BMW Case Study Analysis

Analysis with recommendations of BMW case study

2. BMW FILMS
A case study by:
Victoria Gnatoka

3. BMW IN YEARS
1916 BMW was founded as an aircraft
engine manufacturer
1929 First automobile produced
1980s BMWs position in the
luxury/performance segment had been
firmly established
1990s BMW has 400 dealers in the US
(106 sold BMW only) vs 150 dealers
for Lexus and Infiniti

4. BMW IN NUMBERS
$15 millionProduction costs of 5 BMW films
213,127Total sales in units in 2001 vs 223.983 of Lexus
$ 62.4
million
Media expenditures in 2001 vs $ 187.3 million of Lexus
espenditures
$ 9 millionLogged on BMWfilms.com to see the films
$25,000 -
$34,000
ENTRY LEVEL SEDAN cost with 50% of total sales
$37,000 -
$44,000
MID RANGE SEDAN cost with 32% of total sales
$54,000-
$70,000
FLAGSHIP SEDAN cost with 16% of total sales

5. BMW VS COMPETITORS
ENTRY LEVEL
SEDANS
FLAGSHIP
SEDANS
MID LEVEL
SEDANS
B
M
W
A
C
U
R
A
I
N
F
I
N
I
T
I
L
E
X
U
S

6. THE BMW MARKET SHARE

7. THE BMW CUSTOMER
AGE: 46
INCOME: $150,000
SEX: 2/3 MALE
STATUS: MARRIED
CHILDREN: NO
EDUCATION: HIGH
CHARACTER: LEADER,HARD
WORKING,ACTIVE,DEMANDING
INTERESTS: SPORT
BRAND LOYALITY: HIGH

8. BASIC MARKETING
PROBLEM
Main problem: How to insure market share growth and
become market leader in luxury cars’ category
Sub-problems:
–How to win over new and old competitors? How to
increase brand loyalty?
–How to maintain high level of creativity and productivity
of marketing campaigns?

9. SYMPTOMS
Loosing shares to new Japan market players
Only 44.7% of BMW who disposed of their BMW’s in the 4
th
quarter
of 2000 purchased new BMW;
Out of the 100% of BMW customers who disposed of their BMWs
and purchased a non-BMW car in the luxury automobile category,
37% replaced their BMW with a Mercedes, whereas 12% replaced
their BMW with a Lexus
Historically competitors tend to copy BMW creative marketing ideas
so BMW should think twice before reapplying already once
implemented ideas
Lexus being a bit cheaper with fresh luxury image penetrates
market more aggressively

10. SWOT
Strengths
•Superior quality, reliability, and service
•Introduction of new models and series
•Strong and recognized brand, unique brand
positioning
•Large buzz around the 5 movies
•Positive media reaction
•Customer loyalty
•First mover in advertising in its industry
•Professional and experienced marketing team
Weaknesses
•Higher price than
•Smaller advertising campaigns
•High costs to ensure product diversification
•Nearly niche product
•The historical ‘yuppie-car’ image
Opportunities
•Market segment with lower income
•Such new products as small SUVs, pick-up trucks,
minivans
•Improving performance of vehicles
•Creating new films featuring more or new products
•New non-traditional marketing opportunities such as
games
•Traditional marketing
Threats
•Strong competitors
•Competitors will cat-copy the short film
idea
•Possibility not to increase sales

11. ALTERNATIVE 1
Develop more BMW short films
Pros
Appetite is there: 90% of the www.bmwfilms.com visitors asked for more
Extension of the Momentum created by “The Hire” series
Possibility to design “Collectors’ Set”- classic forever
Internet communication would still be very appealing to the Internet-savvy
BMW customers
Cons
Costs : five initial films’ estimated costs are 15M$, second edition could be
slightly cheaper but still expensive

12. ALTERNATIVE 2
Develop a feature-length movie
Pros
Demand from short film viewers for two-hour movie
First-mover advantage. No car manufacturer has ever made a movie
High revenue if movie is successful
Cons
No experience in feature-length movie making
Costs
Time (6 months to 1 year) to produce
Less successful product placement campaign in
Tomorrow Never Dies movie
Unsuccessful movie can damage BMW brand reputation

13. ALTERNATIVE 3
Make BMW short films more available and
move on to the next thing – computer
games + traditional marketing
Pros
Maximum benefits from the short films squeezed out with minimum costs
Younger audience than competitors’ target market
Continues the image of technology advanced and modern brand
First mover image
Strengthen associations with excitement and speed
Internet communication used
Cons
Development costs of the games
Risk of failure that games are not so attracting as films

14. RECOMMENDATION:
To go for the Alternative 3:
 Continue with traditional marketing,
 Make out most of the existing 5 films,
 Make the existing films available to a wider
audience,
 Move on to the next thing:computer games.

15. IMPLEMENTATION
Screen the short films in the theatres before the feature
films,
Package the short films into a DVD format,
Select different distribution channels for DVD to reach
new audiences:
Through dealers free DVD both for customers, as well as for potential
clients,
Internet orders (free DVD available for the cost of shipment),
Free DVD copy inserted in a prestige lifestyle magazine.
Invent a set of interactive computer games available for
playing on BMW website:
5 games based on the story of the successful short films,
5 games co-created together with BMW fans through an open
competition.

16. Nothing can replace
the REAL driving
experience
TRY the ultimate BMW
driving experience!