MKT10007 Fundamentals of Marketing

Assignment 3: Marketing StrategyBMW 320I SEDAN

Executive summary

The report provides the investigation and analysis about the market strategy

of BMW 320i sedan. We worked on investigating the Industry we are in, the

competitors we have, as well as the micro and macro environments. We also

discussed the consumer’s segmentation, and the attractiveness of the

consumer to the brand and sub-brand, by its size and growth as well as the

structural attractiveness, and finally the degree to which the segment matches

the brand and sub-brand.

We also can see the competitor’s reaction, and how they have a strong role in

such an environment. As well as the recent trends in this area, that have a

strong impact on the environment. Finally, our report suggest that BMW

should use the additional research to recognise the best way of providing the

product.

It is recommended:

1. BMW should develop new cars that according to latest trends and

technologies to help keep up with competitors in the market.

2. In order to meet the target market’s needs, BMW could focus on collecting

data/researching on customer’s need to be able to provide cars.

3. Collecting feedback from customers regarding customer service that BMW

can tap into to improve their brand.

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Table of Contents

Executive summary..........................................................................i

1.0 Introduction...............................................................................1

2.0 The marketplace and influencing factors..................................22.1 The Micro-Environment...........................................................................2

2.1.1 The industry......................................................................................2

2.1.2 The competitors................................................................................4

2.1.3 Other players in the marketplace.....................................................6

2.2 The Macro-Environment.........................................................................6

3.0 Consumer Segmentation..........................................................73.1 Profiling Elements Defined......................................................................7

3.2 Justification of Segmentation Base.........................................................8

4. Segment Attractiveness..............................................................94.1 Size and Growth.....................................................................................9

4.2 Structural Attractiveness.........................................................................9

4.3 Company Objectives and Resources....................................................10

5. Recommendations for Additional Research..............................105.1 Key Questions......................................................................................10

5.2 Gathering Information...........................................................................13

6.0 Conclusion..............................................................................14

7.0 Recommendations..................................................................14

References....................................................................................15

1.0 Introduction

The purpose of this report is to analyze and investigate the BMW 320I Sedan

on different aspects of the marketing. It starts with the micro and macro

environment, consumer segmentation analysis, and the attractiveness of

consumer segments. In addition, we also provide some recommendations for

additional research about our suggested strategies in order to enhance the

marketing effectiveness and improve the strategy of the BMW 320I Sedan.

Research for this report has been confined to the time constraints that we

could not collect the data by our survey and it is difficult to analyze the

information precisely of individual users. Therefore, we grouped these

customers to support the information that can be a substantial evidence and

obtained the data from various publicly available research.

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2.0 The marketplace and influencing factors

2.1 The Micro-Environment

2.1.1 The industry

The BMW Group is a German global company which produces motorcycles

and automobiles. The company was established in 1917 and the headquarter

is in Bavaria’s capital, Munich (CARS 2017). With its three brands, BMW, Mini

Cooper and Roll-Royce, they also provide premium financial and innovative

mobility services (BMW 2018). The company offers wide range of sub-brands

which can be seen in the attached tree diagram Table 1 below to define the

scope of the industry in which BMW operates.

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Figure 1: Industry Tree Diagram for BMW 320I SEDAN

In the diagram above, the BMW group belongs to the automotive industry,

which manufactures and designs cars, motorcycle and formula one cars. The

automobile industry is one of the major economic sectors in the world.

According to (ACEA) the European Automobile Manufacturers’ Association

(2017) more than 12.5 million Europeans work directly or indirectly in the

automotive sector and they represent 5.7% of total EU employment. In 2017,

the global car sales increased by 2.4% due to the high demand in Europe,

Asia-Pacific and Latin America. 86.05 million units of light commercial vehicles

and passenger cars were produced compared to 2016 where only 84.00

million units were produced. Furthermore, JATO ranked BMW the 12th within

global top 25 brands sold in 2017. (JATO 2018)

This chart has been taken from www.JATO.com

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2.1.2 The competitors

Competitors took advantage of the immense demand on vehicles. They

introduced new designs to the market and produced customized cars that

suits customers’ needs.

