An Assessment and Analysis of the Marketing Techniques and

Strategies of BMW in UK and India

Submitted To: Submitted By:

Dr. Peter Taylor Siddharth Subhankar

BBA- 3 Continent

Enrollment No.: A1810411006

ACKNOWLEDGEMENTMy deepest appreciation goes to Dr. Peter Taylor who provided helpful comments and suggestions. I also owe a very important debt to Dr. Loveleen Gaur who provided technical help and sincere encouragement. I would also like to express my gratitude to my family for their moral support and warm encouragements.

ContentsACKNOWLEDGEMENT.................................................................................................................................2

Project objective..........................................................................................................................................4

Research Methodology................................................................................................................................4

Introduction.................................................................................................................................................4

Company Profile..........................................................................................................................................4

Segmenting the markets in UK and India....................................................................................................5

Demographic segmentation.....................................................................................................................5

Geographic segmentation........................................................................................................................6

Market Targeting.........................................................................................................................................7

BMW’s Marketing Mix...............................................................................................................................8

Product....................................................................................................................................................8

Price........................................................................................................................................................8

Placement................................................................................................................................................9

Sales Promotion and Communication......................................................................................................9

SWOT Analysis- BMW India...................................................................................................................10

Strengths................................................................................................................................................10

Weaknesses...........................................................................................................................................10

Opportunities.........................................................................................................................................10

Threats...................................................................................................................................................11

SWOT Analysis- BMW UK......................................................................................................................11

Strengths................................................................................................................................................11

Weaknesses...........................................................................................................................................11

Opportunities.........................................................................................................................................11

Threats...................................................................................................................................................11

Conclusion & Recommendation................................................................................................................12

References.................................................................................................................................................13

Project objective1. Monitoring of BMW's Market segmentation in UK & India for comparing the target audience by study of segmentation

2. Ascertainment of the firm's market targeting techniques in both the countries

3. To identify how the company is acting in both countries with the help of 4P’s of marketing

4. Analysis of sales promotion and communication models in both the countries

5. Critical analysis of the company’s strategies in UK and India through assistance of SWOT analysis

6. Provision of my recommendations so that the company can market itself better

Research MethodologyThe research design to be used is that of “Descriptive design” as the research is based on BMW’s marketing techniques.

Data collection method will be based on secondary method as the information available is in the form of secondary information.

The research approach that is to be followed is comparative approach.

The analytical tool to be used for the project report is SWOT analysis.

The basic underlined objective is to have an in-depth breakdown and knowledge of BMW’s marketing techniques and methods in India and UK.

IntroductionThrough this report I intend to research about the marketing roadmap that BMW employs in UK & India. The core focus will be on how BMW uses market segmentation to differentiate consumers, which consumers they plan to target and how they target the customers. Furthermore I will be finding out how the company is operating in the two different marketplaces, critically analyze their methods, construct a SWOT analysis and provide my recommendations which BMW can reflect in their marketing methods & methodologies.

Company ProfileBMW or Bayerische Motoren Werke (English translation: Bavarian Motor Works) is an automobile manufacturer that is based in Germany. It is one of the largest and the most respected automobile manufacturers in the whole world. They specialize in constructing some of the best luxury cars among its peers and is proclaimed to offer the best driving experience among luxury cars.

It was founded in Munich during the early 1900s as a manufacturer of airplanes. The BMW logo that we see of today is actually two white airplane propeller blades against the blue sky.

Since a very long time BMW’s taglines have been somewhat like “The ultimate driving machine” or “Sheer driving pleasure” which have been an indicator of portraying BMW’s cars as the best cars to drive around in.

BMW’s most prominent cars present in the UK market are:

1-Series 2-Series 3-Series 4-Series 5-Series 6-Series(Coupe and Convertible) 7-Series X-series M-Series Hybrid I-Series Z4_Roadster Mini Rolls-Royce

In India, BMW has in its product line : 1-Series 3-Series 5-Series 6-Series 7-Series X-Series Z4-Roadster M-Series

Segmenting the markets in UK and India

Demographic segmentationBMW’s entry in the UK took place in 1980 when its first branch named as BMW (GB) where GB stands for Great Britain launched operations in England.

