CONTENTS
ABSTRACT3
CHAPTER ONE4
1.1 REPORT OVERVIEW4
1.2 HISTORICAL OVERVIEW.4
1.3 DATA COLLECTION.5
CHAPTER TWO...7
2.1 THE ANNUAL REPORT 7
CHAPTER THREE..11
3.1 RESEARCH OBJECTIVES11
3.2 RECOMMENDATIONS FOR MARKETING..12
REFERENCES13
APPENDIX A15
ABSTRACT
This report will discuss, in depth, the automotive giant BMW. By taking into account the available information on the company via the information that is required to be accessible by various international governing bodies, this report will discuss background information on the company, data collected in investigations regarding the company, and the marketing and business strategies employed by the company. This report will also discuss the most effective business and marketing strategies employed by BMW, and will also briefly touch upon business strategies that have been less-than-successful for the company in the past. Lastly, conclusions regarding the overall potential longevity of these strategies will be discussed.
CHAPTER ONE: INTRODUCTION
1.1 INTRODUCTION TO REPORT
Throughout this report, there will be a discussion of the automotive company known as the BMW Group. This group includes both the Rolls-Royce and Mini brands, and is one of the largest and most successful automotive groups in the world. The report will focus on the 2012 fiscal year, as that is the year that is most recently available in terms of data and annual reporting, However, more recent information has also been culled from the BMW Group’s various online resources. The information has been organized into three separate chapters, each with its own focus. This report will focus on the various activities that the BMW Group takes part in that sets the group apart from its competition.
The purpose of this report is relatively straightforward: to discover the various business strategies utilized by successful automotive giants in the automotive industry. BMW, as a luxury brand, should be suffering greatly due to the overall economic condition around the world; however, the company has remained afloat despite setbacks and economic troubles. The model set forth by BMW is worth investigating, as it has been largely successful for a number of years, whereas other car manufacturers have failed and faltered.
1.2 HISTORICAL OVERVIEW
BMW, or Bayerische Motoren Werke AG, is a German business that was established in 1917 (BMW.com, 2014). Although sometimes associated with Nazi Germany, in reality, the history of BMW dates back earlier; however, the company was heavily influenced by the World Wars that shook Europe in the early twentieth century. During the early years of the company, BMW was, in fact, a part of an aircraft-manufacturing firm; however, once the restrictions on German production began after the end of World War I, the company shifted its focus to automobiles (BMW.com, 2014). According to the company’s website, BMW began with its motorcycle production in 1923, and then with automobiles in 1929 (BMW.com, 2014).
Even after the company began producing motorcycles and automobiles, it continued to produce aircraft engines. The company has long been focused on new innovations in technology, whether it be in aircraft engines, automobiles, or motorcycles.
Today, the BMW Group is made up of the BMW company, the Rolls-Royce company, and the Mini company (BMW.com, 2014). Over the years, the BMW Group has owned stake in a number of different companies, including the British Rover group, a group that included Land Rover and similar name brands. However, the tides of the industry changed in the early 1990s, and cars that got poor gas mileage began to fall out of favor, particularly in Europe and North America (Johansson-Stenman and Martinsson, 2012).
According to the BMW Annual Report (2013), BMW produces about 1,547,057 vehicles over the course of the year; approximately 56% of these vehicles are powered by gas, or petrol, and approximately 44% of these vehicles were powered by diesel. BMW and its member companies do the bulk of their business in Europe and North America; however, much of their business also takes place in Asia (BMW Group, 2013).
1.3 DATA COLLECTION METHODS
Because this is a secondary study, the data collection in this report is generally focused on culling data from a number of sources. These sources include relevant academic journal sources, tax and annual report data provided by the BMW group itself, and a number of business and strategy articles discussing the automotive industry and the methods this particular industry uses to face its rather unique struggles.
All the qualitative data available has been condensed and articulated in the Case Study in CHAPTER TWO; quantitative data, on the other hand, can be found in the Case Study as well; inferences and deductions based on this information can be found in CHAPTER THREE. CHAPTER THREE, which offers all the potential conclusions that can be drawn from this particular set of data, also offers brief recommendations on business strategy and notes on conducting business and marketing strategy in the automotive industry. Finally, more quantitative data can be found in the APPENDICES; all information in this report is culled from reliable sources and the information provided to the public by the BMW Group itself.
CHAPTER TWO: CASE STUDY
2.1 THE ANNUAL REPORT
BMW Group sales have been increasing over the past few years, despite the international automotive industry having significant problems. According to the BMW Group:
Worldwide demand for BMW Group vehicles continues to develop positively. The company reported record monthly sales once again in October Between January and October 2013, sales increased by 7.3% to reach a new all-time high of 1,602,018 vehicles Ian Robertson, Member of the Board of Management of BMW AG, responsible for Sales and Marketing BMW: “We remain on track with a new all-time high in sales in October and in the first ten months, despite the continued headwinds in some European markets. We are confident that sales will continue to develop positively until the end of the year and we will continue to strive for profitable growth. The BMW Group maintains its position as the leading manufacturer of premium vehicles worldwide.” BMW brand sales climbed 5.4% to 140,057 vehicles in October (prev. yr.: 132,826). In the first ten months of the year, BMW delivered 1,349,642 vehicles, an increase of 8.6% (prev. yr.: 1,242,819) (BMWGroup.com, 2014).
