Marketing Mix Of BMW In China

BMW’s Strong Brand Image and Marketing Strategy

Introduction 

Bayerische Motoren Werke popularly (BMW) is a German luxury car making company, with headquarters in Munich, Bavaria. It was founded in 1913 by Karl Friedrich Rapp who soon left the company due to several difficulties and was overtaken by Australian industrialist Franz Josef in 1917 (Sha, Huang and Gabardi 2013). In the present day, the company employs over 1 million employees in over 40 countries around the world. Being counted as one of the big three German luxury car brands the other two being Mercedes and Audi respectively, the brand enjoys massive customer demand and is considered as a status symbol for the wealthiest segment of the society worldwide. 

BMW entered the market of China in 1994 and in 2003, it entered into a combined project with a leading Chinese automotive component manufacturing company Brilliance China Automotive Holdings Ltd. After which it started operating as BMW Brilliance Automotive Ltd (BBA) (Atwal and Williams 2017). The company grew rapidly in the emerging Chinese market. from 800 cars in 1994 it sold 900 cars each day in 2013. In July 2013, BMW announced that China is likely to surpass the US market, and added that sale in China were 182,800 units as against 172,787 units in US.  The company attributed the success to the growth in demand in the smaller cities of China (Armstrong et al. 2015). As per McKinsey report on China’s market, China was found to be the second major luxury car marketplace after US. The report also suggested that the Chinese have an typical annual income of US $16,074 and are eager to splurge on a luxury car. Based on this report, McKinsey anticipated China’s market to reach 2.25million units by 2016 and 3 million units by 2020 and predicted that China would overtake US as the world’s biggest shopper of luxury cars by 2016 (Elijayar et al. 2017.). 

Part A- Marketing mix and marketing strategy of BMW in China

The business approach of BMW collection is founded strongly on having a robust brand image. The strategy forms the key reason behind the achievement of the group. The belief it upholds is that maintaining core values is important, such as improvement, machinery, quality, performance, reliability, individuality, and customer satisfaction. The slogans such as “Sheer driving Pleasure” and “ The Ultimate Driving Machine” gives the world an idea of the marketing strategy it has been adopting ever since its foundation. The strategy can be clearly defined as identifying potential and encouraging growth. The mission state is to be the most efficacious premium producer in the car industry. The Chinese customers have been difficult to be satisfied by foreign companies and it was crucial for BMW to understand this to get a strong market hold in the country. The key to success was that BMW realized that China had a certain preference for long wheel-based cars as they feel this marks a strong account on their accent in life. Keeping in mind this aspect, the marketing mix of BMW for China was set. 

Before studying the marketing mix of BMW in China, it is important to understand the meaning of marketing mix. It refers to set of ideas, tactics and actions that a company use to promote its product or services. The 4Ps of marketing are Price, Product, Promotion and Place. Price means the value of the product or service, which depends on the cost of production, targeted market and various other factors (Pries and Seeliger 2014). Product refers to the items that are sold. Place means the point of sale. Promotion includes all the marketing strategies of the product or service like advertising, press reports, trade commissions and so on.

Understanding the Marketing Mix of BMW in China

Product

The BMW group is associated with the luxury segment of society and the company puts constant effort to maintain the premium quality of the product. The BMW offers premium sedans, SUVs and sports cars, which are all a symbol of luxury and class. The BMW sells its vehicles under three brands, such as BMW, mini and Rolls Royce. Every car in the series has different characteristics. The cars boast of powerful engines, speed and a safety. However, the popularity and sale of BMW cars are much more than their motorcycles. An important area where BMW differs from German counterparts like Audi and Mercedes is that while these two companies are tied to different companies due to which they have to use parts of their products from these companies, BMW has no such limitation and is free to use any parts they feel for the best of their cars. Safety and luxury are the crucial points of the BMW cars. Innovative and unique ideas are introduced at regular intervals as per the needs n demands of the customers. Recently BMW has entered the hybrid and electric segment of motor vehicle in their new model BMW i8. Its consumers praise the top quality material usage (Li, Xiao and Liu 2015). 

Price

The pricing policy of the BMW Group has adopted is decided on the basis of more than one key trend. One significant drift of BMW is labeled as “premium-tization” that causes division of markets. This trend activates the clients to request and pay much advanced prices for the apparent quality. BMW is the finest luxury car brand in the market and their cars are a position symbol. The BMW associated brands like Rolls Royce and mini cooper are priced at a bit higher range than standard BMW product range. While studying the domestic and international pricing policy it becomes clear that BMW has fixed its pricing strategy in a way, which would attract both the high and middle-income group (Murray 2014). The brand charges different prices for different models. This difference is due to the difference in engine size, fuel consumption, and gear levels and so on. Geographical pricing is another important aspect of BMW group. Recently BMW has adopted a competitive pricing strategy in its market in India and Brazil where smaller models are priced at 25lacs which enables buyers to own a luxury vehicle at a much lesser price (Gao and Krogstie 2015). BMW also offers financial services to its customers. BMW is increasing the number of models it makes in China and inventing lower priced models specifically designed for the Chinese market. BMW is producing tailor made products to suit the demand of Chinese market rather than just copying designs from Europe and US.