BMW’s demographic strategies have ranged from age, gender, life stage, occupation and education.

In UK,

BMW concentrates on successful business executives in their mid-twenties to mid-forties. Equal focus is on both males and females. No specific focus on one gender A more concentrated approach towards people who want a car for the purpose of driving it

themselves. The BMW 1-series is directed towards people who want a cheap BMW and don’t have a large

family (positioned towards nuclear families). Since young people want comfort as well as a high performing vehicle, more concentration

towards younger generation due to the fact that the cars are luxurious as well as performance oriented.

In India, BMW entered the automotive industry in 2005 and within 2 years it was competing with Mercedes in the premium car market segment. The cause of BMW’s rise was because they identified changing consumer trends in the automobile market correctly. According to them, their focus was on:

Rise in education levels and the existence of a developing economy resulted in rising purchasing power for individuals

The younger generation i.e. between the age group of 30-40 wants to work as well as enjoy their lives which indicated that the people in this age group want a vehicle that has both luxury and performance. Average age of a BMW owner is 40.

Since it is a developing economy, the country is modernizing at a decent pace and people are earning money quick money, therefore BMW has taken advantage of that and introduced vehicles with new technology which attracts the consumer even more. For e.g. I-Drive system.

Marketing their cars to people who are at a stable life stage and who want a car that resonates of style, substance and versatility.

Also, they are concentrating on marketing their immensely expensive 7-series to highly positioned businessmen.

Geographic segmentationIn today’s scenario, BMW has a majority of its sale in North America and Western Europe, which is about 48% of its total sales. And in the case of Asia only China is the major market for BMW with about 18% of its total sales. The reason that BMW has been so successful in these parts of the world is because of their modernization and industrialization. The rampant and quick modernization of North America, Western Europe and the fast moving globalization of China has resulted in much larger and highly stable economies. This has in turn given a boost to the citizens of these areas in terms of purchasing power parity, better lifestyle, access to modern technology. This shows that the people of these countries were

financially strong and have the ability to purchase luxury vehicles.

19%

18%

16%10%

4%3%

3%

28%

BMW's Key Automobile Markets as of 2012USA China Germany UK France Italy Japan Other

(source: http://annual-report2012.bmwgroup.com/bmwgroup/annual/2012/gb/English/pdf/report2012.pdf)

UK is one of the major economies of Western Europe and a report of 2012 shows that UK is the second largest automotive market in Europe, right behind Germany. BMW nearly owns 6.1 % market share just behind Ford, Vauxhall & Volkswagen. It has a showroom in each and every town and city of UK.

In India, BMW has only concentrated to focus its strategies in Tier-1 and Tier-2 cities such as New Delhi, Mumbai, Chandigarh, Bangalore, Kolkata, Chennai, Hyderabad, Ahmedabad etc. The market penetration of BMW is India is quite low as compared to UK as the cars are priced at a higher degree and even though people have started earning well and buying BMW cars, the percentage of these consumers are very low.

Market TargetingBMW has always claimed itself to be a provider of the world’s most premium automobiles. Its concentration on luxury as well as the ability to produce a sense of exhilarating driving experience within its cars has always made it stand out from other luxury car manufacturers.

In their most important markets such as America and Western Europe(Germany, UK, France etc.), they have always tried to target a segment where the customers are young, energetic, driving enthusiast, socially conscious, luxury seeking individuals and a lot more. But the problem lies here is that it’s not necessary for a driving enthusiast to seek luxury or vice versa. Therefore they made a list of groups that incorporated customers having similar needs. They are:

Upper Liberals: People who are successful professionals, have a family, have weekend outings with the family. To cater to their needs, BMW makes the X5 which is an SUV but which the company prefers to call as a “Sports Activity Vehicle” so that it appeals to the active lifestyle of this group.

