Case Name: BMW North of AmericaDream it, Built it, Drive it
History of BMW A fter World War I, BMW was forced to cease aircraft (engine)production by the terms of the Versailles Armistice Treaty. The companyconsequently shifted to motorcycle production in 1923 once the restrictionsof the treaty started to be lifted, followed by automobiles in 1928-29. T he circular blue and white BMW logo or roundel is portrayed by BMWas the movement of an aircraft propeller, to signify the white blades cuttingthrough the blue sky.
THE US AUTOMOBILE INDUSTRYThe Automotive industry is largest manufacturing sector in united states averaging about 3.6% of the total GDP.IN 2011 the U.S automotive industry was estimated about $500 billion.American auto sales has dropped by 37% during the global crisis.only 10.4 million new cars and trucks were purchased in 2009.The number has increased to 12.7 million units in 2011 and 13.8million units in 2012.
U.S. Car DistributionUS was a home to 17000 new passenger cars andtruck dealers with approximately 37000 franchises in2011.Auto dealers operated on relatively low gross profitmargins in 7 to 15% range for new vehicles.In 2011 more than 70% of purchase originated fromonline research due to its ease.
BMW OF NORTH AMERICA BMW established its US office in wood cliff lake ,newjersey, in 1975. North America is the biggest market for BMW. In2011 three hundred and five thousand BMW’s, Rolls-Royce, and MINI’s rolled to new owners in United States. BMW X3 was the most popular model of the year in theluxury compact SUV segment selling 27,793 units.
BMW Dealerships The company has two types of sales centers “BMWPassenger Car Center” and “BMW Sports ActivityVehicle centers (SAV)”. In 2011 the BMW altogether has 338 passenger carand SUV centers,138 motorcycle retailers,104MINI, AND 30 Rolls Royce motor dealers. Partnership between the dealers and BMW werebased on financial incentives, marketing supports andcorporate training.
Target Customers of BMW X3 The people who are new to the luxurymarket People in their 20s,30s or 40s who arestepping out of domestic and non-premiumSUVs. Young families who need SUV with spacebut not large size. People who have money and can affordluxury cars.
Customization at BMW1992- Launched its first mass customisation business named Individual Program2000- “Customer oriented sales and production process”(KOVP) was launched whichenable on-schedule deliveries and afforded a high degree of flexibility in makingvehicle equipment changes until very late in the production process. It focused on transparency of the production chain in which BMW used vehicle identification and location system that made it possible to automatically identify, collect and document vehicle movement during and after the assembly process. Every vehicle transmitted signal in 4 minutes which is received by in-house antennas. Customisation was available in all models in Europe but in North America it is available in 6 & 7 series The most common BMW individual trimming options included expensive leather and wood for the interior, advance sound and video systems, aero dynamic exterior enhancements and unique body colours. The model which sold for $60000 in North America, sold for euro 60000 in Europe.
The BMW F25(X3)Introduces in 2011 compact crossover5 door wagon body styleFirst introduces in 2003 named X3It is available in the U.S with a 3.0 liter inline six-cylinder gasolineengine, either normally aspirated or with a twin scroll turbochargeronly.The premium xDrive28i($37,100 MSRP, 25 mpg) had 240horsepower where as xDrive35i($42,700 MSRP, 26mpg) used a 300horsepower turbocharged engine.8 speed automatic transmissionIts rear suspension system came from the E46 330xi all-wheel drivemodel.
Dream it. Build It. Drive it.This program encourages to customize their vehicle.The concept of BMW’s new campaign included the engagement of customers atall three stages of sales process: from initial surfing on the internet, whereconsumers “dream” about the car; to the second stage, which involvedindividual customizing or “building” and finally the last stage, which culminatedin delivery and finally “driving it”.BMW extend the concept of online customisation to address the issue ofimpatience in American car buyers by making the wait a more pleasurableexperience.It decided to install video cameras along the assembly line and broadcast theprocess of a how a X3 comes to life.By being able to access a website called “Your X3 on the assembly Line” buyerscould trace seven major assembly stages of their new vehicle at the factory atSouth Carolina.BMW offer 500 side mirror combinations,1300 front bumpers, 5000 seatcombination or 9000 centre consoles which comes from 170 suppliers.
