Introduction
BMW is one of the most recognized brands in the world. It is at the echelon of the
automobile industry, producing products that are known for a combination of quality,
utility, and style. Customer segmentation is a management factor that all companies
should consider in their marketing strategy. This case study analysis attempts to examine
the BMW brand and its approach to market segmentation to expand its automobile
sales.
BMW Case Study Summary
BMW developed into an international automobile company after World War II and
achieved tremendous success by the mid-20th century. In 2012, it had international sales
exceeding $106 billion (Kotler & Keller, 2016). The BMW is an instantly recognizable
symbol, a tribute to the company’s early days as an aircraft manufacturer. Originally,
BMW attempted to appeal to baby boomers, producing sports sedans that were
luxurious and demonstrated high performance.
This became the 3, 5, and 7 series which were a similar design in different sizes. At the
beginning of the 21st century, as consumer needs shifted, BMW began to introduce a
wide variety of other vehicles, ranging from premium SUVs to convertibles and roadsters,
as well as cheaper compact cars in Series 1. BMW offered options to family-oriented
consumers, wealthy conservatives that sought luxury, and those needing bigger cars for
outdoor activities, as well as those seeking highly flamboyant vehicles.
BMW Case Study: Defining the Issue
BMW utilizes various advertising tactics and methods but has continued to employ the
tagline “The Ultimate Driving Machine” since 1974. It has seen a steady increase in sales
in the US and focuses on emphasizing quality rather than status. BMW consumers
usually demonstrate loyalty, but the company seeks to attract new customers. The
marketing issue for investigation is whether BMW adequately segments the consumer
base and how well it employs marketing to each group. BMW’s marketing strategy will
be examined, and recommendations provided for potential improvement.
Consumer Segmentation
BMW generally uses a mono-segment marketing position that appeals to a single
customer segment of relatively wealthy individuals. Most of the automobile lineup which
BMW offers consist of luxury vehicles, and even its Series 1 is priced at the higher end of
the mid-range sedans. The company simply does not offer budget vehicles that may be
appealing to individuals and households with income below the upper-middle class.
Despite this, BMW most likely uses a post-hoc segmentation approach which analyzes
marketing data after sales to determine its customer clusters and category management.
Segmentation is based on consumer preferences, which consists of product evaluation.
In an automobile, this includes aspects such as price, performance, ecological features,
and reliability. These help to shape criteria that are used during automobile selection.
The preferences are vital in constructing the additive value function which is a major
method of determining utility for various customer segments (Liu, Liao, Huang, & Liao,
2018).
As mentioned in the case study, BMW offers a variety of cars that may fulfill the distinct
needs of its consumers. Each of the car types it offers such as sedans, SUVs, or roadsters
all have several vehicles in the series which gradually increase in price and feature
offering. BMW actually segments the premium market by finding a balance between
purchasing behavior and marketing mix and responding appropriately to value and
consumer trends. However, the brand does not compromise and cater to most segments
but adopts a marketing strategy that focuses primarily on a premium target market
(Yuying & Qingrun, 2018).
The primary consumers of BMW vehicles are men aged 30-50 with higher levels of
income. This segmentation works for BMW as it attempts to maintain its status as a
luxury car manufacturer. With BMW combining luxurious superiority with performance
and reliability, the company positions itself to appeal to upper-class customers that will
appreciate the masterpiece and symbolic nature of its highly technological automobiles.
Therefore, BMW establishes a particular value to its product which is reflected in both
pricing and marketing strategy.
BMW Marketing Strategy
BMW focuses its marketing efforts primarily on premium segments with the purpose to
define luxurious brand identification of its vehicles. The focus on affluent customers in
the majority of its marketing for the 3 through 7 series has demonstrated the success of
this approach. BMW positions itself as a leader in the industry through innovation. This
may range from clean energy engines to complex electronic systems in its cars. The
company builds its value and competitive advantage on the innovation concept which is
reflected in its global marketing strategy (Dong & Koo, 2018). In other words, the
development effort, components, and performance that is input into BMW cars are
reflective of its value, justifying such price tags.