Post Moderns: They include people like unmarried entrepreneurs, innovators, technologically influenced consumers and engineers who are looking for roadsters and sporty vehicles and who like to drive their cars themselves. BMW has the M series, 3 series and the Z4 for this group.

Upper Conservatives: They are usually prominent and wealthy businessmen who have never been interested in driving the cars themselves. They look for the ultimate comfort and luxury in their mode of transport and prefer to be driven around by a chauffeur. For these sort of customers, BMW has the 5-Series, 7-Series and the Rolls Royce in its stable.

In case of India, BMW has been present in the country since 2005 and just recently has become a major personality in the premium automobile segment. When they first started operations in the country they only had the 3-series and 5-series. Initially they began to market to customers who were wealthy and wanted a premium sedan of a reputable brand. As they began getting a foothold in the market, they began concentrating on the mid 30-40, entrepreneurial, successful and post-modern technologically influenced metropolitan population.

Now, as of 2013, they have enhanced their product line with the introduction of the:

Z4 roadster: for the young and wild generation with a zeal for driving fast

6-series: for wealthy, young and unmarried people who want a premium convertible with all the luxuries of a 7-series

7-series: for those who want a completely luxurious experience M-Series: for those who are interested in motorsports and want a vehicle that can act as a

racetrack asphalt burner and an everyday go-to vehicle which one can use for going to the office 1-series: for those who don’t want a big BMW but a premium hatchback which can provide

performance and comfort. X-series: for those who want a SUV that can be used as a daily driver and an off-roader.

India has always been a market that attracts consumers who want smaller, compact cars such as Maruti Suzuki Swift, Hyundai i10 & i20, Nissan Micra and a whole lot more. BMW is now trying to tap into this market with the introduction of their 1-series hatchback for those people (young lawyers, businessmen and businesswomen, doctors, engineers etc,) who are interested in a smaller car but a premium brand.

BMW’s Marketing Mix

ProductBMW has always put an emphasis on the importance of quality, premium feel, ride comfort and ultimate luxury. Any product of BMW will have the above mentioned qualities no matter what. All their products are produced with complete efficiency and dedication. BMW also keeps in mind the life cycle of their products and ensure that the cars that they manufacture do not reach the maturity and decline level in a short duration of time. They also ensure that their products do not reach the maturity stage at the same time as this would result in launching a new rendition of each of their products in the same time frame and increase their production costs. For example, the BMW X6 was first launched in 2000 and the next rendition came in 2006. A newer X6 is being tested and is due to be released in 2014.

In the UK, BMW has the 1-series, 2-Series, 3-series, 4-Series, 5-series, 6-series, 7-series, Z4 roadster, X-series(SUV), M-Series, i-Series and Hybrids etc. The BMW 1-series has been introduced in the market because of the rising interest and demand in the small car segment.

In India, BMW only has about a half of the products that BMW offers in UK. It includes the 1-series, 3-series, 5-series, 6-series, 7-series, Z4 roadster, X-series (SUV) and M-series.

If we compare the product availability and the operations of BMW in both the countries then we can see that BMW has a larger presence in UK than India. The product line is longer as well as has a lot more depth in UK than in India. Also, in UK, a lot more of options are available to the consumer regarding product customization.

PriceIn UK, BMW has a price range from £17,000 to £100,000. The pricing strategy in UK has been employed in such a way that as compared to its competitors in the same market, the prices do not have much of a difference. The pricing of the cars are mentioned below:

1-Series: £17,000-£19,000 2-Series: £25,000-£26,000 3-Series: £23,000-£30,000 4-Series: £29,000-£37,000 5-Series: £30,000-£38,000 6-Series: £60,000-£63,000

7-Series: £58,000-£60,000 X-Series: £24,000-£48,000 M-Series: £56,000-£88,000 Hybrid: £40,000-£67,000 I-Series: £30,000-£100,000 Z4-Roadster: £27,000-£28,000