Dream it. Build It. Drive it.BMW moved the complete production of the redesigned X3 from Europein order to reduce the delivery time for the U.S. As a result the deliverytime for new X3 in the U.S dropped from seven to 2-3 weeks and in Europe5 weeks
ProblemDeclining interests in cars among young people, who werebecoming increasingly more environmentally conscious andunresponsive to the traditional advertising.In Europe delivery of F25 got delayed.Misconception between dealers and company itself regardingthe delivery time of vehicle. Dealers think BMW hasoverestimated the impatience of its customers.
CHALLENGES To sustain the current online marketing. Maintaining the suppliers. Maintaining the flexibility in production line. As the customers of US are becomingEnvironment friendly so they have to go in away so that they can attract those customers.
Reasons for success of X3Marketing IN 2011 X3 came back to Hollywood in the latest block buster Mission Impossible 4-ghost protocol. Customization. Introduction of video camera in assembly line so that customers can watch it and share it. accurate positioning. i-AD
Reasons for success of X3OPERATIONS AND SUPPLY CHAIN Introduction of antenna and transmitter. Successful management of suppliers in US and other countries for assembly of X3. Reduction of delivery time from 8-9 weeks to 2-3 weeks keeping the U.S. customers in mind through relocation of assembly line to South Carolina.
The Indian Auto IndustryThe automotive industry in India is one of the largest in the worldand one of the fastest growing globally.Indias passenger car and commercial vehicle manufacturingindustry is the sixth largest in the world, with an annual production ofmore than 3.9 million units in 2011. In 2010, India beat Thailand to become Asias third largest exporterof passenger cars.As of 2010, India is home to 40 million passenger vehicles. Morethan 3.7 million automotive vehicles were produced in India in 2010(an increase of 33.9%), making the country the second (after China)fastest growing automobile market in the world.
Indian Luxury car MarketMercedes Benz ruled the Indian luxury car market formore than a decade.The things started to change after 2006 when AUDI andBMW invaded the Indian market.Within 2 years of its entry BMW became the marketleader.Total of 3500 luxury cars were sold in 2006.This grew 7 folds by 2011 to around 22000 units.
BMW In IndiaBMW started its operations in India in 2006.The company headquarters are located inGurgaon(Haryana).Company has a state of art manufacturing facility inChennai which has a capacity of producing 11000 carsper year.The 3,5 and 7 series cars along with X1 and X3 SAVs aremanufactured in Chennai plant.All other cars in BMW stable are imparted as CBUs.BMW currently has dealerships at 22 locations in India.
BMW X3 in IndiaThe new BMW X3 was launched in August 2011.The SAV was launched in only 2 variants in India TheBMW X3 xdrive20d and xdrive30d.The difference in 2 models was only the engine option.20d came with 4 cylinder diesel engine and 30d cameout with 6 cylinder diesel engine.20d retails at Rs 41 lakh and 30d retails at 47 lakh.
The CompetitorsAudi Q5, it is the best selling car in this segment, comesin 3 engine options 2 diesel and 1 petrol.The price range is between 38.5 lakh for base 2.0Ldiesel and 48.7 lakh for top of the line 3.2TFSI petrolversion.Land Rover Evoque, it’s the latest entrant to thesegment. Price ranges from 41.6 Lakh to 61.3 Lakh.
The Indian and American X3The car on sale in India is same as that in USA.In India there are no petrol options and in USA there are nodiesel options.Huge customization option available in USA but only 3-4customization options in India.X3 retails at 37000$ in USA which is very less as compared toIndian variant.http://www.bmw.in/in/en/newvehicles/x/x3/2010/showroom/index.htmlThis is the Indian site for X3.http://www.bmwusa.com/standard/content/vehicles/2013/x3/default.aspx
ADS for X3• http://www.youtube.com/watch?v=tTEHmMA tXAA• This was the launch add for BMW X3.• http://www.youtube.com/watch?v=iE2ShxxgD O0• http://www.youtube.com/watch?v=ZNFwsPN aBOo&feature=related• http://www.youtube.com/watch?v=W_QpPrC Bz9c• http://www.youtube.com/watch?v=UZLmJj8N DQI&feature=related
Dream it build it drive itCan this campaign be used for new x4 launchplan for 2014?YesFew points to be kept in mind With customer built option for BMW X4 lack of supply has to be checked for customer demand at the dealerships. Trying to reduce the inventory cost as far as possible.
Was the personalization aspect over-rated? Yes to certain extent
Scope of dream it built it drive it campaign in India!This concept can be a great success in Indiaprovided BMW finds a way to cut down thecost.Increase in popularity of BMW in India.Increase in purchasing power of high endpopulation in India.