SWOT Analysis Of
Total Page:16
File Type:pdf, Size:1020Kb
SWOT Analysis of BMW: Strengths Weaknesses Strong Brand Image Because of its Germany Heavy base, Perception of German Engineering fixed costs and labour costs are very and Quality high. BMW makes some of the best Productivity though improved, still lags engines in the world. behind its Japanese rivals like Lexus. Strong commitment to R&D. Less than perfect response to its new Established presence and design direction. Economies of Scale in the big car markets of Europe and USA. Promising presence in growing markets like India, China and Russia. Opportunities Threats Strong growth of China and India Threat of a long recession in the USA Integration of European countries and Europe into the European Union has Strengthening of the Euro against the created the world‟s biggest and US Dollar and other currencies can potentially richest trading zone undercut its top line and affect and EU is BMW‟s home. profitability. Consumer trend towards cleaner Fresh and aggressive new direction at and more fuel efficient high Mercedes Benz that is promoting performance engines which is a driver involvement along with comfort BMW speciality. for the first time in its history. Eg the The percentage of rich people is new C Class. growing worldwide. (Straits Times Article) Segmentation and Target Market: BMW does not believe in a Geographical segmentation of its market. Instead BMW segments its market primarily on a Psychographic and Demographic basis. Societal values are changing rapidly. Society is increasingly taking its cue from the entrepreneurial instincts and self reliance of the Generation X‟ers and dot-comers rather than the baby boomers who have dominated its thinking for most of four decades. Members of the dot-com generation, now in their 20s, are proving to be even more business-oriented. Twice as many say they would prefer to own a business rather than be a top executive. By a factor of 5 to 1, they would rather own a business than hold a key position in politics or government. (Higher education BCS Wiley) BMW wants this segment. BMW‟s ideal customer profile has been 25-40 year olds, with a median income of $120,000 or more. BMW and Fallon research indicated that many were tech-savvy, and had fast, reliable access to the web. Most important, 85% of buyers had researched the vehicle on the web before stepping into a showroom. And they would like to enjoy driving their cars and not be driven in. (Higher education BCS Wiley) The price segmentation BMW chooses limits its target market to individuals at higher levels of income. BMW realizes that their target market‟s financial status requires them to focus on a more educated customer, one that has completed college, and survey results confirm their success. (Grin.com) BMW Brand Positioning: The majority of BMW‟s success is attributed to the development of a consistent marketing policy, the „market niche‟ strategy. The company has built its brand on four core values, which are: Technology Quality Performance Exclusivity BMW has maintained these core values since the company‟s inception. (Higher education BCS Wiley) Its premium price is meant to guarantee the consumer a high level of quality engineering, which can display status or success in a visible manner for social approval. The car‟s driving ability combined with its looks and advertised image distinguishes BMW from its competition. (Grin.com BMW brand audit) BMW has positioned itself as a luxury car maker that offers oodles of driving pleasure thrown in along with the luxury. This is in sharp contrast to Mercedes Benz‟s positioning as a pure comfort and luxury oriented car and Audi‟s positioning as the brand with the best interior quality and understated styling. Its “Ultimate Driving Machine” campaign has been one of the most enduring and loved campaign in the entire Automobile Industry History. So much so that in a poll conducted by Autoblog, the tagline came out tops in terms of best phrase. Marketing Mix Audit: Let us now proceed with the audit of the company‟s marketing mix as we have all the basic building blocks necessary to analyze the 4 P‟s. Let us look at each one 1. Product: To analyze the product mix at BMW, we will use the BCG matrix. Findings: The company has only two „Cash Cows‟ or products that fetch maximum profits for the company. They are the 3 series and the 5 series. The 1 series, 7 series and the Z4 roadster are not doing too well. The company has two star performers in the form of the X5 SUV and the X3 mini SUV. The stars do extremely well but they also cost a lot of money to promote and sell as their market segments are witnessing higher growth rates and competition will be intense. 