In India, BMW has a price range starting from Rs.20 Lakh to Rs.2 Crore (£20,000-£200,000) even though it has a smaller amount of cars as compared to BMW in UK. The pricing in India is done as below:

1-Series: Rs.21 Lakh to Rs.30 Lakh(£21,000-£30,000) 3-Series: Rs.30 Lakh to Rs.40 Lakh(£31,000-£41,000) 5-Series: Rs.43 Lakh to Rs.57 Lakh(£45,000-£58,000) 6-Series: Rs.98 Lakh to Rs.1.3 Crore(£99,000-£140,000) 7-Series: Rs.96 Lakh to Rs.1.8 Crore(£97,000-£200,000) X-Series:Rs.30 Lakh to Rs.1.4 Crore(£31,000-£150,000) Z4-Roadster: Rs.70 Lakh(£71,000) M-Series: Rs.1.2 Crore(£130,000)

If compared, the prices in UK and Indian market have a huge difference. Something that sells in the UK for around £60,000, the same car is sold in India for £200,000. There are several reasons for this kind of price difference. One of them is the heavy import duty that is being imposed upon the manufacturer for the cars that they are selling in India. Furthermore, since BMW is still a new player in the Indian car market, having only arrived in 2005, its products are still in the niche market category and they only cater to a certain segment of clientele.

PlacementIn UK, BMW cars are present in nearly all over the whole country. It has 4 manufacturing plants in the country and around 158 dealerships in the whole country and additionally they have 148 more dealers who have been franchised to sell Mini Coopers. Also, every city has at least one BMW dealership which shows that BMW has really penetrated the market at a high level.

In India, BMW has only 33 dealerships in the current scenario and they plan to increase to around 50 at the end of 2014. Also there is only one manufacturing plant which is located in the outskirts of Chennai which has a capacity of producing nearly 11,000 of BMW’s various models in a year. This shows that BMW is still new to the Indian market and are slowly and steadily increasing their presence but it is going to take quite a while to reach the standards that they have set in the UK market.

Sales Promotion and CommunicationBMW has been advertising its cars as one that provides the most exhilarating driving experience a person can ever get. Throughout its existence in every market, it has promoted itself and its cars with the slogans “The Ultimate Driving Machine” and “Sheer Driving Pleasure”. BMW has partnered with films such as the James Bond franchisee( movies like Golden Eye, The World is Not Enough, Tomorrow Never Dies) and other movies such as Mission Impossible 4:Ghost Protocol which showcased the first ever BMW i8 concept car. This sort of advertising has positioned BMW cars as futuristic, fast, safe and great to drive.

In India, BMW first used celebrities during the promotion of their 1-series with the inclusion of Sachin Tendulkar and racer Armaan Ibrahim. Also during festivities such as Diwali and New Year, BMW brings down the prices of their cars and provide concessions on the purchases during this time such as a low amount of downpayment, lower rate of interest etc.

SWOT Analysis- BMW India

Strengths Appeals to the younger generation: BMW has marketed its cars in India to the young consumers

of the country between the age of 30-40 who want a car that is sporty, fun to drive and exudes of luxury.

Reduced labor costs: India is a place where labor cab be hired and trained at a very low cost therefore can cut down their costs.

Cheaper manufacturing: The cost of manufacturing and resources in India is very low as compared to other places. Therefore it’s a strength.

Existing Brand value: The customers in India know that BMW is associated with premium quality of automotive engineering and that BMW is one of the best car manufacturers in the world.

Weaknesses Costly maintenance & repairs: BMW’s cars are quite costly to maintain and repair so that can put

off some customers. Limited range: BMW has a very limited rage of cars in India. They still have to launch the

different product lines such as 2-series, 3-series etc. Small car segment absence: Even though BMW has the 1-series, it is too expensive for those who

look for an economical and smaller car. Buyer knowledge: Since BMW is relatively new in the Indian market, customers might now be

highly knowledgeable about the products High price perception: BMW is perceived as a manufacturer of costly cars by many customers. Substitute products: Customers want premium quality at a cheap price. For example, Mahindra

XUV500, Honda Civic, Toyota Corolla.

