A Case Study On BMW Marketing Essay

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A Case Study On Bmw Marketing Essay

Published: 23, March 2015
This report is an examination script and must not be reproduced in whole or in part without the written permission of
the Head of School
September 2012
Abstract
Since the global crisis and euro crisis occurred, the biggest problem facing the consumer marketplace is not the weak
state of house hold nances. The problem is the uncertainty weighing on people's minds about the engagement with
brand. Therefore, building a strong brand leads to survive and to be successful for the business.
On this paper, a branding perspective will be reviewed to develop a brand. The case studies on BMW will be provided in
further research.
Branding is the developing concept of marketing that consists of an important interaction between buyer and seller in
marketing transactions in the way of determining consumer behaviors. Brand equity is core value of branding. It
includes indispensable assets that are mainly brand knowledge and brand e ect, brand loyalty, brand extendibility and
various associations and characteristics attached to the brand.
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Global branding is one of the strategies that leads to have more pro tability. However it must consider the di erences
across countries and culture to success. The di erences includes consumer needs, wants and response to marketing
mix element etc. Moreover, as competitive increases in globalization, place branding strategies become more and more
important to increase the investment and customer communication.
Contents
I. Introduction
1.1. De nition of the brand
1.2. Importance of the brands
1.2.1 Importance of the brand to customer
1.2.2 Importance of the brand to company
1.3 Aim of the project
1.4 Objective of the project
1.5 Methodology of the project
II. Literature Review

2.1 Brand equity
2.2. Brand knowledge
2.2.1 Brand awareness
2.2.2 Brand image
2.3. Brand resonance
2.4. Branding strategies
2.4.1 Manufacturer branding
2.4.2 Own-label / Private-label branding
2.4.3 Price branding
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2.4.4 Generic branding

2.5. Global branding
2.6. Place branding
2.7. Business environment analysis
2.7.1 Porter's ve force analysis
2.7.2 PESTLE analysis
2.7.3 SWOT analysis
III. COMPANY DESCRIPTION

3.1 General overview
3.2 Brief history
3.3 Brand width
3.3.1 BMW
3.3.2 BMW Motorcycles
3.3.3 MINI
3.3.4 Rolls-Royce
3.4 Sales pro le
3.5 Summary
IV. COMPANY ANALYSIS

4.1 Power of brand
4.2 Business environmental analysis
4.2.1 External analysis using Porter's ve forces
4.2.2 PESTLE analysis
4.2.4 Internal and External analysis using SWOT
4.3 Summary
5. References
6. Bibliography
CHAPTER I
INTRODUCTION
1.1. De nition of Brand
The de nition of brand in English dictionary is de ned as "trademark or distinctive name identifying a product or a
manufacturer." However, as the business and marketing view, it has more meaning, for example, according to American
Marketing Association, brand is de ned as "a name, term, sign, symbol, or design, or a combination of them intended to
identify the goods and services of one seller or group of sellers and to di erentiate from the competition". In other
hand, brand is de ned as the needs and wants of a target market using the marketing mix of product, price, place and
promotion (Wood, 2000). Moreover, brand is also de ned as a whole of values that enables a promise to be made about
a unique and welcomed experience (Chernatony, 2009). Therefore, brand is a complex multi faced phenomenon which
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includes evaluation, image, identity, values equity and consistency.
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1.2.
Importance of the Brands
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Brands are important for both to consumers and to the company because it gives bene ts and advantages such as;
To customer
To company
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Identi cation of the product

Ease in comparison
Self-expression through brand personality
Legal protection
Ease in segmentation
Loyalty
Brand Equity
1.2.1 Importance of the brand to customer
Brand bene ts to the customers by telling how good or bad the product is. This is based on customer's past experience,
advertisement and rumors. These will help the customer to lter out the countless items. Therefore, brand gives
customers the reason to buy and also wastes less time for customers to choose.
Moreover, brand might be used as a symbolic device. For example, a high quality product with highly price could be
bought by successful people.
1.2.2 Importance of the brand to company
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Brand bene ts to the company, most importantly, that is ability to build purchase con dence and improve customer
loyalty. The primary loyalty builders are the quality, reliability and performance. The role of the brand is also to protect
innovations, to "create a mental patent" and to identify the rm's technical know-how (Michael, King and Reast, 2001)
The bene ts of having a strong brand are; (Hoe er and Keller, 2003).
Having improved product perception,
Enhancing customer loyalty,
Strong marketing position in the competitive environment
Great trade
Increasing rates of margins
1.3 Aim of the project

In this dissertation, BMW is chosen as a case study considering its strong and famous brand in the automotive industry.
It manages to survive and to be surviving the recession period, and even increase the sales of product nowadays. To
analyse the factors and strategy enhancing the brand equity of BMW which further leads to the success of the brand will
be the main aim of this dissertation. Their brand strategy concepts such as brand image, brand elements selection, and
brand identity will be analysed and discussed.
1.4 Objective of the project

In order to achieve the aim of the dissertation, the following objectives are needed to be determined:
To analyse the branding strategy of BMW such as the choosing of brand elements, brand identity, brand image, brand
positioning , and brand equity.
To analyse the factors and strategy that contributed signi cantly to the success of the brand.
To analyse the internal and external business environmental of BMW to design the future strategy of BMW.
To present the possible future branding strategic recommendation for BMW.
1.5 Methodology of the project

The material will be mainly generated by secondary data.
secondary
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blog and news that are related to branding, and also information from the o cial BMW website will be used. Moreover,
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books andfew articles from the internetwill be used to generate the foundation
theory of branding
and some
examples
related
to
the
topic.
CHAPTER II
LITERATURE REVIEW
2.1 The Brand equity
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2.1 The Brand equity

