BMW MARKETING INNOVATION
Since the competition started to imitate BMW’s advertising messages of outstanding quality,
BMW decided to come up with a unique way of reaching its target audience. The company did
so by hiring Fallon Worldwide, and advertisement agency based in Minneapolis, MN, to come up
with a new campaign. Fallon developed the concept “The Hire” series. Fallon's responsibility
also included the way in which these movies were to be delivered to BMW's target audience. It
was also questionable whether the campaign should be the same throughout the world, or if it
should be localized to adapt to language and consumer taste differences. In order to attract highly
recognized directors, as well as actors, BMW was willing to spend a large amount of money.
In addition to coming up with a unique advertising campaign, BMW also wanted to
change their image. One of the goals was to make BMW look, not only cool, but likeable, which
the brand needs to do to combat negative perceptions some people have based on old associations
with the 80’s style yuppie arrogance.
Company Profile
BMW (Bayerische Motoren Werke Aktiengesellschaft) was founded in 1916 and has been
publicly traded since 1969. The company produces, and markets, a varied range of higher end
sporty cars and motorcycles. BMW has also manufactured the first passenger car running on
hydrogen ready for common use, although the production figures are limited by the lack of a
respective filling station net. In addition to cars and motorcycles, BMW operates an aircraft
engine division under the brand name of Rolls Royce.
The company has worldwide subsidiaries and manufacturing plants in Germany, Austria,
the UK, the USA, Mexico, Brazil, South Africa, Egypt, Thailand, Malaysia, Indonesia, the
Philippines and Vietnam. The company also operates its own financing company, which offers
financing for vehicles. Automobiles accounted for 78% of 2000 revenues; vehicle finance leasing,
18%; motorcycles, 3% and other, 1%.
This
case was prepared by Martin Hellhake, Fabian Henault, and Josh Jacob of Temple
University under the supervision of Professor Masaaki Kotabe for class discussion rather
than to illustrate either effective or ineffective management of a situation described
(2002).
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BMW's Revenue Sources
80%
70%
60%
50%
40%
2000 Revenue
30%
20%
10%
0%
Auto
Motor
Cycles
Finance
Leasing
Other
Marketing Overview
The majority of BMW’s success is attributed to the development of a consistent marketing policy,
the 'market niche' strategy. The company has built its brand on four core values, which are:
Technology
Quality
Performance
Exclusivity
BMW has maintained these core values since the company’s inception. Coupled with WCRS
(BMW’s advertising agency since 1979), the company has adopted a consistent advertising
strategy. In addition to the message of these values being portrayed in advertising campaigns, the
company explicitly expresses one or more of these values in all BMW advertisements. However,
it is important to point out that BMW also relies on its sensitively to the environment, which is
clearly seen by how the company’s advertisements evolved in response to economic,
environmental and competitive changes.
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This design philosophy, which runs through every BMW, has been communicated
through a number of TV and print ads. The brand image has been built up by using over 300
color press advertisements, and more recently through a total of 64 different television
commercials. Throughout this campaign, BMW has remained consistent to its beliefs of focusing
on the substance of the cars themselves.
In addition to the high profile national color press and television advertising, individual
dealers are encouraged to run their own local campaigns. Local press, radio and bus
advertisements are all available from BMW dealer marketing. Additionally, brochures, price lists
and dealership point-of-sale materials are made accessible through the corporate office. BMW
encourages its dealers to make use of these services. Providing the dealers with a central source
for advertising, BMW ensures that all communications remain standardized as well as
maintaining BMW’s brand values.
BMW has embarked on a global advertising campaign. What differentiates this
promotion is the fact that it remains consistent throughout the company’s international
campaign across the European, USA, Asia, South Africa and the Middle East markets. In
over 15 countries there will be:
TV spots
Print advertisements
Mega-posters
Radio spots
Events
In all three James Bond films BMW, MGM and EON Productions Ltd worked together on a cross
promotion project. This was accomplished worldwide with TV commercials, print ads as well as
displays in BMW dealer showrooms.
