BMW Films

----Group 16

Songyan He

Emily Walker

Amanda Jones

Mengjia Wang

Elena Ratnikova

Company History
Founded in 1916 as an aircraft engine
manufacturer
Produced first automobile in 1929
Luxury/performance segment by 1980s with
three Series: 3, 5, 7

BMW in the US
Mid 1970s: niche foreign car manufacturer
Late 1970s: very popular luxury brand
Late 1980s: luxury car market shift
BMW as the outdated brand

Competition: Acura (1986), Lexus & Nissan

(1989)
1992 BMW sales fall & very low customer
satisfaction

Invigoration & Recovery in the US

INVIGORATION:
1. Introduced new models within core Series
2. Aggressive pricing strategy
3. Reorganization of the dealer network
4. Introduction of several new Series
Modifications for North Americas market

RECOVERY:
1996-2001: BMW recovered in the market
2001: record level of sales: 2% US market share

BMW 5 Short Films

About the film
$15 million
25% of their media-spending budget, major
competitors spent less than 50% on media advertising
To reach 40% increase in sale, increase share of mind
Only available online at BWMFilms.com

Problems
Wrong Segment
Too much budget on short films

Luxury or Mass-market
In case study, BMW targeted sales as high as 300,000
cars and planed to reach new sales goals of an
additional 40% in the US
Damage the luxury image of BMW
Various series and models or Reduce models to keep
simple as Mercedes-Benz
Raise quantity or price

BMW Current Customers

7 Series

5 Series

3 Series

Most profitable

>50
35 - 50
<35

Current Customer VS Visitor Profile

10% under age of 30
Average age: 46
Median income:
$143,000
Gender: 63% male

25% under age of 25,

60% under age of 35
Average age: 31
Median income:
$88,000
Gender: 88% male

Recommandation:
Supplement the locations of Ads
Why ?
To better targeting the middle-upper class
To targeting the current consumers
How
Advertising in The Wall Street Journal,
BusinessWeek, and finance.yahoo.com
giving them benefits in their customer service
plans to heighten retention rates

Maintain BMW films

Why ?
To attract the younger, urban and chic
neighborhoods
To increase their share of mind and add to their
future 3 Series consumer base
How?
Release films less frequently (every 2 weeks now)
Produce films quarterly or less frequently

BMWs Current Image

Producing more cars than sustainable for a
small luxury company
Turning point
Do not enter mass market, maintain luxury
image
Rise in customers perceived value of BMW
cars

BMW: Luxury Brand ?

Luxury-something that is expensive and hard
to obtain.
Cut down on the number of cars produced

P S1S
D
Q

McKinseys study
McKinsey 2001

Profit Change

1 % increase in price

Up to 8.6% increase

1% reduction in variable cost

Up to 5.9% increase

1% increase in quantity sold

Up to 2.8% increase

1% reduction in fixed cost

Up to 1.7% increase

Recommendation:
Differentiation

Currently not much variety among 3, 5, and 7

Series Sedans
3

55

Why Differentiate?
Better target customers
Avoid cannibalizing brand and entering
mass market
Maintain luxury

Differentiation
Break consumers into 3 segments
Segment 1: willing to pay low price = 3 Series
Segment 2: willing to pay moderate price = 5 Series
Segment 3: willing to pay high price = 7 Series

Use self-selection price discrimination

3 Series

5 Series

7 Series

Age

Under 35

35-50

50 +

Features

Minimal

Moderate

Enhanced

Design

Youthful/Futuristic

Practical

Classic/Luxurious

Price

$30,000

$60,000

$90,000

Thank You!