BMW Strategic Positioning

Prepared by:

Dora Hui

Melissa Kinckle

Candace Neff History

Who is BMW? Founded in 1913 in Germany, Bayerische Motoren Werke, or Bavarian Motor Works in English, puts “the motor” at the core of both their history and innovation.

In the beginning, BMW built aircraft engines. Unfortunately, in 1919 after World War I, the Allies banned BMW from building aircraft engines, forcing the company to build in secret. In 1920, the logo we know so well as the trademark of BMW was created. Visually, it represents the motion of an airplane propeller, and the blue and white color scheme harkens back to its roots in Bavaria.

In 1922, the first BMW factory was built in Germany to expand production. Meanwhile, BMW was back in the aeronautical industry and doing quite well with their aircraft engines. In 1928, BMW became a car company.

The 1936 creation of the 328 Roadster, a car known in racing history as one of the “best and most beautiful cars” ever built, made BMW a household name. The company ran into production issues again after World War II but rallied and was back to building cars, engines and motorcycles by 1949.

Throughout the ‘50s, BMW’s reputation as a creator of fast and beautiful automotives continued to grow despite financial struggles. It was with the creation of the BMW 700 that BMW began its ascent to its former glory. By 1971, BMW was enjoying commercial success and began the building of its headquarters in Munich, Germany. In 1972 during the summer Olympics in Germany, BMW strategically created “BMW Motorsports” to secure its place in the racing community. By the time the ‘90s rolled around, BMW was seen as a key contributor to luxury and racing communities worldwide.

1 History

Now considered a permanent member of the luxury automaker industry, the BMW brand consists of 4 labels including BWM, Mini, Motorcycles, and Rolls Royce. BMW’s label makes up 78% of their brand and competes with other luxury car markets including Lexus, Audi, and Mercedes-Benz. While over 34 brands of cars are sold worldwide, the brand market set of luxury, non-“exotics” is narrow. Other luxury car brands that are not as competitive include Jaguar, Porsche, Maserati, Land Rover, and Bentley. BMW sells over 1 million vehicles per year and is a market leader in its class, ranking 14 in all car sales and number 1 in luxury cars (Schmidt, 2013).

But when did the slogan, “The Ultimate Driving Machine” come into play? How did BMW advertise its brand over the years?

2 History

In the ‘50s and early ‘60s, like many car companies, BMW typically had posters with their cars displayed on it. This was a safe industry standard. In 1968, the slogan for BMW became “The Sportsman’s Car,” referencing its ascent into the world of sports cars and associating itself with the upper echelons of society.

In the 1970s, the tagline changed to what we know it as today: The Ultimate Driving Machine. The 40-plus-year-old slogan is one of the most prolific taglines in the auto industry. The line was created by BMW’s Sales and Marketing Director Bob Lutz and a little known ad agency called Ammirati & Puris, who helped successfully launch Fiat’s brand.

3 History

Over the years, BMW has continually upped the ante in its advertising game by constantly propelling the industry forward, especially with the introduction of video advertisements. The company was one of the first to showcase their cars by demonstrating them in their “natural environment” of racing. An example of showcasing a BMW racing down the speedway is a 2016 commercial that caters to a younger audience with 21 year old model, Gigi Hadid. Gigi is currently an extremely popular model in the fashion industry. (https://www.ispot.tv/ad/ATf3/ 2016-bmw-m2-eyes-on-gigi-hadid)

BMW’s video ads mostly focus on the theme of racing, showcasing the car and its abilities as “Ultimate Driving Machine.”

Meanwhile, BMW print ads are throwbacks to the typical “car with a background” theme that most car companies employ. It is the industry standard because it serves to highlight the beauty of the car itself, and consumers have come to expect it.

4 History

One of BMW’s most recent partnerships is for the 2016 Olympics, specifically the Paralympics. BMW is creating a new racing wheelchair for the Paralympic track and field team and has included the team as part of its advertisements (BMWusa.com, 2016). Diverging from its usual product lineup was a bold move and one that will undoubtedly help consumers associate the brand with positive sentiments.

