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Marketing Plan for BMW

1.0 Executive Summary


BMW (Bayeriche Motoren Werk) was found in Germany in 1913 and used to
build military aircrafts and aircraft engines. With the passage, BMW group
also started to build automobiles, motorcycles etc. The BMW has a strong
market presence in more than hundred countries like U.S.A, U.K, Canada,
China, India etc.
As of now, the company is positioned in the premium segment. The reason
for BMW’s success so far is their accomplishment in the company’s core
strategy and product development. But times are changing and competitors
are getting into new markets and trying to get new consumers.

2.0 Situation Analysis


The BMW’s marketing plan can be defined in the following format.

2.1 Market Summary


BMW place all their cars in the premium segment and it becomes necessary to be
prominent when compared to the competitor brands. The differentiation strategy
can do a lot in this. Branding is the major area of focus for BMW and once
branding is done in right manner, the products becomes noticeable and attract
customers.

Target Markets
The customers targeted by BMW are from upper middle class or upper class
social group who are in midst of their career and may be in the age group 30-35
years. Also their products can be affordable only by financially well-sounded
people. And on getting associated with BMW these people have a feel of pride
and prestige and also as a way to show off their wealth.

2.1.1 Market Demographics


The profile of the customers targeted by BMW consists of following geographic,
demographic and behavioural factors.

Geographics
Though BMW is a German company, it has a global manufacturing network
beyond Europe. It is significantly expanding in U.S market and the company has
setup their manufacturing operations in China and recently in Brazil and Mexico.
Apart from this, there are CKD operations in India, Egypt, Indonesia, Thailand and
Malaysia. In Russia, BMW is partnered with Avtotor in manufacturing. So in total,
the company has 30 production locations in 14 countries worldwide.

Demographics
The BMW owners are equally male and female. The average income of the
customers have slightly dropped to mid-forties. This makes BMW the favourite of
youth in the luxury car market. The so customers typically own their own home
and have at least a degree from a college. A large amount of new BMW owners
are traders and entrepreneurs who succeeded in their business. It can be
concluded that the median household for a BMW owner is around $175,000 per
annum. But this accounts for only new BMW owners, and there are individuals
who won a used BMW and the median household income will be lower in that
case because the used cars are more affordable. Regardless new or used, all these
individuals take care and pride in possessing a luxury vehicle.

Behaviour Factors
Those who are attracted to BMW as a status symbol and a way to show their
financial affluence to the society.
Those who are in seek of the performance and overall driving quality offered the
luxury cars.
Those who have strong like towards its design, the advanced features and
technology offered by such cars.
Consumers seeking the safety options offered by the BMW cars.

2.1.2 Market Needs


The following are the major needs of the BMW customers.
1. Safety
2. Convenient
3. Luxury
4. Reliability
5. Sense of Achievement
2.1.3 Market Trends
The latest trend that is rising in the market is increasing technological updates in
luxury cars to beat the rival brands. Also, there is a rising demand for luxury SUV’s
in the market as they provide a large number of safety features as standard
fitment in such vehicles. Apart from all this, the automakers have started to
produce electric luxury vehicles owing to the advancement in the development of
electric batteries and increase in the number of charging stations, especially in
developed countries.

2.1.4 Market Growth


Growing affluence and rising consumer consciousness has ensured sustained
growth in the global luxury vehicles market. Key factors driving this growth are
rise in HNWI population, increasing net household wealth, growing urban
population, growing wealth inequality and rising internet users. BMW is clearly
the current global leader in the luxury car segment followed by Mercedes-Benz
and Audi. As per the current scenario, the high end manufacturers are having
steady sales growth whereas the mass automobile manufacturers are struggling
with margin.

2.2 SWOT Analysis


The following SWOT analysis captures the key strengths and weaknesses of BMW
and identifies the opportunities and threats facing it.

2.2.1 Strengths
 One of the most valuable automotive brand in the world.
 Revenue streams are geographically diversified.
 Successful partnership in China with Brilliance Auto Group.
 Perfect Engineering and great fantastic driving experience.
 Competency in electric and hybrid cars.
 Clear and defined strategies to meet the future trends and challenges.