BMW’s Product, Pricing and Promotion Strategies

Place 

The official website of BMW says that they have 156 traders in UK who are officially selling BMW cars. BMW functions in over 150 nations with over 6000 traders who are allowed to sell both new and used car parts. In China alone, there are around 60 BMW dealerships in 2015. The worldwide distribution system involves about 3310 BMW, 1550 mini and 140 Rolls Royce dealerships (Heinonen 2014). BMW boasts of highly skilled professionals who work hard to maintain the company image. Since it is a global producer, it has manufacturing conveniences in many cities. Their first facility was located in Bavaria, Munich. However, with increasing worldwide clients, they started to setup facilities in different cities. In 2015, BMW had manufacturing facilities in about 10 countries producing about 2430000 vehicles. Recently BMW has set up manufacturing facilities in emerging economies, which is helping them to expand their market.

Promotion

BMW has earned its reputation by offering trustworthy after sale service and warranties. In 2012, Forbes ranked BMW as the most reputable company. BMW ads focus on the look of the car as much as it does on the technology (Ho 2015). This is because the company knows that the target market of the car expects a certain quality from the car, which would make them, stand apart from the masses. The company has been a market leader for almost a century. Their promotional strategy focuses on aggressive advertising with the help of media channels like billboards, print ads, TV to create and maintain incessant brand presence.  BMW has been a benefactor in various rally racing events and other events including sports cars. They promote and participate in international rally and races. They are a successful F1 race team.  These events have helped in their reorganization globally and it has helped them to reach new markets. BMW hired iconic Indian cricketer Sachin Tendulkar and West Indies cricketer Darren Sammy as their ambassadors (Hwee 2015). In 2010, BMW launched its joy of BMW campaign in China, which used Chinese painting, cultures and calligraphy to suit the local Chinese market. As per reports, BMW is willing to increase its expenses on online marketing to attract the younger buyers who are more interested in the latest features of the cars than its status value. 

People 

 After entering the Chinese market, the strategy of BMW is to provide the people of china with the best quality and luxurious service through their products and for that, they are focusing extensively on this fifth factor of the marketing mix strategy (Huang and Sarigöllü 2014). According to the Chinese website of BMW, they have supported their employees with several working incentives and benefits and are proving them with comfortable amenities so that they can work in a peaceful and sustainable environment. According to the Gallup news report, these strategies has led the employees of the company to involve in the production, marketing and research and development for the innovation and expansion of the company in china (Yu and Srinivasan 2017). On the other hand, people, who are associated with the company as buyers are also in the focus for the development of the company. As the competition level of luxurious cars production in china has increased, according to the China Daily reporter Yan (2017), the company is utilizing the opportunity to train its staff and workers to develop their skills and development. Further, this will help the organization to serve its customers with the best and innovative products in the market.

BMW’s Distribution System and Manufacturing Facilities

Process

Process is the important aspect for the growth and development of any company as this provides the organization with a clear roadmap, through which ultimate excellence can be achieved. In this marketing mix, the execution of the process occurs and a well-tailored process helps the organization to lead its workforce towards productivity and innovation (Sinapuelas, Wang and Bohlmann 2015). For BMW china, the process starts from manufacturing, assembling, marketing, dispatching and sales and it becomes important for the company to focus on each process equally as without that sustainable growth will both be achieved and the bestselling cars of the company will carry the entire baggage of consumer expectation. According to the news organization Xinhua net, Xuequan (2017), the company is trying to apply the process of its headquarter Germany in the Chinese organizations with the total investment of 7.6 billion Yuan; so that the process can be parallel to the process of German headquarter.

Physical evidences

It is an important aspect for any kind of service industry, just to understand the level of acceptance between the common people and the feedback or view of consumers about the company and its products. BMW is concern about its physical evidences as well and tries to find out the things its consumer thinks about the company or its luxurious cars (Huang and Sarigöllü 2014). for this purpose the organization is doing marketing campaigns where the consumers can register their feedback a well as in the official website of china, there is a feedback section introduced by the higher authorities so that the common perception about the organization about the company can be properly understood. Furthermore, according to the feedback, the BMW has already launched the car sharing programs in china so that the craze of small and electric based cars can be hyped among its consumers (Sinapuelas, Wang and Bohlmann 2015).

The current study focuses upon the marketing management of BMW, which is a Shenyang, based leading automobile company. It is presently operated under the joint venture between BMW and Brilliance Auto. The joint ventured regulates the manufacture, circulation and sale of the BMW cars in the China mainland. The company is profoundly focusing on increasing itself in developing markets such as China, India and Brazil. The CEO had emphasized that the strategy of expansion in such developing and emerging markets would be done after critical analysis of the environmental factors in those countries. BMW has been constantly improving its merchandises and facilities to provide the clients with the best in the class experiences. The recent BMW M carbon fiber aerodynamics package can effectively improve the performance of air movement. The high performance brake system kit with lightweight sports ventilated brake disc allows   applying brakes at a short distances even at high thermal loads (bmw.com   2018).  Some of these features make BMW one of the most sought after brands.