The Olympic Games have historically been a promotion of international unity and BMW is creating a product to allow these athletes to perform at their best. Not only is BMW the creator of the Ultimate Driving Machine, athletes who use BMW wheelchairs will become ultimate machines themselves.

BMW strives to consistently demonstrate its tagline, "The Ultimate Driving Machine", through its advertising today just as much as it did years ago.

5 Market Situation

The luxury market continues to grow year over year in the United States, demonstrated by the infograph below:

The graph above presents the luxury Globally, the market is increasing, as market trend from 2010 to 2015. The demonstrated by the €54 billion growth luxury car market is one of the biggest from 2014 to 2015. 2013 returned a contributors to the luxury market, and the significant growth of €32 billion. The market itself has a wealthy and loyal upward trend is undeniable and the consumer base which has allowed the market for luxury vehicles continues to segment to continue to grow grow. exponentially.

6 Market Situation

Another trend in the automotive industry is the introduction of “eco-friendly” vehicles. BMW is leading the way with luxury electric vehicles such as the hybrid i8 and i3 series. These cars appeal to environmentally-conscious consumers. The addition of hybrid and electric cars is also predicted to increase the market size of luxury cars, including BMW.

The automobile industry is integrationg the concepts of connectivity and ergonomics into their environmentally friendly cars. More frequently, brands are implementing connectivity into electric vehicles. This shift will allow the automobile industry to skyrocket into higher growth and sales due to a new market being reached: the eco-conscious luxury car consumer.

2015 marked the fourth consecutive year that BMW has held the title of the most popular luxury car brand by maintaining its position of having most luxury car sales in the US (Vijayenthiran, 2016). The top four luxury car dealers -- Lexus, Mercedes-Benz, Audi, and BMW-- have sales numbers that are more tightly coupled than the remaining eleven. For this reason, Lexus, Mercedes-Benz and Audi are considered BMW’s closest competitors (Vijayenthiran, 2016).

7 Market Situation

While BMW is the current luxury car market leader for the fourth time in five years, global estimates show that Mercedes-Benz will overtake BMW in 2016 (Automotive News, 2016). BMW recently announced its slowest sales growth in the last 7 years. BMW global sales only rose 5.2% while Mercedes-Benz grew 13% due to an increased demand and marketing focus in China (Taylor, 2016).

BMW is lagging within global sales deliveries while Mercedes-Benz and Audi are tapping into the same market and growing quickly. Both Audi and Mercedes- Benz have declared a goal to unseat BMW as the top luxury car brand by the end of the decade (Behrman 2016).

8 Market Situation Current Initiatives

BMW has launched a number of initiatives to further market their brand. Tapping into the car- sharing trend, one includes allowing owners to electronically rent out their Mini Coopers while the car is parked (Soper, 2016).

Another initiative is connecting GoPros to the BMW inset dashboard console so that drivers can record their BMW driving experience (Wilson, 2016).

An enterprising BMW strategy is allowing customers to buy their BMW via their smartphone (Vizard, 2015). All of these initiatives are marketing efforts that demonstrate that BMW is keeping pace with current social trends and mentalities, staying on the cutting edge and cementing its competitive advantage via diversification and technology.

9 Market Situation The Future of BMW

To ensure that BMW maintains its role as the leader of the luxury car industry, the company has identified lifestyle trends and future production prospects that will diversify and elevate the BMW brand. The current social focus on eco-friendly products has impacted the auto industry profoundly. Manufacturers responded by designing alternative-fuel vehicles that cater to the demographic of environmentally-conscious consumers. There will always be a demand for cars, however having a hybrid option can be an advantage that will attract an otherwise disinterested or hesitant consumer. With the introduction of the i8 and i3 electric models, BMW is beginning to tap into this market and it has plans to produce more (bmwusa.org, 2016).

Drivers choose a BMW because they want the pinnacle driving experience that BMW is known for. BMW must continue moving in the direction of alternative fuel in order to meet the growing demand for cleaner emissions.

