Relationship Marketing - The case of MINI

Table of contents

1. The remarkable significance of relationship marketing for the automotive industry

2. MINI

3. Relationship marketing orientation of MINI

4. Relationship marketing activities implemented for the MINI
4.1. Product
4.2. Price
4.3. Promotion
Internet
Co-operations
MINI International magazine
Guerrilla marketing actions
4.4 People
4.5. Place
4.6. Processes
Individual offer proposal and customer support
Automation
Complaint management

5. Shortcomings of existing relationship marketing theory

Conclusion

Reference list

Appendices
Appendix 1
Appendix 2

1. The remarkable significance of relationship marketing for the automotive industry

Relationship marketing has become of pre-eminent importance for the automotive industry in recent years (Finsterwalder, Lutz, Packenius, 2004, p.373). This development has been basically caused by a sectoral shift from a seller’s market to a buyer’s market since the beginning of the nineties (Holland, 2004, p. 485). Moreover, declined market conditions like decreasing brand loyalty, high level of information transparency and fast shifting technological developments complicate the road to success for car manufacturers (Wecker, 2004, p. 113). Quality and technical innovations do no longer guarantee competitive advantage so automobile companies have for some years been aware of the need to increase their efforts to satisfy individual customer expectations.

Thus the contact to customers as well as the knowledge about their particular needs becomes a key factor for success (Holland, 2003). Managers can no longer merely think about profit maximisation measures but rather about how they can establish long-term business relationships with their customers in order to gain their loyalty (Bauer, Huber, Keller, 1997, p. 68). Loyal customers represent an important immaterial value for car manufacturers as the customer life time value in this industry is estimated about 300,000 euros, and a premium car manufacturer is even able to gain twice that much. Moreover, a high relationship marketing orientation does not only push profit but is able to decrease costs at the same time. The acquisition of new customers costs five times as much as the maintenance of existing customers. So the acquisition of new customers does no longer take centre stage of activities but the binding of existing customers to the car manufacturer’s brand portfolio in order to operate successfully in a highly competitive market (Diez, 2004, p. 673-675).

The aim of this paper is to critically analyse the relationship marketing orientation of MINI, a cult car of the car manufacturer BMW. A brief historical review serves to demonstrate MINI’s specific position in the BMW brand portfolio. Further, the need to build a close relationship especially with retailers and end-consumers is demonstrated.

In this context the expanded marketing mix framework is applied to state the relationship marketing activities MINI currently adopts. Further suggestions for improvement are provided accordingly. Finally shortcomings of relationship marketing knowledge as well as appropriate recommendations are provided.

2. MINI

In former times MINI was part of the British Rover Group which was acquired by the premium brand carmaker Bayrische Motoren Werke (BMW). After a fundamental reorganisation of BMW in 2000 (BMW Group, 2001, p.1) it remained as the only brand of the former Rover Group in the car manufacturer’s brand portfolio (Wecker, 2004, p. 124) in order to undertake the position of a premium brand quality vehicle in the rapidly growing small-size car segment (BMW Group, 2001, p. 2).

Since that time BMW has been able to sell more than 730,000 MINI cars and sales are still increasing on a continuous base (BMW Group, 2006, p. 17). MINI has developed to a kind of cult car that is able to gain the sympathy of people among all social levels, age groups, and nationalities and has a high emotional brand appeal (Müller-Ötvös, Robertson, Segler, 2005, p.188).

3. Relationship marketing orientation of MINI

Many definitions exist that all aim to describe the term relationship marketing (Egan, 2004). Principally it differs from transactional marketing in a number of aspects. While transactional marketing aims solely on the acquisition of customers, relationship marketing focuses on retaining targeted customers. Moreover, the latter marketing approach addresses actions to multiple markets rather than solely on the customer market. Another characteristic which differentiates relationship marketing from the transactional approach is that the responsibility does no longer rest only with the marketing department. It has become cross-functional (Christopher, Payne and Ballantyne, 2002, p, 5).

The buying decision process for such a high-priced and durable consumer good like a car is very complex (Diez, 2001, p. 66). Thus in comparison to other goods consumer involvement is very high (Holland, 2004, p.490). For high-involvement goods a relationship marketing approach is most appropriate and preferred by potential and existing customers (WebArticles, 2005). Moreover, usually consumers repurchase a new car only after 36 months on the average so it is a matter of a low-frequency relationship (Armbrecht, Braekler, Wortmann, 2004, p. 400). Thus during all phases of purchase for car manufacturers as well as their retailers it is crucial to implement activities which aim on the maintenance of customers in order to bind them to the car brand and stimulate a loyalty spiral (Diez, 2004, p. 681).

For MINI it is crucial to build a close relationship primarily with two groups: the retailers who sell the car (b2b relationship) and current and potential end-consumers who purchase the MINI from the retailer (b2c relationship) (Armbrecht, Braekler, Wortmann, 2004, p. 392).

The end-consumers of MINI can be characterized as modern younger people, especially women in the age between 25 and 40 who are well funded and demanding. Further, design plays an important role for these consumers who most frequently work in creative jobs. A car is not a status symbol for them but expression of personality. The target group normally lives in the urban environment, and is alike in many aspects independently to the particular country they live.

So MINI as a very special cult car addresses a very unique group of end-consumers. This must be considered for the development of appropriate relationship marketing activities as well (Müller-Ötvös, Robertson, Segler, 2005, pp.188-189).

4. Relationship marketing activities implemented for the MINI

Christopher, Payne and Ballantyne (1991) expanded the traditional 4P classification of marketing instruments to an expanded marketing mix framework (Appendix 1) in order to cover all elements important for building relationships rather than solely that one aiming on the manipulation of the market (Christopher, Payne and Ballantyne, 1991, p. 13). The model places customer service in the centre to demonstrate that it must build the central focus for marketing policy formulation (Stone & Young, 1992, p.25).

4.1. Product

The MINI has a strong relationship orientation as it undertakes the task to establish relationships with two end-consumer groups. The first one is the young consumer who does not have enough money to buy a high-priced bigger car of the BMW brand, and who searches for a dynamic and fresh car. For this type of consumers MINI acts as a bridge to the core brand BMW. MINI is a sort of entering brand that builds the starting point for at best a life-long relationship between end-consumers and the BMW Group. The second group of end-consumers who are addressed with the MINI cars are already existing BMW customers who want to drive an interesting second or third car. In this context MINI serves to deepen the relationship to already existing customers (Wecker, 2004, pp.125-127).

BMW is able to benefit considerably from the decision to keep MINI as the only former Rover brand in its portfolio. The cult car is the optimal product to attract a new customer segment to the premium brand BMW as well as to exploit cross-selling potentials. However, MINI appeals to a very individual target group that shows rather small common characteristics with that one of the core brand BMW. Thus the risk occurs that the typical BMW driver regards MINI as an independent product and brand rather than recognizing an imaginary connection to the core brand. In this case MINI fails to win the consumers over to the whole BMW brand portfolio.

4.2. Price

MINI offers the possibility of instalment sales (BMW AG, 2003). This way they signalize to customers that they believe in their willingness to pay on the one hand, and the barrier to buy the high price good is decreasing on the other hand. Regarding the building of relationships the most important benefit of this strategy is the possibility to contact customers on an expanded base which might lead to the establishment of a long term relationship between both parties.

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