Brand equity is one of the most important marketing concepts to increase the pro tability. This is because it is unique
ability to contribute directly without adding features or lowering price. Strong brand equity is able to; (Quarles, 2007)
Command premium prices
Capture and maintain market share
Support new line extensions
Attract investors
Fend o new competitors
Brand equity is de ned in many ways. However, it can be classi ed as 3 main perspectives which are nancial, brand
extensions and customer based. Financial perspective is the incremental discounted future cash ows that would result
from a product having its brand name in comparison to that would accrue if the same product did not have that brand
name. Brand extensions perspective is the bene ts that a successful brand can be used as a platform to launch related
products. The bene ts are the customer awareness of the brand which further will reduce the advertising cost and the
risk. Customer based perspective is the di erential e ect that customer knowledge about a brand that has on
consumer response to marketing activities and programs (Kotler and Keller, 2009). Therefore, brand equity can be
generally de ned as a set of assets connected to the name and symbols of the brand that adds to the value of the
product or service to a company and/or company's customers (Aaker, 1990). Brand equity is mainly considered on 5
types of assets which are;
Brand name awareness
Brand loyalty
Perceived quality
Brand associations
Intellectual rights
These measures allow assessing e ectively the value of the brand as a rm asset, and the examination of brand value at
regular intervals. Aaker (1999) suggests that these measures can e ectively be applied across a variety of products and
markets.
2.2 Brand knowledge

The brand knowledge is a key to create brand equity and de ned as awareness and image.
2.2.1 Brand awareness
Brand awareness is when consumer is aware of a brand within a purchase category and is a prerequisite for purchase
and for the formation of brand attitude. It consists of brand recall and brand recognition (Keller, 2003). According to
Aaker (1999), brand awareness can add value to the brands in many ways, such as;
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Placing a brand in customer mind
Become a barrier of new-entry product
Ensuring the customer about the commitment of the company of maintaining the quality
Providing leverage in distribution's channel
2.2.2 Brand image
Brand image is the impression in the consumers' mind of a brand's total personality. It consists of consumers'
preconception and of association for the brand (Keller, 2003). This is developed over time through advertising,
campaigns and consumers' direct experience. The components of the brand image can be classi ed into three groups
which are;
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The image of company: The image of company that the brand belongs to. 2
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The
image of the consumer: Consumers' ideas and feelings about the brand.
The image of the product/service itself: The image of the brand such as cheap, and innovative.
2.3 Brand resonance

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Brand resonances are characterized by a strong relationship between the consumer and the brand. The strong brand
resonance has bene ts to increase customer loyalty and to reduce the risks by competitive advantage. Building brand
resonance involves a series of steps, as seen in Figure 2.1
Figure 2.1 Brand Resonance Pyramid
(Source: Keller, 2009)
The rst stage is "Identify". It is based on customers' needs and perception.
The second stage is "Meaning". It is based on customers' understanding points of di erence and points of parity such as
performance and reliability.
The third stage is "Response". It is based on the responses and judgements of customers about the brand.
The nal stage is "Relationships". It is based on consumer loyalty with the brand. At this stage, customers feel a
connection or sense of community with the brand (Keller, 2009)
2.4 Branding strategies

Branding strategy generally aims in uencing the perception of customers about products and services to lead to
purchase or to use. Moreover, it a ects the customer to purchase the products at higher prices and maintain the
customer loyalty in the competitive market (Gelder, 2002). There are many forms of branding; however, primarily there
are manufacturer, private-label, price, and generic brands.
2.4.1 Manufacturer branding
This strategy used by the manufacturers to brand the product. It helps identify the producer of a brand at the point of
purchase. Therefore, this strategy requires the assistance of channel intermediaries for wide distribution, and the
promotional drive stems from the manufacturer in an attempt to persuade end users to adopt the brand, which in turn
stimulates channel members to stock and distribute the brand. (Chris, 1999)
2.4.2 Own-label / Private-label branding
Own-label branding means that brand is owned not by a manufacturer or producer, it is owned by a retailer or suppler
who gets its goods made by a contract manufacturer under its own label. This is also called private brand. This strategy
o ers many advantages to both the manufacturer and retailer. The advantage on manufacturer is that can use excess
capacity, and on retailers is that can earn a higher margin than they can with manufacturer branded goods and at the
same time develop organizational images.
2.4.3 Price branding
Price branding are produced by manufacturers in attempt to compete with private brands. The product is low-priced
and is further characterized by an absence of any promotional support. The e ect on the other brands in the
manufacturer's portfolio may be to stimulate promotional support to prevent the less loyal buyers trading over to the
low-priced o ering. (Fill, 1999)
2.4.4 Generic branding
This strategy avoids any promotional materials and the packaging only displays information required by law, so that,
brand is not widely recognized. However, this strategy uses the less expensive than branded products and sometimes; it
is 40% below the price of normal brands. Generic branding is largely used in area of fungible products such as
aluminum foil, recording media, hand tools, paper products etc.
2.5 Global branding

The global branding is very important to brands. Especially China is 'must win' market for global brands. There are
several reasons that the business contributes to the growing interest in global marketing, which are;
Perception of slow growth and increased competition in domestic markets
Belief in enhanced overseas growth and pro t opportunities
Desire to reduce costs from economies of scale
risk
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Need
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Recognition
of global mobility of customers
However, it is very di cult to build brand equity all over the world due to fundamental di erences across countries and
cultures. Critics claim that designing one marketing program for all possible markets often results in unimaginative and
in e ective strategies geared to the "lowest common denominator". Possible di erences across countries come in a
variety of forms as follows; (Keller, 2003)
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Di erences in consumer needs, wants, and usage patterns for products

