The automobile industry has already established a turbulent ride in the past few years due to economic conditions. Fierce competition and globalization possesses made manufacturers strive for their market shares. Clients expectations, product innovation, differentiation strategy and high levels of Research and Development have been the major region of emphasis for the industry.
Bayerische Motoren Werke (BMW), which initially entered as an aircraft manufacturing business in 1917, had to end its production after Environment War I in 1923 because of the Versailles Armistice Treaty. BMW then simply made a change to production of motorcycles in 1923. Finally, BMW started out the creation of cars in 1928 and today is probably the biggest automobile manufacturers across the globe.
This circumstance highlights the birth of BMW Group in britain (UK) together with the key issues faced by the business, its marketing strategies, key competencies, market competition and brand positioning of BMW.
Key words: BMW, growth in the united kingdom, brand positioning, marketing approaches, company issues.
One of the ten greatest car manufacturers on the planet, Bayerische Motoren Werke (BMW) includes a long record of excellence. Founded in 1916, headquartered at Munich Germany, BMW started its United Kingdom (UK) businesses in 1980 (www.bmweducation.co.uk). The BMW Group as well provides financial and it services such as for example customer relationship and supply chain management. Through strong company customs, detailed engineering, and pioneering innovations BMW Group has been able to determine itself as manufacturers of 1 of the very most elite automobiles on roads today.
UK may be the third largest market in conditions of sales and the next biggest regarding production base (www.bmw.co.uk). "The BMW Group provides invested over £800 million in its UK operations since 2000." (www.bmw.co.uk).
UK may be the only country where all of the three of the BMW Group makes- BMW, MINI and Rolls-Royce are produced (www.bmw.co.uk). BMW (UK) Ltd employs 8000 employees and 11,000 persons across a 158 strong supplier network. BMW Group was the first major automobile maker to get documentation to the intercontinental environmental management common ISO14001. The company markets its automobiles through company-owned showrooms, subsidiaries, independent dealers and importers.
Since its base, the BMW brand has stood for one thing, "sheer driving pleasure." Sporting and dynamic effectiveness of its cars coupled with peerless design and distinctive quality, has resulted in the unique selling point of BMW automobiles (www.bmwgroup.com). "The main strategies are to identify potential and encourage progress, knowing what they stand for, recognising where their strengths lie and producing the best use of every opportunity." (www.bmwgroup.com). The automobiles division evolves, manufactures, assembles and sells passenger autos and off-road vehicles beneath the brands of BMW, Rolls-Royce and Mini. The exceptional accomplishment of the company in the past years can be a sketch of their strategys accuracy.
"The mission statement up to the entire year 2020 is clearly defined: the BMW Group may be the worlds leading service provider of premium goods and premium companies for individual mobility." (www.bmweducation.co.uk)
Birth and development of BMW in UK:
BMW (UK) Ltd extended its procedures in 1994 by taking over the Uk Rover Group (www.bmweducation.co.uk). This included reputed makes like Rover, Land Rover and Mini cars.
BMW Group saw enough potential in the Rover Group and made a decision to type in the mass car marketplace in the UK. This plan was likewise supported by the united kingdom government as it allows investment opportunities and help in exploring new export market segments. This however, didn't proceed as BMW Group decided. The business incurred huge losses following the takeover and sales declined. This led BMW Group to market the Land Rover procedures to Ford. BMW (UK) Ltd and Rover split in-may 2000 (www.bmweducation.co.uk). Even so, BMW (UK) Ltd decided to continue with the Mini company.
BMW Group obtained Rolls-Royce from Volkswagen in 1998 and attemptedto expand the luxury segment. This proved as a primary competition to Mercedes Maybach and was powerful in biting into its market. The turnover of BMW (UK) Ltd was £ 3.3 billion in 2008.
The creation of BMW (UK) Ltd Mini hasn't been able to live up to the demand all over the world. This led BMW (UK) Ltd to re-examine its manufacturing procedure along with technology. The brand new technique was derived in 2006 to handle this and is named 'production triangle (www.mini-production-triangle.com). The final assembly of cars and physique shell are done at the plant at Oxford. The Hams Hall plant is utilized for outsourcing engines. Swindon plant handles the fabrications and major pressings. Therefore, the advantage received at one plant is certainly used in other to enhance the process. Heavy existence of KUKA robots plus a good integration of the 'creation triangle the creation of Mini provides been highly increased (Mortimer, 2008). Accordingly, this development triangle of the three BMW (UK) Ltd crops could be highlighted as a significant core competency because it has resulted in a rise in the development and a rise in the sale of Mini everywhere.