BMW Film
The best new film series, by the most cutting-edge directors, are not playing at the local theater.
Instead, these films are accessible through your home computer, as well as your local BMW
dealership.
Since its launch at BMWFilms.com, “The Hire” (a film series consisting of five different
short films) has been singled out as the first high profile, big-budget, celebrity-laden Internet
marriage of advertising and entertainment. It has been reviewed, scrutinized, deconstructed and
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cited as evidence of the perilous future for traditional advertising. New York Times film critic
(Elvis Mitchell) called the series “a marriage of commerce and creativity, straddling the everdwindling line between arts and merchandising.” BMWFilms is simply the latest and possibly
the hippest Web site to make use of streaming video in order to lure prospective customers. Fast
cars, mysterious passengers, Buddhist monks, rock superstars, and sinister enemies are all part of
the film series, which are presented in installments by some of Hollywood’s top directors. These
films are being advertised on television the same way that movie trailers are advertised; the
difference is that instead of the catch phrase “coming soon to a theater near you,” this catch
phrase reads “see it only on BMWFilms.com.”
Actor Clive Owen (star of the acclaimed British film "Croupier" and, in the opinion of his
growing legion of fans, the next James Bond) is “The Hire” in the series title, a skilled mercenary
driver who seems to specialize in risky assignments. While he is certainly a smooth operator
behind the wheel (very “James Bond” like), it is always the Ultimate Driving Machine that saves
the day. The car is definitely the star of the show.
Each episode features a “driver” (in a BMW, naturally) who is on a mysterious nighttime
mission along with a mysterious passenger. Examples include one incident where the driver is on
the run with a small Buddhist boy, to another episode that has an arrogant superstar diva (played
by Madonna) desperately wanting to escape the swarm of the paparazzi.
Filmgoers, thrill seekers, and potential customers have the option of watching the
video using Real Video or QuickTime video players. Another option is to download the
BMW Film Player, a fairly simple process offered through the BMW web site, which
turns the computer screen into a miniature personal theater complete with “DVD quality”
pictures and sound. Installing this player allows the user to download and view the video
on the full computer screen while offline. In addition to the full-length videos, BMW
also offers trailers for those customers with slower modem connections. These trailers
allow viewers the ability to have a “quick peek” at the films.
The numbers of viewers to the site are souring each week. One week following the
advertising blitz of the web site films, traffic to the site was up 55% to 214,000 unique visitors
compared to only 138,000 the previous week. (according to Web measurement, firm Nielsen/Net
Ratings) This tremendous leap made BMWFilms one of the Internet’s fastest growing sites.
The films all have differentiating styles, however one thing that they all hold in common:
the majority of the action takes place in a BMW while the participants are in the middle of a car
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chase. There is no limit to the actual number of BMWs that you will see; one, two, three, even
more Beemers are seen speeding down alleyways and streets, screeching around corners.
BMW did not randomly decide to initiate a web based advertising campaign. The
company clearly did its homework. It is a well known among advertising firms that over 85% of
potential car buyers will conduct most (if not all) of their initial research on the Internet before
they make a final decision on a purchase. Therefore, BMW has made it convenient for shoppers
by adding a link to their film site to BMWUSA.com. This site gives consumers basic information
about the car(s) as well as the location and phone number of the local dealerships.
Given that the average BMW automobile starts at approximately $30,000, the company’s
decision to design a classy film series, which can be viewed on a high-speed Internet connection
by an upscale, mostly male audience, is clearly targeted.
The simple concept of these films – BMW wants to sell cars!
Film concept
In the spring of 2000, two factors were on the table at BMW. The first was concerns over TV
effectiveness, and the second was how to exploit the popularity of the Internet. BMW wanted to
come up with an entirely new branding campaign; too many competitors were copying the “look
and feel” of the BMW, the company needed to do something different to distinguish itself. On a
more basic level, BMW was growing more concerned with its ability to reach its core market via
traditional methods such as network TV.
