BMW Case Study Analysis

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Analysis with recommendations of BMW case study

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  • BMW Case Study Analysis

    1. 1. BMW FILMS A case study by: Victoria Gnatoka
    2. 2. 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
    3. 3. BMW IN NUMBERS $15 million Production costs of 5 BMW films 213,127 Total 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 million Logged 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
    4. 4. BMW VS COMPETITORS ENTRY LEVEL SEDANS FLAGSHIP SEDANS MID LEVEL SEDANS BMWACURAINFINITILEXUS
    5. 5. THE BMW MARKET SHARE
    6. 6. 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
    7. 7. 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?
    8. 8. SYMPTOMS  Loosing shares to new Japan market players  Only 44.7% of BMW who disposed of their BMW’s in the 4th 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
    9. 9. 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
    10. 10. 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
    11. 11. 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
    12. 12. 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
    13. 13. 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.
    14. 14. 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.
    15. 15. Nothing can replace the REAL driving experience TRY the ultimate BMW driving experience!

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