BMW Cars

Contents

Executive Summary.................................................3

Introduction..............................................................3

Key Competitors..................................................4

Customers.............................................................4

Products................................................................4

Relevant Environments............................................5

Political Environment..........................................5

Economic Environment........................................6

Social and Cultural Environment.........................6

Technological Environment.................................7

Target Segments......................................................7

Product Market.....................................................8

Target Market.......................................................9

Product Positioning..................................................9

Perceptual Map of BMW...................................11

Recommendations..................................................11

References..............................................................13

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Executive SummaryThe rationale of the report is to analyze the operational activities of one of the prominent and renowned automobile company BMW, in the context of its competitive position in the market. BMW cars are under the flagship of the premium German car manufacturer BMW Group. The BMW group comprises of Rolls Royce, Mini and BMW cars respectively. The aim of the study is to conduct the challenging external environment analysis of the company’s operations across the world. In order to get the clear understanding and the clear picture of the external and industry environment in the market, a roadmap is developed aimed to carry out pestel analysis, competitors’ analysis followed by marketing strategic analysis.

IntroductionBMW also known as “Bayerische Motoren Werke AG” is one of the most triumphant automobile manufacturers in the world. The flourishing automobile company is into the manufacturing and distribution of passenger cars comprises of sedans, coupes, and convertibles. The company’s common stock is traded on Prime Automobile Performance Index and DAX Index.

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BMW has its production and assembly plants across the world. They are mainly in Germany, United Kingdom (UK), United States of America (USA), China and Brazil. (BMW, 2005). Moreover, the mission and vision of the company is “to become the most successful and triumphant premium car manufacturer in the industry”. The company aims to clinch the mission through its vision of endowing the consumers with uniqueness in the luxurious cars through diversity, leadership and being courteous.

Key Competitors The major rival of the BMW cars is the Mercedes car group, especially in the premium car segment. Moreover, the company faces competition with the European car maker Volkswagen (especially Audi, VW and Bentley) Fiat (the premium cars include Lancia, Ferrari, Alfa Romeo, and Maserati), Ford (Jaguar, Land Rover, Aston Martin and Volvo), General Motors (Opel, Saab, and Vauxhall), Porsche, Renault, Toyota (Lexus), and PSA (Peugeot/Citroen). (BMW, 2005)

Customers The company BMW conducts regular research in the context of their customers and their profiles with respect to their demographic profile and lifestyles. They track and monitor the actions of their distinguished customers in the way of their usage of cars. The collective information from the high profile customers is implicated with the design,

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development and advertisement of their products respectively. (BMW, 2005). The super luxury car of BMW 7 series exhibited highest sales records in the very first quarter of 2011. In addition to the theme, BMW 6 Series is also incredibly demanded with 37 units sold alone in Latvia and Lithuania. (BMW 7series - most popular luxury car in first quarter,2011). In terms of demand and fondness in India, BMW 1 is one of the most desired cars with special preference to Blue and White colors. (Carzy, 2011). With the study conducted in UAE, SUVs are likely to gain the popularity with BMW as the most trusted brand with X1 and X5 as the best selling models respectively. (Sambidge, 2010)

Products BMW’s key products across its automobile brands comprises of BMW 1 Series, BMW 3 Series, BMW 5 Series, BMW 6 Series, BMW 7 Series, BMW X3 Series, BMW X5 Series and BMW M Models. All the models of the respective series comprises of sedans, convertibles, coupes, compact vehicle, touring vehicle, and security vehicle. Moreover, the BMW group has Mini Brand as well as Rolls Royce Brand that comprises of unique models and series of cars. (BMW, 2005)

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Relevant Environments

Political Environment The political factors may lead to several obstacles for BMW’s operations. The company was abruptly affected by the rigorous emission standards of carbon dioxide in the environment. The legislation of many countries restricts carbon dioxide emission and the enforcement of the law became instrumental in the functioning of activities of the company BMW. The enforcement of the agenda in Europe, the country with the maximum revenue generation compelled the company to follow certain norms and standards in the respect of manufacturing of cars in that region. The company’s operations are also affected by the evolution of ELV (end of life) directives, which made the company to manufacture cars that 85% recyclable and recoverable. Indeed, in order to beat the industry in terms of sustainability, the company has to follow the stringent directives of the political environment. (Valuation of BMW,2010)