BMW (UK) Ltd spends plenty of money regarding R & D on its automobiles. This is why why BMW (UK) Ltd, as their core competency has innovated motors like Hydrogen combustion engine, hydrogen H2R and straight six petrol engine.
Positioning and Branding of BMW:
"The positioning theory indicates the way the management wants potential buyers to perceive the companys company" (Cravens and Piercy, 2009). "A clear positioning strategy can insure that the factors of the marketing software are steady and supportive." (Cravens and Piercy, 2009). In this regard BMW has got positioned the manufacturer as the lone car that provides both luxury and functionality. Its German legacy and reliance on designs, along with a clever marketing strategy, BMW has had the opportunity to achieve (1) a point of difference on performance and a point of parity on extravagance regarding luxury cars and (2) a spot of difference on extravagance and a point of parity on efficiency regarding performance cars. The smart slogan, "The Ultimate Driving Machine," properly captured the recently created umbrella category-luxury effectiveness cars.
"The positioning strategy may be the combo of marketing program (combine) strategies employed to portray the positioning desired by management to the targeted potential buyers." (Cravens and Piercy, 2009).
BMW (UK) Ltd features led its advertising programmes in various ways. The successful advertising of BMW through mass media and film industry adds to its gain and creates an appeal for its customers. "Colour press for example: Tatler, Vogue, lifestyle publications, motoring publications, broadsheet newspapers and tabloid newspaper weekend color supplements. BMW has strongly influenced customers through press and film industry" (Source: BMW education programme). BMW vehicles have made their occurrence in Bond videos like Octopussy, Golden Vision, Tomorrow Under no circumstances Dies and The Community Is Not Enough (www.bmweducation.co.uk).
"Global publicity, communicated in partly subliminal means and partly by overt ones, is positive and important, because it reaches a wide portion of the public quiet generally on a world-wide scale" (www.bmweducation.co.uk).
BMW (UK) Ltd features managed to market the products in a differentiated way. The idea of BMW Artwork Car was were only available in 1975 (www.bmweducation.co.uk). BMW Art Vehicles are shown in museums and art galleries across the world, just like the Royal Academy of Arts in London (www.bmweducation.co.uk). Within the last twenty years 15 BMW Art Automobiles were created by artists like Andy Warhol, Michael Jagamara Nelson and Matazo Kayama (www.bmweducation.co.uk).
BMW Group is usually a Tier One Partner and the lone car manufacturer to sponsor the London Olympics 2012. The company will give out 4000 vehicles to help transportation of athletes, media officials, specialized officials and Athletics Federations members (www.independent.co.uk). Through the games the company has promised to supply vehicles that will deliver 'low carbon and 'healthy living.
Reacting to the environmental pressures BMW (UK) Ltd has promised to meet the Euro 6 emission norms and also outdo the maximum standard of 120gCO2/km founded by LOCOG (The London Organising Committee of the Olympic Video games and Paralympic Games). (www.london2012.com)
Facing the marketplace competition- A genuine challenge:
"Porters five forces of competition consist of three resources of "horizontal" competition: competition from substitutes, competition from entrants, and competition from proven rivals; and two sources of "vertical" competition: the power of suppliers and ability of buyers" (Grant 2010).
Entry in to the automobile industry takes a substantial amount of purchase. High costs of setup, infrastructure, plant and machinery, distribution network and study and expansion make it tough for any new competitor to enter the marketplace. BMW (UK) Ltd previously enjoys enormous economies of scale and this can only be performed in the long term. The brand impression of BMW is very high and therefore to surpass this, plenty of spending would be required.
BMW (UK) Ltd possesses outsourced the assembly and production of some parts to make its operations stronger. This also reduces the risk of a fresh entrant since it will be yet another price for them. By outsourcing an organization may gain strategic advantage by concentrating on its primary competencies, while outsourcing other necessary business functions to independent companions (Cravens and Piercy, 2009). BMW (UK) Ltd made a decision to outsource its engineering and creation for the X3 compact SUV to Magna Steyr in Austria. This increased their production proficiency remarkably. BMW (UK) Ltd in addition has outsourced its operations to low wage countries like Indonesia, Thailand and India.
