Essay on BMW Case Study

Submitted By Ryan-Gelburd
Words: 1203
Pages: 5

The BMW automobile has stood as a leader of luxury and makes a statement to those that it passes. With an original target strategy that focused on the wealthy segments of “baby boomers and successful yuppies”, BMW now focuses on a wider marketing strategy. As the catalog of vehicles grows to meet the changing consumer needs, BMW creates more competitors. As the millennium continues, so does the target strategy. Originally targeting a focus group with their 3, 5 and 7 series cars, BMW has changed their segmentation focus of this fleet. The 7 series addresses the “upper conservatives”. The introduction of the 1 series and the X3 SUV targeted the “modern mainstream” group by lowering their entry point into owning a BMW. This group was a larger segment, as it concentrated on the family-focused and budget aware consumer. This was drastic change in segmentation from the 7 series. The “post moderns”, who are the high income, flamboyant consumer segment, is targeted with the 6 series and M class vehicles. The last group that is a segment of the Bayerische Motoren Werke is the “upper liberals”. This segment is generalized as the people who have had success in the 90’s and now have a family or are enjoying the fruits of their labor by enjoying the outdoors. To cater to this segment, BMW has created the X5. The X5 is an SUV that encourages the activity, while providing luxury. By growing their target segments, BMW can create more revenue and reach consumers at different points in their lives. More revenue is achieved by creating a different car for each segment, which has a different overall cost and return on investment. By providing a product for more segments, you attract more customers. The ability to create different products that have a different style and price point also attracts different ages of customers. One can notice from the impressive catalog of vehicles, that each car targets a different age demographic. By starting at a younger demographic, BMW can have multiple purchases along the life of the consumer. As BMW invests in multiple segments, they take on new competitors in each segment. This negative is apparent within the example of a competitor in the “upper conservative” segment is not the same competitor in the “modern mainstream”. Other negatives in the approach taken by BMW are the costs of manufacturing and the costs to market each product. The investment to manufacture different cars is more than in the past, where they where focusing on three automobiles. Now, BMW is manufacturing cars, motorcycles and other vehicles. The cost to market to each of these segments is also a burden on the P&L financial statement. The research and insights that is required to build an advertising campaign is different than in years past. There are many threats to this approach, by taking on new competitors, and may lose its focus. For example, the BMW X3 is attracting the consumer at a lower price point. To do this, they are not delivering the same features as a 7 series. Though the BMW may not include the feature, a competitor that has smaller focus strategy may be able to deliver the “advanced features”. As a consumer, the segment may begin to buy into the competitor. An example of this is the Asian car manufacturers, specifically Kia and/or Hyundai. Both manufacturers deliver a product that delivers quality at a lower cost. They also feature warranties that are better than the BMW brands. By investing in different products, BMW may not be able to react as quickly to changing technologies, trends, consumer needs or competitors. With creating one or two different products for each segment, the risk of being too focused is possible for BMW.
For a luxury automobile company like BMW, I do not believe they are being too selective. The company is able to deliver each of these products and still create $76 billion in revenue. The size of its employee workforce and production