2.2.2 Weaknesses
 Cars recalled due to airbag concerns.
 Few strategic alliances with other companies.
 Increasing debt level of BMW Group.

2.2.3 Opportunities
 Rise in fuel prices in the near future.
 The demand for autonomous vehicles.
 Weakening euro exchange rates.
 The frequency and timing of new model launches.

2.2.4 Threats
 Rising competition in the global automotive market.
 Rise in cost due to increasing government regulations.
 U.S automotive market may slow down or even decline.
2.3 Competition
BMW’s traditional and prominent rivals are Mercedes Benz and Audi.
Mercedes has never beaten BMW in the sales game. BMW has a clear
advantage over any other brands in terms of handling and performance.
Audi’s used to be really fast and luxurious but has just started to come out
with some really impressive handling cars. Apart from the traditional rivals,
the non-traditional competitors are really becoming dangerous for BMW.
The Jaguar came out with XF which really shook the 5-series segment of
BMW. Other major competitors to BMW in the global level are Alfa-Romeo
and Cadillac.

2.4 Product/Service Offering


The product portfolio of BMW in the as follows.

Cars:
1. Sedans and Station Wagons – 1 Series, 3 Series, 5 Series & 7 Series.
2. Coupes and Convertibles – 2 Series, 4 Series & 6 Series
3. Each of the series has its own SUV model and they are – X1, X2, X3, X4, X5
& X6.
4. Some of the series offer Grand Tour (GT) Crossovers and they are – 3
Series GT, 4 Series GT, 5 Series GT & 6 Series GT.
5. M Range (High-performance cars offered under different series) – M3
Sedan, M4 Coupe, M5 sedan, X5 M, X6 M.
6. Electric/ Hybrid Range – i3 hatchback, i8 Sports Sedan
Motorbikes:
Following are the motorbikes offered by BMW under different segments.
1. Sport – S 1000 RR, R 1200 RS
2. Roadster – G 310 R, R 1200 R, S 1000 R
3. Heritage – R nineT Racer, R nineT, R nineT Scrambler
4. Adventure – G 310 GS, R 1200 GS Adventure, R 1200 GS, S 1000 XR
5. Tour – K 1600 B, K 1600 GTL, R 1200 RT

2.5 Key Success Factors


Based on the assessment of past successes and failures in the luxury
automotive domain and on it’s future requirements, the key success factors
of BMW are keeping pace with Shorter Strategy Cycles, Keeping up with
Customers and Trends, Embracing Connectedness and Sharing (a car sharing
program initiated by BMW in international cities), Making a Real
Commitment to Innovation and a great Workforce that makes a Difference.

2.6 Critical Issues


BMW need to do the following things for excellence and success:
 Establish its reputation over Mercedes-Benz as a superior car in
terms of interior quality and luxury (as Mercedes lead in this segment).
 Pursue excellence with respect to cost control of vehicles.
 Monitor much strict cash flows so that the high debt can be dealt
with.
 Monitor client delight on a regular basis.
 Continously update and upgrade its technology, capability, after-
sales service and global presence.

3.0 Marketing Strategy


The key to marketing strategy is the focus on professionally managed client
groups concentrating on limited geographical areas, keeping customer
intimacy, responsiveness in queries and assistance raised by clients and
affordability in strategy planning.

3.1 Mission
The BMW’s mission statement is “The BMW Group is the world’s leading
provider of premium products and premium services for individual
mobility”. The BMW brand itself stands for the “Sheer driving pleasure” and
thus concentrates on sporting and dynamic performance combined with
excellent design and exclusive quality.

3.2 Marketing Objectives


 Achieve sales and revenue targets higher than its major
competitors, Mercedes-Benz and Audi.
 Get renowned as the world’s most client-friendly and responsive
auto brand in the next four years.
 Redefine luxury mainly in terms of performance and power rather
than just comforts.
 Marketing of i3 and i8 are focussed on taking an edge over Tesla in
the electrified or hybrid vehicles segment.
 Retain its brand image and consumer trust that got faded due to
several technical issues.