BMW group has two competitors, Mercedes and Audi, both of them are well

known in the automotive industry.

Table 1: Product Comparison Table: BMW 320I vs Mercedes C200 vs Audi A4

P Our Brand + Sub-Brand

Strategic Group Competitor 1

Strategic Group Competitor 2

Brand + Sub-Brand BMW 3 Series

320i(Petrol -

Premium

ULP/Automatic)

Mercedes-Benz

C-Class

C200(Petrol -

Premium

ULP/Automatic)

Audi A4 sport

(Petrol -

Premium

ULP/Automatic)

Brand Positioning German

expensive/luxury

fast car.

German

expensive/luxury

overpriced/fast

car

German

expensive

Olympic cool

car.

Product Specifications

135kW @

6500rpm

135kW @

6000rpm

100kW @

3800rpm

135kW @

5250rpm

135kW @

5500rpm

110kW @

6000rpm

140kW @

6000rpm

140kW @

4200rpm

Place BMW Dealership Mercedes

Dealership

Audi Dealership

Price $58,000 $67,000 $62,000

Promotion Television, social

media, website,

billboards, test

drive, sport event

 Television,

social media,

website,

billboards, sport

Television,

social media,

website,

billboards, test

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(Rugby Australia) event (football

world cup)

drive,

Sponsorship of

the 2010 US

Alpine Olympic

Team

Advantages c/w our Brand and Sub-Brand

fast, nice, class &

luxury

Well known car

of their luxurious

design

cool, nice and

class

Disadvantages c/w our Brand and Sub-Brand

There is no diesel

version

Overpriced Poor

performance

Other factors important to prospective buyers

Eco friendly,

quality, safety

Eco friendly,

price, safety,

reverse camera

Eco friendly,

stability on the

road, safety

Data was current as of (insert date/s). 1st May 2018

Sources; (insert sources):

- BMW(2018)

- Mercedes(2018)

- Audi(2018)

In 2018, Audi announced to release the new Audi E-tron Sportback concept, a

car that is fully electric and has high level of safety. This announcement came

out after Mercedes planned to have an electric version of each model that

would be available by 2022 (Electrek 2017). On the other hand, the BMW

group will raise its annual production capacity to 3 million cars by 2020. The

BMW group has also produced the i3/i8 that has the plug-in hybrid

technology, which performs with TwinPower Turbo engine that is used to turn

on the car when the batteries are flat. (BMW 2018)

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2.1.3 Other players in the marketplace

The Micro-Environmental includes the forces close to the organisation that

affect the ability to serve its consumers. These forces can be supplier,

intermediaries, publics company, competitors, and other consumers. It can

also be characterised as the competition.

Those who sell similar products are the market competitors, for example,

BMW has two main competitors in its market Audi and Mercedes Benz. The

competition is done through similar product lines but different prices and

characteristics. It can also be under the customers, each customer consumes

a specific product for different reasons, it could be because of the appearance

of the car or because of their prestigious view.

2.2 The Macro-Environment

The Economical status is a big player stated under the macro-environmental

players. The income, which is under demographics, is one of the most

important things. It plays a big role with the company especially with the brand

and sub-brand. For example, if a person takes a specific amount of wage, it

helps him in buying the BMW 320i sedan, but if his wage decreases, he will

not be able to buy it. Similarly, if his income was low and when demographics

change his income, status will change by then he will be able to buy the car

he likes. This means demographics has a big role in the playing within the

microenvironment.

Another example of macro environment is the inflation, which is a main key

factor that is under the economist’s vision.

Macro-Environment is the larger societal forces that affect the whole micro-

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environment. Which are the demographics, economics natural technology,

political and cultural.

Demographics is the most applied one in this example in which the change in

income has a variance in the macro-environmental status.

3.0 Consumer Segmentation

In this section, we evaluated the marketing of BMW 320I Sedan which divided

our current and potential consumers according to how much they use a

product from the behavioral base for segmentation. They are divided into

groups of low, regular and high product usage rate. We also based on initial

research from a usage of car and analyzed profile elements and segmentation

base as daily drivers (BMW 2018).