Economic Environment In the stint of the financial crises in the market, companies have to be huge aware of the credit and currency risks and debt financing. BMW undertakes the financing by matching the maturities of the bonds to their activities. BMW mainly relies on the derivatives to hedge the exposure to interest rate risk. Moreover, the company lessens its

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exposure to currency risk by hedging that takes place between two main currencies, Euro and US Dollar, as the company has major revenue source from the US operations. Increase in the prices of the raw materials, especially steel and aluminum will remain an i9mportant issue for the company. Thereby hedging is the vital option to counteract the volatility of the prices of raw materials. Proliferation in the prices of crude oil is an important variable of the economic outlook of the company BMW. The prices of crude oil are reflected in manufacturing and eventually in the demand of the cars from the emerging markets globally and internationally.

Social and Cultural Environment The demographics of the society are instrumental in yielding new opportunities for the company BMW in the emerging markets. In the context of the countries like India and China, middle class markets are emerging with a new market segment evolved for the company. Moreover, customers from the European and American nations are demanding “green” products. These preferences are certainly been evident in the product development and distribution. Consequently, BMW is inclined towards the production of hybrid cars with the motto of green driving.

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Technological Environment The technology has always remained the first and the foremost issue for the manufacturing company, especially automobile industry. BMW focused on the fierce competition and managed to get the advantage in the production of its products. The company has been awarded several times for the reason of its focus on development of innovative technological and environment friendly solutions for the sustainability in the market. The company has been successful in gaining the competitive advantage in the market in the context of technology and expertise. The best instance is its hybrid electric cars and hydrogen driven cars. (Valuation of BMW, 2010).The dynamic range of hybrid vehicles comprises of models- Hybrid 3, 4 and 5. This is eventually a causative in reducing the pollution from the environment. Moreover, the company is continually expanding its production with special focus on 4-cylinder fuel saving engines for the purpose of reducing emissions, fuel consumptions and performance. (BMW Group winsmajor order to supply Saab with engines, 2010)

Target SegmentsBMW focuses on product marketing that is implicated with the market segmentation, target choice and product positioning in the eyes of the distinguished customers of the company. The

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company is very clear about the targeting of its products and customers in the market.

Product Market BMW only concentrates and focuses on premium range cars that do not strive to compete with other segments of the automobile industry. The company overlooks the products and cars with the high volume middle of the road vehicles and strictly concentrates on the luxury premium priced cars with eye catching styles and designs.

The company BMW only contemplates on the spectrum of upscale range of cars. Thereby, BMW acquired Rolls Royce and Mini, the British cult car and had put altogether with the BMW brand in the range of sports utility vehicles, sedans, coupes, convertibles, crossovers and most recently, the compact cars. BMW takes into consideration all the aspects of the society, viz. geographical, behavioral, demographical, social, cultural and beneficial characteristics that enables the company to target the customers for the targeted products effectively and affluently. The main customers of the company in terms of geographical consideration are in the regions of Europe and North America, where the company is generating more than 50% of revenue especially in highly industrialized areas with financially positioned residents. Behaviorally, the customers have a magnificent image in their mind that underlies in company’s actions in fulfilling the

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specific and unique needs and requirements of the customers pertaining to the car with a clean modern look and sports look. The customers’ needs are also instrumental in the driving the company to focus on superiority, performance, reliability and quality of their products. (Case Study: BMW)

Target MarketThe target market of BMW for its unique series model of cars comprises of well educated and relatively affluent males those of which looking for the automobile for the satisfaction of the need of luxury, adventure and excitement. Moreover, the company has a target market of the customers with a preference for the practical family vehicle with sufficient space and safety features and unique indifferent characteristics. Even there are some females driving the models of BMW cars, but the target market of the company is approximately of 70-80% male customers. BMW targets a wider age group of customers anywhere between the ages of 25-55 to purchase their models. Indeed, The BMW series is a well suited for the sophisticated customers deliberately searching for a car with a sporty ride. (Case Study: BMW)

Product Positioning BMW focuses on different strategies for the brand positioning in the market. The brand positioning strategies are advantageous on every part of the

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company’s operations and activities. The company’s product differentiation strategy exhibits its outstanding efforts in developing differentiated and innovative products and cars in the premium and luxury segment of the automobile sector. BMW group have successfully initiated differentiation by gathering unique information in order to gain competitive advantage in the market over its competitors. Moreover, the company has achieved uniqueness in their value chain activities and reconfiguring its actions respectively.

