BMW
Brand Audit
By:
Nik Jain
Moe Abusaad
Cassi White
Omar Ismail
Giovanna Walden
Chad Cosimin
1
Along with performance, class, and style, BMW has been a leading premium brand in the
automobile industry since 1917, and continues to appeal to a wide host of target groups around
the world with over 11 million Facebook fans, more than almost any other auto brand out
there. The key success factors are BMW’s design, handling and performance characteristics, and
innovative thrust of continually building the brand. A big recent step for BMW was capturing
the title of being the official automotive partner of the London 2012 Summer Olympics, which
BMW provided more than 3,000 vehicles to the games, successfully demonstrating its advanced
level of global brand management and further extending their positioning worldwide. BMW
strives to set new goals in the dealership experience, opening brand stores in London and Paris
this past year as part of BMW’s “Future Retail” program. The stores represent the first step
toward a new generation of brand experiences. Never short on innovation, BMW is also
planning to introduce the “I” series, which promises to bring new excitement and attention to the
electric vehicle market. Aimed to be fuel efficient and environmentally friendly and to compete
with the smart car and other hybrids, BMW hopes to reach that new market while keeping the
performance and luxury always promised by BMW. BMW, the bestselling luxury car in the US
in 2011, once again claimed the title of the bestselling luxury car in 2012. Compared to the
305,418 vehicles sold in 2011, BMW registered 347,583 vehicles for the year, an increase of
13.8 percent. For BMW, 2012 will be recorded as its best ever year of sales in the U.S. to
date. Brand Top 100 global survey is one of the best ways to determine the brand value of a
company. After losing to Toyota last year, Millward Brown, a market research firm who
conducts the survey, placed BMW back at first place for the year with the numbers as follows:
(in millions)
2
Building Resonance
BMW has built its brand resonance based on its consistency of producing top quality
luxury products and by targeting the right market. The user demographics are one of the
essential building blocks on how BMW has created the customer loyalty. Since BMW is part of
the luxury class, they target middle aged males who can afford it. On average, BMW customers
are approximately 46 years old, two-thirds of which are male, and are usually married with no
kids pulling in around $150,000 a year. BMW also has loyal customers because of the quality of
performance and style they pursue. Comparing BMW to their top competitors, Toyota focuses
on keeping their cars affordable, which leads to not being leading edge in technology and usually
cut corners. Striving for top quality and newest technology is what BMW is about and is why
their cheapest car starts at over $30,000. Also, BMW is widely known not only for its luxury,
but its performance, as reminded by their slogan, “The Ultimate Driving Machine”. Mercedes,
another top competitor, also offers top luxury cars with top notch performance; however, they
are all about numbers, horsepower, torque, etc. BMW’s performance not only comes from
what’s under the hood, but their handling, balance, and just overall complete performance
package. This is what differentiates them from everyone else and keeps their customers pleased,
and coming back for more, and is a key tool to building resonance. Compared to the rest of the
industry, BMW has a relatively high resonance from their customers to the brand name. When
compared to the industries averages, BWM claims one of the best customer retention ratings
pulling in 4th place at 59%, only 5% behind the leading Hyundai and a full 10% ahead of the
industry averages. Although not by much, BMW was also able to pull off better ratings than its
top competitors, Toyota and Mercedes.
In characterizing the positioning of BMW one must look at how aggressive the brand is
to attract sales, for example in market share alone BMW has moved up in market share from just
9% in 2006 to 42% in 2011 and took over as the top selling luxury car. The brand positioning for
BMW is characterized by a car that is driven but seems as if it is chauffeur driven. After all the
tagline “The Best Or Nothing” and “The Ultimate Driving Machine” does not come without
responsibility and sustainability. A key component to what BMW keeps intact is the ability to
stay new and innovative as well as introducing new product lines and models over time. BMW is
not a fan of having a product in the decline stage of the life cycle and if the product is on the
decline than they prefer to have that product completely withdrawn from its market. BMW is one
of the most prominent luxury manufacturers in Europe, North America, and the world today with
the ability to attract the consumers with its 3 series, 5 series, and 7 series, giving the consumers
the preference of a smaller model, medium model, and larger model to be able to pick from.