Di erences in consumer response to marketing mix elements
Di erences in brand and product development and the competitive environment
Di erences in marketing institutions
Di erences in administrative procedures
A global brand must be consider four key areas. Firstly, it must be decided which markets to enter. This decision could
be similar to the factors a ecting the decision to enter any new markets. The attractiveness of the market and possible
competitive advantages must be evaluated. The second decision in developing a global marketing is to decide how to
enter the market. There are mainly three alternative ways to enter a new global market which are; (Barwise and
Robertson, 1992).
By exporting existing brands of the rm into the new market
By acquiring existing brands already sold in the new market but not owned by the rm
By creating some form of brand alliance with another rm
The third decision is to decide on the actual nature of the program such as the controversy over standardization versus
customization strategies. Finally, it must be decide on the most appropriate organizational structure for managing
global brands. After, these four decisions are considered the developing a global branding strategy must be made.
2.6 Place branding

Place branding is a new umbrella term encompassing nation branding, region branding and city branding. It is de ned
as a network of associations in the consumers' mind based on the visual, verbal, and behavioral expression of a place
(Zenker and Braun, 2010). Place branding aims especially to increase the attractiveness of a place. The successful
branded place, such as London, brings an attraction to new investment and creates a positive success to rms and
organizations. Therefore, it is more and more important to create branding strategies in branded place. The good
example could be Apple. Apple started to have retail stores aiming branded place over the world. The result was the
one on factor that bring to have more pro ts in global crisis by increasing of investment and customer communications.
2.7 Business environment analysis

2.7.1 Porter's ve force analysis
Porter's ve forces analysis is a tool to analyse the competitive strength and also to determine position of brand in the
immediate competitive environment. With clear understanding, the company can take the advantage of strength,
improve a weakness, and avoid taking wrong decisions. The ve forces are described as follows;
ve force.png
Figure 2.2 Porter's Five Forces Analysis
Competitive rivalry
For most industries, the intensity of competitive rivalry is the major determinant of the competitiveness of the industry.
It helps to determine the extent to which the value created by an industry will be dissipated through head to head
competition. The intense rivalry occurs when there are numerous competitors under the slow growth market condition
and high exit barriers. (Needle, 2004)
Bargaining power of suppliers
The power of suppliers in uences several factors to the rm. For example, if the suppliers are powerful, it can in uence
on the producing industry such as selling material at high price. According to Needle (2004) supplier power is stronger
when there are few suppliers and raw materials are highly speci ed.
Bargaining power of customer
The power of customer is the impact that customers have
the company.
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stronger, many suppliers with a buyer, the buyer sets the price of product. In reality, only few exist. However, according
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the buyer power will increase
when there are numerous
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to Needle
(2004),
competitors who o erssimilar
or substitute
products,
hence
the
customer
might
switch
from
a
brand
to
another
brand.
The threat of new entrants

The new entrants to the market will a ect the environment. For example, if it costs little in time or money to enter your
market, the new competitors can quickly enter your market and weaken your position. According to Needle (2004), the
treat of new entrants relates to how easy for a company to establish or develop a business under the same product
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market. The barriers of entry are considered to protect the high pro t level of rms in the market and inhibit additional
rivals from entering market. Barriers could be the capital requirement of entering, customer loyalty in the market, and
operating experience which is competitive advantage by existing rms.
The threat of substitution
The threat of substitution is the availability of a product that the consumer can purchase instead of the industry'
product. For example, tap water might be considered a substitute for Coke whereas Pepsi is a competitor's similar
product. Therefore, it depends on the relative price to performance ratios of the di erent types of products or services
to which customers can turn to satisfy the same basic need.
2.6.2 PESTEL analysis
PESTEL analysis is used to analyse the macro-environmental factors that will a ect the decisions of the any organisation.
It is a strong framework to set stages to develop speci c tactics to mitigate the risks involved in executing vision in
unfamiliar environment. PESTEL stands for Political, Economic, Social, Technology, Environment, and Legal.
Political
Political aspects is related to government intervention which in uence some of the regulatory in the business
environment of the company. For example, tax policy and labour law.
Economic
Economic refers to the major impacts on how the business operation and decision. According to Omar (1999), the
economical condition a ects the development of business cycle of the business and the cost to the business. For
example, rental cost, labor cost, cost of inventory and cost of maintaining and developing the market based on
economic growth and interest rates.
Social
Sociological aspects refers how to operate the strategy based on the characteristic and behavior of the people, and also
the movement of the people (Omar, 1999). For example, population growth rate and age distribution
Technology
Technology enable the company to remain competitive in domestic or foreign market, and even have a competitive
advantage in the business environment (Omar, 1999). It also enable the company to reduce cost, innovate the products
and improve the quality of product. For example, research development activity and automation.
Environment
Environment aspects is to determine how to operate relate to the surrounding environment and create bene ts to
business activity. This aspect covers the weather and climate change. For example, tourism, farming and insurance.
Legal
Legal aspect refers to government legislation in the environment of the company operate. For example, employment
law and safety law
2.6.3 SWOT analysis
SWOT analysis is a useful technique to identify internal and external factors of business. It stands for Strength,
Weakness, Opportunities, and Threat. The internal factors are classi ed as strength and weakness, while the external
factors are classi ed as threat and opportunity (Omar, 1999). The description and example of SWOT analysis are shown
in Figure 2.3;
Strength
Characteristic of the business that gives an advantage over others. For example, reputation, quality of products and
services, experience, etc
Weakness
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Characteristic of business that gives a disadvantage relative to others. For example, high product cost, lack of
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distribution
channel,
lack of expertise, etc
Opportunity
External chances to improve the performance in the environment. For example, emerging market, technological
development, new distribution channels etc.
Threat
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Threat
External elements in the environment that could cause trouble for the business. For example, new competitor, trade
barrier, increasing in cost etc
Figure 2.3 The Example of SWOT Analysis
By good understanding and analysing the SWOT analysis, it helps in matching the rm's resource and capabilities to the
competitive environment in which it operates, in other hands, it helps to gain the competitive advantage based on the
surrounding business environment.
CHAPTER III
COMPANY DESCRIPTION
3.1 General Overview
Bavarian Motor Works (BMW) is a German automobile, motorcycle and engine manufacturing company. It is
headquartered in Munich, Bavaria, and Germany. It also owns and produces the Mini marque, and is the parent
company of Rolls-Royce Motor Cars. BMW produces motorcycles under BMW Motorrad and Husqvarna brands.
The BMW is present in the world markets with 25 production and assembly plants, 43 sales subsidiaries and a research
and development network. The BMW rose sales by 14.2% to reach a total of 1,668,982 vehicles in 2011.
The brand value of BMW has been increasing by 10% in 2011 through negative economic turbulence. BMW now has
$24,623,000,000 of brand value, the highest brand value in automotive industry. brand value 1.pngbrand value 2.png
Figure 3.1 Most valuable brands in 2012 (Left)
Figure 3.2 Most valuable brands in automotive industry, 2012 (Top)
(Source: Milwardbrown,com, 2012)
3.2 Brief History

