BMW- International Management & Research Study

Introduction:


Karl Benzin, has designed the first automobile i.e. BMW, equipped with Petrol engine in 1885, in Mannheim Germany. “Patent” for the same automobile has been received on 29 January 1886, and then the first production of Patented automobile was started in 1888 after an event when “Bertha Benz” his wife has asked for first long round trip in August 1888.

Bavarian Motor Works” is an abbreviation of “BMW”. One of the world’s most reputed automakers, well known for manufacturing of SUVs, luxury cars and passenger Cars,  provide a willing full and comfort driving. Bavarian Motor Works logo, represents “white propeller blades against a blue sky, reflects these origins”; its “blue-and-white color scheme also reference Bavaria’s blue-and-white checkered flag”. Last couple of decades, BMW, an automobile company have turned out to be the zone of luxury and performance standard at utmost of the above 55,000 brands. Among all of its luxury vehicles most of them share a common characteristic: the optimist of driving passion to make feel hilarious driving sense, when it is connected to the road. Under various of departments, Assembly, Plant Management, Human Resource and Facility and Information technology are the backbone of this automobile company.

The Era has emerged as the competitive time in the automotive world, as not only the BMW M3/M4 is in the chasing line, there are so many excellent cars to choose from. Among all the new competitors the biggest chaser to the new M4 series and other brands, is an optimist for this company, for their potential growth. Some of them are “Lexus RC F (BIMME)”, “Mercedes-AMG C63 S Coupe”, “Shelby GT350”, “Ferrari”. Apart from all other chaser the strongest and the most competitive chaser is “Cadillac ATS-V” series model. So now it’s not a blind goal game for BMW nowdays, as the competitors are at their peak of their level, so BMW has to benchmark the industry to grow its potential much more.

Now lets come with the scope of this report:

  • Study about the market structure existed in present scenario?
  • Potential market strategy that could be yield in India;
  • Market segment that need to be covered in Inda;

As automobile has proved its significance in our daily life, mostly in countries like, India, China etc, so it is a relevant study project to discover the market segment that need to benefited from a branded automobile company i.e. BMW.

LITERATURE REVIEW:


“Marketing strategy development often is one of the most important aspects of business, because it is necessary to achieve company goals, to organize activities in a focused and targeted manner.” Marketing Strategy address specifically how to act to achieve the desired result. (Chlivickas (2008)).

“Market strategy is aimed to adjust the market segments on which the organization plans to focus its efforts. These market segments differ in their needs and demands, the reaction to the marketing measures and profitability.” The organization must possess certain skills to be able to target its resources and energy at preparing these segments, where it could obtain the maximum benefits of competition. (Ramanauskiene (2008))

“Marketing strategy is one of the functional strategies of the company that collectively make up an overall business strategy. However, the value of the common marketing strategy, the business strategy, is very high, whereas the control key marketing relationships with companies are outside of the support functions – delivery of the goods to the market and sales.” (Virvilaite (2009))

“Marketing strategy must be competitive. Its primary purpose is to carry out offensive or defensive action creating a strong market position, as well as to secure the return on the reversibility.” (Porter (1998)). This strategy has explored by answering to two of basic queries: 1) Is it effective for Long Term competitive and its benefit, 2) Building an competitive benefit for a long period.

Fierce Market competition encourages companies to prepare marketing strategies and marketing plans. According to them, marketing management is systematically organized, which includes all corporate marketing activities of planning, implementation and control content.

Strategic Models:


Marketing businesses often use strategic models and tools to analyze marketing decisions. There are three main models that can be applied and used within a business to receive better results and reach business goals. These include:

  1.  Ansoff Matrix:

One of the most effective strategy model, the “Ansoff matrix”, which was invented by Igor Ansoff in 1965, is used in developing the strategic options for firm/businesses. Over the periods, it has been observed that among all others, the most commonly used tools for strategic option analysis “Ansoff Matrix” has been used due to its simplicity and ease of use.

Market Penetration:

  • It is derived for “sell existing products into existing markets”.
  • Market Penetration can obtained by:
    • With increase in share of the Market,
    • With increase in the frequency of Utilities,
    • With increase in frequency of usage;
    • With increase the increase number of quantity used, or
  • Penetration simply means, “Increased sales to present customers, without changing products in a major way.”
  • To defeat mature market’s competition, the company should have-
    • A promotional campaign,
    • An under processed and over pricing strategy which is for those competitors which are unattractive for market.

Product Development

  • It covers, to introduce New Product into Existing Markets.
  • The company improvement increases by maintaining “new products to current markets.”
  • Product Development can be achieved by-
    • Adding products features, product refinement (improvement)
    • A New generational product is being developed, or
    • New product is being developed for new market.
  • Development of new competitors require this strategy.

Market Development

  • This segment is used “to sell existing products into the new markets.”
  • This process can be marched ahead through,
    • Market in a Newly Geographical area,
    • Newly distributed channels,
    • New Product Packaging,
  • Pricing policy to cover various customer.

Diversification

  • This strategy used to sell new products in new markets.
  • It does not rely on its current position in current markets or either the company fruitful product or

So as stated above “Ansoff matrix”, visualizes your current strategic position and offers you to opt for next four possible routes.