To keep products in the introductory and growth stages BMW introduces new models for
each of its new series, for example the 3 series might have the option of also being a sedan one
year, a coupe the next, and a convertible in another or maybe even a hatchback. That would be 4
products for 6 years of the product life cycle. BMW usually sees its production after 6 or 7 years
after the product is introduced to the consumers resulting in a positive outturn in sales growth
from year to year. In the global market alone BMW has a revenue of 69 billion compared to
Mercedes which is at 57 billion and has unit sales of 1.67 million to 1.26 million for
Mercedes. The position for BMW in China is number 2 but its position in the U.S. is at number
1 compared to Mercedes which is 3rd in China and 2nd in the U.S. behind none other than BMW.
3
The global aspect of BMW is what has driven the brand into a whole new aspect and is the
backbone in keep the success for their entire strategy.
Some of the major key points to the marketing of BMW results in the ability to be global.
Globalization plays a major role with the ability of BMW having overseas facilities and mergers
between automakers. The mergers including General Motors, Ford, Toyota, and Honda have
each helped BMW in operating in a global market place. Partnerships is always a good thing and
BMW knows how to get the most out of its mergers with going directly towards what is being
needed and asked for. Sustainability is what BMW is known for and prided on so they have to
feel as if they are secure and comfortable for working with other major companies. The key to
the strategy that BMW uses for the marketing is they know how the relationship works and
knows that many companies that merge come to a quick stop this is why they get what is needed
from the other companies but know that the other companies are going to want to move on and
expand. In regards to globalization and marketing, BMW’s main key component is still
innovation. Innovation is what keeps the brand successful and perceived as one of the best
companies not only in the U.S. but also internationally. In 2002 BMW received the OCI award a
prestigious award standing for “Outstanding Corporate Innovator”. BMW were the first
enterprise to ever win such an award and was known as an “Oscar” for innovation management.
It is not a coincidence that BMW is number one throughout the U.S. because the brand always
keeps innovating from year to year and has the drive that wants to keep the consumers coming
back forever. Innovation and globalization serve as the major keys for BMW and nothing is
going to change in that aspect as the brand as a whole will keep pushing to stay successful and
keep those two pieces as the core.
The ways to expand in the positioning of those two aspects would be to keep the
engineering of BMW as the main component, for instance BMW has a high quality of
engineering than usual production cars. While most other cars use robots or workers from low
economies of scale BMW uses the skill German labor force in enduring the safety and motor
sustainability of the vehicle which keeps the engine in a different type of class than other types
of makes and models. The company benefits from an educational system which gives basic
technical skills to a high proportion of the population. The relationship between BMW and its
suppliers is what has kept the long associations with the company, BMW really just has to keep
the repetition in strategy of quality engineering and enhancing that aspect for maintaining the
quality and sustainably of enhancing in that area to maintain the success already established.
How well has the Brand expanded into new markets or channels? How would you judge
its growth strategy?
Brand Expansion
All over the world, businesses are striving to globalize their market. BMW has easily
continued to internationally reach more customers with high quality and performance
automobiles by articulating global marketing strategies.
To expand a business globally and succeed in any foreign market, it is essential for a
company to conduct extensive research and analysis on many elements including: economy,
demographics, the cultural and sociological climate, market conditions, technological
environment, and the competitive market. The company must cater to the country’s needs and be
aware of the business environment in order to succeed internationally and achieve the best
results. A tool to utilize would consist of the marketing mix, and identifying strengths,
4
weaknesses, opportunities and threats. The price strategy, promotions, distribution channels and
products must all match with the targeted consumers.
BMW demonstrates leadership in their global marketing strategy by catering to the
premium markets through innovation. It concentrates on these premium segments to define their
luxury brand, selling well to customers with high standards for quality and performance, as
BMW stresses these attributes in their automobiles. Along with premium markets, it also
implements emotional marketing communication to directly affect the consumer purchase
behavior. Combining both of the premium marketing and emotional marketing strategies
constitute their advertising and global marketing strategy.
“Brand loyalty can only be established if a brand is able to connect with its customers on
an emotional level. From a brand management perspective, we see ourselves not only as a car
manufacturer, but also as a creator of emotion."
-Dr. Uwe Ellinghaus
-Director of Brand Management, BMW
This marketing strategy of premium and emotional marketing made its mark in superior
performance, high quality and strong leadership positioning in the automobile industry. This has
led them to establish the core competencies of their leadership in the global market, as well as
integrating Corporate Social Responsibility through economic benefits. CSR activities include
science and engineering education, as well as concentrating on preserving the environment. For
the past several years, The BMW Group has been ranked industry leader in the Dow Jones
Sustainability Indexes.