The luxury product market continues to demonstrate significant growth year over year,
despite any economic downturns in the last decade. Premium vehicles such as BMW
base their segmentation and marketing on the concept of scarcity.
Consumers purchasing luxury products are buying into the dream and exceptional
quality. BMW takes advantage of this by adopting a “masstige” approach, combining the
prestige of its automobiles with mass marketing strategies to achieve a high level of
sales. Premium products directly impact the psychological concepts of self-esteem and
social recognition. The consumption and possession of premium brands are associated
with pleasure and a range of other emotions which consumers pursue as part of
increasing or upkeeping their social status (Chandon, Laurent, & Valette-Florence, 2016).
Based on this, BMW began to test a new slogan of “sheer driving pleasure” in limited
markets to attempt the transition of marketing focus from performance alone to the
emotional appeal of its luxury brand. While the iconic “ultimate driving machine” may be
successful, it may be viable for BMW to eventually change its slogan. The current slogan
appeals to its primary demographic of wealthy men but fails to capture other market
segments such as women, young adults, and those without such great enthusiasm for
cars. The emotional marketing approach is closely relatable with individualism, a coveted
value for United States consumers.
Emotional paradigms contribute to the cultural entourage and social constructs of a
vehicle (Lutz, 2015). By integrating its quality and performance into emotional marketing,
BMW can capitalize on its widely known brand and enhance consumer communication.
BMW can improve its marketing strategy and adopt new consumer segments by
combining emotionally sensual marketing with premium performance. The two concepts
are inherently synergistic and would allow for BMW to maintain a leading position in the
industry.
BMW Case Study Solution & Recommendations
In addition to using the emotional marketing appeal, BMW should seek to expand its
consumer segments. This is particularly important in light of potential economic
downturns and expansion into developing countries where average incomes are
significantly lower than BMW’s primary markets of North America and Europe. One
recommendation would be to expand its lineup to include more budget-oriented cars
that maintain a similar level of quality, safety, and performance. This would be in line
with BMW transitioning its focus from class to performance as mentioned in the case
study.
It would attract a significant market segment from middle-class households who would
now be able to afford a BMW automobile which does not sacrifice much in terms of
performance, only luxury. However, this decision should be taken into consideration of
the long-term commitment of the company since it would dilute the premium status of
the BMW brand. Even now, driving one of the cheaper series of BMW is considered far
less prestigious than its luxury sedans. Expansion into new segments will present
challenges with both advertising and competition.
BMW should keep track of changing consumer trends, diversity, and social opinions,
basing its advertisement strategy on appealing to a wide variety of the market, even
those that may not be able to afford its cars. The BMW brand image is distinguished and
synonymous with prestige, quality, and performance. The company’s further strategy
should encompass significant investment into technologies such as clean energy and
self-driving cars, and reflect this in their marketing campaigns which position BMW as an
innovator in the industry.
Conclusion
BMW is a global automobile brand that produces and sells premium-level vehicles. Its
primary consumer segment consists of affluent individuals and the car lineup is designed
to meet the demands of this market segment. BMW bases its marketing strategy on
innovation and performance, taking advantage of its luxurious brand name to emphasize
quality and scarcity. While this marketing strategy has been successful, it may be viable
to modify the approach by using emotionally sensible marketing and introducing lowend vehicles with a similar level of quality in order to expand its consumer segments.
References
Chandon, J.-L., Laurent, G., & Valette-Florence, P. (2016). Pursuing the concept of luxury:
Introduction to the JBR special issue on “Luxury marketing from tradition to
innovation.” Journal of Business Research, 69(1), 299-303. Web.
Dong, H. B., & Koo, J. (2018). Conspicuous and inconspicuous luxury consumption: A
content analysis of BMW advertisements. Reinvention: An International Journal of
Undergraduate Research, 11(2). Web.
Kotler, P., & Keller, K. L. (2016). Marketing management (15th ed.). London, England:
Pearson.
Liu, J., Liao, X., Huang, W., & Liao, X. (2018). Market segmentation: A multiple criteria
approach combining preference analysis and segmentation decision. Omega, 83, 1-13.
Web.