Looking across the global automotive industry landscape, the premium automobile manufacturer from Munich has the most to lose, should the integrity of its brand begin to falter. Yet recent changes in BMW’s product development and marketing strategy leave us wondering whether the Bavarians are deliberately veering from their familiar route, or if they will in fact be caught off-guard as this otherwise finely-tuned machine drifts into another lane. The Brand in Context First, let’s take a look at BMW in context of the global automobile industry.
In recent decades, the industry has undergone significant consolidation among manufacturing enterprises. From multiple acquisitions by Ford to the Daimler-Chrysler merger, many automakers now enjoy economies of scale and global distribution networks that afford significant advantages in procurement, R&D, manufacturing, and distribution. The synergies borne by these scale economies allow larger manufacturers to better weather fluctuations in the macro-economic environment, yet profit from the evolving needs of the car consumer.
The Essay on Global Industries
Global Industries As far as the topic of multinational management has recently ... As multinational corporations and similar to them structures win the global market of goods and services, it has become evident that ...
For instance shifting production away from gas-guzzling SUVs to more economical automobiles helps manufacturers profit in years where oil prices rise; while developing innovative brands and designs can satisfy new segments of consumers who will pay premium dollars for differentiated features and styles. Manufacturers that cannot rely on scale to deliver profitable returns need to ensure that their brands and limited product lines remain highly differentiated and relevant, and continue to aggregate a growing consumer following in the face of sophisticated competition.
Even without a degree in microeconomics, you can get a sense of the relative advantage among various manufacturers by examining the sector chart below. The chart plots relative automobile unit share and growth rates of the major manufacturers. Depicting relative “share of garage” illuminates several observations: – In a mature category tamed by annual growth of two percent, above-average growth for one major player will come at the expense of flat to declining sales of another. Here, strong competition from Japan and Europe chips away at Ford and GM’s global dominance. In order to enjoy greater cost advantages as well as research and development, distribution, and marketing synergies, volume players are compelled to defend their positions by consolidating tertiary brands (for example, Mazda, Volvo, Land Rover, and Jaguar under Ford Motor Company), or joining forces (for example Nissan and Renault).
– When measured by relative unit growth, the BMW group (helped recently by the introduction of the new MINI) has enjoyed the most success in serving and aggregating loyal and new customers around its brands.
BMW succeeded in differentiating its product line to address the growing needs of its target audience, introducing the Z3 roadster and the X5 sport utility in the late 1990s. By the end of 2003, fully ten percent of all BMW sales were in the “light truck” category. The new MINI, launched in 2001 as a separate master brand yet arguably benefiting from the halo effect of its parent brand, was a phenomenal success, reaching estimated sales of over 120,000 units in 2003, or ten percent of the BMW Group’s unit sales.
Nonetheless, isolating pure BMW unit sales reveals respectable five-year unit growth of 30 percent, a virtual tie with the growth of Mercedes-Benz. Drive Diversion But just over the last few years, some major tweaks have been churning out of BMW’s design and marketing departments. Perhaps threatened by the marketing savvy and performance-minded products from Audi, Mercedes, Infiniti and others, BMW has decided to shake things up a bit in its quest to keep the core brand distinct from the pack.
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Coursework Title: Identify your favourite brand from any sector of your choice. What makes the brand successful? Use relevant theories (branding concept, brand equity and brand positioning) and examples to illustrate your answer. You need to integrate and critically evaluate these concepts in the context of your chosen brand. “The Ultimate driving machine”, a simple, strong, distinctive and clear ...
And while significant shifts in design philosophy, driving qualities, or brand identity could alienate loyal consumers and damage brand equity, BMW has ironically put these very attributes into play in what appear to be some risky moves to achieve greater brand relevance. The Bavarians certainly succeeded in shaking things up from a core product standpoint. It began in the fall of 2001 when BMW introduced the radically restyled 7-series luxury flagship, which focused heavily on form and technological innovation.
The love-it-or-hate-it design introduced aggressive and controversial angles to BMW sheet metal, especially those framing the “humpback trunk,” as one editor put it. The extreme makeover went beyond body design, re-arranging the traditional driver interface from a quirky column-mounted shift mechanism to the oft-criticized iDrive multi-function control. Automotive journalists fussed for over 15 minutes just to start and engage the car in drive, never mind operate the air-conditioning.
And as Frank Markus of Car & Driver wrote, “the new 7 seems less intimate, more aloof and disconnected from the driver than its forebears” – quite a contrast with traditional Bimmer gestalt. The 7-series edgy styling and technological gadgetry set the tone for the new ranges of BMW sedans: The recent 5-series replacement features speed-sensitive steering ratios (a further evolution from traditional driver interface), and trunk design that one journalist termed “angry. Judging by the overall flavor of trade reviews, the new flagship has ushered in more of an “ultimate technological revolution” than a further enhancement of the driving experience. Dating back to the first 3-series in 1975, BMW has been well served in the US and UK by the ubiquitous tagline, the Ultimate Driving Machine. Today, however there appears to be a shift in North America to align with the Joy of Driving brand positioning used globally.
The Term Paper on Bmw M Series
Hand-built by German engineers, the cars are more expensive than BMWs core line, but the cost is justified to the up-to-now limited number of buyers in the way of extra horsepower and other tweaks that add up to a lot more get-up-and-go. But this year, BMW is taking M from being just a small-volume bit of driving candy for hardcore enthusiasts to a product group that will sell 12,000 cars this ...
While this move may facilitate some marketing synergies and unite today’s broader product lineup under a more accessible brand, it seems to dilute the power of the Ultimate Driving Machine associated with BMW’s core sedan offerings. Fortunately for BMW, taking risks has not resulted in disaster yet. But the shift in strategy may already be exposing some setbacks at a time when most luxury brands are struggling through a weak first quarter. While last year’s initial sales build for the new 7-series actually exceeded that of the preceding design, sales through February 2004 for the 7-series are down 21 percent versus last year.
The American watchdog publication Consumer Reports recently singled out BMW’s flagship as the most unreliable European model, with more reported problems per 100 cars than other models in its class. Among vehicles that have been recalled multiple times, the 2000 to 2001 X5 nearly tops the list with 12 recalls, according to the Center for Auto Safety. It’s always interesting to see a tried and true brand change course. At the end of the day, while the designers and marketers tweak the Machine, hopefully they’ll continue to steer the Ultimate Driving brand down a road that’s true to its heritage. |
