Marketing & Sales Management Cases

Case Study One:

BMW is a manufacturing company in Germany known for its world class cars and motorcycles, and it is
also one of the world’s most recognizable and admired brands. Known for its reliability and quality
workmanship, the company sold over 1.95 million BMW cars in 2013, as well as over 115,000
motorcycles. BMW is one of the ‘big three’ in German luxury cars (Mercedes and Audi are the other two)
the company enjoys a high worldwide customer demand for its vehicles, and it has become a status
symbol in many places to have a BMW parked in your drive. The company takes part in various esteemed
events like formula one, bike racing, touring cars and rally cars.

BMW India is a subsidiary of the BMW group, and has its headquarters in Gurgaon, near New Delhi, and
its own manufacturing facilities in Chennai. BMW India employs 650 staff, and has had 1.8 billion Indian
Rupees invested into it by the BMW group.

Luxury Car Segment- Indian Auto Industry:

The automotive industry in India is one of the largest in the world and one of the fastest growing globally.
Passenger vehicle sales during 2010 were up 29% with more than 2.5 million passenger vehicles sold in
the Indian market. The luxury segment has been growing at a very consistent pace in the last two years.
Luxury car sales for 2010 were recorded 15815 vehicles which was a 75% jump from previous year,
which saw only 8717 vehicles sold. BMW, Mercedes Benz and Audi are the three dominant players in the
luxury market which also includes companies like Aston Martin, Ferrari, Porsche, Jaguar, Bentley and
Rolls Royce. For the past two years (i.e. 2011/2012), BMW has been the number one player in the
segment by selling the highest number of cars in the luxury segment in India.

BMW India – Marketing Mix Issues:

Although BMW is involved in many sports and events, as well as other promotions, the key aspect for the
success of BMW is the range of cars it provides. BMW cars appeal to so many people including to lower
class customers. It is no surprise that BMW is a part of the “Want segment” now. The upper class
WANTS this product. Each of the cars in the series (1, 3, 5 and 7 as well as X and other classes) is
different to drive and have different characteristics. Car enthusiasts regularly review these cars on the
internet and on the television along with testimonials about how great BMW feels to drive.

BMW started with basic models in its start, but soon progressed to advanced engineering. The cars now
boast of exceptional designs, powerful engines, extra ordinary acceleration, fantastic speed, and a promise
of safety, reliability and good service. Over time, the powerful promotions have propelled the BMW
products to have an “Awe” factor. Whenever you look at BMW, you really look at it.

BMW India and Competition Product Mapping:

Table 1 shows a product map for BMW and its competitors in the luxury segment. The map caters for
major competitors for each of BMW’s models; of course each model comes with certain features,
characteristics and price range.
 BMW Mercedes -Benz Audi jaguar Land Rover Porsche
BMW 3 Series C Class, CL Class Audi A4 Porsche Cajun
BMW 5 Series E Cl;ass Audi A6 Jaguar XF Porsche Cayman
BMW 6 Series CLS – SL Class Jaguar XK Porsche Panamera
BMW 7 Series S Class Audi A8, R8 Jaguar XJ Porsche 911 turbo
BMW Grand Turismo Audi A7
BMW X1 Audi Q3 Evoque
BMW X3 Audi Q5 Freelander 2
BMW X5 GL- ML Class Audi Q7 Range Rover Sport, Porsche Cayanne
Discover 4
BMW X6 Range Rover Evoque Porsche Cayanne S
BMW X6 M Porsche Cayanne S Turbo
BMW M3 Coupe Audi RS 5
BMW M3 Convertible
BMW Z4 Roadster SLK Class Roadster Audi TT Roadster Porsche Boxster, Boxster
Spyder
Table 2. BMW India and competition mapping.

BMW has a dealership network for the sales of its automobiles. BMW does not go through automobile
distributors, but directly appoints showroom dealers, because the investment is very high to assign a
distributor and the margins are less for showrooms. Thus, BMW has its authorized showrooms and the
cars are sold from showrooms to customers. However, for distribution of spare parts, BMW does have
distributors at strategic locations. The showrooms of BMW are found to be present in the most premium
parts of urban cities. Even in a place like Mumbai, you will find only 3-4 showrooms of BMW, and not
more. BMW believes it will lose some of its brand image if it distributes products too aggressively. BMW
further limits the role of dealerships in promotion to the minimum.
2012 saw BMW ranked as the world’s most reputable company by Forbes.com. Criteria included
‘people’s willingness to buy, recommend and to work for’ the company. Interestingly, the answers were
driven 60% by perception of the company, and 40% by perception of the company’s actual products. It is
well known that to build a positive brand perception, it takes years and the same has happened with
BMW. BMW has been promoting itself with the most amazing television commercials, print
advertisement, out of home advertisement and now through online advertising.
The company itself knows that its target customers expect high levels of quality from BMW cars, and are
willing to pay a bit more for it. They also expect exclusivity because the car should not be available to the
masses. Thus, the ads on television are sleek, and seem to be of a higher quality than other car ads, asking
the viewer to apply this logic to their products. BMW ads focus as much on the looks of the car as on the
engine and the technology of the car. BMW also focuses on customer delight and a purchase of a car is
almost always accompanied by gifting a few memorable moments to the customer for the purchase of the
car. On a general scale, the car is associated in the mind of the public as being connected to success,
someone who has extra to pay for luxury and craftsmanship rather than buy a run of the mill car. Iconic
cricketer Sachin Tendulkar who himself is an avid fan of BMW and West Indies cricket team captain
Darren Sammy were roped in as their brand ambassadors.
It is no doubt, that with such good technology, and with top of the mind positioning, BMW is a premium
priced car and motorcycles company. Prices of BMW cars can vary by a great deal, depending upon
which series, model or extras the buyer intends on purchasing. What can be said though, is that BMW
cars are not aimed at everybody, as they are more expensive compared to other cars because of their
image and technology, and they are also more expensive for repairs and general maintenance.
Looking at the competition, especially Mercedes-Benz, BMW has also launched low priced cars (as per
BMW standards) like the BMW X1. This is primarily aimed to tap the higher end of middle class Indian
market. BMW offers various loan deals and repayment methods to help those who wish to spread the
cost, and has hundreds of dealerships and showrooms word wide.

