BMW is a well-known company with a high status branding that has a very high recognition factor. The company has been strengths in both research and development and design as well as in marketing. For example when it comes to marketing it was a BMW advertisement that was the first e-advertisement that made it to Campaigns ‘Pick of the Week’ (Doman). However, in a long-term purchase such
as these, there is a need for more substance than just marketing, otherwise the life of
the company would be relatively short due to the nature of the purchase. It is in these
longer-term systems and strategies that we can see many of the strengths of BMW, we
can consider these by starting with the market position of the company.
BMW as well as Mercedes’ and a few other companies have managed too
successfully attain a market position where they have a focus on a narrow range of
exclusive cars. These can be seen as aimed at the market place that is not also sensitive
to price, and as such we must argue that the market positioning may be seen as a
strength as there will not be such a reaction if the economic conditions change. The
customers that are in the target group are happy to pay a premium price for what
they perceive as a premium product (Thompson).
This may not be so true of the subsidiary companies that have had different
problems, such as the ill-fated Rover group. However, the core product has remained
strong (Thompson). This may be seen as diversification, and some of the
diversification may also be seen as a strength, for example the purchase of Rolls Royce
where there is a similar strategy, however the range and target market are even more
focussed and exclusive.
The strategy of BMW is designed to be defensive against other car
manufactures, and as we will see when it comes to the section on threats this is a
defensive strategy that BMW have adopted after learning the need for defensive as
well as aggressive marketing and strategies. These strategies can be seen as follows;
? Customers may choose any color that the wish from the entire range, this is only matched by Rolls Royce and Aston Martin, other companies offer a choice of color but only within a limited range (Thompson). The advantage of this is by differentiation and the gaining of a competitive advantage, the target market here is different from he other companies that offer the same facility of choice. Therefore there is an advantage over companies such as Toyota and Mercedes. There is also a very wide range of optional extras (BMW).
? The marketing as well as design emphases the differentiation by focusing on safety, the environment, as well as comfort and economy (Thompson). This is emphasized in all models and can also be seen as reinforcing the branding of the BMW logo and name.
? The way in which the company is an lows for a high level of control. The national BMW sales companies in each country are all wholly owned subsidiaries of the company. This is also co-ordinated with the strategic location of the parts warehouses so that they are in the most beneficial locations (Thompson).
? The computer system that BMW use for the ordering of parts by the independent distributors is also very efficient, reducing the time it takes between placing and order ands supply. The orders are placed directly into the BMW central computer for processing (Thompson).
? There has been a sting message form BMW that it intends to retain its independent position, and this appears to have given the market confidence in the company, as such the company may be seen as stronger financial in the markets own perception (Thompson).
? In the United States BMW managed to gain a first mover advantage in terms of its European competitors, being the first company to produce cars on this continent (Thompson).
However we can also argue that it was this international desire that also bought about a realization of some of the weaknesses of the company.
There has also been a desire to make use of strategic alliances and acquisitions.
This has not always been undertaken with the full knowledge or abilities to make the
changes needed. This was demonstrated in the acquisition of Rover. This was not
successful and then in 2000 the company was sold, as there was simply too much
work and expense involved in turning the company around. There were severe doubts
by anyone that the company could be turned around, and in the end there was only
one bid for the company, a bid from a venture capital company Alchemy, which also
turned out to fail in favor of a bid from the employees of the company in a consortium
bid. We can see here that the synergy that BMW had successful maximized and
benefited from with Hyundai was not a feature here. Therefore there was a loss of
funds as well as bad publicity, which surrounded the news of the sale and the failure
of BMW to turn around the company. In the end the company was sold to the
employee consortium by the name of phoenix for a mere 10 (Lorenz). In a separate,
but related sale Land Rover were sold to Ford illustrating the depth of this weakness
(Foundry Management ; Technology). However there are also other weakness that
can be identified separately from this.
We can also argue the strength we have seen in the narrow ranges may also be
seen as a restriction and limitation in terms of the market. For example there has been
a conscious decision not to look to the sports car and hatchback. Despite this there
have been some exceptions to the rule, the 1994 modelf the BMW compact was a
development of the 3-series with a hatchback (Thompson). Also those who have
watched the James Bond film, Golden eye will also see that there has been an effective
use of a BMW sports car. This may lead to confused marketing however in the case of
these cars this does not appear to have occurred, possibly explained by the very strong
branding that surrounds the cars. If we look at an analysis of the position of the
company in terms of Porters Competitive Advantage model then we can see the
weakness as well as the strength that this brings.
