BMW‘s intended target market. DVD player penetration in the US today is approximately at 25.000.000 for a full-page color ad. This trend is supposed to increase and the DVD is supposed to become the next VHS.5%. The percentage of viewers in BMW‘s target age group (25-34) is 26. DVD Promotions/Freebies The cost of producing a DVD master is between $50. Time Magazine is one of the premier periodicals on the market at this time. The average age of a Time Magazine subscriber is 45 and they have a median income of $69.000—plus the cost of producing any bonus materials.5%.

consumers ranked BMW at virtually the same level as Mercedes or Lexus on attributes like "fun to drive" and "responsive handling. Mercedes‘ strength would be its global presence. it positioned the online campaign right at the top of its marketing mix. Mercedes The range of cars from the giant company DaimlerChrysler is a traditional rival of BMW‘s. for the first time since BMW had been tracking its image. Mercedes marketing campaigns have always been subdued and low key.000.7 billion euro. strong brand presence.A. roughly 75% male. The current average age of a Lexus owner is 50. Joining in a winning partnership with MSN. another global brand with similar values. Lexus is targeting its youngest buyers ever with the IS 300. Mercedes allocates 25 per cent of its annual marketing budget to innovative Internet strategies. Lexus is a division of Toyota Motor Sales. Lexus is America‘s top selling luxury marquee. with the median age of the brand's hottest selling vehicle.S. Inc. Lexus‘ national advertising manager.Competitive Analysis In 1997. the RX 300 sport-utility. between the ages of 35 and 40.155. They are trying to leverage the Japanese technology to add brand value to their vehicle. BMW was not able to distinguish itself anymore as the only company that boasted the unparalleled standard of quality as before. Mercedes. Lexus.. In 2000.000 units and had revenues of 43. The annual sales of Toyota vehicles in the US have been on the order of $90-93 million in recent years. Nearly half of those considering a luxury car rank "fun to drive" as their number one reason for purchasing the car. BMW was in danger of losing its long-standing lead in the import luxury car segment. Therefore. married. Mercedes sponsored A-Ha‘s eagerly awaited homecoming concert. U. Lexus has since grown into one of the world's most inspiring automobile companies. highly educated with annual household incomes of $100. product range and its technology leadership. at B-10 ." BMW‘s three biggest competitors have launched new advertising campaigns that highlighted what traditionally had been BMW‘s greatest strength: performance. recognizing the power of the Internet for delivering effective and precise marketing campaigns. When the car manufacturer launched the new Mercedes C Class Sports Coupe. According to Chris Conrad. The tough task for Lexus is to lose the ‗Cheap but Reliable‘ Toyota image. However. and Audi were coming on strong with great new products and new marketing campaigns designed to dethrone BMW. Lexus Sparked by a decision from Toyota Chairman Eiji Toyoda in 1983 to challenge the best luxury vehicles. they sold 1.

Should BMW show their new marketing campaign on the Internet exclusively. "The main thing is to educate and entice users to go to dealerships. Recently. Implications of Marketing to Dot Comers and Gen X‘ers? B-11 ." said Steve Glauberman. The sales revenues of the Audi Group totaled 39 billion Deutsch Marks. or as part of the media mix? 3. the privately -held Ann Arbor. The estimated $32 million campaign for the car broke recently on national TV and will continue for the next six months. Their online presence even for this campaign is limited. Audi Audi is an international developer and manufacturer of high-quality cars. Melville. Team One. Five TV spots for regional dealer ad groups and two magazine ads. run by Don Jagoda Associates. created the two national TV commercials. They have been trying to promote the exclusivity of their cars.Y. They can also register to win prizes while learning about the car and its features. president-CEO of Enlighten. Should BMW be using a uniform global promotion strategy? 2. the company sold more than 650.. The European car importer kicked off the "Double Take" "advertainment" online sweepstakes as part of its $25 million launch of the redesigned 2002 A4 sedan. GA. Calif. though Lexus is one of the advertisers launching a rich-media campaign on the Excite Network. In 2000. Audi of America has embarked on its most ambitious online-marketing effort ever. Discussion Questions 1. The sweepstakes. The agency also created billboards and six commercials that will be projected on buildings in three cities. The grand prize is a three-day trip for two to the Audi Driving Experience at the Panoz Driving School in Atlanta.48. N..000 Audi models. allows prospects to enter up to eight times. which includes WebCrawler and Classifieds 2000. The Audi Group has slowly but surely been encroaching on the BMW and Mercedes markets. creator of the site and sweepstakes. El Segundo. MI. Visitors to the site can try to solve mysteries after viewing clues from three short episodes involving the A4.