If we are consider BMW with this Strategy, then we can find that the BMW need to develop a new product in large volume of market, and has to capture the Indian market in order to Penetrate the market. Its other competitors like Audi, Mercedes are in line to capture the market. So in order to capture the market, the product needs to develop the product and has to cover the market. So, this strategy theory is relevant in order to increase the market share of the BMW sales in India.

  • The Marketing Mix

Jerome Mccarthy, 1960, has designed the traditional method i.e. market mix and the 4 P’s is one of its associates. It is one of the means which is used in most of the businesses and by the Marketers to assist them to determine a product or brands.

 The various elements of 4 P’s are:

  • The Product– “The Product should fit the task consumers want it for, it should work and it should be what the consumers are expecting to get.”
  • The Place– “The product should be available from where your target consumer finds it easiest to shop. This may be High Street, Mail Order or the more current option via e-commerce or an online shop.”
  • The Price– “The Product should always be seen as representing good value for money. This does not necessarily mean it should be the cheapest available; one of the main tenets of the marketing concept is that customers are usually happy to pay a little more for something that works really well for them.”
  • The Promotion– “Advertising, PR, Sales Promotion, Personal Selling and, in more recent times, Social Media are all key communication tools for an organization.”
  • Porters 5 Force:

The model has 5 various areas which cover the combination of operating and competitive pressure in the overall market:

Why to use Porter 5 factor model:

  • Identify the competitive pressure associated with 5 force;
  • Determine the pressure of 5 force,
  • Determine whether the 5 competitive forces are favorable to earn profits.

The Five Forces are:


Ø  Current Players Competition:

  • Competition among the current players should be understood.
  • The competition is all about rivalry among the current player;
  • Existing competitors increase prices and the cost relating to the industry, workforce and advertisement of the rivalry competitors;

Ø  New Entrants Fear:

  • It means that “new entrants” are to be considered as a competition beginners;
  • New competitive pressure give rise to the new product range and influence in existing capacity ;
  • Bigger the new entrants indicates the severe (strict) competition.
  • Person entering in the Market may also influence the price limits. &
  • Existing players may suffer decrease in their existing profitability.

Ø  Threat from Substitute:

  • A hidden source i.e. Substitute product are often a rivalry symptom in the existing market.
  • Various cases were found where it has proved to the major portion of the competition.
  • Any performance improvement & benefit in price can be alter the competitive character of an industry.
  • Substitute products will appear if there exist a high investment in the Research and development work.
  • Prices and Profit are usually limit, in an industry.

Ø  Suppliers bargaining power:

  • Companies have to admit the bargaining suppression from Suppliers as they are the one who will fulfill the demand of the product;
  • Raw material costs, inputs for the industry, profitability and industry attractiveness are some of the bargaining power of suppliers;
  • Influence increases as the suppliers who have the special offering increases;

Ø  Customers bargaining efficiency:

  • Another force which effect the existing condition of the industry.
  • It gets influensive where an industry depends on such buyers who are a Cartels or create a new group;
  • Industrial products are some of the possible scenario of those events;
  • In such cases apply pressure on the producer is often seen from the users of products.
  • For e.g. Reliance Jio providers are putting pressure on the Telecom to get reduce on the service rate of the telecom service.

 

The 4C’s :

A 4 P’s model is which was described earlier is a traditional Marketing mix which is itself a business oriented approach. But if we urge for Consumer Oriented approach, a 4 C’s model of marketing one of such example. It is basically a “Niche Marketing”. Still, industry used it as a business oriented approach by applying its four variables, i.e.

  1. The Consumer
  2. The Cost
  3. The Convenience
  4. The Communication

The Consumer – A customer is the king of the market. What he desire will rule the market. Hence, 4C’s market determine Consumer as its prime focus and target. Though traditional Market focus on Products rather than Consumer, it has its variance of opinion. So, those companies which follows these model, focus on the consumer satisfaction rather than only focusing in the product. Moreover, they have a smaller market segment and they focus on that market rather such batch market. For such batch or bunch market, Marketing mix of traditional styles are being used.

The Cost – After the consumer attention and consumer target, 4 C’s model target the next such important variable i.e. Cost. Cost is an important segment for determining the product success, so a special attention was given to this part. As this model focus on the customer not the product, so it is necessarily understood the purchasing power of the consumer. And hence the cost needs to be determined and ascertained after taking consideration of consumer purchasing power. They have to target the consumer in a group line. If Group A has more purchasing capacity then the cost need to be high, if the Group B has less capacity then the cost should be kept low.

The Communication – Communication is an important segment of a Traditional and modern model’s. So, this Model also has an important consideration about Communication. As 4 C’s model used for niche market so, marketing for such market is completely different than a mass market i.e. traditional marketing mix. For example, “A niche marketing company might use more of BTL rather than ATL whereas in a mass marketing company, ATL communications are very important.”

 The Convenience – It is determined for an equal placement or distribution of the traditional marketing mix. It is a vary situation where a company, which sells the product which need a heavy installation and delivery procedure. But some companies like AC providers, computers and other machinery providers does not provide the installation and distribution facility. They have to install such product themselves after the delivery is done. But if one want a specially installation, then they have to pay much for it.

