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Third most important factor if the industry analysis with BMW is about the maintenance of the car. Cars with high performance uses high technology and high quality products which are comparatively at higher price than normal parts. While Honda and Toyota majorly uses the parts that are cheap in price and highly available in the market. So the maintenance of such car is very easy and cheap than that of BMW.

All these industrial factors affect the purchase habit of the buyer. That depends what kind of car buyer is looking to buy. If he has higher budget but still he is confident about buying a low maintenance car he may still go for the higher priced version for the Honda car then BMW. If he is interested in buying a fuel efficient car he will again go for Honda or Toyota then BMW. All these factors are the strength of these brands against BMW.

The major threat of Honda and Toyota to BMW is that they influence the purchase habit of the buyers. They give enough reasons to the buyer to choose their product over that of BMW. Even though BMW falls under the luxurious car’s category, the sales of these brand’s car influence highly to the sales of BMW. Other than that, Honda has vast range of cars starting

from low budget to higher budget, so such range of options gives opportunity for sales team to pitch the type of car that buyer is looking for while BMW lacks such advantage.

Competitor Analysis:

BMW has been enjoying its brand loyalty and the sales that they were having over Mercedes since last decade but since last couple years Mercedes-Benz is on the track to dethrone BMW. According the sales figure of the both sites, in 2016 Mercedes had sold 1.54 million cars where BMW was able to sell 1.48 million cars. That means Mercedes had found a way to beat BMW in terms of the unit sales of the cars.

Strategies that Mercedes used was to introduce new model to compete the ever-growing market of BMW. In 2016, introduce new models of crossover, SUVs and new E-Class modes. These models made huge impact on their domestic market. These models were comparatively cheaper than that of BMW and they were offering more facilities than that of BMW. BMW was affected by this and they decided to react to this problem in year 2017 and they introduced their series 5 cars for cheap prices to fight against Mercedes. The vision of Mercedes to beat Audi and BMW was clear since 2012. Their group CEO reportedly said in an interview with Bloomberg that they had decided to be the best-selling company in coming decade since 2012 and by 2016 they had already reached the level where they have already reach to the par level and that is beyond their expectations.

Mercedes’s objective was very clear they wanted to beat the BMW and Audi with their sales figure in a decade or so. They wanted to capture the more market share while exploring the new market share and opportunities with introducing new models and giving the high edge competition to BMW with better technology, product design and better prices.

The strength of Mercedes is that they are far more old company than BMW, they have a better experience and reputation in market as they are almost a half century old than BMW. They are running with clear vision to be at the top and their steps are somehow in the right direction that helps them to reach their goals. Their products are fitting to their marketing message and they are innovatively introducing each of the new products to increase their sales and beat BMW. Even though the brand value of BMW is higher than Mercedes, they are beating the loyalty of the BMW’s customer with their marketing. The weaknesses of Mercedes is that it still lacks the essence of loyalty ant luxury that BMW carries and offers to their market. Also BMW is having larger budget to invest in their R&D than Mercedes. So the chances of BMW to come with better technology in the future are brighter than Mercedes.

PART – II

In this part I will be explaining about the BMW marketing mix strategy which are product, placement or channel, price and promotions. All these aspects are totally interconnected and influence each other in a marketing plan. Below are the details of all of them:

Product:

BMW has range of product but the main essence of any product is their quality. The cars boast of powerful engines, extra ordinary pickup, fantastic speed, and a promise of safety and reliability. Over time, the powerful promotions have propelled the BMW products to have an “Awe” factor. Whenever you look at BMW, you really look at it. BMW motored too, focuses on high engineering products. However, the numbers of cars sold by BMW is much higher in comparison to motorcycles.

An important factor here is that BMW is essentially free to operate on its own, while the other two German brands of Audi and Mercedes are tied to different companies (VW and Mitsubishi/Chrysler respectively) and therefore have to use parts from across the companies in order to make savings, BMW has no such restrictions, and is free to use exactly the right part designed precisely for the job in mind. To the public, this seems to enhance the company’s reputation, and seems to be a rare case of the public expecting to pay a bit more for a product they perceive to be of high quality.