Table 2: Consumer Segmentation Table

3.1 Profiling Elements Defined

Comfortability: The comfortable leather seats with lumbar support and electric

adjustment and enough legroom which provide the more enjoyable

experience for drivers who spend lots of time on driving. After-sale services:

Customers who use the car more, would require a higher percentage of car

maintenance compared with customers who use the car less frequently.

Customers who require greater car maintenance would want a better after-

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Usage rate Comfortability After-sale services Safety PriceLow Moderate Moderate Moderate LowRegular Moderate High High LowHigh High High High Moderate

sale services to save money. Safety: Customers tend to be more concerned

about car safety if they spend more time traveling by car, compared to those

that spend less time traveling by car. Customers who are more concerned

about car safety look for cars with a higher standard of safety, such as active

protection and an intelligent safety system. Price: Customers require this car

in some business occasions or social situations frequently would be willing to

spend more money on this car, compared with customers who occasionally

use it for transporting.

3.2 Justification of Segmentation Base

The segmentation base has to pass through the acid test to demonstrate that

the profiling elements are able to be used for this product in several ways.

Also, we separate customers which depend on their expected usage rate of

this car.

We assessed the viability of the segment and analyzed the segmentation for

profiling elements which based on five elements. These segmentations should

be measurable, accessible, substantial, actionable, and differentiable.

Measurable: It refers to the fact that it should be available to measure the

market size and purchasing power of each segment. The expected using rate

can be found information via marketing research about the general

consumers' using habits and velocity.

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Accessible: The market segment needs to be able to be reached and served

appropriately and efficiently by company. The segment of accessibility would

be related to other factors, because the customers' expected usage rate is not

directly connected with the marketing communication and distribution

channels.

Substantial: The market segment should be active for all usage rate of

customers. Given an amount of time spent on driving, this market would be

more likely thriving on regular and high usage users.

Actionable: The actionable segment has markets to product efficiently by the

company with practical value, such as BMW can market their car to the higher

standard of safety and greater car maintenance in order to satisfy the high-

frequency customers.

Differentiable: The segment has customers with similar preferences and

characteristics, but the external requirements for the car are different, such as

how to satisfy the customers' purchase requirements with comfortability and

security.

4. Segment Attractiveness

4.1 Size and Growth

Automotive segment revenues grew due to higher sales volumes. The volume

increase of customer is because of the amount of people that like to go to

prestige cars with a good price. On the other hand, some people think that the

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maximum usage is alternately relevant to middle to a higher range due to

prestige associated with a nice car with all features in it and a moderate not

too high price. Overall, the automotive segment reported a significant increase

in its profit (BMW 2018).

4.2 Structural Attractiveness

BMW as a whole are facing a huge market of competitors, targeting nearly

every structural make it has, there is not a lot of a big difference between the

structural attractiveness, and BMW faces a lot of competition especially from

Mercedes Benz and Audi (Atwal, Williams 2009). BMW intact has this in mind.

They know how to compete the other automotive companies using better

structures, prices, and attractive trends.

4.3 Company Objectives and Resources

BMW’s brand objectives are:

To make their position stronger than at the moment

To manufacture environmental friendly cars

To stay ahead in the competition

To help the society by being responsible

To increase the sales all across the world

The segment matches the brand and sub-brand in which the consumer likes

the BMW as a car and the 320i as a specific model because it is good in fuel

good price and gives him all what he wants from the car, as it is one of his

favorite cars.

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5. Recommendations for Additional Research

In this section, we will be discussing further information we would need to

collect to set the best strategies for our marketing team.

5.1 Key Questions

1. What customer service do customers prefer?

People have different behaviour and different preferences when it comes to

purchasing an item. We would like to know how our customers like to be

approached when we are selling a car to them. With information from this, we

will be able to set up the most suitable strategy in dealing with customers

(Atwal, Williams 2009). This goes on from how they like to be approached in

the car dealership, whether they like memberships and receiving promotions

from the company, etc. The more information, the better, so we can make our

customers feel as comfortable as possible.