Self-driving cars have been in development for the last few years. In March of 2016, BMW released its first prototype of the semi-autonomous BMW Vision Next 100, which was showcased at the company’s celebration of its 100th anniversary (Ziegler, 2016).

This car includes a sleek new aluminum look that is still very much recognizable as a BMW, with an augmented reality display that replaces the entire windshield and dashboard. The car comes with The Companion, a computer system within the car that gets to know the driver and his or her habits over time. This is a push in toward artificial intelligence in car form. The car can shift easily between manual mode and autonomous mode, with a steering wheel that appears when needed. Currently, the Vision Next 100 is not quite production-ready, but it represents a future in which BMW can utilize many different pieces of technology to enhance the driver and passenger experience.

10 Competition Overview

BMW is a strong brand and arguably the leader in its class of luxury cars. As noted in a study by Goodcarbadcar.net in March of 2015, highlighted above, it competes primarily with Audi, Lexus, and Mercedes for the “Luxury Crown" (Cain, 2015). Understanding BMW’s competition will help identify the company’s place among its competitors and discover the edge that makes BMW unique.

11 Competition Audi

History: Headquartered in Germany in the the city of Ingolstadt in the Bavarian region, the Auto Union Automotive Group was created when Audi, Horch, DKW, and Wanderer merged in 1932. This history is reflected in its current logo. Each interlocked ring represents one of the original four independent manufacturers that made up Auto Union AG, now known as Audi Automotive Group. This manufacturing merger then produced the first European car to combine a six-cylinder engine with front-wheel drive (AudiUsa.com, 2014).

Current: Audi has grown into a highly profitable company and enjoyed dramatic sales growth in the 2000s. Audi has seen global deliveries increase from 654,000 vehicles to 1,003,000 in just a matter of 8 years. The biggest increase in sales came from Eastern Europe, Africa, and the Middle East (Sadler, 2015). 2015 brought scandal to Audi when the company admitted that 2.1 million Audi vehicles were manipulated in an emissions testing debacle. The company suffered widespread negative media coverage, but their sales still increased that year by 16% (Moore, 2015).

What Audi is known for: Audi reimagines the impossible and defies convention. The company is known for pushing performance limits while engineering lighter and more energy-efficient vehicles. The innovative technology that is utilized in Audi vehicles demonstrates understanding of their consumers and their consumers' vehicular needs. Audi’s designs are sleek and aerodynamic, invoking a futuristic sentiment that helps the driver imagine a world-to-be and his or her role in it (Young, 2010).

12 Competition Audi Advertising

Audi’s German tagline is Vorsprung durch Technik (Progress through Technology), and it has been used in advertising for Audi in Canada and Germany. The slogan in the US, however, is Truth in Engineering, a direct response to its 2015 emissions debacle. Cleverly, an Audi ad during the 2015 Primetime Emmy Awards highlighted Kermit the Frog and his catchphrase, “It’s not easy being green”. This promoted Audi’s new efforts in creating low-emission technology. The new tagline evokes a sense of honesty and trustworthiness that Audi hopes to rebuild with its clientele, positioning the company as the one that consumers can believe in (Moore,2015).

The Audi company sponsors Major League Soccer events, including the All Star Game, the MLS Cup and the MLS Cup playoffs. Audi’s sponsorships also include professional sailing, international winter sports, as well as the German Olympic team (Audi Media Center, 2015). Audi launched its “Green Police” commercial during the 2010 Super Bowl which has garnered more than 2.2 million hits. It also advertises during high-viewing events like the Winter Olympics, FIFA World Cup and March Madness (AudiUsa.com,2016).

Audi’s online strategy is multimedia-based. Heavy on the visuals, the company maximizes its wow-factor by creating videos and images that highlight the car’s aesthetics. For social media, Audi is active on Facebook, Instagram and Twitter, posting photos and videos of Audi vehicles while using common hashtags like #quattroweek, #AudiTTS, and #AudiA3.

