Marketing Plan: BMW 1-series in Germany

Table of contents

1. Terms of Reference

2. Executive Summary

3. Business Mission

4. External Marketing Audit
4.1. Macroenvironment
4.1.1. Political
4.1.2. Economic
4.1.3. Socio-Cultural
4.1.4. Technological
4.1.5. Ecological
4.1.6. Legal
4.2. Microenvironment
4.2.1. The Market
4.2.2. Competition

5. Internal Marketing Audit
5.1. Operating Results
5.2. Strategic Issues Analysis
5.3. Marketing Mix Effectiveness
5.4. Marketing Structures and Systems

6. SWOT Analysis

7. Marketing Objectives
7.1. Strategic Thrust
7.2. Strategic Objectives

8. Core Strategy
8.1. Target Markets
8.2. Competitor Targets
8.3. Competitive Advantage

9. Marketing Mix Decisions
9.1. Product
9.2. Promotion
9.3. Price
9.4. Place

10. Budget

11. Organization and Implementation

12. Control

Appendix

References

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, high-quality 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:

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Figure 1: The external marketing audit.

Following: Nieschlag et al. 2002

Abbildung in dieser Leseprobe nicht enthalten

4.1. Macroenvironment

The macroenviroment will be described by the PESTEL^[2] 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.

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).

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Figure 2: Oil price development 1999-2005.

Following: BMW Group 2006

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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).

4.1.4. Technological

In the automobile industry, companies are forced to invest huge sums into R&D measures to foster technological development and be cutting-edge. Currently, the focus lies in the fields of security and alternative energies, e.g. hydrogen (FTD online 2006a).^[3]

4.1.5. Ecological

In view of high media covering, ecological influences become increasingly important (Cheverton 2004). Especially automobile companies have to show that they responsibly use the available resources and care for the environment. Following, BMW reduced plant emissions and vehicle consumptions, which required improvements in engine technology and aerodynamics (BMW Group 2006).

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Figure 3: Fuel consumption of BMW Group cars 1990-2005.

Following: BMW Group 2006

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4.1.6. Legal

Examples of legal factors influencing the German automobile industry are the introduction of fuel consumption declarations or the emission trading system. From 2007 onwards, the EU End-of-Life Vehicles Directive requires car manufacturers to take back – free of charge – end-of-life vehicles, which leads to higher costs (BMW Deutschland 2006a, BMW Group 2006).

Another legal factor influencing the automobile industry in Germany is a regulation that by 2015 every tenth litre of fuel has to be biological. In combination with the VAT-increase, petrol prices increased by 5-8% on 1 January 2007 (FTD online 2006c). The effects on people’s driving habits have to be observed.^[4]

4.2. Microenvironment

The micro environment in an industry can be described by Michael E. Porter’s five forces model. In this report, first the market including suppliers, buyers and substitutes and second, the competition (including potential new entrants) in the automobile industry and its effects on the BMW 1-series will be analysed (Porter 1980).

4.2.1. The Market

The automobile market is a mature market with significant overcapacities. The rate of competition is high as the market is a oligopoly (Petri 2004). Except for the premium segment, business develops cyclical with peaks every 3-5 years (FTD online 2004a).^[5]

In Germany, about 46m cars were registered in 2005. 3.34m cars were newly licensed, which was an increase of about 2% in comparison to the previous year (FTD online 2004c, VdA 2006). Market shares and sales developments of different producers are shown in figures 4 and 5.

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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, Socio-cultural, 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).

^[3] As car manufacturers often have to implement the given ecological or legal pressure through the development of new technologies, a high correlation between those fields exists. Compare parts 4.1.5 and 4.1.6.

^[4] Compare part 4.1.3.

^[5] For an illustration of the business cycles in the automobile industry as well as the continuous development of the premium segment, see figure 20 in the appendix.