BMW was founded in 1917 with 'Rapp Motorenwerk' which is aircraft engine manufacturing rm. However, it was forced
to cease after First World War in 1918. Therefore, the company shifted to motorcycle production in 1923 and also
automobile production in 1928~1929.
In 1920s, the rst car, which successfully launched, was produced called 'Dixi'. It was based on Austin 7 and licensed
from the Austin Motor Company in Birmingham. Furthermore, in 1930s, BMW came up with the amazing 328 Roadster
which was a legend in the racing history. However, by the year 1959, the company had nancial crisis, so that, it had had
to be decided either to sell the company or to nd a way of carry on. It was decided to carry on and to try to cash in on
inexpensive small and medium size cars such as BMW 700. This plan was successful and helped the company get back
on its feet.
In 1966, the company bought the crisis-ridden Hans Glas GmbH with its factories in Dingol ng and Landshut. Both
plants are restructured, and over the coming decades the world's largest BMW plants takes shape in Dingol ng.
In 1994, BMW bought the British Rover Group (which at the time consisted of the Rover, Land Rover, and MG brands as
well as the rights to defunct brands including Austin and Morris). However, by 2000, MG and Rover brands were sold
due to incurring huge losses. Meanwhile, BMW retained to build the new Mini, which was launched in 2001.
In 1998, with long negotiations, the company obtained the brand and naming rights for Rolls-Royce Motor Cars from
Rolls-Royce plc. It was held entirely by Volkswagen until the end of 2002. When BMW Group took over full responsibility
of Rolls-Royce Motor Cars, the new Rolls-Royce plant and headquarters were built in Goodwood, in southern England,
and was scheduled to manufacture newly developed Roll-Royce models, new Phantome, in 2003.
In 2007, BMW Motorrad took over Husqvarna Motorcycles, a Swedish company. As it is a leading supplier of sporty o road motorbikes, the rm widens the product range ofUK
BMW
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BMW Group adopts the Strategy Number ONE with its four pillars, "Growth", "Shaping the future", "Pro tability", and
the BMW Group with two targets,

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and customers". It aligns
'to be pro table',and
'to enhance longPrint to technology
term
value in times of change'. The mission statement up to the year 2020 is clearly de ned as the world's leading
provider of premium products and premium service for individual mobility. (BMW Group, 2012)
In June of 2012, BMW becomes most reputable company in the world based upon on people's willingness to buy,
recommend, work for, products and invest in a company. Kasper Ulf Nielsen, a managing partner at Reputation
Institute, is said
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" BMW has earned the trust and respect of consumers all around the world though its consistent focus on delivering
high quality in all of its actions" (Jacquelyn, 2007)
3.3 Brand width

3.3.1 BMWBMW logo.png
BMW brand has stood for one thing since its inception, 'Sheering driving pleasure'. Sporting and dynamic performance
combine with peerless design and exclusive quality result in the unique appeal of BMW automobiles.
3.3.2 BMW Motorcyclesbmw moto logo.png
Premium is the key word for BMW Group which in uenced motorcycles as well. To develop and build the best
motorcycles regarding to technology, environmental protection, safety, and provide outstanding customer service, has
great success to the company.
3.3.3 MINI
MINI is a British automotive marque owned by BMW, which specialises in small cars. Over the years, it has changed
from the origin ideal. However, the foundation of small car, its character traits, have remained unchanged from its
inception in the 1950s until today. The current MINI range includes the Mini logo.png
Hardtop/Hatch/Convertible, Clubman, Countryman, and Coupe/Roadster.
3.3.4 Roll-RoyceRoll logo.png
Roll-Royce Moter Cars has been part of BMW Group since January, 2003. It is well-known brands in the world with the
most fascinating and luxury motor car par excellence. For over 100 years, the Roll-Royce brand have stood for truly
outstanding engineering, quality and reliability.
3.4 Sales Pro le

Based on BMW Group nancial annual report 2011, the overall sales volume increased compared to year 2009 and year
2010. The gure 3.3 shows the highlight of sales volume of BMW products and also the gure 3.4 shows the net pro ts
of BMW Group.
Figure 3.3 Total BMW Group net sales in 2007-2011
BMW group achieved best results with sales volume in 2011. The sales of BMW brand cars alone rose by 12.8% to
1,380,384 units, 21.7% to 285,060 units with MINI brand, and 30.5% to 3,538units with Roll-Royce brand. Moreover, sales
of BMW Motorcycles and Husqvarna brand rose by 3.1% to 113,572.
Figure 3.4 Total BMW Group net pro t in 2007-2011
BMW Group also achieved best results with net pro t in 2011. The net pro t signi cantly improved in 2010 compared to
2009 through the negative economic turbulence. This could be due to strong BMW brand as premium vehicles, which
caused strong demand in Asia and in USA in 2010. The net pro t in 2011 increased by 51.3 % to 4,907 million
compared to 3,243 million in 2010.
Figure 3.5 Key automobile market for BMW group
(Source: BMW Group annual report, 2009-2011)
The gure 3.5 shows the key automobile markets. It shows that the sales performance in Asia dynamically increased
since 2009 with BMW, MINI and Roll-Royce Motor Cars brand vehicles. The main contributor to this automotive segment
signi cant increased was the Chinese market, with sales up to 233,630 units, nearly double of year 2009.
3.5 Summary
Bavarian Motor Works (BMW) is a German company that is one of the most successful car and motorcycle
manufacturers in the world. It owns three of the strongest premium brands in the automobile industry and also strong
position in the motorcycles market with the BMW and Husqvarna brands.
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The company has grown with corporate strategy with prime objectives as striving for ecological and social sustainability
value-added chain, taking full
responsibility for products and
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resources. For these reasons, the BMW now has top-of-mind brand awareness in car category with around
$24.6 billion of brand value.

