Marketing Plan – BMW 1-series in Germany

by: Andreas Klein

Table of contents

1. Terms of Reference 4

2. Executive Summary 4

3. Business Mission 4

4. External Marketing Audit  5

4.1. Macroenvironment 5

4.1.1. Political 5
4.1.2. Economic  6
4.1.3. Socio-Cultural 6
4.1.4. Technological  7
4.1.5. Ecological 7
4.1.6. Legal  7

4.2. Microenvironment 8

4.2.1. The Market  8
4.2.2. Competition  10

5. Internal Marketing Audit  12

5.1. Operating Results 12
5.2. Strategic Issues Analysis 13
5.3. Marketing Mix Effectiveness 14
5.4. Marketing Structures and Systems 15

6. SWOT Analysis  16

7. Marketing Objectives  17

7.1. Strategic Thrust  17
7.2. Strategic Objectives  17

8. Core Strategy  18

8.1. Target Markets  18
8.2. Competitor Targets 18
8.3. Competitive Advantage  19

9. Marketing Mix Decisions  19

9.1. Product 19
9.2. Promotion 19
9.3. Price 20
9.4. Place 20

10. Budget  22

11. Organization and Implementation 22

12. Control  24

Appendix  25

References  28

1. Terms of Reference

This marketing plan for the BMW 1-series aims to outline and analyse the market environment in Germany. Also, an evaluation of the strategic and operational orientation as well as the strength and weaknesses of the product should be given. Based on this, recommendations for the future direction and implementation of the marketing-mix will be given.

2. Executive Summary

In the competitive compact segment (short: C-segment) with increasingly demanding customers, BMW with its newly launched product clearly builds on its premium image as a sports car manufacturer. Although this is generally a good strategy, certain parts of the marketing mix need to be adjusted. Especially the high price of the product in comparison with its competitors is a potential problem. The following suggestions can be given to successfully built up a sustainable leading position in this segment, which is very important in terms of Customer-Lifetime-Value (CLV):

- Reduction of quality problems
- New technology development through increased R&D measures
- Increased promotional measures focused on the target group
- Strengthening of the dealer relationship
- Development of new distribution channels

3. Business Mission

The business mission of BMW is shown in the slogan “Freude am Fahren”, which pronounces a high driving experience. Also, BMW’s long tradition as a manufacturer of premium cars is connected to the attributes sportive, highquality and reliability (Bernhardt and Kinnear 1994, Spiegel online 2004). This orientation can also be found for the 1-series, where Kermit the frog campaigns for “the principle fun”.1 The market introduction of the 1-series was headed “¹ like no-one”. In line with the business mission of BMW, the series is connected to a long tradition as the successor of the BMW2002tii from 1971 (Miete 2005, Spiegel online 2004).

4. External Marketing Audit

The external marketing audit will be conducted in two steps:

4.1. Macroenvironment

The macroenviroment will be described by the PESTEL² analysis, which helps to analyse general, long-term market influences (Cheverton 2004).

4.1.1. Political

Politics can have an influence on companies in an industry (Cheverton 2004). One example is the German VAT increase from 16 to 19%. Additionally, reforms put further burdens (e.g. increased health service contributions) on customers. This may reduce demand and could have an effect on the automobile industry (FTD online 2006d). After the liberalisation of the automobile market through the EU, a VW-dealer is also allowed to sell BMW. This strengthens the position of dealers in relation to the manufacturers.

Figure 1: The external marketing audit. [figure only in downloadfile]

4.1.2. Economic

In 2005, the crisis in the construction industry and the persistent reluctance of consumers to spend, kept Germany’s growth rate down to less than 1% (BMW Group 2006). Nevertheless, the future prospects are positive: For 2006, the growth expectation is 2.5%. After an expected dip to below 2 percent in 2007 (due to the VAT hike), growth is expected to pick up again in 2008 (Spiegel online 2007).

However, the economic environment for automobile companies in Germany can be described as difficult. In particular, challenges arise from the co-occurrence of adverse currency factors (especially the weak dollar) and above-average raw material prices. Also, the increased petrol prices lead to a reduced car demand (Bernhardt and Kinnear 1994, BMW Group 2006).

4.1.3. Socio-Cultural

An on average older population in European countries forces car manufacturers to develop new strategies in relation to their target groups (Cheverton 2004, FTD online 2006b). This is also required in view of the fact that increasingly higher numbers of commuters and the demand of lower consumption cars show an attitude change regarding transportation, potentially causing image problems for companies producing higher-consumption cars. A generally lower average income may lead to lower demand for cars, especially in the luxury segment (Innovations Report 2006).

Figure 2: Oil price development 1999-2005. [figure only in downloadfile]

4.1.4. Technological

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1 For an example of the campaign, see figure 19 in the appendix.

2 The PESTEL-analysis (also: PESTLE-analysis) describes the Political, Economical, Sociocultural, Technological, Ecological and Legal macro-environmental factors in a market. As a short form, also the PEST-analysis is known. But as the legal and ecological factors are important for automobile companies, the PESTEL-analysis will be used in this assignment (Cheverton 2004, Formisano 2004, Grundy 1995).