Expanding to more than 130 markets around the world in 2011, this held an astonishing
73% increase from 2010. Their global marketing strategy is continuing to succeed. One of the
larger and impactful places BMW has expanded to is China. Opening a plant in China is said to
be a wise move in that it was one of the largest markets worldwide with sales of over 35%
vehicles. It also expanded dealerships by 80 over the course of one year in 2011, setting it at 290
dealerships. BMW has 29 plant locations in 14 countries, and has a global sales network in more
than 140 countries. Not only has BMW expanded globally, but it exported 70% of its vehicles,
leading it to be named the largest automotive exporter to the non-NAFTA countries.
Growth Strategy
The global strategy of BMW is driven by building resonance and maintaining global
brand identity. It considers many aspects of its target consumers, broadening its consumer range,
and caters to the market on a stronger level. It is supported that the brand must be managed with
different priorities in each market it targets. This involves organizational structures to implement
resources for brand building, while supporting each market. To ensure the brand is positioned as
a premium brand globally, management must cater to the consumer differences while preserving
and representing the consistency of the global brand appearance. Since not all markets are the
same, and customer behaviors may vary between markets, it is agreed that concentrating on each
segment while representing the brand will specifically meet a market’s needs on a more
emotional and relatable level. The emotional marketing strategy BMW uses as well as the
premium marketing strategy enables it to take the lead in building essential consumer
relationships and resonance with the brand. This strategy is well thought out in that it caters to
the individual market, reaching more consumers in a stronger way.
5
Positioning
The BMW group is one of the most successful car and motorcycle manufacturers in the
world. BMW’s group activities will remain firmly focused on the premium segments of the
international automobile markets.
BMW’s mission statement: “the BMW Group is the world’s leading provider of premium
products and premium services for individual mobility.”
BMW’s focus on engineering excellence allied to leading-edge design continues to drive
successful, profitable expansion.
The key success factors are BMW’s handling characteristics, design, and innovative
thrust of the brand. As the official automotive partner of the London 2012 Summer Olympics,
BMW provided over 3,000 vehicles to the games, successfully demonstrating its mastery of
global brand management and further unifying its positioning worldwide.
BMW is also poised to introduce, the i series, which promises to bring new excitement
and attention to the electric vehicle market.
BMW is a strong player in the luxury car market. Some key competitors include; Audi,
Mercedes Benz, Infiniti, and Porshe. BMW’s highly innovative engineering and ability to make
that strong connection with consumers has made them outperform many of these companies. In
the chart below, we see that BMW is highly ranked in luxury and performance.
Key Marketing Activities
At BMW, emotional connection seems to be the biggest marketing tool they use. "Brand
loyalty can only be established if a brand is able to connect with its customers on an emotional
level. From a brand management perspective, we see ourselves not only as a car manufacturer,
but also as a creator of emotion.“-Dr.Uwe Ellinghaus (Director of Brand Management BMW).
A big marketing tool many companies use in today’s market is social media. BMW
introduced their own YouTube page and BMW TV, which displays numerous BMW television
ads and racing and driving videos of all of the company’s models. Many of their videos have
over a million views. BMW’s current page has over 13 million likes on Facebook. Their current
Facebook page display’s a lot of information about the mechanics of their automobiles as well as
reinforcement of the prestige of their product. BMW’s official Motorrad site gets very specific:
it’s a page and community dedicated to those who love riding high-priced motorcycles. This is a
blogging community for users of their motorcycle products. This is a great online marketing tool
for BMW because it creates a sense of community and creates a higher level of brand loyalty for
years to come.
In 2010 BMW embarked on one of its biggest branding campaigns to date. A new theme,
"The Joy of Driving," was integrated into every television, digital and print ad as well as event
and team sponsorships.
The "ultimate driving machine" slogan still appears in the ads, but the shift in emphasis
was apparent with copy in one of its print ads that read "At BMW we don't make cars, we make
Joy." This marketing campaign sticks true to what they are trying to accomplish; a sense of high
emotion between the product and the customer. They are trying to portray that driving a BMW
will bring you that joy you are missing.
6
This is a very general view of BMW brand architecture. This is a simple representation of
BMW groups brand elements and the levels of brand hierarchy. First of all, you see the BMW
group as the corporate brand followed by its family brands BMW, Rolls Royce, and MINI.