The creative team of writer David Carter and art director Joe Sweet, had recently
completed a project for Timex with director Tim Burton. This marketing campaign incorporated
an Internet portion that featured short videos specifically shot for the Web.
The executives at BMW saw this as a way to differentiate the company from other
manufacturers. BMW wanted something done exclusively for the Internet, something not
only entertaining but also cinematic. A concept was born – a longer film that would be
shot in segments and distributed via the Internet as a series. This series would combine
product placement with entertainment. Most importantly, it would allow BMW to push
the envelope when it came to scripting the series. The Internet would allow the company
to show what a BMW can do when pushed to the limits, under extreme conditions and
circumstances. BMW would not be able to convey this type of advertising through
traditional TV ads, without a few hundred disclaimers.
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BMWFilms has accomplished several objectives; the most important being the
tremendous buzz in both the entertainment and business press. This was important to BMW,
since one of its goals was to make the BMW look cool, without the old association with the
1980’s style of yuppie arrogance.
A fact that was not prominently mentioned in much of the coverage of “The Hire” was
the core creative concept along with key strategic thinking, Web development, as well as several
scripts, all came from one source: Publicis Troupe’s Fallon Worldwide in Minneapolis. “I think
we’re reinventing advertising,” said David Lubars, Fallon president and executive creative
director. Mr. Lubars added “We’re not looking to make this a template, as though this is what
advertising is [going to be]. I think what technology affords you is that every client can get their
own customized media approach, and this was really right for this client.”
“BMWFilms.com is a good example of blurring the lines between entertainment and
advertising,” said Jarvis Mak, senior Internet analyst at NetRatings.
“The site combines
Hollywood’s intense car chase scenes and Internet video to deliver a new spin on product
showcasing,” added Mak.
“We think that a lot of the time when people view traditional advertising they view it
through a filter of disbelief,” said Jim McDowell, vice president of marketing for BMW of North
America. “When people watch entertainment or a movie, then they’re watching in an entirely
different way where they enjoy the fantasy, and hopefully remember it and share it with others.”
“We thought maybe instead of doing advertising we should be doing entertainment and doing
something fun and interesting on the Web,” McDowell said.
What if you do not have a computer, or if your computer is not hooked to a T1
connection? Never fear, BMW has already begun buying infomercial time on the Bravo and
Speedvision channels to showcase their “Hire” series.
Target Audience
Initially, BMW had no real idea to whom the films would appeal. BMW executives knew they
would have everyone from high school students to 7-Series owners as viewers. BMW’s guess
was that their central tendency would have been 25-year olds, with a median income of $100,000.
BMW and Fallon research indicated that many were tech-savvy, and had fast, reliable access to
the web. Most important, 85% of buyers had researched the vehicle on the web before stepping
into a showroom.
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Characteristics of the typical BMW Target Audience
Societal values are changing rapidly. Society will increasingly take its cue from Generation X'ers
and dot-comers rather than the baby boomers who have dominated its thinking for most of four
decades. Associated with that demographic shift will be a return to the appreciation of selfreliance and cooperation. Self-reliance because the traditional safety platforms such as Social
Security and pensions will no longer exist, and cooperation because it involves group action that,
in turn, is the optimal strategy for the use of scarce resources. Family issues such as long-term
health care, day care, and anti-drug campaigns will remain dominant issues up until the end of the
decade.
Generation X and dot-com will have major effects in the future. This 30-something
Generation X cohort will be recognized for its entrepreneurial instinct since its members are
starting businesses at unprecedented rates. They are economically conservative, begin saving at
an earlier age, and seek the shallow information skimmed from a CNN or a USA Today rather
than absorb in-depth reporting.
Members of the dot-com generation, now entering their 20s, are proving to be even more
business-oriented. Twice as many say they would prefer to own a business rather than be a top
executive. By a factor of 5 to 1, they would rather own a business than hold a key position in
politics or government.