Although traditional model makes market understand more efficiently, but 4 C’s Model is really helpful if one is following a customer oriented firm.

BMW firm has still on the focus of Traditional market, as the luxury is a sign of Product oriented model. But in order to formulate a market in niche market too, it has to follow the 4 C’s model.

 

Data and Methodology


Early History:

BMW Group, an automobile industry is engaged in manufacturing highly branded passenger cars, motorcycles and also engage in distributing franchise for manufacturing its other several products all over the world. The company is basically engaged in manufacturing three different business segment: “Automobiles, Motorcycles and Financial Services”. “BMW is the parent company of the Miniand Rolls-Royce car brands, and, formerly, Rover (car)/Rover.” One of the common slogan of the company is “The Ultimate Driving Machine” & “Sheer Driving Pleasure” for its production and marketing.

BMW has spread its wings from manufacturing motorcycles to highly flexible and sport cars, which is used in various field. Apart from such superior interior BMW has also designed the very first passenger car which is running on “hydrogen”. After all these land rover vehicles BMW group has spread their wings to operate an aircraft’s engine division which is a brand product of “Rolls Royce”.

BMW, has many segments and which is sold all over the world, with various of their franchise and subsidiaries. Among them some of the subsidiaries are and manufacturing plants are in “Germany, Austria, the UK, the USA, Mexico, Brazil, South Africa, Egypt, Thailand, Malaysia, Indonesia, the Philippines and Vietnam”. Now, as we have already discussed that the company has three major segments, but let us discuss its major segment in detail i.e. about Automobile. This group has emerged with multiple of tangible and intangible financial services. Among the various of its brands some of multi-selling brands with a premium landscape are: “BMW, MINI, and Rolls- Royce”. Among these premium brands, I am focusing on the most royal and luxury brand i.e. BMW. Some of the luxurious products of this brand i.e. BMW are: “BMW C1, BMW 1series, BMW 3 series, BMW 5 series, BMW 6 series, and BMW 7 series, BMW X 3, BMWX 5, BMW X 6 and the BMW Z4, BMW M5, BMW M6, and BMW Z4 M.”

As BMW group has an emotional prospect with its BMW product. Those customers which are reviewing these products for the purpose of purchase or franchise, do often analyze the “SWOT” and “TOWS” analysis so to understand its current market share. BMW Group opinion on this note is: “We offer our customers emotional products, which through the strength of the brand and the substance of the product fulfil the customer’s wish for individualization and differentiations”.

BMW has a clear statement of mission, “To be the most successful premium manufacturer in the industry”. BMW’s success has varied of reasons, and one of such reason is a steady and constant market strategy. So I believe that if the same strategy is being followed in the Indian market then the sales growth will has a new landmark. In order to retain its share in the market the company has consistent mechanism to monitor to some of the major divisions like: advertising, marketing strategy, retaining suppliers and technology updating.

Among various of media channel company has always being using the advertising channels like roadshows, press, magazine, motor shows. All those advertisement expenses were duly added in the values of the brand and the same strategy has being followed for each of the subsidiary. Though there are different strategies for each of the model but the most targeted products in the market are “Sports Convertibles (Z3, 3 series, and new Z4), Executive (3 series, 5 series), Super Executive (7 series), Touring / Estate (3 series, 5 series), Super sports (M series), and 4X4 (X5).” As we have observed that the product of BMW has its own demand in the market but the same product needs to face some of the rivalry with many other automobile companies and their some popular products in the market. These products are so popular that the company existing share are in the decreasing trend and hence to overcome the company needs to benchmark its product feature with these brands. Some of them are as follows:

  • “X1: Land Rover Freelander, X2: Range Rover, Mercedes M-Class, Volvo XC90,
  • Porshe Cayenne, VW Touareg, Acura MDX, Lexus GX 470,
  • Chrysler Sebring Convertible, Toyota Camry Solara, Z2: Porsche Boxster, Audi TT,
  • M3 – Mercedes E55, Audi RS6, N Range: M3 Coupe – Mercedes C53,
  • Audi RS4,
  • Ford Focus RS, MINI: Mercedes A Class, Vauxhall Corsa and Toyota Yaris,
  • 1 Series: Audi A3, Volkswagen Golf, Alfa Romeo 147,
  • 3 Series: Audi A4, Jaguar X-Type, Mercedes C-Class, Lexus IS200,
  • 5 Series: Audi A6, Mercedes E-Class, Saab 9-5, Jaguar S-Type, Volvo S80,
  • 6 Series: Jaguar XK, Maserati 4200, Porsche 911,
  • 7 Series: Audi A8 and S8, Jaguar XJ series, Lexus LS400, Mercedes S-Class,
  • Rolls-Royce Phantom: Mercedes May bach, Bentley Arnage.”

 

Financial Prospective:

BMW Groups sales volume of 132529 units covers the brand products like “BMW, MINI, and Rolls-Royce.” In an interview the management of the company and the board member chief stated that, “We are pleased to see the sustainable levels of growth we achieved in 2015 continuing into this year. Despite many markets showing continuing volatility, we remain optimistic that this positive trend will continue through 2016, our company’s centenary year.”