The brand identity of BMW is the ultimate driving machine. The brand slogan is associated as 'THE ULTIMATE DRIVING
MACHIN' in USA, Australia and UK and 'SHEER DRIVING PLEASURE' in international o cial website and many other
counties. Moreover, the consumer brand association for BMW might be 'heritage', 'stylish', luxurious', powerful',
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'elegant', performance' and fuel e ciency' to extent. In addition, BMW brand strategy consists of innovation, dynamism,
exclusivity and aesthetics which helps to boosts the development of brand identity.
CHAPTER IV
COMPANY ANALYSIS
4.1 Power of Brand
The BMW name, one of the oldest company in car market, is an important source of brand equity as well as it's the
German car. According customer based brand equity pyramid (Figure 4.1), the BMW is equally strong on the left and
right sides, and also from bottom to top.
pynamid.png
Figure 4.1 Customer Based Brand Equity Pyramid
The premium quality of its products in term of design, safety, services and performance enables a premium price
among its competitors. Furthermore, the strong brand equity o ers the competitive advantage by supporting new
market extension, and reducing the marketing costs due to high brand awareness and loyalty. Without the strong brand
equity, BMW could not dynamically increase the sales in Chinese market since 2009 which resulted a great pro tability
in 2011.
The key success factors to build strong brand equity for BMW are as follows;
BMW implemented a di erent marketing strategy in di erent socio-economic segments to build strong premium brand.
BMW achieved optimising between the purchasing behavior of consumers and the marketing mix to maximize sales to
premium segments. For example, BMW only concentrate on giving drivers pleasure whereas Mercedes-Benz,
competitive rivalry, also concentrates on the transportation like vans and trucks. In addition, BMW has shifted its
position as 'Ultimate driving machine' and 'sheer driving pleasure' by the emphasis on automobile performance and
taking emotional factors into serious consideration. Advertising is the communicative approach relevant to the motives
of the targeted customers (Young, 2011). It appeals the emotional factors to customer, which may directly a ect
customers purchasing behaviors. For example, in 1996, a sporty new Z8 convertible was featured in James Bond movie
called 'Golden Eye'. It had strong impression of BMW automobiles, which was rare and bold, captivating the luxurious
image of the vehicle. This led BMW to be strengthened the customer loyalty and helped prospective buyers to
congruently lean toward its cars. Moreover, in recent time, BMW was one of the biggest corporate supporters of the
2012 London Olympics. BMW supplied about 4,000 vehicles to advertise the 'green' automobiles like electric MINIs,
hybrid 5-Series etc. As the results, tra c on BMW's American Web site was up 26% between Olympics period, with more
than half of the total number being unique visitors (InAutoNew, 2012). Another example would be the rst luxury brand
store in Paris. It aims three objectives which are, rst, to increase the number of possible contact points with customers
and prospects, second, to increase the services and bene ts o ered in its retail channels, and third, to enhance the
retail experience at all touch points (Steve, 2012). Overall, BMW combines the premium marketing and emotional
marketing, for global marketing strategy, to be compensated with superior economic performance and a strong
leadership position in the automobile industry.
Innovation is also a key word to build strong premium brand in automobile industry. In a trend, the 'green' automobile
is getting popular due to increasing price of crude oil and global warming. BMW spends largest amount of money on
R&D to develop the technology like 'green' products. The BMW X6, the world rst SUV coupe, is an excellent example of
BMW innovation at work. It combines the attributes of an SUV, four-wheel-drive, with the on-road performance of a
sports car and also the stance of a coupe. It was released for sale in the second quarter of 2008 for the 2009 model
year, since then, it has upgraded using highest technology. The hybrid power train is one of the technologies used for
development of X6. It o ers the driver to bene t from the combination of both electric power and power of combustion
engine. Therefore, it is able to be driven completely free of CO2 in the electric mode, speed up to 40mgh. In recent time,
BMW supplied high technology automobiles to 2012 London Olympics that set an emissions standard of 120 grams CO2
per kilometer where as the U.K new car emissions average is 138 grams CO2 per kilometer. (AutoBlog, 2012)
In order to keep high technology, BMW has excellenceUK
training
for employees
and great promotion of young talent.
ESSAYS
(/)
According to BMW AR (2011), the BMW Group continued to be highly attractive
employer in 2011 based on numerous
improves the expenditure on

2 basic and further training
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Print and rankings
studies
table. Furthermore, BMW
to meet future
vehicle
development
requirements.
This
leads
to
conclusion
that
BMW
has
high
skilled
workers
for
the
development
of
new technologies. The BMW Group also allies with other companies to improve the technology. For example, BMW and
Toyota recently agreed to extend their cooperation to develop next-generation lithium-ion cells for the batteries used in
hybrid and electric cars. From this alliance, BMW will bene t further developing the 'green' automobiles, because Toyota
has been a leader in hybrids and also is leading an industry push to develop hydrogen-powered cars (John and Chris,
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2012). Meanwhile, BMW can help Toyota to reduce the weight of cars. The German company has taken a leading role in
carbon ber, a lightweight, super strong and expensive material that so far mainly can be found in high end sports cars
(Christiaan, 2012). The alliance between companies reduces the cost spending on developing technologies and help to
have similar technology standards with competitive rivalry.
Therefore, in conclusion, BMW creates value, competitive advantage and innovation through various marketing e orts
heavily committed in the premium segments to build strong brand equity
4.2 Business Environmental Analysis