Outsourcing to an authorized always involves dangers despite its advantages. Outsourcing may be attractive regarding reducing production costs and for that reason allows laying more concentrate on marketing, product invention and Research and Creation (R & D). However, the 3rd party may arise as a risk because it can share facts with rivals, making it difficult to displace them.
The partnership between BMW (UK) Ltd and Fiat (mutual utilization of elements of Mini and Alpha Romeo), is described as a competitive advantage. Since Fiat can be in a contract, it cannot bind itself right into a partnership with any various other automobile manufacturer. Very few automobile manufacturers have the ability to create such partnerships with their advantage. This framework is very tough to replicate as well. Collaboration with somebody with equal sum of knowledge of the market and when it comes to operations could be rarely found. These varieties of frameworks are likewise very costly in nature and therefore, make it difficult for any competitor to find yourself in.
"For most industries, the important determinant of the entire express of competition and general level of profitability is definitely competition among the businesses within the sector" (Grant 2010). Most the manufacturers lay wonderful emphasis on developing their products and design and attracting new innovations.
The direct competition of
BMW in UK happen to be as follows:
1 series: Mercedes A class, Audi A good3, Volkswagen Golf and Ford Focus.
3 Series: Audi A4, Jaguar X-Type, Mercedes C-Class, Lexus IS200
5 Series: Audi A good6, Mercedes E-Class, Saab9-5, Jaguar S-Type, Volvo S80
6 Series: Jaguar XK, Mercedes SL, Porsche 911 and Lexus SC340.
7 Series: Audi A8 and S8, Jaguar XJ series, Lexus LS400, Mercedes S-Class.
X3: Terrain Rover Freelander, Nissan X-Trail, Jeep Cherokee and Honda CR-V.
X5: Collection Rover, Mercedes M-School, Volvo XC90, Porsche Cayenne, VW Touareg.
Z4: Porsche Boxster, Mercedes SLK, Honda S2000, Nissan 350Z and Audi TT.
M Assortment: M3 Coupe- Mercedes C55 and Audi RS4, Mercedes E5 AMG, Audi RS6, Jaguar S-Type and Porsche Cayenne Turbo, M6- Ferrari F340 and Aston Martin DB9.
MINI: Renault Clio. Peugeot 206, Toyota Yaris, Vauxhall Corsa, VW Polo, Nissan Micra.
The Rolls-Royce Phantom: Mercedes Maybach 57, Bentley Flying Spur, Maserati Quattroporte and Mercedes S65 AMG Limousine.
(Origin: BMW Education Programme)
Choo and Mokhtarian (2004) argue that luxury segment customers in which BMW has placed itself have higher level of disposable money hence they dont look for generic substitution of products that compete on disposable profits. But purchase of various other luxury products like expensive watch, jewels, shirts, hand bags, and house may acts as a trade-off for purchase of luxury cars.
Suppliers and manufactures interact to deliver excellence. This creates high dependency between buyers and retailers. Suppliers are an integral part of BMWs manufacturing process. Most of them have been termed as partners of their organization and influence their procedure to a great extent. Since, the quantity of suppliers is increasing worldwide it increases their bargaining power too. BMW has a strong brand graphic and an extensive basic; this sets the suppliers on a high platform dealing with BMW. So, their bargaining power remains medium. The prices of raw materials are extremely volatile in characteristics, which once again lowers the bargaining electricity of suppliers.
The brand legacy can be a hindrance which minimizes the shifting of customers among various options available for the reason that segment. BMW being a strong brand reduces this mobility. Even so, buyers in this segment dedicate a lot of time finding details about the products. This boosts their negotiating powers.
According to BMW they place all their cars in the high quality segment (www.bmwgroup.com). Therefore, it becomes necessary to be prominent when compared to others. Differentiation strategy has a huge role to enjoy in this respect. Branding is the prime area of concentration for BMW. Once the branding is done the right way, the brand becomes noticeable and creates an appeal to the clients, as they prefer to see it.
Due to the recession before few years, the primary focus of the corporation has gone to arrange liquidity. BMW has been able to achieve the same by starting their own in-house funding and lease financing to its clients. The major threat faced by the business during insufficient liquidity is usually that of a takeover, and BMW has had the opportunity to avoid that. They also face major issues with regards to oil prices and raw material prices. These are highly volatile in mother nature and therefore, less predictable. However, this again has been looked after by their in-house financing division through risk hedging activities.