Throughout the period the car made for the passengers have upward trend in comparing with the other models. The reason of the increasing trend is “X range of SUV’s”, with the X2 which has tremendous performance. In comparing to the previous year same month target the company’s model X2 has lifted with approx… 61%. The same product has recently launched in India. Other products like Series of Sedan has a growth of 27% and the BMW X5 SUV has 25%. In comparing to the previous year figures the MINI model has its best figure in the month of January with sale of 18900 units, which is 9% increase.

The same figure can be tracked with other subsidiaries. As North America, Mexico and Canada has shown the upward trend whereas the US has shown 3% downward sales in compared to January, 2015. Other Subsidiaries like European countries and SPAIN, ASIA has the normal growth trend during the period.

Now the same growth has been described in the below mentioned table, we can review the sales of each product model wise sales and the sale in comparison to previous year sales.

Group Sales
Jan, 16Jan, 1
Whole Group148758+6.5%
Passenger Car154365+5.5%
MINI Model15698+7.6%
Motorcycle6385+17.6%

Current Strategy

 The following section discusses the current strategy embodied by BMW Group, detailing the organization’s business and corporate level strategies. Also included are the company’s international and cooperative strategic orientations.

 Business-Level-Strategy: Focused Differentiation:

The group has spread in four brands: “BMW, MINI, Rolls-Royce Motor Cars and BMW Motorrad”. BMW’s business level strategy can be classified as a focused differentiator as it serves the needs of narrow segments (Hitt, Ireland, & Hoskisson, 2012). BMW produces a range of reputable luxury vehicles, while Rolls Royce is in the sparsely populated segment of luxury collector vehicles (BMW Group, 2016h). MINI caters to drivers who are looking for a compact sports vehicle and BMW Motorrad is for customers who prefer motorcycles over traditional vehicles (BMW Group, 2016h). In each brand there are models ranging in price from moderately to extremely expensive, catering to consumers’ varying tastes. Furthermore, BMW offers financial services; it finances and leases contracts with dealerships and retail customers (BMW Group, 2016h). BMW’s research and development investments, in both technology and its workforce, are aligned with their focused differentiation strategy to produce new and innovative features for each respective brand.

Corporate-Level-Strategy: Dominant Business Diversification:

BMW Group is operating under a dominant-business diversification strategy. Approximately 78 percent of BMW’s revenue comes from the automotive segment, as illustrated by BMW’s Year-end December 6 31, 2014 external revenues of €76,059 million (BMW Group, 2015). This revenue is comprised of €59,654 million from the automotive segment, €1,671 million from motorcycles, €19,073 million from financial services, and €3 million from other sources (BMW Group, 2016i). By focusing on only a few businesses, namely the automotive sector, BMW Group is able to “develop capabilities useful for these markets and can provide superior service to their customers” (Hitt et al, 2012).

 

International Transnational

Company seeks combination of together the “multi-domestic and global strategy techniques through its transnational strategy to achieve both global efficiency and local responsiveness” (Russel, 2011). To pursue this BMW Group produces a car that can be sold worldwide, designing cars for multiple markets in an effort to show “consumers what the next big thing is” (Carpenter & Dunung, 2012). Cooperative(Strategy: Joint(Ventures(and(NonREquity(Strategic(Alliances BMW operates both joint ventures and non-equity strategic alliances through its “purchasing cooperating with Daimler AG”, its “joint venture with the SGL Group to produce carbon fibers” and its “joint venture with PSA Peugeot Citroen to produce four-cylinder engines and hybrid components” (Hitt et al., 2012). In doing so, BMW Group can gain experience from other corporations in their respective production techniques in order to deliver innovative products to its customers. Strategic(Challenges The following section details the strategic challenges that BMW Group faces in an effort to sustain and grow its successful operations. It discusses the two main challenges facing BMW Group, namely defending their position in the market and raising economies of scale in their production process. Defending their Position In the summer of 2015, BMW Group warned that financial forecasts could be at risk for that year. The corporation had been affected by a slow Chinese economy as their cutthroat competition left its ageing product range vulnerable. As said in Reuters, the reason for this decline in their quarterly profit was associated with “higher personnel costs, increased expenditure on new products, and a shift in sales towards 7 lower-margin compact vehicles” (Taylor, 2015b). However, despite challenges in some markets, sale volume increased throughout the period. BMW Group stated that they expect these threat, and probable to face in the year 2016, so it will be crucial that they sustain to be flexible in terms of their response to the market conditions to ensure success (Boston, 2016). Furthermore, due to increasing competition from rivals such as Audi and Mercedes, BMW is working to revamp their model range by upgrading their 2-Model Series & also work in their new versions of its 4 and 6 Series, as well as the X1 compact off-roader (Taylor, 2015b). Raising Economies of Scale Part of the challenge for Harold Krueger, who recently took over as CEO, will be “Strategy Number One”. As stated by Business Insider, this strategy anticipate to “make 30 percent more vehicles with the same number of workers, while reducing production costs per vehicle by raising economies of scale in components, drive systems and modules” (Taylor, 2015a). The major protest is that it poses for Roshwor will be based on how to maintain this strategy with cars that are becoming more complex, lighter, and more fuel-efficient (Taylor, 2015a).