BMW is in speci c sector of automobile industry that is luxury and exclusive. The pleasant or desirable features beyond
the necessary need has to be provided in this market. The additional cost can be re ected in the equipment,
performance , comfort, design, status and prestige that the product supplies. More business environment of BMW will
be analysed using Porter's ve forces, PESTEL and SWOT analysis as follows;
4.2.1 External factors using Porter's ve forces
The Porter's ve forces is common tool for describing the competitive environment of company. The model of Porter's
ve forces is seen as Figure 4.2 and is described as follows;
ve force model.png
Figure 4.2 Porter's Five Force Analysis for BMW
Competitive rivalry
The industry rivalry is considered to be very high in automobile industries. The one of reason could be the competition
of price in global market. However, the companies in the premium automobile industries like BMW do not compete on
price. The premium automobile industries are competing with the high quality of products, in terms of design, safety,
features and reliability, as well as strong brands. Although BMW is in premium automobile industry, the industry rivalry
is still considered to be very high. According to Kolter (2007), automobile market has very low customer loyalty in
general, even when satisfaction with a brand is high, because people like changing cars. Furthermore, the rival is
expected to increase more in the future based on possibility of new entrance to the market. For example, Toyota and
Honda are pinching BMW with their luxury segments (Lexus & Acura) in terms of quality product and reliability. For
these reasons, the premium automobile industry has very competitive environment. The BMW major industry rival
would be Mercedes Benz and Audi.
Bargaining power of suppliers
The major suppliers of BMW would be producer of components such as aluminum, plastic and steel. These types of
suppliers are various in the global market under near perfect competition, many suppliers and many buyer. In general,
BMW is expected to have the positive bargaining power of supplier by production network. The extensive production
network, that BMW possesses, has advantages in transfer pricing and moving expenditures to countries. Moreover,
BMW has won several awards for their production network and their relations to suppliers. Therefore, BMW has good
position when negotiating prices with suppliers. However, it can be very di cult for BMW to maintain full control of
suppliers as the increased cooperation between BMW and its suppliers.
Bargaining power of customer
The power of customers in automobile industry is considered to be high due to low customer loyalty and various
automobile companies in the market. However, the premium automobile industry like BMW seems to have higher
customer loyalty based on product and services. Customers often have high expectations when they buy a premium
car, so that, if the customers are not satis ed with a product, they will either not come back the next time or they will
spread a rumor via internet or friend-to-friend. Both scenarios are costly for premium producer and also damage the
brand image. Therefore, the brand contributes to customers are important to increase the customers loyalty which will
decrease the bargaining power of customers.
The threat of new entrants
In order to enter the premium automotive market requires huge amount of capital investment and nancial resources
due to pursue the business along with high technologyUK
to manufacture
or product automobiles that would compete
ESSAYS (/)
strongly with existing brands. Moreover, as customers are willing to pay a price
premium for the image of premium
2
capital is required on branding
that the consumers see the
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Print a lot of
brands,
products as being of equal
quality and
technological
standard.
However,
there
is
a
growing
export
potential
in
the
developing
countries
such
as China. This
export potential can lead to a signi cant threat to BMW, for example, if a Chinese competitor enters in the premium
automotive industry with a product as good as BMW's.
The threat of substitution
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The threat of substitute products in automotive industry are facing very high due to the existence of various
transportations like buses, trains, bicycle or even walking. Moreover, the automobile industry is continually moving
towards more and more sustainable products like hybrid cars as technology develops. However, BMW products are
more than just a mean of transportation. If a customer considers buying a car, the customer might be looking for
cheapest alternative which is not BMW products. Furthermore, BMW is already manageable and investing in future
threat of di erent types of fuel cell cars. Therefore, all in all, the threat of substituting products is considered to be low
in short-period and medium in the long-run, since new technologies in uence the automobile industry.
4.3.2 External factors using PESTLE analysis
Political factors
The political factors, that BMW concerns, are mostly the emission of CO2. The current standard of carbon emission in
Europe, which is the largest market for BMW, prescribes car manufactures to ensure that their new car eet does not
emit more than an average of 130 grams of CO2 per kilometre (g CO2/Km) by 2015 and 95g by 2020 (European Union
Environment, 2012). Moreover, BMW's second and third largest market, the US and China, are enforcing emission
regulations in certain areas. The emission restrictions increase costs in the areas of development, testing and
manufacturing for BMW. Therefore, BMW has invested 'green' technologies as well as providing new technological
advances. For example, BMW has manufactured the hydrogen car in order to promote 'green' brand image which is
heightened in U.K with new technology, called 'E cient Dynamics', and the new campaign, 'Less emission and more
driving pleasure'.
Economical factors
The economical factors are very important because it a ects the customer purchase behavior and also consumer's
ability to gain credit. BMW is in a premium price market which may cause higher risks related to both the customer
purchase behavior and consumer's ability to gain credit. For example, BMW made very low pro tability in negative
economic turbulence, year 2008 and 2009. The global economic seems to recover since the second half of 2009.
However, the sovereign debt crisis plagues the Euro zone since summer 2011. According to World Bank (2012), the
world GDP growth rate grew 4.3% in 2010 and 2.7% in 2011. In addition, the major markets for BMW have the GDP
growth rate of 1.6% for Europe, 1.7% for U.S and 9.1% for China in 2011. This leads the BMW Group to focus in Chinese
market to increase the pro tability rater then Euro zone.
Another factor regarding the economic climate is the currency. As BMW is continuously globalisation, currency risk is an
important topic for BMW Group in the future. For example, BMW lost 517 million Euros due to adverse currency
uctuations and increasing raw material prices in 2007 when the dollar fell against the Euro. To reduce the currency
risk, BMW has increased production facilities in its major markets, especially China. This means that BMW is able to
spend the revenue in the same currency. However, BMW will not be able to perfectly match its revenue with its costs
because not every car model is produced everywhere. The main currency takes place between both Euro and US Dollar,
and Euro and Renminbi, since BMW has large revenue from US and China operations, but not correspondingly high
costs. The current weak Euro makes the exchange rates to a major concern for BMW.
The price of crude oil and raw material is also major determinant for the economic outlook of the BMW Group. It is both
re ected in the price of manufacturing and in the demand for products. The demand for products is changing to fuele cient vehicles in order to o set the rise in fuel prices and higher road tax. The price of both crude oil and raw
material is expected to rise in the future due to the increasing demand from emerging market.
Social factors
BMW has diversi ed in many di erent markets and countries dealing with di erent cultures, expectations, values and
incomes. Therefore, a winning formula in one country is not necessarily working in another, However, the environment,
'green' product, is concerned more and more important role especially consumers in the US and Europe. BMW reacts to
their customers with increasing focus on hybrid cars, dual fuel engines and in general more fuel e cient cars.
Furthermore, in the long run BMW is expected to provide innovative solutions to environmental points.
The demographic is another social factor that is yielding new opportunities to BMW. For example, the middle-class in
China is growing estimated more than 300 million and hence new big target segments evolve (CNNMoney, 2012).
Technologies factors
UKESSAYS (/)
The technology is a key point for automobile industry because the demand of products in automobile industry is safe,
performances and environmental.
2 have spent lots ofmoney