BMW bases its pricing strategies that are instrumental in giving shape to the global marketplace of automobiles. The company works on the particular phenomenon named as “premium-tization” that brings polarization in the automobile market. BMW then trigger those consumers who demand and pay higher prices for the perceived quality. In addition to this, BMW also squeezes the middle range market by discounting and reduction in the prices of its unique models and series. (Report on BMW's Strategy, 2009)

BMW focuses on aggressive marketing for the promotion of its products certainly for getting the brand positioning in the market. It has successfully and confidently asserts its position as the industry leader with its superior and luxury products. The company often makes changes in the logo and taglines as a strategy for the positioning. The

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company is in partners with the Austin based advertising agency GSD&M for the alternatively designed advertising campaigns. One of the recent advertisements has shown the spot that shows the changes in the vehicle as it speeds around a track. These advertisements have positioned the “BMW” brand a cultural icon with a loyal following.

The company offers incredible product range of cars for the customers. The customers are finding the models with sport driving performance with the familiar comfort and pleasure of reliving. The exclusive variants of the models with outstanding and enhanced agility and precision on the road are like icing on the cake. BMW cars are laced with superior designs and emotional appeal. The distinguished customers are experiencing beyond captivating driving. (Boeriu)

Perceptual Map of BMW

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RecommendationsBMW should continue to build the strong and prestigious brand image of its models.

1. BMW should concentrate and focus more on the clever advertisements and marketing campaigns and its placement through all mediums, especially internet that has grown substantially in the couple of years.

2. The company should not misappropriate with its advertising and marketing budget, as the case was with the BMW Film series.

3. It should ensure that the brand and model awareness of its products should be high.

4. The company should invest cleverly and smartly in its fuel efficient technology in its product lines for their effective performance. Although BMW cars fuel efficient, but the company needs to work on fuel efficiency to counteract the competition.

5. The company should focus more on women oriented and women driven cars with the safety and practicality of the vehicle. Besides the concentration on young and professional women with the need for exhilarating vehicle, it should also target on the older females holding the significant decision making power within their families.

6. And lastly, to conclude that the company can double its sales figures by continuing its investment in Research and Development to

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enjoy and gain competitive edge in the market.

References

1. BMW. (2005). Retrieved January 7, 2012, from www.just-auto.com: http://www.just-auto.com/store/samples/aroq_bmw_profile_2005ed1.pdf

2. BMW 7 series - most popular luxury car in first quarter. (2011, May). Retrieved January 13, 2012, from http://bnn-news.com: http://bnn-news.com/bmw-7-series-popular-luxury-car-quarter-26968

3. BMW Group wins major order to supply Saab with engines. (2010, September). Retrieved January 13, 2012, from www.bmwgroup.com: http://www.bmwgroup.com/bmwgroup_prod/e/nav/index.html?http://www.bmwgroup.com/bmwgroup_prod/e/0_0_www_bmwgroup_com/home/home.html

4. Carzy. (2011, April). BMW X1 – The Most Preferred Luxury Car in India. Retrieved January 13, 2012, from www.carzy.co.in:

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http://www.carzy.co.in/blog/car-news/bmw-x1-preferred-luxury-car-india.html/

5. Case Study: BMW. (n.d.). Retrieved January 7, 2012, from http://wps.pearsoned.co.uk: http://wps.pearsoned.co.uk/ema_uk_he_kotler_euromm_1/126/32286/8265285.cw/content/index.html

6. Introducing BMW M Performance Automobile. (n.d.). Retrieved January 13, 2012, from www.bmwblog.com/: http://www.bmwblog.com/

7. Report on BMW's Strategy. (2009, September). Retrieved January 7, 2012, from http://ivythesis.typepad.com: http://ivythesis.typepad.com/term_paper_topics/2009/09/report-on-bmws-strategy-1.html

8. Sambidge, A. (2010, June). Toyota, BMW top UAE, Saudi car brands survey. Retrieved January 13, 2012, from www.arabianbusiness.com: http://www.arabianbusiness.com/toyota-bmw-top-uae-saudi-car-brands-survey-281751.html

9. Valuation of BMW. (2010, May). Retrieved January 7, 2012, from http://pure.au.dk: http://pure.au.dk/portal-asb-student/files/10730/Valuation_of_BMW.pdf

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