ABOUT THE COMPANY

BMW (Bayerische Motoren Werke) in English (Bavarian Motor Works) Group is the leading car manufacturer and seller in the world. BMW Group is a German company and manufacturers of automobiles and motorcycles. BMW Group is the parent company of BMW MINI and Rolls Royce car brands.

BMW was founded by Karl Friedrich Rapp in 1913, under the name of BFW (Bayerische Flugzeug-Werke). But due to difficulties of over expansion, Rapp left and the company was owned by Franz Josef, an Austrian industrialist in 1917.

The headquarters of BMW Group is in Munich, Germany, the famous four cylinder building which was developed in December 1971.

BMW Group employs more than 1 million employees in more than 40 countries. BMW Group has worldwide subsidiaries and manufacturing plants in Germany, the UK, the USA, Egypt, China, South Africa, Brazil, South Africa etc.

CURRENT BUSINESS STRATEGY OF BMW GROUP

The business strategy of BMW Group is based on having a powerful brand image. This strategy forms the foundation of the success of the BMW Group. BMW Group believes in maintain core values as technology, innovation, performance, quality, reliability, exclusivity and customer satisfaction. The company slogans of BMW Group in English i.e. “The Ultimate Driving Machine” and “Sheer Driving Pleasure” give us an overview of the marketing strategy it adopts.The strategy of BMW Group is clearly defined on the homepage of the company i.e.“Identify potential and encouraging growth. Knowing what we represent. Recognizing where our strengths lie and making the best use of every opportunity. Goals we have attained are in essence the point of departure for new challenges”.Product/process design is also a key costs driver. Product design meliorations can help in labour productivity, better yield and maximum utilization of working capital. Product design can also be used to gain competitive advantage over its rivals with simple use of marketing intelligence.BMW was considered to be the best when it came to product/process design and was tipped as an engineering excellence. It was highly dependable, influential and lavish. BMW

also restored new and modern technology for its products thus marketing maximum utilization of the working capital available.

MARKETING STRATEGY OF BMW GROUPThe success of any company is based on how effective marketing and advertising strategy it adopts. BMW Group adopts a marketing campaign of targeting its customers. In the slogans i.e. “The Ultimate Driving Machine” and “Sheer Driving Pleasure”. BMW tells its customers and other people that BMW cars give a pleasure in driving that no other car can give.The marketing strategy of BMW also consists of a strong advertising strategy. WCRS has been BMW’s advertising agency since 1979 and have really made a great brand image for BMW by advertising campaigns including famous actors like James Bond, Tom Cruise etc.

SEGMENTATION, TARGETING AND POSITIONING

Segmentation for BMW:BMW Group has a strategy of targeting their customers by using segmentation. Geographically, BMW Group targets the areas that are more industrialized like Europe, North America, some parts of Asia and Africa i.e. China and South Africa. More than 70% of sales of BMW cars are recorded in Europe and North America.

BMW Targeting:BMW Group targets people who are aged between 25 and 40 because these people have a successful image. By, these people have a clean modern look and a feel good factor. BMW Group focuses on being labeled as a “luxury car” and “a foreign or international car”, so BMW Group does not look to target one ethnicity or citizenship.The aim of BMW Group is to target customers that have an income of 25,000 Pounds.

BMW Positioning:There is a quotation on the website of the BMW Group, which says that “the image that BMW Group has positioned itself in exclusivity, performance, quality, technologically advanced producer in the world. The markets BMW position themselves are very competitive”.

Most of the people value “a feeling of safety” while using BMW, which positions BMW Group ahead of its competitors in customer satisfaction.

MARKETING MIX4 P’s of marketing i.e. Product, Price, Promotion and Place is called the Marketing Mix. Furthermore, marketing mix will be used to further research that marketing strategy of BMW.

1. Product:BMW Group wants an efficient and dynamic look to their products. The major emphasis of BMW Group is on product innovation and development.The latest versions of BMW Group include BMW 1 Series, 3 Series, 5 Series, 6 Series and 7 Series, BMW Z4-Roadster etc. The most recent version of MINI includes the “MINI Countryman”.In recent times, BMW Group has started making smaller cars, which shows the company’s innovative structure. Also because of the increasing competition in car industry, BMW Group has to come up with some new innovative cars to compete with its competitors. In 2009, BMW Group was named as “Greenest Premium Manufacturer” by Clean Green Cars website and wins accolades at Fleet news awards 2009 for fuel saving.

2. Price:The prices of BMW Group are based on a differentiated strategy. This means that they charge extra for premium quality. This difference in prices is due to each cars different engine size, gear levels, fuel consumption, sports version.The pricing strategy that the BMW Group adopts is based on several key trends. One most important trend of BMW is labeled as “premium-tization”.Premium-tization trend of BMW causes polarization of markets. This trend triggers the consumers to demand and pay much higher prices for the perceived quality.