13 Competition Lexus

History: Headquartered in Nagoya, Japan, with manufacturing plants in Belgium and the US (California), Lexus is the luxury vehicle division of Toyota and is currently Japan’s best-selling premium brand. The first Lexus model, Lexus LS, was released in 1989, but the company didn’t become its own brand in Japan until 2005. Previously, all Lexus vehicles in Japan were released as Toyota vehicles, and 2005 marked the introduction of Lexus as Japan’s first luxury vehicle company. Lexus operates its own design, engineering, and manufacturing centers. The brand has been introduced to markets in Southeast Asia, Latin America, Europe, and others, with the strongest-performing being the United States (MarketWatch, 2012).

Current: Despite vehicle recalls in the late 2000s and early 2010s, the Lexus brand continued growing while its parent company, Toyota, took the brunt of the criticism. In 2011, Lexus ended its 11-year streak as the US’s top- selling premium car brand when production lines were disrupted by the Tohoku earthquake (Rechtin, 2011). BMW replaced them in the top spot and Mercedes-Benz rose to second (Rechtin, 2011). Current Lexus models include sedans, coupes, SUVs and convertibles. In 2015, global sales of Lexus vehicles reached a company-record high of 652,000 units. In 2004, Lexus introduced its first hybrid vehicle and in March of 2016 marked the sale of its one-millionth hybrid unit (Toyota, 2016).

What Lexus is known for: The company is best known for the “Lexus Covenant”-- employees are trained in the motto that “Lexus will treat every customer as we would a guest in our home” (Mahler, 2004). Because of this covenant and the company’s demonstrated emphasis on the customer experience, Lexus drivers tend to be loyal to the brand. Due to its affiliation with Toyota, Lexus is seen as a reliable and dependable brand-- both descriptions are often used to describe Toyota cars. Buying a Lexus often means buying a luxury car without the sticker shock that is associated with buying a luxury vehicle with German roots.

14 Competition Lexus Advertising

The company’s advertising media mix includes a combination of event marketing, sponsorships, online, print and video.

Lexus’s first tagline was “The Relentless Pursuit of Perfection,” developed after Team One representatives visited Lexus designers and noted their obsessive attention to detail. In 2000, the tagline was modified to “The Passionate Pursuit of Perfection” (Dawson, 2004). In recent years, the tagline has been shortened to “The Pursuit of Perfection”. This phrase evokes a sense of precision and determination. It lets the customer know that Lexus works tirelessly to put forth only products that are perfect. In turn, the Lexus driver feels safe and secure in the driver’s seat knowing that this car had a team of engineers working on it that settle for nothing less than perfection. This tagline is so powerful in its simplicity. It suggests a continuous practice of seeking the best and it’s made by the best, for the best.

Of note, James Sloyan was the voice of Mr. Lexus from 1989 to 2009. Through the years, Lexus has employed Andy Roddick (tennis), Annika Sorenstam (golf), and Peter Jacobson (golf) to be the faces of Lexus. Lexus has also sponsored sporting events such as the US Open, the US Golf Association US Open, the USGA Women’s Open, the Champions for Charity golf series, etc. Additionally, Lexus sponsors private parking lots for Lexus drivers at sporting events (Lexus.com, 2016), creating a sense of exclusivity for the brand and a sense of belonging for drivers.

For its online presence, Lexus uses Facebook, Instagram and Twitter to promote its brand. Lexus uses a combination of professional photographs, Lexus-sponsored events, user posts and a designated team to respond to user comments. This delivers a very personalized touch that falls within the Lexus Covenant of employing the merchant mentality. Lexus strives to understand its clientele and delivers what they want: updates on all-things Lexus, a vision for the future of the company and recognition for being a member of the Lexus community. Images and videos across the three platforms are unique and never repeated which demonstrates that Lexus stays true to itself by remembering the details.