Below those you can see the individual brands for the following family brands and those include:
BMW: 1,2,3,5,6,&7 series (Sedans), Z series (Coupe sports car), M series (Coupe
Sports), and X series (SUV’s)
MINI: Cooper, Clubman, Hardtop, Paceman, Roadster, and Countryman
Rolls Royce: Ghost and Phantom
To step back and look at the BMW Group's brand hierarchy, Rolls Royce and BMW’s
are clearly sold as prestige brand high end products. Rolls-Royce is a very good example of
vertical brand extension. Rolls Royce is sold at a much more expensive price compared to
BMW’s and they are considered to be very classy vehicles. They are to serve the “elite”
customer base.
MINI on the other hand is the opposite. MINI is a small economy class vehicle originally
made by British Motor Company. MINI is sold as a low-end product and BMW always keeps a
fine line between its low end products and the high-end by never affiliating the two. They don’t
match in design, color, or even upgrades.
Just as it appears on the brand architecture above, BMW Group has its hand in the lowend automobile industry and also the high-end. With that in mind, what would be a good
direction for BMW Group to go? What can they do to further penetrate markets?
Changing the current architecture by adding a new vehicle family brand would not be a
good idea considering BMW group is already targeting the middle, high, and low class
consumer. In fact, adding a new family brand of vehicles could actually cannibalize from its
current sales no matter how which category it could be added to. Marketers say that low fit
extension always fail, but BMW is an exception. Years ago, BMW Group launched BMW
skateboards and kitchen sinks, which have proven themselves successful. By adding low fit
extensions BMW can increase revenue and at the same time not affect its current brand equity
7
for its other brands. BMW Group can also benefit by higher brand awareness with these low fit
extensions. When BMW Group decides to release these products, as it did with the skateboard
and the kitchen sinks, they are to be sold at an expensive price compared to products in that
category. With a low fit extension BMW can keep its top of the line and high end product
reputation even with “cheap” products.
New low fit extensions for BMW Group could include Rolls Royce Yacht product line
and sold as high-end Yachts. Yes, BMW Group has made marine engines in the past, but a yacht
could allow BMW to enter a whole new market in which it can do some severe market
penetration. The boat industry could open up BMW to a prosperous high end market. If BMW
group chooses to add a low fit extension, watches could make BMW lots of profits. Watches are
known to have a heavy profit margin and BMW Group could generate serious revenue through
this low fit extension. Though it is a low fit extension a BMW watch with a BMW dial has the
potential to raise brand awareness and to build equity. It will send a message to BMW Group’s
consumers that BMW has spanned its wings to different product categories and lines. The
watches would be sold alongside high end watches such as Citizen, Burberry, or Fossil watches.
To adjust its current architecture, BMW Group needs to add a selection of BMW X series
Hybrids. BMW is the only car brand that can handle a modification such as a hybrid. RollsRoyce is too prestige of a brand for a hybrid engine to even affect its sales. MINI is too cheap of
a vehicle for consumers to afford a hybrid engine and that leaves us with only BMW. Currently
BMW has its hands on hybrid 3, 5, and 7 series. Those are the only vehicles that BMW offers
with an option for a hybrid engine. By adding a line of hybrid SUV’s BMW can compete with
the popular escalade SUV hybrids and many others. Another down side to BMW Group’s brand
architecture is that BMW does not offer enough Product categories. BMW needs to have many
different products in precisely selected markets to build higher equity.
Recommendations
To build and manage equity for BMW, it is agreed that focusing on long-term strategic
objectives will make a difference. As the Director of Brand Management had noted, it is the
consumers that ultimately set the bar. These three factors are agreed to be the most important in
building and managing brand equity for BMW.
·
Reinforcing the brand’s performance and high quality in the context of its rapidly
expanding product lines
·
Develop and maintain its marketing competencies to compete effectively
·
Concentrating on the premium and emotional niche marketing to pursue the
markets on a more focused and targeted level
BMW is a prestigious brand that will continue to grow exponentially in sales and brand
loyalty. Their Joy campaign had a very high success rate. Perhaps maybe doing a new campaign
with a different positive emotion could be beneficial.
8
References
http://www.bmwgroup.com/
http://www.stealingshare.com/pages/BMW%20Brand%20Study.htm
http://annual-report2011.bmwgroup.com/reports/bmwgroup/annual/2011/gb/English/3010/report-of-thesupervisory-board-_.html
http://www.bmwgroup.com/e/0_0_www_bmwgroup_com/investor_relations/fakten_zum_unternehmen/_
pdf/BMWGroup_Corporate_Governance.pdf
http://www.autoevolution.com/bmw/
9