3. Promotion:The BMW Group uses different slogans and advertisements for the promotion of its products. WCRS has been the advertising agency of BMW Group since 1979. The company invests a large amount of money for their cars in films e.g. the film “The World Is Not Enough”. James Bond drove the new Z8 before the car was launched and in “Austin Powers 3-Goldmember” the MINI Cooper was used. These advertisement techniques have really helped BMW Group in their promotion of the cars. BMW Group also promotes its cars by using slogans such as “The Ultimate Driving Machine” and “Sheer Driving Pleasure”.

4. Place & Distribution:The website of BMW Group regarding Placement and Distribution say that “BMW have 156 dealers in the UK who are franchised to sell BMW cars, additionally 148 dealers are franchised to sell MINI Cooper. Worldwide BMW operate in 100 different countries with over 4.400 dealers which are authorized to sell both new and used cars, parts and after sales service products”.

COMPETITORS OF BMWBMW Group is the leading premium car manufacturer in the world. In recent years BMW Group has been closely marked by its competitors. The major competitors of BMW Group include Mercedes, Audi, Lexus, Ford, Porsche, Jaguar, etc. But the two major competitors of BMW Group are Mercedes-Benz and Audi.In this situation BMW Group has to maintain a strategy in which BMW Group has advantage over its competitors in the long run.

SWOT – INTERNAL ANALYSIS

Strengths Weaknesses

1. Brand reputation

2. Environment friendly vehicles

3. Quality products

4. Highly skilled workforce

5. Corporate Social Responsibility (CSR)

6. Strong brand presence in China

1. High cost structure

2. Weak brand portfolio

3. Perception of high prices

4. Too few acquisitions and strategic

partnerships

Opportunities Threats

1. Increasing fuel prices

2. Positive attitude towards “green”

vehicles

3. Expand brand portfolio

4. Changing customer needs

1. Intense competition

2. Rising raw material prices

3. Decreasing fuel prices

4. Growing euro exchange rate

Strengths

1. Brand reputation. BMW brand is the third most valuable automotive industry brand in

the world valued at $29 billion. In 2012, Forbes has also listed BMW as the most

reputable business in the world.

2. Environment friendly vehicles. The company tries to develop environment friendly cars

by making them more efficient. It offers nearly 20 models that emit CO2 as low as

140g/km. To make BMW cars more environment friendly firm’s engineers develop new

types of fuels, such as hydrogen, too.

3. Quality products. BMW is valued on its engineering capabilities, skilled workforce and

quality products. BMW recalls their cars less often and at lower numbers than most of its

competitors do.

4. Highly skilled workforce. Quality cars require premium materials and skilled workforce

and BMW employs only the most skilled workers to produce its vehicles. BMW sets up its

assembly plants at the countries, such as USA and Germany, where there is only the

most skilled vehicle assemblers.

5. Corporate Social Responsibility (CSR). BMW is strongly committed to the environment

protection, employee and community well-being and sustainability programs. The

company invests large sums in employee health management, programs promoting

balanced work life, sustainability requirements for its suppliers and producing zero waste

at its plants.

6. Strong brand presence in China. Over the last few years, BMW has seen strong sales

growth in China, the largest automotive market in the world. In 2012, BMW sold 326,444

vehicles there.

Weaknesses

1. High cost structure. Producing quality cars and hiring skilled workforce results in high

costs for the business. BMW cost structure is higher than of its biggest competitors such

as Toyota, GM and Volkswagen.

2. Weak brand portfolio. BMW Group manufactures and sells only 3 brands: BMW, MINI

and Rolls-Royce. Although these brands perform well in their segments, they are unable

to serve larger market needs. Therefore, BMW has to introduce more brands to its

portfolio to meet diverse consumer needs.

3. High prices. BMW manufactures luxury cars that require best quality materials, skilled

workforce and a great brand image. All this results at a higher car prices that are often

considered as too pricey compared to other car prices.

4. Too few acquisitions and strategic partnerships. 90% of BMW growth is organic and

only 10% is from acquisitions. Without acquisitions, the company finds it hard to grow

even with exclusive engineering capabilities. Thus, if the company wants to grow

significantly, it has to acquire more brands and enter into more strategic partnerships.

Opportunities

1. Increasing fuel prices. Increasing fuel prices open up large markets for BMW hybrid

and hydrogen cars as consumers shift towards cheaper fuel types.

2. Positive attitude towards “green” vehicles. Today consumers are more aware of the

negative effects (air pollution) caused by cars fueled by petrol and diesel. Large

quantities of CO2 emissions intensify greenhouse effect and negatively impact the life on

earth. Thus, consumers are more likely to buy new hybrid and hydrogen fueled cars that

emit less or no CO2 at all.