15 Competition Mercedes-Benz

History: Headquartered in Stuttgart, Baden-Württemberg, in Germany, Mercedes-Benz was founded by the descendants of Karl Benz, the creator of the first automobile, and Gottlieb Daimler, the inventor of the high speed petrol engine in Germany. Their two respective companies merged in 1926 to create DMG. In 1900, DMG created the car dubbed Mercedes, a beauty of its time that graced the racing circuits. By 1927, 7000 Mercedes-Benz cars had been produced. By the 1930s, Mercedes-Benz was a household name signifying luxury and prestige. (Global Car Brands, 2015)

Current: In 1998, Daimler-Benz merged with Chrysler and created the world’s fifth largest car manufacturer (UKEssays.com, 2015). The Daimler brand includes Mercedes-Benz, Mercedes-AMG, Mercedes- Maybach, Trucks, Buses and Financial Services (Simconblog, 2015). Mercedes sells luxury sedans, SUVs, buses and trucks all over the world including Asia, North and South America, Europe and Africa (Simconblog, 2015). In 2015, Mercedes-Benz recorded its highest US sales in history, selling 380,461 cars (PR Newswire, 2016). Despite that achievement, Mercedes-Benz still trails BMW and Lexus in sales (Forbes, 2014).

What Mercedes-Benz is known for: Mercedes-Benz prides itself on its innovation, safety features and committment to being environmentally friendly (Simconblog, 2015). The brand filed over 2000 patents in 2009, illustrating its commitment to innovating and expanding futuristic features for its brand (Lavrinc, 2011). Mercedes is recognized globally regarding their safety, inventing the “safety cage” with front and rear crumple zones that protect the passenger. In addition to innovation and safety, Mercedes has taken a stand against emmissions and global warming by introducing greener combustion engines and environmentally safe auto production (Simconblog, 2016).

16 Competition Mercedes-Benz Advertising

Mercedes has had a few taglines over the years. Notably in the 90s, it was “Engineered Like No Other Car In the World”. In the early 2000s, the slogan changed to “Unlike Any Other”. But it was in 2010 that Mercedes came up with the now iconic tagline, "Das Beste oder nichts" in German or "The Best or Nothing" in English (Halliday, 2010). This slogan is renowned and a hallmark of the Mercedes-Benz brand. It symbolizes Mercedes' commitment to being the absolute best, a position that loyal customers believe in.

The Mercedes-Benz advertising approach uses social media in order to target a younger audience segment. They employ social listening, conversations and interactions in order to appeal to a younger audience (Simconblog, 2015). One such strategy was to enlist famous Instagram photographers to take photos of their CLA class car and post the photos on their individual pages to share with their followers. Mercedes promotes owned advertising via their sponsorship of “Mercedes Benz Fashion Week” in New York City. Every year, Mercedes sponsors tents, equipment and locations for fashion week with their brand logo splashed across the fashion week signs and tents. They implement elements such as tweet contests, photo booths and fashion photographers interacting with customers as part of their fashion week advertising strategy (Simconblog, 2015). Mercedes-Benz also organized a 90-city tour in Europe for the Class A release allowing 25,000 people to test drive the car. This was an attempt to add accessibility to the brand and attract new customers (Mahmoudsadek, 2014).

Mercedes' overall advertising approach is one where they interact with customers utilizing "touch points". They want to give their customers a feeling of connectivity and collaboration between the customer and the brand. They believe that this community brings out the best in their brand and creates unparalleled loyalty with their customers. Mercedes advertises itself as the best at everything: luxury, comfort, safety and customer brand loyalty. 17 Target Audience

The BMW consumer has traditionally been the professional male who is established in his career and earns a steady high income ($150k+) (MRI, 2014). There is also an upsurge of BMW consumers in the latter stage of the 18-24 age range (MRI index: 147). This age group includes individuals who are aging out of their first car and are looking to purchase a new one. Likely to be buying a car of their own choosing for the first time, they seek a car that reflects who they are and the direction in which they are headed. These demographics represent two types of BMW drivers:

Driver 1: Danny

One of BMW's drivers is the recent college graduate who is newly established in his career of choice, most likely in finance. He is well on his way to moving up the social ladder. He wants a car that will show the world, and especially the older folks in his field, that he means business. This type of BMW driver enjoys traveling, but specifically traveling in style. He understands the importance of making his mark in society. He strives to ensure every impression he leaves is a good one so that he can make the right connections with the right people. He feels like he has something to prove and intends to do so.

