Marketing plan on BMW

Pattern of distribution for BMW is shown below in the diagram which is followed by the company: Manufacturer Dealers Consumers.

Proportional flow performance of channel member:

Manufacturer performs mostly in Promotion, Negotiation, Financing, and Risking, and Payment - as these are the most important parts of the business.

Dealer is mostly involved in Physical possession, Negotiation, Risking as it deals with warehousing and transporting the cars and Ordering, as it needs to deal with customers directly.

Consumers' performance is in Physical possession, Ownership, Promotion. Financing, and Payment, as it is the customer who makes the whole system working.

The cost added by each member is as follows:

Major Channel for segments

In order to satisfy various customers needs, BMW uses the following channels.

Individuals make orders through the web site and in dealer offices.

Businesses as well make their orders in dealers but they also can order the cars directly from BMW manufactures.

Government Structures, obviously, order cars from BMW manufactures.

BMW dealers in Ukraine:

* AWT Bavaria (Lepse) - Kiev

* AWT Bavaria (Parus) - Kiev

* AWT Bavaria (Podol) - Kiev

* AWT Bavaria - Dnepropetrovsk

* AFZ Bavaria - Zaporizhia

* Car-Alliance - Poltava

* Emerald Motors - Odessa

* Impulse - Donetsk

* Bavaria Motors - Kharkiv

* Avtodel - Simferopil

* Christina - Lviv

* Aria Motors - Lviv

* M AUTO - Mikolaiv

* Car Alliance - Kremenchug

* Automobile House "Victoria" - Lugansk

* Bayern Zahid - Khmelnitsky

* Valerie M - Rivne

* Center Kherson - Kherson

On the Ukrainian market BMW uses only exclusive distribution. This type of distribution is usually seen with high end and luxury products, which is absolutely suitable for BMW cars.

The structure of an exclusive distribution favors both the manufacturer and the distributor: All dealers receive cars and auto accessories without mark up, they have unlimited dealer agreement and are provided with all necessary corporate identity elements. The headquarters on the other hand have complete market coverage and a total control over the quality of front office, which is especially important for luxury products.

All Customer Segments are covered: those customers who are aware of the BMW products are able to buy very easily what they are intended to buy; those who don't know what they need but want to buy some BMW car, receive high quality consultancy so that they can make a decision whether to buy a car and choose the specific package that absolutely suits the customers' needs.

In order to communicate to those potential customers who don't have the intention of purchasing BMW, the company uses TV, Internet, wire advertising, product placement and screening short films dedicated to BMW cars, so that potential customers become interested in this brand.

3.5 Pricing

The prices of BMW Group are based on a differentiated strategy. This means that they charge extra for premium quality. This difference in prices is due to each cars different engine size, gear levels, fuel consumption, sports version.

Let's take an example of the pricing strategy that has been used by BMW for the 3-series is competition-orientated pricing. Most of the Research shows that all other competitor such as VW, Audi, Alfa Romeo and etc. in the 3-series market is based around the same price. This is because the car industry is large and production costs are not so important and creating the largest profit is not as necessary as it would be for a smaller company.

BMW could be either dynamic or negotiated pricing depending on the sales person. Dynamic because the car can fluctuate between prices or negotiated because the buyer and seller can come up with a reasonable price for both parties.

Value based pricing

BMW is definitely a value-based product brand. Cost can be an issue if it is priced unrealistically against the cars of close competition, but overall most of our customers are not concerned with price as a contribution factor. BMWs are luxury cars and are elastic expenses. But when the economy is weak, our car becomes a hot pick as a secondary choice for BMW customers who buy the higher luxury cars. BMW customers are not only purchasing their car due to legroom, high technology, and comfort nor just for the reasons of high horsepower and great fuel mileage. They are buying BMW's because of the brand name and the quality and reliability the brand name stands for.

External Pricing

1. Customers: Since it is perceived as a luxury automobile, BMW customers are willing to pay around $60,000 for a 5-Series. However, if BMW decided to increase the price of the 5-Series to $90,000, the company would most likely lose some customers because $90,000 is beyond the acceptable range for that type of product. For $90,000, BMW customers expect to buy the larger 7 Series.

2. Competitors: Regarding the BMW 5 Series, its main competitors are the Audi A6 and the Mercedes-Benz E-Class. As a result, BMW must ensure that the 5 Series has a similar price.

3. Legal, Regulatory, and Ethical Concerns: In addition to applicable laws and regulations, BMW should consider the ethical dilemmas in pricing. For instance, what are BMW's ethical responsibilities regarding full disclosure of prices for upkeep, updates, or replacement parts?