Business Partners:


If we count he worldwide distribution network then it has been accumulated that currently the network all around is 3200 for BMW, 1600 for MINI model and 160 for Rolls Royce dealership. The highest range is in China i.e. 65 of BMW which was currently monitored in the year 2015. The sales made inside the Germany or outside the Germany are being conducted primarily by its subsidiary companies and it is dependent upon its market. All in all there are all about 1050 location where the dealership and the network agencies are being located and serving the product for the purchasers.

Ø  Along with different partners and the subsidiaries, a new BMW partners with Intel to get autonomous cars on the road by 2021.

  • TVS Group,
  • TOYOTA Group,
  • GAYA Motor, Jakarta
  • Inokom Corp

Investments:


  • During the year 2015 it war marked that the investment was made upto 6.3 billion INR and 5.6 billion INR in 2013.
  • It has also been predicted that through the investment and affiliate program the investment in nearer year will reach over $300million.
  • But still in some South Africa region the volumes of sales has been reduced to lower level.
  • China (Shenyang) : If we take the manufacturing of the local company, the “Brilliance Automotive” has an important contribution in the sales in China.
  • Brazil: Even though the initial segment investment were less but the company has goo market and ready sales of 35000 units per year.

Business Financial Report

A company founded in Munich, 1917, which has 23 production plant and assembly plants in 13 countries, has 5.27% market share. A Revenue of 62,293€ Million (2015) from all of its product i.e. Automobiles, Motorcycles and other revenues.

Sales Volume Report :

Years20112012201320142015
Sales Volume94400141165198542275891282000

Sales Revenue Report:

Years20112012201320142015
Sales Volume6882176848760598040192176

Workforce Report:

A workforce is said to be the backbone of the performance and production growth. A several study were conducted for the appraisal performance of the employees and it was found that behavior aspects were different than the performance. These factors also necessary affect the growth rate. A regular incentive practice leads to stable workforce and quality of service. Here is a variance workforce report during the last 5 years.

Years20112012201320142015
Workforce38994266444545954700

BMW India Private Limited, also known as BMW India, is a 100% subsidiary of a BMW group having headquarter in Gurgoan, Haryana. Though it has its manufacturing plant in Chennai, but it has a parts warehouse in Mumbai and in major metropolitan centers various of  a world class premium dealer organization across. In order to continue on its successful path in innovation, At this plant, BMW Group is able to produce 3 and 4 “cylinder petrol engine” that make up the latest generation of their Twin Power Turbo engines. BMW’s production network will reap the benefits from the plant as they are about to share the “know-how with other engine plants at any time” (BMW Group, 2016b). Also, they have recently acquired HERE Technology, a location-based service that provides real time maps to drivers (BMW Group, 2016g). AUDI AG and Daimler AG also acquired HERE Technology, thus BMW Group’s choice to take part in the acquisition enables it to compete with these two automobile manufacturers (BMW Group, 2016).CASE STUDY

FDI operations in the industry:

In the automobile industry, one of the greatest automaker, BMW has invested a large money outside the Germany. Some of the largely invested countries are China, India, United States and Russia.

BMW in India has a great potential large over as because of immense population of luxury society in India. So, they have recently bought a large land and equipment and seeks to use its growing India market to expand its  running business whole over the nation. Moreover it has increased the figure of sale from year to year. They have also increased the figure number of dealership in India. Now the dealerships are spread all over the nation and the marketing strategy are also roaming to increase the sales.

Value Chain Analysis:


According to Michael Porter, business activities are classified in 2 different categories i.e. Primary & Secondary Activities. The competition has its own advantage and the company should beat existing competitors and the consumer want should be result in the upward trend.

‘Primary Activities’

‘Inbound logistics’

In this group, it monitored that around 15,000 suppliers are been existed all over in an international format. It also determine the value in use of the logistic program that is to be added in the primary activities and as per the figure given below it has been illustrated the decrease in the transportation cost and the equipment cost with highest quality, “the company purchases most of its raw materials from Germany (42.6%) and Eastern Europe (19.7%). This is because the majority of manufacturing and assembly units are based in Germany and Europe and the company purchases from trusted suppliers in close proximity in order to reduce the costs of logistics and ensure an undisputed supply.”

 Operations

Operations of BMW Group has been divided into the following four business segments:

  1. Automotive. In 2015, among other three segments, this segment generated the gross profit margin of 17.7 per cent.
  2. The Motorcycle. It has near about 23% increase in profit for the period 2015.
  3. Financial Services. The financial service means the credibility of the product or the firm. So the models of this group has a high credibility performance. The overall GP margin from this segment is 14% in the year 2015.
  4. Other bodies: In the year 2015, this segment has reported the profit of 60million (Euro) after tax, which seems higher than the last year.

This company rush a huge network in about 35 manufacturing sites in all about 15 different countries. The group has also opened some new franchise in different part of the world. Like in China, Shenyang the company has opened a new plant engine which will nearly served through 160 countries.

Company has also engaged in the robotics technologies which will be considered in upcoming projects. For example, “robots work with a door sealant that keeps sound and water out of the car. The goal of this implantation is not to replace human workers, but to help them in their daily tasks. Moreover, as part of the most recent developments, BMW Group is testing a number of autonomous vehicles on its factory floors as part of an automation drive that is expected to help cut costs by 5% per vehicle annually.”