3. Expand brand portfolio. In order to grow at a higher rate, BMW should expand its

brand portfolio to meet more needs and to satisfy larger consumer market. The company

could introduce new models that aren’t currently included in its range.

4. New emission standards. A new wave for stricter regulations on vehicle emission

standards would positively affect BMW position in automotive industry. The firm

produces one the most ecological vehicles and has introduced hydrogen fuels that emit

zero CO2. New vehicle emission regulations would mean 0 additional investment for

BMW while its competitors would have to invest large sums of money to comply with

regulations and lose a share of profits.

Threats

1. Intense competition. BMW faces increasing competition from its direct competitors and

now tends to compete on price rather than differentiation. Moreover, the markets for

luxury cars are saturated in the developed economies, thus intensifying competition.

2. Rising raw material prices. Rising prices for raw metals will lift the costs for auto

manufacturers and result in squeezed profits.

3. Decreasing fuel prices. Due to increasing extraction of shale gas, future fuel prices

should drop and make electric, hybrid and hydrogen cars less attractive. This creates

huge losses for BMW most ambitious projects, hydrogen fueled and electric cars.

4. Growing euro exchange rate. BMW earns part of its profits outside the euro zone.

Exchange rate fluctuations threaten BMW profits if the euro will start appreciating against

other currencies

PESTEL ANALYSIS

Political factors

Political factors highlight the probable government laws and regulations, security measures and restrictions that can apply to the industry as a whole. The probable factors that affect the automobile industry are:

1. Laws and regulations had affected the automobile industry since its outburst. These laws generally revolved around the environmental norms that were to be fulfilled by any car industry. Thus the car manufacturers had to take care of the environmental issues during manufacturing of cars.

2. Taxes and government foreign policies are critical for the automobile industry. The foreign policies help to us decide the probability of success in the global market.

3. Introduction of new schemes in the US and Europe automobile industry wherein regulations led to produce high mileage cars along with increase in automobile sales and production.

Economical factors

Economical factors related to the exchange rates, economic growth globally and the business setting prevailing in the industry. Economic factors for the industry are:

a) There was excess capacity of cars produced thus giving rise to high amount of revenue in marketing and new product designs. Thus there was lot of revenue withheld even though demand was less than supply. For example the UK auto market had excess 80% capacity in 2003 which freeze 1.3 billion euro of the automobile industry (autofacts, 2004).

b) Total increase in the GDP globally from 2.0% to 3.1% in the year 2008 (statistics, 2008).

c) Decrease in the exchange rate if euro has hampered the European car makers in a big way (Allen, 2006).

d) Economic downturn in the US market (Copper, 2008)

e) Surplus capital and buying power in the developing economies like India and China and their personal emergence in the global market place.

Social factors

Social factors include the changes in cultures and demo graphics globally apart from change in buying pattern and capacity of the consumer. Social factors having an impact on the auto industry are:

Changes in the customer predilection from car being a status symbol to fuel efficiency and low emission cars.

Changes in buying pattern of the consumers due to recession in mature markets.

Environmental issues and awareness of the harmful emissions through automobiles

Technological factors

Increase in use of technology to gain a clear competitive advantage

Use of new and sophisticated design to overcome the decreased margins in the industry.

Modifications or restriction on technology causing environmental pollution

Environmental factors

Increasing effect if awareness of global warning, greenhouse effect and burnout among patrons (organization, 2008)

Shift in consumer’s tastes and preferences towards use of more eco-friendly cars, hybrid cars, fuel cell cars etc.

Stern application of the EURO norms set up to curb pollution in developing countries.

Legal factors

Restrictions and strict pollution norms set up in European and US markets

Strict implications of the EURO norms in developing countries e,g, formation of BHARAT norms on the lines of EURO norms in India(CEN, 2006)

SWOT MERCEDES

SWOT Analysis

Strength 1. Mercedes Benz has a strong brand value and global leader in premium cars2. Lack of capital constraints 3. Leader in innovation i.e. 1st to introduce diesel engines, fuel injection and anti-locking brakes4. More than $12bn allocated for R&D

5. Strong presence in motor sport under McLaren Mercedes6. Manufactured and assembled in over 20 countries across the world7. Mercedes holds patents on the majority of safety features

Weakness 1. High maintenance cost of Mercedes Benz cars

Opportunity

1. Developing hybrid cars and fuel efficient cars for the future2. Tapping emerging markets across the world and building a global brand3. Fast growing luxury automobile market & increased income

Threats

1. Government policies for the automobile sector across the world2. Ever increasing fuel prices3. Intense competition from global automobile brands