Opportunities Rising income and economy: As the purchasing power of the customers rise, it is getting easier

for the customer to buy a premium luxury vehicle. Rising small car segment: BMW can capitalize on this segment by producing smaller cars at a

cheaper price. New products: BMW can introduce new products to appeal to different types of customers such

as those who want their BMWs to be highly customized. New technology: The use of new technology in automobiles can attract tech savvy customers.

Threats Competitors: Mercedes and Audi are very close competitors and Mercedes has already been

present in the Indian market for a long time and has an established brand awareness. Rising fuel prices: The fuel prices in India are rising day by day and fuel efficiency of BMW is

not that impressive.

Government regulations: With the rise in the price of imports, and the fall in the value of rupee, government might impose regulations on BMW as many of their cars are also imported.

SWOT Analysis- BMW UK

Strengths Strong brand image: BMW has built up its brand image over many number of years through

unique marketing strategies and the quality of its products. It is the 10th most powerful brand in the UK. It is solely associated with supreme quality vehicles. Therefore whenever a customer thinks of BMW, the image of premium quality, products and services come in mind.

Strong product innovation: BMW has been an innovative organization and has brought to light some of the most revolutionary vehicles in the world. For example, the BMW M5 redefined the joy of owning an everyday vehicle with the ability to become a sports-car.

Multiple dealerships: BMW has around 148 dealerships in UK and 158 more for dealing in Minis. People have easy access to the dealerships and don’t have to travel far.

Weaknesses High prices: BMW has a huge product line but as we go up the line, the prices become

astronomical. 7-series costs around £60,000 which is too expensive for many customers. High cost incurred: R&D and highly skilled labor results in incurring high costs of production. In

fact, their cost structure is at a higher degree as compared to GM, Ford & Volkswagen. New technology confusing for some customers: They have some of the newest technology in

their cars but the interfaces are most of the time complex which some customers do not like.

Opportunities Increasing fuel prices: With the fuel prices rising up, it brings an opportunity to shift focus

towards hybrid cars as consumers want a vehicle which is cheap to drive and maintain. New attitude towards green vehicles: People are becoming more inclined towards a cleaner

environment and want vehicles that have low emissions. Customization: BMW offers its customers to customize their cars according to their tastes.

Threats Competition: BMW is facing intense competition from GM, Volkswagen, Audi, Ford, Mercedes

in the UK market. Rising cost of technology: As new technology comes into existence, the price of that technology

is also high due to its uniqueness. BMW brings new technology at the cost of high price. Rising fuel prices: Apart from its hybrid cars which are economical, BMW’s other cars consume

a lot of fuel and the rise in prices of fuel can result in a low demand for BMW cars.

Conclusion & RecommendationBMW has a market presence in both UK & India. But in India BMW still has quite a way to go. As the automotive industry is evolving day by day and new players are entering the market it is becoming vital for BMW to revise their strategies and operations so that they can remain a major competitor.

In UK, BMW should concentrate on investing in hybrid vehicles as the consumers in UK are moving towards having a more environment friendly vehicle and want to contribute towards the environment.

Also they are getting a lot better deals with other car manufacturers who provide the premium tag at a lower price such as Volkswagen. Also they have to bring down the price on certain models which are too harsh on the pocket.

In India, BMW has to concentrate on penetrating the market on a larger scale. Till now they have only concentrated on the cash rich customers who can pay a large amount of money to own a BMW. Therefore there is a need to bring down the prices of many of their cars as they are too expensive. Also BMW should take into account that India is a country which has customers who like small and efficient cars. If BMW can capitalize on this aspect of the market then they can also compete with the likes of Hyundai and Maruti Suzuki who are leaders in the small car segment.

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