He is an adventure seeker with a bit of an impulsive streak. He considers himself on the cusp of success, attractive, but missing something. In a BMW, he might find what he is looking for to complete his image. He’s what is called an “emulator”. He reaches beyond his means in order to mimic the lifestyle that he craves. More often, emulators tend to be younger, more financially unstable and have lower self-esteem. The flashy car is more an outward projection of his inner insecurities. He views material things as part of his identity and sees the car as an extention of himself.

18 Target Audience

Driver 2: Jacques

Another BMW driver is the middle-aged, mid-career, high-earning male. He buys a BMW because he wants one, crunched the numbers and knows he can afford one. Money is not something he worries about on a daily basis because he has established himself for the future. He leads the life that the younger BMW driver is trying to emulate. He’s well dressed, cultured and a high achiever in his career.

This man has a family that is growing up- he has invested in them and now believes it is time for him to invest in himself. He is at a point in his life where he is completely confident. He’s done the work, paid his dues and has earned the lifestyle he always envisioned for himself. He feels that he deserves a car that represents who he believes he is: successful, influential, and in control.

19 Positioning Statement

To high achievers who see cars as a reflection of themselves and their journey, BMW provides unparalleled tools for control, comfort and peace-of-mind to navigate the road ahead.

20 Positioning Statement

BMW manufactures machines that conquer the concrete and showcase status. A symbol of European luxury, BMW creates cars that provide control, power, and innovative technology.

BMW dominates the road with its engineering prowess. A model of safety and reliability, BMW drivers can be assured that they are in complete control of their driving destiny. For them, it’s never merely about getting from Point A to Point B: The journey is just as important.

BMW believes the journey, however long or short, should be conducted in comfort. From the leather seats and the cutting-edge dashboard to the buttery seat belts and custom climate control, getting into the driver’s seat becomes something worth looking forward to. While its competitors Lexus and Mercedes-Benz hone in on durability or legacy, BMW provides both, along with a particular focus on experiences. A car ride isn’t just a car ride when it comes to BMW. From the sleek exterior to the amenities within, design is an integral part of the BMW process along with its enjoyability for the driver and passenger.

The current BMW is reminiscent of being a pilot in a cockpit, ready to take off. BMW’s designs and technology have adopted not only current concerns but also anticipate future needs. The introduction of the runflat tire made obsolete the need for spares in the trunk, and the unveiling of the fully electric BMW i3 paved the way for other luxury cars to join in the environmental conservation movement.

Who are BMW drivers? Classy, tenacious, formidable, unrivaled-- they are appreciators of the best. They are, or aspire to be, the alpha, the leader, and always on top of their game. Technologically savvy and on the cusp of "the next," a BMW driver covets the classics and admires innovation. A forward thinker who appreciates the iconic, the BMW driver never goes out of style, much like the car itself. 21 Creative Brief

What do we want the advertising to do? Convince drivers that a BMW should be their next car because it best reflects their identity and life goals.

Who is our target? Males, specifically two groups: young post-college men in high-earning jobs who have aged out of their first car and now want to drive a car that reflects who they want to become (their motto is “If you want the job, dress like it”), and middle-aged men who are already established in their careers and want a car that mirrors their achievements.

What would we like them to think? Driving a BMW is more than just getting from point A to point B. A BMW gives the driver full control—from maneuvering the car itself, all the way down to little luxuries like a scent to suit the mood. The journey can take twists and turns, but you’ll be ready in a BMW.

Why should they believe it? Every BMW was designed with the users in mind. Both the driver and the passenger will have a full experience that includes riding in comfort but also peace of mind. A BMW is one of the safest in the industry and offers some of the best handling to navigate through any unexpected bumps along the way. From the heated leather seats and the introduction of aroma controls to the runflat tires and powerful whispering engine, BMW cares just as much about the details of how you get there as much as where you’re headed.

Is there anything else worth considering that may help us get to great creative work? BMW is a German company with a history of making airplane engines.

22 Creative Execution Magazine

23 Creative Execution Billboard

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