2. What is their view on cars?

To be able to know how we present the brand and the product, we would like

to have it as familiar as possible to the customer’s eye. It is good to know how

customers view cars. Do they see it as a luxury? As a family need? As a work

necessity? A hobby? If we know how consumers see or expect from a car, we

will be able to know how to present/promote the car to customers.

3. When would customers purchase a car?

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This question is not asking specifically what date, month, or time of the year.

This question is asking, when would the customer purchase a car according

to the timeline of a product launch. Would they purchase it within the month

the car has been launched? Or 3 months after the car has been launched.

This information will help us set the price scheming of the product. If we know

customers tend to buy the car 5 months in after the launch of the product,

then we will set the price scheming very gradually, according to when

customers buy the car so we can make the best profit (Atwal, Williams 2009).

This information would also help marketers set a timeline for when the product

can be discontinued, and when other cars should be launched.

4. What information are customers wanting?

Now, when selling a car, we would like to know what information customers

are wanting to get. Once we know what product information customers are

looking for, we can set on how we give away the information. With this

knowledge, we may also choose what information is best to share and what

information is not best to share to customers. Another way of saying this,

once we know what they want to know, we recognise what is sensitive

information and what information would really convince customers to buy the

car. This helps us, especially car dealerships, to know what customers are

expecting to know, and to be prepared on how to handle every query the

customer has. This information can also help as a guide on what information

should be provided in the website and product catalogues.

5. What ways of payment is the most favourable for consumers?

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Consumers may have different preferences and ways of paying the bills. They

might also have different perspectives on how bills should be paid (Agrawal

2010), and how different ways of paying reflect the brand and its service.

Certain consumers may be willing to pay full price, because they have the

ability to do so, and some may even have the pride of doing so. Other

consumers may prefer a payment plan. With data collected from this

research, we will be able to recognise the best way of providing different

billing options that best suites customers.

5.2 Gathering Information

Now, once we have a list of customer information that we need to obtain, we

set up a way we can work for obtaining that information. The best way to gain

the information is through primary research. We shall set the strategy for one

of the questions above, which is, “What customer service do customers

prefer?”

How can we get the information that is fit to answer this key question? Well,

firstly by gathering feedback from current customers. It is best to collect the

information that is straight from the source (Agrawal 2010). In this case, our

car dealers would ask customers for feedback as they are in the store. After

you are ‘selling’ the car, before the customer leaves, ask them for feedback of

how they think of the customer service. The second way of collecting the data

is by observing customer behaviour when dealing with our customer service.

This doesn’t mean recording them, but simply have a manager who monitors

the store and report on how customers react when interacting with car dealers

in the store.

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From all the feedback and observation, we can answer the key question.

Then when setting new strategies, the company can ‘test’ the strategy on

certain dealerships, to ensure the strategy is effective before applying to all

dealerships.

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6.0 Conclusion

In conclusion, we can see BMW belongs to an industry that is one of the

major economic sectors in the world and also an industry that has a very high

level of demand. With a lot of strong competitors in the market, BMW keeps

up by providing advanced car designs, such as what their i3/i8 has.

In this report we also segmented BMW’s customer base from the behavioral,

specifically the different usage rates of customers. Then we recommend

gathering feedback on customer’s preference from customer-service. From

the research, BMW can set the best strategy for approaching customers that

suits them best and make them feel comfortable. From all the information

discussed in this report, we can better understand BMW whole market

environment that can lead for further developments of BMW’s marketing

strategies.

7.0 Recommendations

There are several recommendations based on our research include:

1. Continue developing new cars that follows latest trends and

technologies to help keep up with competitors in the market.

2. Continue collecting data / researching on customer’s need to be able to

provide cars that will meet the target market’s needs.

3. Collect feedback from customers regarding customer service and how

customers feel from company’s approach. Feedback is to be used for

setting best customer service strategy to make customers feel

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comfortable with the brand.

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