Case Questions:
1. Table 1 represents a product map for BMW’s product models and their competition in the luxury
segment. In general, what are product maps used for? In the case of BMW, which models have
the toughest competition and which have the least.
2. BMW and its main rival, Mercedes-Benz, have been tempering with the idea of down- market
stretch. Underlining it in the case, explain what is meant be down market stretching, what
advantages and drawbacks it has?
3. Does BMW apply a push or a pull communication/distribution strategy? Explain your answer.

4. BMW offers various loan deals to its customers, to which type of pricing strategies does this
approach belong?
Case Study Two:
Rolex is a private brand that deals in manufacturing, designing and distribution of wrist watches. The
most premium wrist watches that you can imagine. Alfred Davies and Hans Wilsdorf founded this watch
manufacturing company in England in the year 1905. Presently the company’s headquarters are located in
Geneva, Switzerland. Rolex is amongst the top hundred powerful brands in the global market and the
largest with a single day produce of two thousand watches. Some of the competing brands for Rolex are
IWC, Universal Geneve and Corum. Rolex has the distinction of having many “firsts” / innovative
products launched due to its R&D and manufacturing of unique and timeless watches. It was the first
watch company that received a chronometer certificate, first to have automatic date changers and most
importantly first wristwatch that was waterproof.  Rolex offers nine varieties of watches for men’s
collection and six models for women’s collection.

On a global front these exclusive watches are distributed in major places around the world through
certified dealers. Most of the watches are manufactured in Switzerland and then distributed to the foreign
dealers. Rolex has always encouraged a personal relationship with the client as this endorses its actual
brand image. The company does not allow the sales at poor locations like small showrooms and not even
on the internet. Instead, the brand is available only at selected retail showrooms, thus avoiding the
chances of counterfeit watches. The brand does not have a very large distribution network. But to
maintain its premium value, a premium channel is needed which Rolex definitely has. Rolex is a global
brand with 28 affiliates and 4000 watchmakers in nearly 100 countries. The brand’s outlets and retailers
are available in almost all the continents of the world.

Rolex is a luxury item and it has a super-premium pricing policy for its products. Its pricing range varies
in accordance with the model of the product and the materials that are used in its manufacturing. The
labor costing is also very high as the brand employs only the best craftsmen for assembling and designing
purposes.  The retail prices for different ranges like “Diamond Inlay” are much higher. “GMT ice” is the
costliest watch to be produced from the Rolex factory, priced at 485,350 dollars.

The high prices of the watches are affordable to the upper class of people largely. The increase in the
prices of raw materials like gold has forced the company to once again raise their prices. Therefore, the
high cost of production results in higher pricing policies but the company still makes a profit because of
its unique design and the value of the finished product. The brand has targeted consumers from the
wealthy class to whom money does not matter but exclusive items do. Hence, the market for such watches
is always open. As the range of products is limited, it also lessens the financial instability, thus
maximizing the chances of large profits.
Rolex has always branded its products as luxurious and owning it is a status symbol. Its product line is
marketed only to a particular demographic which is upper-rich. Hence Rolex is always interesting in
linking its watches to a particular high profile sport or event. The company promotes the watch as a
specialized product for every individual consumer. The goal of the brand is to persuade the customer that
there is only one suitable watch for him and that is Rolex. “Australian Open” and “Wimbledon” have
made Rolex as the tournament’s timekeepers.  It is also the timekeeper for the golf tournaments “U.S
Open” and “The Open Championships”. Rolex also sponsors “The senior Open Championship” and the
“Women’s World Golf Rankings”. It is the title sponsor to “Rolex Sports Car Series” and “24 Hours of
Daytona”.
Since the year 2001, Rolex has been the timekeeper for the motor racing Le Mans 24 Hours and in 2013
became the timekeeper for FIA Formula 1. Sir Jackie Stewart, driver of Ex-Formula 1, was its brand
ambassador since the year 1968. The other famous celebrities and sportsmen to be linked with this
prestigious company are Roger federer, Michael Schumacher, Daniel craig, Cristiano ronaldo, Arnold
Palmer, Dame Kiri Te Kanawa and Jean Claude Killy.

Case Questions:

1. In relation to product classification, what type of products is Rolex? Explain your answer.

2. In relation to customer-value hierarchy, at what level is Rolex Operating?

3. In relation to Porter’ generic strategies, what strategy is Rolex applying? Explain your
answer.

4. What type(s) of marketing channels is Rolex applying? Your answer should address the
levels of marketing channel(s) and the number of intermediaries if available in the
channel(s).

5. In relation to Rolex’s pricing policy, what pricing objective does Rolex apply? Explain
your answer.

6. All marketing mix elements should send the same message to target markets. How
consistent is Rolex communication campaigns with the brand’s other marketing mix
elements and its overall image? Explain your answer.