Outbound logistics

Some basic aspect of outbound logistic are:

  • It engage in accumulate, restore and transmit the products from one division to consumers and other subsidiaries.
  • For those products which are tangible in nature handles the warehouse, transport and material services.
  • In the part of service, this involves arrangement for bringing customers to the service (e.g. sport events).

Similarly, if we collect the data from whole of worldwide network, then we can see that near about 3200 BMW’s, 1600 MINI’s and 160 Rolls-Royce dealership are being spread everywhere. It has been also reported that “The dealership and agency network for BMWi comprises about 950 locations. In total, about 63.1 per cent of new vehicles are transported out of manufacturing plants by rail. BMW Group exercises three patterns of vehicle distribution from the assembly line to the final user.”

Marketing and sales

  • It provides awareness to consumers regarding product/service.
  • Traditionally, “print and media advertising represented the main element of the marketing communication mix extensively used by BMW Group. However, during the past several years the company has been successfully adapting social media as an efficient marketing platform in terms of cost-effectiveness and a channel to reach out to global audiences in a short period of time.”

Accordingly, “social media and viral marketing can be specified as the main sources of value for marketing and sales primary activity. Moreover, BMW Group regularly benefits from product placement marketing strategy in popular movies and shows, as it was the case with the promotion of BMW MINI Cooper in The Italian Job (2003), as well as, James Bond and Mission Impossible franchises.”

 Service

Service department include the servicing of the models which is entrance for repair of the product. It also include the training session given for the employees which are engage in serving the repair works to those branded products. BMW and MINI models are a member of “THE INISTITUTE OF CUSTOMER SERVICE AND BMW UK” which has recognized them as “New car retailer of the year”. Moreover this group has introduced many innovative and improvement programs for the customer services and they serve to their customer in a regular period of time. The workforce spread in all their subsidiary and all other agency. They also conduct a monitoring program which are assigned a job to monitor the service quality that are been provided to the customer and getting feedback of the service. Those feedback are been monitored by the group committee and the necessary action were taken for each of the feedback.

Competitors Performance Scenario:


BMW:

BMW Group has announced total sales of 179,285 units during the month of April 2016, an increase of 1.9% over sales in April 2015. Total YTD sale were up 5.0% with 739,631 units sold while the company is confident of positive sales through to the end of this year.

While all models in the company line up saw increased sales, the company’s BMW X models were more in demand. Sales of BMW X1 increased 60.6% with 63,243 units sold while BMW X1 sales increased 19.4% to 59,615 units. BMW’s 6 Series, BMW i3 and BMW X5 xDrive sales also saw significant increase in sales. MINI Convertible and MINI Clubman sales during the first four months of 2016 stood at 5,849 units and 16,409 units respectively.

Audi:

Audi sales were up 7.5% during April 2016 with 164,350 units sold. Significant growth was noted in China where sales were up 9.4% and in Germany where sales increased 12.4% during the past month. Year to date sales stood at 600,000 units marking the first time in company history that such a target was achieved. Two Audi models that did particularly well over April 2016 were the new Audi Q7 and the A4 both of which saw demand rise by 76.5% to 8,400 units and 34.7% to 32,100 units respectively. Sales across Asia Pacific region and Europe also noted a significant increase in April.

Mercedes Benz

Marking the company’s 38th record month in succession, Mercedes Benz sales during April 2016 increased 10.8% with 164,063 units delivered to customers. Overwhelming performance was noted in USA, Germany, Japan, Canada, Australia and Taiwan in April 2016. The year to date period saw 650,000 units sold while the company looks ahead with fervor as besides other new products that were introduced during the period.

Mercedes Benz sales across Europe increased 14.2%. Sales in the Asia Pacific region were up 17.2% with over 50,000 units sold of which most sales were noted in China with 35,625 units sold during April. Growth was more noteworthy in China, Great Britain, Japan and South Korea during April 2016 with C Class Saloon, E Class Saloon and Estate being most favored models. The E Class Saloon was presented in a long wheelbase version at the Auto China Show. It measures 140mm larger than other quality version products that are found in the China market.

Jaguar Land Rover

Jaguar Land Rover reported 11% increase in sales during April 2016 with 41,341 units sold. Year to date sales over the first four months of this year were up 24% with 200,154 units sold. Land Rover sold 33,348 units in April while 9,422 units of Discover Sport and 8,293 units of Range Rover Evoque were sold during the month. Year to date sales were up 19% with 162,307 units sold during the period. The fastest selling family sports car was Jaguar F-PACE with 1,500 units sold.

Volvo

With global sales of 42,434 units Volvo Cars posted 11.3% increase in sales during April 2016. The new Volvo XC90 was the company’s bestselling model while Volvo XC60 also significantly contributed to sales. While outstanding sales were reported in Europe and the US, China was a leading market for Volvo Cars in April 2016 with 6,280 units sold while locally produced Volvo XC60 and S60L were in highest demand.

Literature Prospective

Among the models and the Marketing strategies that has been defined earlier in the Literature Segment, BMW has its own application of those. Lets review some of such Models and strategies that has been used by the BMW enterprise in order to overcome their target and their effective market strategies.