3.3 Financial Objectives


 Generate a surplus of $8.6 billion this year to ramp up its
presence in electric and autonomous vehicles.
 Become a zero-debt organisation in the coming years.
 Maintain its share value to the best in the global stock market.

3.4 Target Markets


The customers/ clients targeted by BMW are those from the upper middle
class, the high class and elite class of the society.
The targeting is more emphasized on financially sound and young people
who are in middle age group. Also, a wide range of offers are given to
attract those prospective clients to BMW, from slipping towards other
brands.
The targeting strategy includes undifferentiated targeting strategy,
differentiated targeting strategy and concentrated targeting strategy.
 In undifferentiated targeting strategy, the same promotional message is
sent to everyone.
 In the concentrated targeting strategy, only one promotional strategy is
designed to communicate the benefits expected by a special group of
customers.
 In the differentiated targeting strategy, more than one promotional
strategy would be designed.
In the processing of choosing one targeting strategy, the size of market
segmentation, segment structural attractiveness and organizational
objectives, and some other factors should be taken into consideration.

In general, it is the differentiated targeting strategy that is chosen by BMW.

3.5 Positioning
The BMW have a mono-segment type of positioning and the company
makes an appeal to the single customer segment. Or in other terms, the
BMW’s product portfolio only comprises of vehicles at premium level which
are expensive. And the company does not have any budget vehicles in its
product range to target consumers with smaller budget.

3.6 Strategies
BMW’s major strategy will be concentrating on the customer-client intimacy
and offering best-in-class features at competitive pricing.
After evaluating the competition from all fronts, BMW has pursued three
major strategic objectives.
1. Increased Product Variety, where each customer can have a unique car.
2. More frequent product releases.
3. Quality improvement of newly launched products.
3.7 Marketing Program

 Pricing
BMW will offer attractive, value-based and affordable pricing.
 Distribution
The distribution will aim at setting up dealerships and locations at
easily accessible areas by the clients.
 Promotion
The promotion activities will be based on personal selling for affluent
clients, experience based, where customers will be given facilities to
drive and test different products, word-of-mouth. Also, the internet
and social media will be highly leveraged.
 Product/Service
BMW’s key product features will be the Luxury segment, High quality
products, Excellent brand pull and Good service.
 Customer/Client
BMW will ensure to follow responsiveness, integrity and mutual
cooperation and respect in client relationship with focus on developing
a long term and rewarding relationship with its clients thus assuring
their loyalty towards the BMW brands.

3.7 Marketing Research


The market research will be focussed on re-inventing the programs and
offers based on inference developed from systematic research of client
requirements, developments in the market environment and feedbacks and
suggestions of clients.
BMW will be having access to appropriate tools and databases to support
this activity.

4.0 Financials
BMW estimates that its profit before tax in 2018 will be at least equal to
10.65 billion euros ($13.1 billion). Also a high upfront of investments will be
made in the years 2018-2020. This will include investment in model
offensive, the locations worldwide and in future technologies, such as
electrification and autonomous driving. All these factors will affect the
earning momentum of BMW in the coming years.

5.0 Controls
BMW will be very closely monitoring the following areas.
 Revenue
 Expenses
 Client/Consumer feedback
 New clients acquired
 Research and Development of new products
 Client retention rate

5.1 Implementation
BMW’s plan implementation will be based on a detailed activity-wise
execution schedule, specifying key activities, deadlines for completion,
responsibility and budget appropriately, wherever required.

5.2 Marketing Organization


The marketing activities are being undertaken by a top manager supported
by highly experienced executives.

5.3 Contigency Planning


Difficulties and Risks
 Delay in project execution.
 Delay in payments from dealers, resulting in cash flow problems.

Worst-Case Risks
 Split in the top management or board of directors due in
difference in interest or opinion.
 Actions can be taken by the banks due to high debt liability.
 Change in market trend from performance luxury vehicles to
comfort luxury vehicles, resulting in a mega trend, thus leading to fall
in global sales of BMW.