2.Price: When compared with its direct competition like Mercedes Benz, Audi and Lexus etc, BMW is competitively prices as all of these brands position their brands at more or less the same price in all the segments. 3. Place: Part of BMW‟s success comes from the unique way in which it gets cars from the factory to the consumer. Other automakers mass produce vehicles and ship them to local dealerships where they sit until a buyer comes along but BMW‟s unique ordering system reverses the process, allowing the customer to order a vehicle before it even exists. Customers can visit BMW showrooms to custom order vehicles, selecting from a broad range of customizable features. Once an order is placed, BMW‟s manufacturing facilities go to work. While it would be reasonable to suppose that BMW‟s process significantly slows vehicle production and delivery time, the company has streamlined its logistical processes, enabling its factory to churn out customer-specified vehicles within a mere 10 days of receiving an order. (David Maloney, Modern Material Handling) Findings: BMW has earned its reputation for producing the highest quality car with the highest level of customer service. It leads its competitors when it comes to these areas. 4. Promotion: BMW pursues a bold and aggressive marketing campaign that sometimes directly attacks competitors. A case in point is the advertisement below BMW reaches its target audience of young well to do 20 something‟s through a mixture of intelligent and provocative advertisements that have been highly successful. It always actively promotes the fact that its cars have a high amount of sportiness and driving pleasure mixed with luxury. Below is another provocative ad from BMW. An advertisement that is actively attacking its competitor „Jaguar‟. Note how the leaping cat on the bonnet of the Jaguar has turned back when confronted by a BMW To appeal to its extremely tech savvy and internet using customers and enthusiasts, BMW has launched BMW Web TV. It is a place where videos about BMW and its activities can be viewed online. Findings: BMW has its marketing strategy bang on target. There is no inconsistency between its positioning, its target audience and its advertising. Its cars are bold and so is its advertising. Gap Analysis and Recommendations: The audit shows that the only area of concern amongst the 4P‟s for BMW is surprisingly, its product line up with only two cash cows. Shocked? Well so was I . After all BMW has always been known for the cars it makes. So what are the Product Gaps? 1. Flagship cars like the 7Series and the Z4 which were bestsellers earlier, are not selling well enough. 2. The two stars that the company has, the X5 and the X3, which should ideally turn into cash cows later are SUV’s. 3. Lexus has already commercially launched its hybrid cars and BMW does not yet have an entrant in this segment of the future. Let us analyze our gaps. Why are the 7 series and the Z4 not selling as well as they should? Mr. K. Bobby, the owner of G.N.Car Care, a prestigious luxury car servicing centre in India had this to say to us when we solicited his opinion. “Many of my customers who have been with BMW for years do not like the design of the new cars under Chris Bangle. They find that the styling is not BMW like. Some of them are switching over to Audi and Mercedes Benz.” There is other data to support this theory Many leading auto journalists also rubbished the new „design philosophy‟ adopted by Bangle and his team. There is another problem. When interviewed, Mr. K.S. Rao, the Regional Transport Authority officer for Andhra Pradesh, India who is responsible for issuing permits to new cars says that there is resentment among people who are buying the 7 Series about its extremely and needlessly complex „ i Drive‟ Navigation System. And it is flawed. Responding to a USA Today report that a bug in the „i Drive‟ system of the BMW 7 series and fuel pump problems could make the engine stall, BMW spokesman Gordon Kiel commented: . “certain cars stalled if the fuel tank was below 1/3″ . “There is a not-uncommon shakedown period of one to two years with technology this new.” Ironically, more than two years later, a number of electronic and „i Drive‟ problems continue to plague BMW‟s 7 series vehicles, and is not limited to those produced in 2001. (BMW Problems Forum) Recommendations for this gap: Stick to the BMW design DNA that was so successful for decades and which all the customers have come to love so much. Chris Bangle‟s radical new designs have caused too much bad blood. A mid life styling upgrade for both the Z4 and the 7 Series is necessary to make them more palatable.