The 4C’s

  1. Consumer: As mentioned in Literature part, 4 C’s Model follow the consumer aspect more than traditional model. So, in a review it has observed that BMW also needlessly follow this model and for the same it the company has a strong believe that if it want to keep the consistent market share and growth in Indian market should be consider an important segment so that the consumer need will be satisfied and a welcome feedback could be received.
  2. The Consumer expenditure: The next aspect of the 4 C’s Model is Consumer cost. The group decide the product and its price range according the expenditure that could be bear by the consumer. Many region accept least price whereas the higher GDP region can accept higher price. So the consumer expenditure has been seriously measure interm of the BMW group.
  3. The Conveniences: BMW company never led the consumer suffer only because they don’t have online purchase system and the service providers. But still they provide certain service which makes the customer happy, like ‘online test drive appointment system’, and making test drive system more equipped and comfortable.
  4. Communication system: The best mode to keep existing consumer happy is Communication and since the company has 24*7 helpline service towards query session and other complex issues. It has reached a quality service provider and it has also an exclusively communication channel for some customer which believes the issues are more than necessary and hence provide the personal interface to solve their issues.

Porters Theory

Porter’s Five Forces BMW Information
Threat from Substitutes: HighMarket for luxury vehicles is fairly saturated, with several competing brands Audi, Lexus, Mercedes-Benz all present threats
Threat from New Entrants:Low Other than BMW, Audi, Mercedes, has broken into top 3 ranking in ~10 years (Cato, 2014)
Power of Suppliers: LowBMW sources from 12,000 suppliers (BMW Group, 2014) Prides itself on risk identification and management in supply chain management (BMW Group, 2014)
Threat from Rivals: HighAudi and Mercedes-Benz explicitly stated goal to unseat BMW as market leader by 2020 (Rauwald & Tschampa, 2014) Competition is thus expected to intensify
Power of Buyers: ModerateBuyers have ability to simply purchase other manufacturer’s vehicles Audi is aggressively competing on price to attempt to win market share (Boston, 2015)

THE MARKETING MIX


The traditional approach i.e. Marketing Mix has also a restful impact in the BMW group and its subdivisions. So, let us consider the four 4 Ps: “ Products, Promotions, price & Place. These doesn’t work in the isolation. It work within a perfect time and resources that will likely to impact everywhere.

  1. The Product: Product is the most efficient and the most important segment for any of the automobile industry. The same is the case with BMW Group. They focus the mix model so called “Product” oriented. They focus on the quality of product develop with the updated technology and equipped with all the mechanical feature that is essential to develop such branded products. Now let us consider some of such branded products which are seen in the market these days:
  • “BMW 3 Series – Sedan, Coupe, Convertible, Touring, Compact
  • BMW 5 Series – Sedan, Touring
  • BMW 6 Series – Coupe, Convertible 14.
    • BMW 7 Series – Sedan
    • BMW Z4 – Roadster
    • BMW X3 – SUV
    • BMW X5 – SUV
    • BMW M –Convertible, Coupe”

It is the company policy that each product manufactured will goes through a defined process which is known as a life cycle process. The firm’s policy says, “When exploring what mix is best suited to the product, we need to consider where in the life-cycle your products lie which is shown in the below figure and then depending decide if there is need to make changes in the product and re-launch.”

  1. Price: It is an important aspect, what is the range of price of the product before targeting to purchase the product. So, it has been observed that range of the product starts from 2.7 million to 132million in Indian rupees. As per the marketing team experts, “There are many factors that can affect their car prices such as engine size, motor sport versions, etc. For more clarity let us take an example of the pricing strategy that has been used by BMW for the 3-series is competition-orientated pricing. Most of the Research shows that all other competitor such as VW, Audi, Alfa Romeo and etc. in the 3-series market is based around the same price. This is because the car industry is large and production costs are not so important and creating the largest profit is not as necessary as it would be for a smaller company.”
  2. The Placement: Placement is an another zone of traditional marketing mix and BMW use superior market Dealerships & Imports for non-dealer networked countries. So as per the report some of the important segment and market are being reported. According to them, “among them they have four car manufacturing plants in the UK. Altogether there are more than 156 dealers in the UK who are franchised to sell BMW cars, additionally 148 dealers are franchised to sell Minis. All over the world BMW operate in more than 100 different countries with approximately 4,000 plus dealers which are authorized to sell both new and used cars, parts and after sales service products.”
  3. The Promotion: Without advertisement and promotion of the brand the manufacturing units cannot get place, which it really deserves. So, as per the management reported that, “BMW has always focused entirely on their cars with same advertising company, “WCRS” being the used since late 1979. Along with that a broad range of advertising is designed by this agency such as television for branding campaigns and new car launches, the press with Tabloid weekend colour supplements, regional publications and magazines, Outdoor campaigns, Sales literature, brochures, etc. Advertising Campaigns/Slogans used by the company in the past.”

