[1]

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
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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

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.

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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. 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
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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

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
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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),
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)

1200
1000
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600
400
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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

300

250

200

150

100

50

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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 1. Established itself over time
brand with the unique from its introduction in the US
benefit of ‘a luxury car that market in 1974 (the First Great
provides an exhilarating Opportunity)
driving experience with
2. Ran for 15 years – Overall
advertising.
brand – focus on prestige
2. The Ultimate Driving
3. Focus on the 7 Series
Machine
4. Focus on the 3 Series
3. The New 7 Series:
Designed for Peace of 5. New strategy with a focus on
Mind, Not Just Peace and brand & product, franchise, and
Quiet organization.
4. BMW core values at
more attainable price5.
BMW – The Smart Choice

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
featured a central character called The Driver who "helped people through difficult
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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
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
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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

www.bmw.co.uk/models

www.bmw.co.uk/prices www.bmweducation.co.uk/companyfacts.shtm
www.bmweducation.co.uk/statistics http://www.brandchannel.com/features_profile.asp?
pr_id=171 http://www.15digitalmarketing.co.uk/articles/2006/01/21/mobile-marketing-
look-before-you-leap/ http://www.bmw.co.uk/bmwuk/modelselector/0,,1156___sit-
bmwuk,00.html#

Kotler, P. and Armstrong, G., (1989) Principles of Marketing, Prentice-Hall International

Edition.

David Jobber, Principles and Practice of Marketing 5’th Edition www.just-auto.com

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