Employee Incentives and Benefits

However, there are a number of factors affecting the survival of the brand within the global market. The factors could be divided into micro and macro environmental factors. An analysis through these factors helps in the development of an effective marketing strategic policy. There are a number of factors which provides BMW a competitive advantage over similar market players such as global distribution channels, which makes them easily accessible. The implementation of state of the art engineering techniques in the making of the automotive vehicle along with continuous R&D evolution makes it a market leader in the premium segment of care sales (bmw.com 2018). 

The suppliers controls a large part of the business process by tightly regulating the supply of the core raw materials, which goes into making the products (Shiu et al. 2017). Therefore, solely depending upon a single core supplier can make the organization vulnerable. In this respect, the BMW has more than one supplier base, which provides them with a competitive advantage over some of its contemporary market players. Additionally, BMW conducts its manufacturing process close to the source, which prevents any additional expense (Reinhardt et al. 2017).The customers and their attitude also affect the strategic positioning of the brand in the global market. However as argued by Lee  et al. (2015), putting sufficient liberty in the hands of the Customers can result in unnecessary cost-cutting which in turn generates negative revenue, leading to huge market layoffs.

Macro environmental analysis 

The analysis of the external market could be done using a PESTLE.  Here, the PESTLE refers to –Political, economic, communal, technical, lawful and environmental factors.  

Attributes	Effect
Political	· Enforcement of legislation related to CO2 emission can affect the survival of the company in the china mainland. ·  Investment in the lack of political stability is subject to risk. · BMW may face high tax burdens due to the adverse spending patterns of the customers (Trocchia et al. 2015) · Changes in the government policies and regulations applied upon the sales of automobile products and services due to increased environmental concerns.
Economical	· The effect of the GDP fluctuations on customer spending can affect the annual revenue  earned by the company · Global inflation rates and change in the exchange policies might also affect the profitability margins of the company · Increasing level  of debt · Could potentially lose out on a larger customer base due to excessively high  prices
Social	· Changing in the buying patterns of the customers (Otani and Yamada 2017) · Increased  rate of awareness regarding the adverse health effects of Co2 emissions   · Poor automotive brand portfolio with little product differentiation which  the customers may find boring within the changing market
Technological	· The new and sophisticated design will help in attracting new age customer base inclined to the use of technology · New embedded technologies  will help in controlling the rate of environmental  pollution
Legal	· The increasing debts from the investment returns can result in additional legal obligations on the company (de Araújo 2015) · Ineffective compliance management can led to legal breach which could result in untoward consequences
Environmental	· Emergence of consumerism activism can  lower the purchase of the product due to  increased realization regarding high carbon foot print generation · Increasing demand of products sourced from sustainable resources

Table 2: PESTLE analysis

(Source: author)

The PESTLE analysis could be conducted in order to understand the influence of the external environmental factors on the growth of the BMW market shares. Some of the factors could be discussed in details over here which are GDP fluctuations and global inflation rates. The inflation results in rise in the price of the raw materials, which could make the end product expensive. Increased environmental awareness also serves as a barrier where any new model has to pass though sufficient clearance tests and legal procedures resulting in additional charges. Additionally, ineffective compliance management could also lead to legal disputes.

BMW is one of the most highly rated and luxurious car brands, which are coveted by high-end customers across the world. In this respect, a number of different marketing strategies can be used by the company such as business to business (B2B) and business to customers (B2C). The BMW goes an extra mile on connecting with some of its priority based customers.  In order to connect with their customers in India they developed a separate ipad application (bmw.com 2018). It was used as a means of psychographic analysis where the web browsing history of the customers where used for customer targeting and segmentation. However, BMW is known to the first choice of the high-end customers, it faces stiff competition from some of the similar market players such as Volkswagen Audi A6 (Copley 2014). Therefore, one with a lower or middle economy income cannot easily think of owning a BMW.  However as argued by Balmer et al. (2017), BMW has its loyal customer base who would remain loyal to the brand in the long run.  

Customer Feedback for Sustainable Development

Conclusion 

The current assignment deals with the marketing and management of the BMW Company. The BMW is a leading automotive company based in Shenyang region and has a huge amount of loyal customer base. The company strives to be the chief and superior in the premium car producer in the entire world and the sales are getting higher with each passing year, however the growing rivalry in the automobile section of the market poses a risk to the company. As it is getting fierce competitors, which are next-door to BMW group in the competition in the sector of premium car, major changes in the marketing strategy, might be required. However, the company faces a large amount of restriction from a number of micro and macro environmental factors. The changing government policies as well as the market dynamics can result in huge debts upon investment returns. Therefore, an analysis of the overall competitive environmental of the organization can help in designing of effective marketing strategies. The increasing environmental concerns also affect the growth in demand of the company. Being counted as one of the big three German luxury car brands the other two being Mercedes and Audi respectively, BMW enjoys massive customer demand and is considered as a status symbol for the wealthiest segment of the society worldwide. However, the lack of cost effectiveness along with the changing government policies can limit the progress of the company within the global market. 

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