When it involves competition BMW is not able to keep up with the volume in ways of price. There are high volume level producers who certainly are a immediate competition to BMW. The approach is by using the excess resources of one area to the rest of the business areas. Manufacturers of greater volumes will lead in a cost leadership strategy. They'll enjoy bigger economies of scale and for that reason, cost advantage. BMW even so, runs on the differentiation strategy. They do not produce volume cars but keep up with the image of their top quality cars. This allows them to gain by charging a premium price on the cars. Even so, BMW has decrease their costs in other areas.
It wouldnt be incorrect to state that branding is still the key element for BMW as a significant success factor.
The VRIO (Benefit, Rarity, Imitation, and Corporation) framework assists in analysing the internal resources of an organisation. The framework is structured around some queries, which have to end up being answered with yes to ensure that the learning resource to qualify as a potential sustainable competitive advantage.
In case of a VRIO framework, one learning resource can be compared on the four elements and this assists in understanding the difference between competitive parity and sustainable competitive gain.
EXPLOITED BY ORGANIZATION
Portfolio of Brands
Fiat as suppliers
The main resource of BMW (UK) Ltd is its manufacturer portfolio. Its very exceptional that a manufacturer has a portfolio where they are able to charge reduced across almost all their brands. BMW has prevailed in doing so. This is an enormous threat to the opponents and a challenge since they cannot imitate this.
Innovation has always been BMWs concentration. No compromise on advancement helps them to expand constantly. BMW has been able to stitch their branding and creativity very creatively. Their exceptional R & D has had the opportunity to achieve solutions which help their brand grow in the market. Since, BMW is capable of doing so, it creates them stronger down the road perspective aswell.
It is both precious and rare to rank at the very top, when university students are asked about their preference for near future employment (BMW AR, 2009).
Question 1: Carry out and analyse the problem analysis of BMW.
SWOT analysis will be employed to conduct the problem research of BMW (UK) Ltd. Employing SWOT the strengths, weakness, chances and threats of the company will be identified. "Strengths and weakness relate to the inner resources and functions of the business, as perceived by the customers" (Piercy, 2002); and "Opportunities and threats happen to be externally oriented conditions that could influence the performance of an organization" (Baines et al, 2009: 188).
BMW (UK) Ltd due to its German legacy is regarded as trustworthy and high quality of engineering. It has very helped BMW to build its company image. The successful marketing of BMW through media and film industry increases its advantages and creates an appeal for its customers. Colour press for example: Tatler, Vogue, lifestyle publications, motoring publications, broadsheet newspapers and tabloid newspaper weekend color supplements. BMW has highly influenced customers through press and film industry (Resource: BMW education programme).
The recent CO2 emission norms and legislations regarding End Lifestyle of Vehicles (ELV) have been a major risk to BMW (UK) Ltd. However, the business has prevailed in turning this into strength. Innovation of 'hybrid autos and 'smarter motors has given BMW an edge. Raising demand for 'greener cars also allows them to check out new markets. BMW (UK) Ltd offers reacted on ELV directive and is currently manufacturing cars, which are at least 85% recyclable and at least up to 95% recoverable (Group Management report 2008, p.32).
Prices of the raw materials used have been unpredictable for BMW (UK) Ltd due to its volatile characteristics. BMW (UK) Ltd has managed this with their in-house finance division.
BMW (UK) Ltd due to its large exports of Mini faces key currency risks. This again has been taken care of by their professional in-house finance division through financial hedging.
BMW (UK) Ltd faces a major weakness when it comes to the brand Mini. Since its simply produced in the united kingdom, BMW (UK) Ltd is usually forced to incur substantial costs on shipping to other countries. As a strategic decision this could also be produced in other countries.
BMW (UK) Ltd due to its valuable brand perception enjoys the chance of charging an extra premium on its automobiles.
China being the greatest market for cars can be seen as an opportunity for BMW (UK) Ltd. They are able to get into an contract with the Chinese and generate Mini in their country.
BMW (UK) Ltd has got been able to diversify its businesses by providing leasing finance to its customers. This allows its customers to make the cars easily available to them.
The company should consider emerging markets for development since, US and Europe account for its major sales and have been affected because of economic recession.
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BMW Group Deliveries of automobiles by place and market