Internal Pricing

1. Product Strategy: If sales of the Audi A6 increase dramatically, BMW could lower the price of the 5-Series to defend its market share.

Segment Pricing

BMW uses segment pricing in their pricing strategy by offering programs for recent college graduates. With a recent degree or diploma and a letter from a current or future employer, graduates that qualify can receive the best pricing and financial offers that BMW has. This is particularly good for the demographic chosen because of their young age. Many may have already graduated from college, but many more may be going to law school or going back to get their Masters. BMW wants to hook a younger market so they can be life-long customers. By helping graduates, they are making that possible.

Discounts

BMW offers several different discounts depending on what and how the customer is purchasing. For example, in a lease, BMW offers a $1,500 dollar credit and a reduced interest rate of 2.9% for 36 months. Leasing, especially starting out, is a good idea for a young person like those in the target demographic. BMW offers discounts because, to a buyer, it is enticing. A good deal has the potential to persuade a customer to choose BMW over, say, Mercedes-Benz.

Part 4: Conclusions and Recommendations

4.1 Concusions

It has taken a lot of referencing and researching for me to write this report and I have learnt a lot from this report too, I started off with very little knowledge about this topic and worked my way through the assignment and I would conclude that BMW is a very powerful name in the automobile industry due to its reputation of providing high quality products and services.

BMW Group is the leading premium car manufacturer and seller in the world. The sales of BMW Group are rising day by day. But one great threat for BMW Group is the increasing competition in the automobile market. BMW Group has got fiercing competitors like Audi, Mercedes-Benz being the two nearest to BMW Group in competition in the premium car industry.

BMW Group is now trying to target the emerging markets of the world. The sales of BMW Group in different markets of the world tell that the European and the US markets are the best markets for BMW Group in terms of sales. In recent years, however, the Chinese market has been a great attraction for the BMW Group and sales have been increasing every month for the BMW Group.

In the end it may be said that the BMW Group distinguishes from its customers by its great advertising and marketing campaigns and mostly by their great brand image. The innovation of the company, diversification in new markets, technological advancement and customer satisfaction are the key to BMW success in the luxury car market.

The latest TV-Ad of BMW Group is a great description of BMW Group as an automobile leader in which they say, “we just don't make cars, we make joy”. BMW Group should also remain careful to the changing trends in demographics, society, thinking of people and remain a diversified company.

4.2 Recommendations

Most of the people argue that there is always a chance to learn new thing or no matter. How big is the company and how successful they are companies needed to think about the future and make few plans for them? For the future marketing strategies, I would like to recommend few points.

The BMW cars are considered to be as the luxury cars, of which most products are applied to rich people but not the poor people. BMW can enter the market with Small `Lifestyle' Car which can apply to the middle-class people, its market share can be expanded.

On the other hand, its accessories and parts of cars are expensive for maintenance, which can reduce the desire of people purchasing its cars.

In addition, for this can get few new models in BMW Mini this could help then to target few different segments and also can target females, Middle-class or upper middle class people. BMW can also create good relationship with female buyers, they need to do more of promotional strategies to attract more of female consumers in their existing models or for new models in this edition just by giving few simples thing which females like in the car, for example- pink colour, soft-toys, trendy seat covers, etc.

Furthermore, The Asia Pacific region is becoming increasingly crucial to global automotive sales. Although it has been overshadowed by China's rapid growth in recent years, emerging markets is set for steady growth where BMW is already there but needs to concentrate more and needs to adaptive marketing strategies to get success out there. These markets are going to be huge as there is more population in these countries as in comparison to US and UK market.

In addition, BMW needs to come with few more BMW Films interactive marketing campaigns, the "Ultimate Driving Machine". As it is had very successful and showed good promise in it for the selling point. These kinds of advertising are creating very good brand value for the company and company portrayed itself how they want to be in front of customers.

References

1. BMW Annual Report 2013.

2. Hespos, T. (2002) “BMW Films: The Ultimate Marketing Scheme, retrieved October 3, 2005, from http://www.imediaconnection.com/content/546.asp

3. BMW BLOG, BMW targets 8% return on equity, Retrieved from http://www.bmwblog.com/2011/03/15/bmw-group-annual-report-2010-bmw-aims-to-further-increase-earnings-in-2011/

4. Article. Supply Chain Management of BMW. Management Paradise, online community

5. http://www.managementparadise.com/forums/elements-logistics/211402-supply-chain-management-bmw.html

6. International BMW website

7. http://www.bmw.com/

8. Bavarian Auto Group website

9. http://www.bag-eg.com/

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