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Print
innovative,
high
Therefore, many companies
on their
research
and
development.
According
to
Korzeniewski
(2012),
BMW
and
Honda
spend
largest
amount
at
5.5%
of their
total revenue on R&D and followed by VW at 5.4%. This leads to conclusion that technology is an area where it is di cult
to gain competitive advantages. As BMW's R&D has large amount of their total revenue, BMW has managed to get an
advantage in the production of engine, resulted winning several 'engine of the year awards' (BMW AR, 2011). Moreover,
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BMW is at good position on environmental products by researching dual fuel engines, hybrid electric cars and hydrogen
driven cars. Their latest technological advances are showcased by Formula 1 car, which has the very latest technology
concerning engines, safety and performance.
Environmental factors
In 2011, BMW achieved to remain the automotive sector leader for the seventh consecutive year in the Dow Jones
Sustainability Index, which rates environmental friendly companies. BMW reduced both consumption of resources and
emissions per vehicle produced by an average of 8 percentage points. In terms of resource e ciency, the average
improvement since 2006 has been 32% (BMW AR, 2011). In addition, BMW clearly understands that the demand for
alternatively powered vehicles using electric or hybrid technology is growing and also the premium brands of the future
are being increasingly de ned by their degree of sustainability. Therefore, BMW spends lots of times and money to
develop the less-polluting cars as well as the developing environmental friendly fuels for the future, example, electric
power, and hybrid power and hydrogen engine.
Legal factors
Compliance with the law is one of the basic prerequisites for success. BMW needs to consider current law for wide
range of activities around the world. The growing in globalisation for BMW Group increases the large number of
complex legal regulation to expose the risk of laws being broken. For example, the BMW Group is exposed to the risk of
warranty claims, product liability claims and other legal disputes which are typical for the sector or which arise as a
consequence of realigning our product or purchasing strategy to suit changed market conditions (BMW AR, 2011).
Therefore, the Compliance Organisation for BMW Group ensures that its managers and its sta acts in a lawful manner.
Moreover, the BMW group has adequate provisions to cover any such claims. The high quality of product also helps to
reduce the risk of laws. At the momemt, the BMW group is not currently involved in any court or arbitration proceedings
which could have a signi cant impact on its nancial condition (BMW AR, 2011)
4.2.3 Internal and external factors using SWOT analysis
The SWOT analysis analyses the both external and internal factors of BMW. It is used to manipulate the strategic
ndings in order to identify which areas are particular interests for BMW. The table 4.1 shows the sum up of SWOT
analysis and is described as area to develop in the long-period (Threats/Strengths & Weaknesses/Opportunities),
exploitable opportunity (Opportunities/Strengths) and Serious threats (Threats/Weaknesses)
Strength
Strong brand equity
Strong marketing communication
Skilled labour force
Strong R&D due to huge percentage of its revenues, which is the highest in the industry
High performing products
Powerful distribution network and relation with supplier
Weakness
R&D costs due to di erent economies of scale to volume producers
Shipping cost of two brands, Mini and Rolls-Royce, from Britain to emerging market
Opportunities
New technology in automobile
Innovation and alliances (Hybrid cars)
Entering new markets where the country is developing
New products and segments
Threats
UKESSAYS (/)
Extremely high competition for customers and resources
Print
New
legislation
(/myaccount/)
Volatility
in price of raw material
Currency
Copyright infringement
Table 4.1 SWOT analysis of BMW
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Areas to develop in the long-period (Threats/Strengths &

