VIDEO
CASE
11
"We're fortunate right now at BMW in that all of our
roducts are new and competitive," says Jim McDowll, vice-president of marketing at BMW, as he explains
MW's product life cycle. "Now, how do you do that?
'ou have to introduce new models over time. You have
o logically plan out the introductions over time, so
ou're not changing a whole model range at the same
e you're changing another model range."
BMW's strategy is to keep its products in the introuction and growth stages by periodically introducing
ew models in each of its product lines. In fact, BMW
oes not like to have any products in the maturity
r decline stage of the product life cycle. Explains
lcDowell, "If a product is declining, we would prefer
withdraw it from the market, as opposed to having a
trategy for dealing with the declining product. We're
.ind of a progressive, go get 'em company, and we
n't think it does our brand image any good to have
y declining products out there. So, that's why we
ork so hard at managing the growth aspect."
MW-THE
COMPANY
AND
TS PRODUCTS
.\1W is one of the pre-eminent luxury car manufacturin Europe, North America, and the world today .
.\1W produces several lines of cars, including the
series, the 5 series, the 7 series, the Z line (driven by
erce Brosnan as James Bond in Goldeneye), and the
w X line, BMW's "sport activity" vehicle line. In
ition, BMW is now selling Rovers, a British car line
hored by the internationally popular Land Rover
rt utility vehicle. It started selling Rolls Royce vehiin 2003. Sales of all the BMW, Rover, and Land
over vehicles have been on the rise globally. Highfile image campaigns (such as the James Bond protion) and the award-winning BMW Web site (where
sers can design their own cars) continue to increase
popularity of BMW's products.
RODUCT
LIFE
CYCLE
_fW cars typically have a product life cycle of seven
ars. To keep products in the introductory and growth
ges, BMW regularly introduces new models for each
its series to keep the entire series "new." For
stance, with the 3 series, it will introduce the new
model one year, the new coupe the next year, then
convertible, then the station wagon, and then the
rt hatchback. That is a new product introduction for
e of the seven years of the product life cycle.
McDowell explains, "So, even though we have sevenyear life cycles, we constantly try and make the cars
meaningfully different and new about every three years.
And that involves adding features and other capabilities
to the cars as well." How well does this strategy work?
BMW often sees its best sales numbers in either the
sixth or seventh year after the product introduction.
As global sales have increased, BMW has become
aware of some international product-life-cycle differences. For example, it has discovered that some competitive products have life cycles that are shorter or longer
than seven years. In Sweden and the United Kingdom,
automotive product life cycles are eight years, while in
Japan, they are typically only four years long.
BRANDING
"BMW is fortunate-we
don't have too much of a
dilemma as to what we're going to call our cars."
McDowell is referring to BMW's trademark naming
system that consists of the product line number and the
motor type. For example, the designation "328" tells
you the car is in the 3 series and the engine is 2.8 litres
in size. BMW has found this naming system to be clear
and logical and can be easily understood around the
world. The Z and X series do not quite fit in with this
system. BMW had a tradition of building experimental,
open-air cars and calling them Z's, and hence when the
prototype for the Z3 was built, BMW decided to continue with the Z name. For the sport activity vehicle,
BMW also used a letter name-the X series-since the
four-wheel-drive vehicle did not fit with the sedanoriented 3, 5, and 7 series. Other than the Z3 (the third
in the Z series) and the X5 (named 5 to symbolize its
mid-sized status within that series), the BMW branding
strategy is quite simple, unlike the evocative names
many car manufacturers choose to garner excitement
for their new models.
MANAGING
THROUGH
THE
PRODUCT
THE WEB-THE
WAVE OF THE
FUTURE
One of the ways BMW is improving its product offerings even further is through its innovative Web site
(www.bmw.com). At the site, customers can learn about
the particular models, e-rnail questions, and request literature or test-drives from their local BMW dealership.
What really sets BMW's Web site apart from those
of other car manufacturers, though, is the facility for
customers to configure a car to their own specifications
(interior choices, exterior choices, engine, packages, and
options) and then transfer that information to th
dealer. As Carol Burrows, product communi
manager for BMW, explains, "The BMW Web
an integrated part of the overall marketing
for BMW. The full range of products can be
interacted with online. We offer pricing option
Customers can go to their local dealership via
site to further discuss costs for purchase of a car.
is a distribution channel for information that
people access to the information 24 hours a day
convenience."
QUESTIONS
1 Compare the product life cycle described by BMW
cars with the product life cycle shown in Figure 11are they (a) similar, and (b) dissimilar?
2 Based on BMW's typical product life cycle, wh
keting strategies are appropriate for the 3 series? The 3 Which of the three ways to manage the product ill
does BMW utilize with its products-modifying the pr
modifying the market, or repositioning the product?
4 How would you describe BMW's branding
(multiproduct branding, multi branding, private branding
mixed branding)? Why?
5 Go to the BMW Web site (www.bmw.com). and d
car to your own specifications. How does this enable.
a customer to evaluate the product differently from
would otherwise be possible?