Market Analysis Report:


BMW has different distribution Channels, through which the sales has been increased in domestic and the foreign market. Some of them are :

  • Retail Network
  • Company Carpool
  • Military Service
  • Franchise System

Key Success Factors:


It has been reviewed that the Key success factors of BMW’s high growth, quality service and maintenance of high market shares are:

  • Branding
    • Brand Loyalty
    • Brand Awareness
  • Global positioning
    • Positioning in established markets
    • Positioning in growing markets
  • Innovation rate
    • Differentiation
    • Hybrid

Ownership credential:


Normally it is identified that a BMW Customer is someone who have some credentials like:

Age: 47                        Income: $160,000        Sex: 2/4 Male              Status: Married

Children: No   Education: Literacy     Interest: Luxury          Brand Loyalty: High

Character: Leader, Harworking, Active, Demanding

CONCLUSION & RECOMMENDATIONS

Conclusion


After this whole study, one of the major outcome that I have observed that BMW is one of the luxurious brand which has much more potential to extend its current market share in India. As the literature part is concerned, it has been observed that most of the marketing techniques i.e. traditional marketing technique i.e. 4 P’S Model has adopted by the company for its really outfit. Whereas it has also being successful in implementing the 4 C’s Model to reach the actual outfit of the customer. Along with that we have also successful in analyzing the Value Chain Analysis of the firm. And the logistic department of the company has been successful in implementing the primary and the secondary activities to and above par level. Though the firm has various of its rivalry like Mercedes Benz, Jaguar land Rover, Audi, Ferrari and Volvo but the marketing strategy that the company is being following with its 128 plus other subsidiaries is a progress mark for future. The companies Financials report were also been analyzed and as per the past 5 years record, it has been monitored that the company has 5-10% increase in sales volume each year and the revenue tends to increase via sales and services too. Company’s existing investment were found in increasing tend than in last pervious period. On the closure not lets us analyze the methodology segment for the study of this project. The company performance has been increased since its past years and the marketing strategy adopted in India, The marketing strategy and VCA analysis also shows that the performance has been increased and so the market share. So this is an optimistic sign to uplift the market in coming year. Methodology: The study has been conducted by taking data from important sources, so called, Secondary sources. Under the Secondary source we took annual reports, magazines report, new project review and performance report.

Results and Conclusion: The company promotion in a well known brand so it believe in high internal competence rather than develop the product in the large market scale. There is a future in many other countries like, “Asia, Russia, Europe and South America”, which have shown consistent growth in the sales value. So now it is recommended that the company growth should be developed and increased in these reasons. Though the high price are some of the reasons which is effecting the production of these products, as the average performance of per liter is on an average 5-6 km/hr. So, increase in price could also effect the sale of these high branded products.

For the future marketing strategies, I would like to recommend few points. As the case study is presented above, BMW has seem to follow Portors 5 model, 4P’s Model and marketing mix. As per the financial growth table, BMW has a bright and incredible future in India. As the GDP is growing many rich-gates are in a search of comfort life and luxury environment. India has a good potential to adopt the BMW as its luxury mode of transportation. Though, it has several of competitors in the market like, Audi, Mercedes, Jaguar but to own a BMW is a sign of luxury in itself and with its incredible features and remote access, it is now possible for BMW to own a good market share in India.

Recommendations:


Though company has its premium level marketing strategy but if it want to increase its current scenario i.e. want to increase the market share then the company needs to benchmark its product with its rivalry. As a recommendation note, I want to recommend that company should develop some of the lower priced product so that the middle class level will also get benefit from this brand. As BMW is itself a brand of luxury and high class people, but if it want to get the higher market it need to target some middle level person also. As in India, the most of the segment are at middle level so the existing market strategy will not work with that. So, to reach the target over current period, the BMW has to develop much over those strategies which are getting success for these products. So now the company should move in the country like India and China in comparison to US and UK market. So the turnover will surely reach to new level if they get success in targeting the Asian Countries and mostly the countries like India and China. In addition BMW needs to come with few more BMW Films interactive marketing campaigns, the “Ultimate Driving Machine”. Even nowadays, Affiliate Marketing is achieved for the company growth so the company should come with these marketing strategies.

References


  1. Hespos, T. (2002) “BMW Films: The Ultimate Marketing Scheme, retrieved October 3, 2005, from http://www.imediaconnection.com/content/546.asp
  2. Giardina, C. and Lehane, S. (2002) “The Driver Returns,” retrieved October 3, 2005, from http://www.dtvprofessional.com/2002/12_dec/features/bmw_returns.htm
  3. (2002) “BMW Films,” retrieved October 3, 2005, from http://www.pmalink.org/awards/reggie/2002reggiewinners3.asp
  4. www.bmweducation.co.uk/company
  5. www.bmw.co.uk/models
  6. www.slideshare.net
  7. www.bmw.co.uk/prices
  8. www.bmweducation.co.uk/about
  9. Principles of Marketing, Prentice-Hall International Edition. David Jobber, Principles and Practice of Marketing 5’th Edition www.just-auto.com
  10. http://www.supercarworld.com/cgi-bin/overview.cgi?BMW

 

 

Happy Reading!!

Published by

Shushant ( ICAI Final )

Shushant is a Chartered Accountant student at Institute of Chartered Accountants of India. He is also a Student of Company Secretary at Institute Of Company Secretaries of India. He is a administrator of this site . In his spare time he hang out with his friends and discuss about the current issues in market. You can find his latest blog posts at www.enrollmyexperience.com and at his facebook profile.

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