There are a number of important facts and figures available in this press release, and even more available in the annual report; according to the report, annual outlooks for BMW Group have been good despite the poor economic climate throughout the rest of the world. The BMW Group Annual Report (2013) cites the continuing excellence of the brand as a reason for its continued growth (BMW Group, 2013).
The BMW Group Annual Report (2013) is designed to provide shareholders and interested parties with the information necessary to make an informed decision about the state of the company. It is not a report for those interested in buying a car from BMW or any of the member companies; instead, it provides a much more hands-on approach to the information that an individual will need to purchase stock in a company. Because BMW operates in a market economy on the global stage, globalization and the globalized economy is fundamental to their success-- and potential failure.
In a market economy, decisions on investment, production, and so on are based on the laws of supply and demand; while this can be a simplistic view of the economic state of the world, it can also be a helpful one insofar as companies like BMW are concerned. Because BMW is mostly invested in one particular industry-- the automotive industry-- the health and well-being of that industry is vital to the success of BMW.
The BMW Group has recognized that there are, and will always be, potential challenges when dealing with business on a global scale. To deal with the potential difficulties of doing business on the global state, BMW developed a strategy that they refer to as Strategy Number ONE (BMW Group, 2013). BMW Group writes, in their annual report: “The world continues to change at a rapid pace. In many countries, individual mobility remains a focus of political regulation and national industrial policy. The shift in society requires new mobility solutions. Volatility has long become a constant in our everyday business. Markets and consumers alike remain uneasy in these periods of economic uncertainty. To meet these challenges we formulated our Strategy Number ONE, which aligns the BMW Group with two targets: to be profitable and to enhance long-term value in times of change. And this applies to technological, structural as well as cultural aspects of our company. Since 2007, we have been implementing various initiatives in keeping with the strategy’s four pillars: Growth, Shaping the Future, Profitability and Access to Technologies and Customers” (BMW Group, 2013). In short, the BMW Group has taken a more globally-focused approach to marketing. This can be seen in their community outreach projects, as well as in the projects that are currently in concept, many of which are fuel-efficient cars (BMW Group, 2013). BMW is one of the few car companies who, interestingly, have partnered with artists to create pieces of art with their cars; while not necessarily important economically, this does demonstrate a level of integration with the community that is absent in other automotive groups.
The Internet has also changed the way marketing is conducted in nearly every realm of business. Instead of maintaining traditional marketing ploys to encourage consumers to purchase their automobiles, BMW-- and, indeed, other car companies-- have had to modify their marketing strategies to take the Internet and online marketing into account. The first way this is done is through the website, BMW.com (BMW.com, 2014). Unlike many websites in the past, the websites of today are extremely interactive; the user can move around the website, building his or her ideal vehicle. This helps the individual bridge the gap between thinking about his or her ideal car and seeing it, without the fuss of going to a dealership and asking questions of a salesperson, who may be pushy or insincere. In addition, the growth of social media has allowed BMW and the BMW Group to integrate much more effectively with their potential clientele, asking for information about what the clientele wants and how they feel about the product. This also gives the company much more specific, regionally-based information than the numbers alone may give the company. Anecdotal evidence, when used in conjunction with data, can be extremely effective for adjusting company policy.
The Internet also allows the BMW group to attempt new and different methods of marketing towards younger and younger audiences. Johansson-Stenman and Martinsson (2012) write, “BMW has strategically used computer, tablets and other mobile devices applications for e-marketing strategies due to their increasing popularity rapid advancement. The currently existing marketing related applications include BMW Mobile Configurator, BMW Magazine, BMW Connected, The Ultimate Drive and numerous official games.These applications are available for different platforms including Facebook Apps, iOS, Android and Windows. The applications can be accessed online or downloaded through the BMW websites” (Johansson-Stenman and Martinsson, 2012). BMW has developed a number of marketing strategies, it would seem, directed specifically at engaging with a younger target audience, with the apparent goal of acquiring individuals who will be life-long advocates of the brand. It seems unlikely,for instance, that an older person will play the BMW Game on a Facebook application; however, a younger person who may not have the disposable income could play the game, making a BMW seem to be a car that he or she would like to work towards.
CHAPTER THREE: CONCLUSION
3.1 RESEARCH OBJECTIVES
BMW Group has managed to maintain relevance in a world that is demanding more and more from automobile manufacturers. Despite more and more demand for fuel-efficient cars, BMW still remains successful in its attempts to remain relevant. Part of the quest for relevance is discovering what the people are looking for in the market, and BMW has become excellent at ensuring that they are meeting the needs of their clientele.
One way that BMW Group meets the needs of their clientele is by cunning marketing strategies. By owning Rolls-Royce, Mini, and BMW, the group has access to three different types of vehicles with entrenched, solid reputations. Although Americans will often comment that they would “never buy a European car,” the Rolls-Royce remains a name that is synonymous with extravagance and luxury in the automotive industry.
3.2 RECOMMENDATIONS FOR MARKETING
BMW Group still struggles (relative to their European and Asian success) in the American market. Because the American market is flush with vehicles of every make and model, BMW Group must try harder to set itself apart from the other luxury brands available to the average American consumer. While BMW is very integrated into the European community, the same cannot be said of the relationship that BMW has with its American audience.
The Annual Report does suggest that there were no real attempts made to break into the American market in new and different ways in 2012, but perhaps that is because the global market-- and the American market, more specifically-- was in such a terrible economic state in 2012. Because the market in America-- and the world as a whole-- has improved, the prospects in the American market must also have changed for BMW.
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APPENDIX A
Total annual sales for BMW