In summary, the corporate and business culture of the baby boomers is a mismatch for
these advancing generations that thrive on challenge and opportunity. It is more than cash that
they want. They understand the need for lifelong learning because that is the way life has always
been for them. In addition, as both customers and employees, they will demand even more
advanced telecommunications and net-based transactions. Consumerism is still growing rapidly.
Because consumers will increasingly have access to and information about pricing, services,
delivery time, and customer satisfaction through the internet, the consumer marketing battle will
see a halt in the decline of prices and a counter-prevailing shift to service improvement and
salesmanship.
In the end, however, fixed pricing will fall out of favor as goods and services are sold
through online auctioning. The proponents of the need for improved customer service will be
proved right. To quote the report, "as prices fall to commodity levels and online stores can list
virtually every product and brand in their industry without significant overhead, service is the
only field left in which marketers can compete effectively."
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Lorraine Ketch, the director of planning in charge of Levi's trendy Silvertab line
explained, "This audience hates marketing that's in your face. It eyeballs it a mile away, chews it
up and spits it out."
As expected, branded items with dominant reputations will remain powerful and in
demand.
Marketing Channels
Internet
Auto manufacturers have taken some innovative approaches to draw Internet users to their web
sites. However, it is surprising how quickly innovative becomes ordinary. Slide shows, flash
animation, and surround video are now commonplace on most manufacturer’s sites. In addition,
contests have become so common that the possibility of winning a free car may not be enough to
hold a viewer for more than a few minutes.
468x60 banners are sold on a run-of-site (ROS) basis, meaning, they will appear on every
search results page and on an equal rotating basis with other advertisers' banners. Advertising
rates for 468x60 ad banners are computed on a cost-per-thousand (CPM) impression basis and are
currently priced at US $10 to $15 CPM. Flashing banners and other methods cost slightly more
based on the website and technology involved.
For online ads, each advertiser is given password-protected access to Real-Time
advertising statistics, including how many impressions were served, how many click-throughs
were achieved, and what click-through rate was achieved. The industry standard for the click
through rate is anywhere from 0.25% to 2%, for sites like CNN, ZD Net, or Yahoo. Your actual
click-through rate will depend on the appearance of your ad, and what it offers in terms of a
marketing message and call to action. Just like running a television commercial during prime
time, or placing a full-page ad in "Time" magazine, these ads do not necessarily cause people to
pick up the phone and order a product at that very moment. Whereas a web-based process which
guides the consumer through a systematic process is to make a purchase more likely.
Specifically, these types of ads build name recognition for the company and establish it as a
major force in the industry. Then, when consumers are ready to buy, your company will come to
mind.
Television
The 1999 American Association of Advertising Agencies Commercial Production Costs Survey
revealed that the average cost of a 30 second national commercial for an automobile was a
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whopping $389,000. The percentages of viewers of MSNBC and Bravo who are in BMW’s target
income bracket constitute 20.5%. The percentage of viewers in BMW’s target age group (25-34)
is 26.5%.
Print
The advertising rates in a periodical like Time Magazine ranges from $250,000 for a full-page
mono to $360,000 for a full-page color ad. The average age of a Time Magazine subscriber is 45
and they have a median income of $69,000. This audience is of twice the age and half the income
of BMW’s intended target market. Time Magazine is one of the premier periodicals on the market
at this time.
DVD Promotions/Freebies
The cost of producing a DVD master is between $50,000 and $100,000—plus the cost of
producing any bonus materials. DVD player penetration in the US today is approximately at
25,600,000 units. This trend is supposed to increase and the DVD is supposed to become the next
VHS.
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Competitive Analysis
In 1997, BMW was in danger of losing its long-standing lead in the import luxury car segment.