Weaknesses/Opportunities)
The external threats are able to be reinforced by strengths of company. Moreover, weaknesses are able to be improved
by future opportunities to create more favorable situation. Both combinations will be described for BMW but either of
them should not be major priority to work in short-period, rather BMW should keep these combinations in mind for the
future.
New legislations, for example, increased emissions standards or taxes for emission, are a threat to company's
pro tability in the automobile industry. However, BMW is able to easily turn this into advantages against competitors
due to the strong R&D within the area of 'green' driving.
The volatility in price of raw material is non-predictable for the company. However, as the BMW is strong relationship
with suppliers, the negotiation can be made on reasonable price.
The currency is major concern for such a globalised company like BMW. However, BMW brings down the currency risk
through, for example, natural and nancial preparation as the BMW has strong R&D and nancial department.
BMW has the great opportunity to enter emerging markets where growth prospects are good, i.e. BMW made great
pro t on Chinese market in 2011 and it is still growing on pro tability. However, the two of its brands, Mini and RollsRoyce has weaknesses on the product network to emerging markets. Mini and Rolls-Royce is manufactured in Britain
which may cause the high cost of both shipping and inventories. Therefore, MINI and Rolls-Royce has to develop into a
close market contact to reduce the cost of both shipping and inventories.
BMW has the great opportunity that for charging premium prices though its valuable brands. It will increase a higher
margin to the company. However, the automobile industry is extremely competitive environment, so that, it might
increase threats as well. Moreover, BMW is only involved in the premium segment of automobile industry which is
di erent economies of scale as volume producers. This causes the high costs on R&D and therefore, has weakness of
relatively higher cost associated with each of their cars.
Exploitable opportunity (Opportunities/Strengths)
The combination of strengths and opportunities yields the immediate exploitable opportunities for the company.
The Chinese market is now the biggest single market for automobile industry. Therefore, the utilization of strong brand
image and strategic alliances with Chinese partners, BMW should be able to bene t from the opportunity, example of
increasing market share. Moreover, the demographically changes in emerging markets lead to a growing middle class
which is a core market segment for BMW. This opportunity can be explored by drawing on strong brand image and
market knowledge of the company.
The demand of either fuel e cient or 'green' fuel cell automobile is increasing due to the increases of oil price. This
environment may be posing an especially big opportunity to BMW since they have strong R&D and skilled labours to
lead ahead both fuel e cient and 'green' fuel cell automobile in the industry.
Serious threats (Threats/Weaknesses)
The combination of threats and weaknesses should be the major area to concern for BMW. It will damage the
company's pro tability and the brand image sooner or later, so that, BMW has to be dealing immediately to protect
from serious threats.
The copyright infringements become a big threat for BMW, since their growth in emerging economies. There is no
obvious way to solve the problem but it can be reduced by laws against copyright infringements.
Euro Crisis is another big threat to the company. BMW said" "higher personnel costs, increased expenditure on
development and new technologies, intense market competition and the higher baseline of the previous year's record
second-quarter earnings all contributed to the lower earnings gures in 2012" (RTE new, 2012). Moreover, Euro Crisis
may a ect the China in the future although the earning is, nowadays, supported by increasing in Chinese market.
The politic aspect in emerging economies is a threat to the company's operations. However, BMW cannot leave out the
chance to grow in emerging economies, since the earning is supported by emerging markets.
4.3 Summary
Print
UKESSAYS (/)
(/myaccount/)
The BMW is one of the oldest and German automaker being successes to build strong brand equity. Their premium and
emotional
marketing leads the BMW Group to interplay synergy e ects between BMW products and services that
successfully communicate with target customers. Moreover, developing technologies under customer demands also
leads them to a strong position in automobile industry.
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The business environmental is analysed using Porter's ve forces, PESTEL and SWOT analysis. In general, BMW is not
assessed to be under threats. However, the currency becomes biggest threats to BMW. Therefore, BMW could increase
the inventories to keep same currency of incomes and outcomes to reduce the risk. Moreover, customer's demand is
changing to 'green' fuel cell automobiles. BMW spends large amount of money on R&D and also allies with competitive
rivalry to develop the technology to meet customer's demand.
The economic seems to be recovering from the nancial crisis. However, Euro zone is still struggling with debts.
Therefore, BMW should consider increasing the pro tability in the emerging markets, especially in China. The Chinese
market is rapidly growing; GDP has grown 9.1% in 2011, as well as the middle class consumers.
The emission regulation of Co2 is reducing against laws. The new car should emit no more than an average of 130g/km
by 2015 and 95g/km by 2020 in Europe. The U.S and China are also enforcing emission regulations in certain areas.
Therefore, BMW should invest 'green' fuel cell in the area of production and products. The BMW automobiles supplied
to 2012 London Olympics are good example of fuel-e ciency and 'green' automobiles.
CHAPTER V
CONCLUSIONS AND FUTURE RECOMMENDATION
5.1 Conclusions
5.2 Future recommendation
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A Case Study On Bmw Marketing Essay

A Case Study On Bmw Marketing Essay

II. Literature Review

A Case Study On Bmw Marketing Essay

2.4.4 Generic branding

III. COMPANY DESCRIPTION

IV. COMPANY ANALYSIS

A Case Study On Bmw Marketing Essay

Identi cation of the product

1.3 Aim of the project

1.4 Objective of the project

1.5 Methodology of the project

A Case Study On Bmw Marketing Essay

2.1 The Brand equity

2.2 Brand knowledge

2.3 Brand resonance

A Case Study On Bmw Marketing Essay

2.4 Branding strategies

2.5 Global branding

A Case Study On Bmw Marketing Essay

Di erences in consumer needs, wants, and usage patterns for products

2.6 Place branding

2.7 Business environment analysis

The threat of new entrants

A Case Study On Bmw Marketing Essay

A Case Study On Bmw Marketing Essay

3.2 Brief History

the BMW Group with two targets,

A Case Study On Bmw Marketing Essay

3.3 Brand width

3.4 Sales Pro le

$24.6 billion of brand value.

A Case Study On Bmw Marketing Essay

improves the expenditure on

A Case Study On Bmw Marketing Essay

4.2 Business Environmental Analysis

A Case Study On Bmw Marketing Essay

2 have spent lots ofmoney

A Case Study On Bmw Marketing Essay

Extremely high competition for customers and resources

A Case Study On Bmw Marketing Essay

Areas to develop in the long-period (Threats/Strengths &

A Case Study On Bmw Marketing Essay

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