In response to recognition of the weakness there is now a planned
diversification, with the announced development of a 4×4 vehicle, as well as a
compact car, here we can see the recognition of a weakness and its turnaround into
The company has many opportunities, these may have been recognized from
an examination of increasing the leverage gained from strengths or by developing
weaknesses, as well as watching for emergent opportunities and observing market
conditions. However we can argue that they exist, an opportunity will only become a
strength it is developed and worked on successfully.
BMW have developed a fleet of Hydrogen-powered cars called the BMW
750hL (European Car). This fleet has taken 30 years to develop and has recently been
put on show an will be arriving in the United States in July 2001 (European Car). This
is seen as the first car suitable for mass production developed using hydrogen as a
fuel, and with an emission free car on show there is a tremendous opportunity for the
first mover advantage as well as the use of the publicity surrounding the cars to
promote the company and its range, even if the 750hL is not available yet!
There is also an opportunity in other product areas, we have already
mentioned the company car and the 4×4, but there is still an opportunity in the bikes
division. In recent years they may have been seen as a weakness or as a threat due to
the loss of market share, however it has been recognized by the company and turned
into an opportunity. In 1997 in the United States there were only 4,018 bikes sold,
however Douglas Atkin is applying some very original marketing techniques to the
bike market in order to change this, and is using models such as the Hare Krishna
movement to learn from (Wells). It is BMW biker testimonials that are forming the
basis of this campaign (Wells). The marketing appears to be working with 11,637 bikes
sold in 2000 (Wells). Here the opportunity is for BMW to present itself in such a form
as to make itself appear a suitable substitute for other bikes on the market.
The threat of substitutes is never far away for most competitive industries.
Here there is not only the threat from similar competitors with other motor vehicles,
but also from other forms of transportation. In many countries there is a government
response to encourage alternative forms of transports such as public road, rail or even
water transport systems. These are seen as being more environmental sustainable as
well as reducing some of the congestion on the roads of many cities and towns. This is
especially a risk that the BMW target market as the marketing campaigns are designed
to appeal to those who are also more likely to be environmentally aware and more
responsive to the government or environmental campaigns when compared to other
target markets. There has been an opportunity here as well, as BMW can be seen as
tackling this threat by undertaking joint ventures such as seen with Munich, where it
was found that during peak times of congestion, 50% of it was caused by cars moving
around looking for a parking space (Thompson).
There are also threats from other manufactures. BMW has a reputation for
executive cards, but this is not an unassailable positions, as BMW were to find out
when they faced competition in their own primary market from the newer Japanese
company Toyota. Toyota aggressively pursued the same market with the slogan
‘ultimate in quality’ and succeeds in claiming a significant place in the market at the
cost of BMW.
Therefore the biggest threats can be seen in the form of the competition, but we
must also remember that changing legislation, social habits and political environments
may also be a threat, especially with such an international, yet independent company.
The position of BMW is relatively strong; they have made mistakes, but appear
to be learning form them. Their relatively small size can be seen as justified in such a
competitive market by their own market position. Therefore as long as the company
retains it focus and is not tempted into too great a level of diversification then it
should have a bright future.
European Car, (no author cited), (2001, May), Hydrogen-powered BMW 750hL,
European Car, v32 i5 p14
The Economist (UK), (no author cited), (2000, April 1), Milberg’s mission. (Strategy of
BMW, The Economist (UK), p70 (2)
Lorenz Andrew, (2000, Dec 20), Rover and out. (BMW’s sale of Rover, automobiles)
Autocar, v226 i12 p62 (4)
Mintzberg H Quinn J B, Ghoshal S (1998), The Strategy Process, London. Prentice Hall.
Thompson J (1998) Strategic Management; Awareness and Change, London, Thomson
Wells Melanie, (2001, April 16), Giving an Old Brand New Mystique. Forbes, p198s02
Foundry Management ; Technology, (no author cited), (2000, July), BMW, Ford Motor
Sign Definitive Agreement for Land Rover, Foundry Management ; Technology, v128 i7 p8
/ Pages : 1,903 / 24