Mercedes, Lexus, and Audi were coming on strong with great new products and new marketing
campaigns designed to dethrone BMW. Nearly half of those considering a luxury car rank "fun to
drive" as their number one reason for purchasing the car. However, for the first time since BMW
had been tracking its image, consumers ranked BMW at virtually the same level as Mercedes or
Lexus on attributes like "fun to drive" and "responsive handling."
BMW’s three biggest competitors have launched new advertising campaigns that
highlighted what traditionally had been BMW’s greatest strength: performance.
Therefore,
BMW was not able to distinguish itself anymore as the only company that boasted the
unparalleled standard of quality as before.
Mercedes
The range of cars from the giant company DaimlerChrysler is a traditional rival of BMW’s. In
2000, they sold 1,155,000 units and had revenues of 43.7 billion euro. Mercedes’ strength would
be its global presence, strong brand presence, product range and its technology leadership.
Mercedes marketing campaigns have always been subdued and low key. Mercedes allocates 25
per cent of its annual marketing budget to innovative Internet strategies, recognizing the power of
the Internet for delivering effective and precise marketing campaigns. When the car manufacturer
launched the new Mercedes C Class Sports Coupe, it positioned the online campaign right at the
top of its marketing mix. Joining in a winning partnership with MSN, another global brand with
similar values, Mercedes sponsored A-Ha’s eagerly awaited homecoming concert.
Lexus
Sparked by a decision from Toyota Chairman Eiji Toyoda in 1983 to challenge the best luxury
vehicles, Lexus has since grown into one of the world's most inspiring automobile companies.
Lexus is a division of Toyota Motor Sales, U.S.A., Inc. They are trying to leverage the Japanese
technology to add brand value to their vehicle. Lexus is America’s top selling luxury marquee.
The tough task for Lexus is to lose the ‘Cheap but Reliable’ Toyota image. The annual sales of
Toyota vehicles in the US have been on the order of $90-93 million in recent years.
According to Chris Conrad, Lexus’ national advertising manager, Lexus is targeting its
youngest buyers ever with the IS 300, roughly 75% male, between the ages of 35 and 40, married,
highly educated with annual household incomes of $100,000. The current average age of a Lexus
owner is 50, with the median age of the brand's hottest selling vehicle, the RX 300 sport-utility, at
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48. The estimated $32 million campaign for the car broke recently on national TV and will
continue for the next six months. Team One, El Segundo, Calif., created the two national TV
commercials. Five TV spots for regional dealer ad groups and two magazine ads. The agency
also created billboards and six commercials that will be projected on buildings in three cities.
Their online presence even for this campaign is limited, though Lexus is one of the
advertisers launching a rich-media campaign on the Excite Network, which includes WebCrawler
and Classifieds 2000.
Audi
Audi is an international developer and manufacturer of high-quality cars. In 2000, the company
sold more than 650,000 Audi models. The sales revenues of the Audi Group totaled 39 billion
Deutsch Marks. The Audi Group has slowly but surely been encroaching on the BMW and
Mercedes markets. They have been trying to promote the exclusivity of their cars.
Recently, Audi of America has embarked on its most ambitious online-marketing effort
ever. The European car importer kicked off the "Double Take" "advertainment" online
sweepstakes as part of its $25 million launch of the redesigned 2002 A4 sedan. Visitors to the site
can try to solve mysteries after viewing clues from three short episodes involving the A4. They
can also register to win prizes while learning about the car and its features. The grand prize is a
three-day trip for two to the Audi Driving Experience at the Panoz Driving School in Atlanta,
GA. The sweepstakes, run by Don Jagoda Associates, Melville, N.Y., allows prospects to enter
up to eight times. "The main thing is to educate and entice users to go to dealerships," said Steve
Glauberman, president-CEO of Enlighten, the privately -held Ann Arbor, MI, creator of the site
and sweepstakes.
Discussion Questions
1. Should BMW be using a uniform global promotion strategy?
2. Should BMW show their new marketing campaign on the Internet exclusively, or as part
of the media mix?
3. Implications of Marketing to Dot Comers and Gen X’ers?
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