Price:

It is no doubt, that with such good technology, and with top of the mind positioning, BMW is a premium priced car and motorcycles company. Prices of BMW cars can vary by a great deal, depending upon which series, model or extras the buyer intends on purchasing. What can be said though, is that BMW cars are not aimed at everybody, as they are more expensive compared to other cars because of their image and technology, and they are also more expensive for repairs and general maintenance.

Looking at the competition, BMW has also launched low priced cars (as per BMW standards) like the BMW X1. The price of which starts from 22.5 lacs. This is primarily aimed to tap the Indian market. BMW offers various loan deals and repayment methods to help those who wish to spread the cost, and has hundreds of dealerships and showrooms word wide.

Key pricing features in the marketing mix of BMW:

• Premium pricing

• Pricing helps create the “Want” feeling

• High cost of marketing to maintain brand image

Place:

BMW has highly skilled people working for them in all areas, from mechanics to customer helpline staff. These professionals work hard to maintain the company’s image. BMW has manufacturing facilities in many different countries. In USA there is manufacturing and assembling unit in North Carolina, that produce more than 350,000 SUVs and cars and is expected to produce in coming years as BMW is planning to expand their manufacturing in USA. The problem here is that the BMW;s demand in the domestic is low compared to what the manufacturing plant is capable to produce, so they are exporting their units to other countries from here.

BMW has a dealerized network for the sales of its automobiles. BMW does not go through automobile distributors, but directly appoints showroom dealers, because the investment is very high to assign a distributor and the margins are less for showrooms. Thus, BMW has its authorized showrooms and the cars are sold from showrooms to customers. However, for distribution of spare parts, BMW does have distributors and stockists at strategic locations. The showrooms of BMW are found to be present in the most premium parts of urban cities.

Key Distribution features in the marketing mix of BMW:

• Lean distribution model

• Innovation to try centralized distribution.

• Dealers and showrooms get good margins

Promotion:

In 2012, BMW ranked as the world’s most reputable company by Forbes.com. Criteria included ‘people’s willingness to buy, recommend and to work for’ the company. Interestingly, the answers were driven 60% by perception of the company, and 40% by perception of the company’s actual products. As marketers know that to build a positive brand perception, it takes years and the same has happened with BMW. BMW has been promoting itself with the most amazing television commercials, print advertisement, out of home advertisement and now through online advertising.

The company itself knows that its target customers expect a certain quality from them, and are willing to pay a bit more for it. They also expect exclusivity because the car should not be available to the masses. Thus, the ads on television are sleek, and seem to be of a higher quality than other car ads, asking the viewer to apply this logic to their products. BMW ads focus as much on the looks of the car as on the engine and the technology of the car. BMW also focuses on customer delight and a purchase of a car is almost always accompanied by gifting a few memorable moments to the customer for the purchase of the car.

On a general scale, the car is associated in the mind of the public as being connected to success, someone who has extra to pay for luxury and craftsmanship rather than buy a run of the mill car. Indian Iconic cricketer Sachin Tendulkar who himself is an avid fan of BMW and West Indies cricketer Darren Sammy were roped in as their brand ambassadors.

References:

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Rauwald, C., & Fahmy, D. (2017, January 09). BMW Loses Luxury-Car Crown to Mercedes as 2017 Headwinds Rise. Retrieved June 03, 2017, from https://www.bloomberg.com/news/articles/2017-01-09/bmw-loses-luxury-car-crown-to-mercedes-as-2017-headwinds-rise

R. (2016, April 12). BMW Could Lose Its Sales Crown to This Top Rival. Retrieved June 03, 2017, from http://fortune.com/2016/04/12/mercedes-benz-bmw-sales/

Marketing-Mix. (n.d.). Marketing, 395-730. Doi: 10.1007/978-3-8349-9584-1_4

Shapiro, B. P. (2014, August 01). Rejuvenating the Marketing Mix. Retrieved June 08, 2017, from https://hbr.org/1985/09/rejuvenating-the-marketing-mix

Kotler, P., & Armstrong, G. (2010). Principles of marketing. Pearson education.