Thursday, July 10, 2008

Launching the BMW Z3 Roadster

Situation Analysis

James McDowell, vice president of marketing at BMW North America, Inc. must design Phase II communication strategies for the launch of the new BMW Z3 roadster. The program follows an “out-of-the-box’ pre-launch campaign centered on the placement of the product in the November 1996 James Bond movie, Golden Eye, and including other “non-traditional” elements such as a product appearance on Jay Leno’s Tonight show, an offering of a James Bond Edition Roadster in the Neiman Marcus Christmas Catalog, and large scale public relations activities. McDowell must assess the effectiveness of the pre-launch activities and design marketing tactics that can sustain product excitement until product availability in March.

BMW Z3 is the first BMW car which is being manufactured in North America which has not been a very big market [roughly around 16%] for BMW because of the inability of the American customer to associate with a foreign brand. Therefore the sales and marketing approach of BMW Z3 will lay the foundations of the future of BMW brand in America. Their phase I was a success, and they had two months between the launch and the product availability to further ingrain their brand image in the hearts of the Americans. So how to strengthen their brand campaign for the coming two months was their main concern.

SWOT Analysis


STRENGTHS

1. BMW is not the biggest but the best car company in the world as it is more into youth targeting.
2. Increase in sales: Their franchise expansion seems to be more promising way to incremental sales to the brand.
3. It influences consumers strongly through Media and film industry.
4. It is Innovative and Impactful.

WEAKNESSES

1. Their corporate image is too serious and tradition-bound
2. Plan Execution was complicated.
3. Z3 was perceived to be German-made car not an American made-car.


OPPORTUNITIES

1. The cars are not as expensive as German manufactured cars.
2. It is the first Auto plant outside Europe.


THREATS

1. Competition from Mercedes.
2. People not accepting a German car in US.
3. New players in the market. The partners or sub- partners may turn into rivals.
4. Government regulations

Exhibit Analysis

Exhibit 1: BMW Units Sales history (U.S and worldwide)
Ø Perfect for the Z3 launch because people were getting familiar with BMW products.
Ø Unit sales showed up to an upward trend and actually increased during the given period (1984-1985), which showed that BMW had its global strategy.
Ø Comparatively in the US, Sales figures showed an increase as well as decrease for the same period. Between ’84 to ’86 it actually increased by approximately 37%, and from then on till ’91, it was down by approximately 40%, but again the sales picked up from ’92 to ’95 recording almost a 45% jump, perfect for the Z3 launch because people were getting familiar with BMW products.

Exhibit 2: Notable movie product placement Examples.
Ø Gauging from the movie product placement examples, there have been many movies in the past, which have acted as a springboard for launching a new product with responses being mostly favorable at times for the company.
Ø For Example when Tom Cruise sported Ray ban sunglasses in Risky Business, Ray ban’s sales tripled. When Apple laptops were shown as an integral part to solving an intrigue plot in Mission Impossible, Apple’s long terms sales increased.

Exhibit 3: Time line of Key events.
Ø The key events followed pre-launch from 1992 onwards followed BMW ‘s strategy to position and market the z3 appropriately. During the year 1994, they tied up with MGM for the product placement through the movie Golden Eye.

Exhibit 4: Z3 Roadster Neiman Marcus Christmas catalog
Ø A part of BMW’s strategy to pursue the audience to check out the new Z3 roadster while shopping for Christmas. It highlighted the fact that it’s now James Bond’s BMW

Exhibit 5: 1996 Apple Corporate Print Advertising referring BMW Website
Ø It was a positioning that BMW was looking out for. They wanted the American public to know about its superior technology. What better way to showcase it than associating itself with a true blue American tech brand like Apple

Exhibit 9: Comparative Launch advertising Campaign Expenditures and Introductory year sales
Ø It actually analyses figures for all the cars in all segments launched in that period (’90-’95), and they finally come out with figures for the average launch reach goal, which is 75-90% with the average frequency being 2.5, which is exactly what BMW is looking for to promote the Z3.

Exhibit 10: ”007 licensed to sell” dealer promotional kits
Ø Associates BMW with the legend of 007, and these are kits for dealers who are the connect point of the customers, which means the customer will also have the movie in mind while driving.

Exhibit 11: Box office draws for Noteworthy Product Placement Movies
Ø It shows the opening week ticket sales for notable product placement movies and Golden Eye is in the top 5 which is good news for BMW

Exhibit 12: Sample Product Reviews from Major Automotive Magazines
Ø Automotive magazines tend to be the consumer’s guide before buying a car. So, everybody takes them seriously. For the Z3 to receive good reviews from the automotive.

Exhibit 13: 1995 Unit Sales and Advertising Spending within the U.S Luxury/ performance Segment
Ø This was the time when the car was being prepared to be launched, and BMW was doing good to be at No.3 in that list which considered total sales. But BMW shrewdly went about its Media expenditure, far below its capacity

Issue Analysis

The main issue in this case is that, in the context of a new product launch, how bmw will structure its marketing mix and manage its launch? Dr. Helmut Panke, Chairman and CEO of BMW (U.S.) Holding Corp. were saddled with the responsibility of exporting BMW’s mystique from the Bavarian hills to the fields of South Carolina. Franchise expansion into more youthful targets seemed the most promising way to add incremental sales to the brand. Updating the corporate image and to have a new product development program which was capable of sustaining that image. Positioning Z3 in the American culture and settling into the hearts and minds of American public. Focus on nontraditional marketing methods to leverage the excitement and enthusiasm of the core customer base in a way that would draw broader attention and interest to the brand. Search of unconventional ways to introduce the unique vehicle like selecting Fallon McElligott whose proven experience in integrated and electronic marketing-the key skills for a nontraditional launch. Deal negotiations with MGM/United Artists on the James Bond “Golden Eye” film. The Z3 appeared in the movie for a miniscule amount of time which was considered ironic. Other complimentary elements of the program that would pre-sell the Z3 and generate dealer traffic would be stimulating interest in other models in the BMW product line.

Recommendations
BMW, being a global company decided to open Spartanburg plant in North America. We think it should have had an approach to open few other plants in other top strategic parts of the globe at the same time. If it had done so, it might not have given an opportunity to its competitors in those strategic parts of the globe to open their plants or to develop a similar strategy. Doing so, BMW would have gained the edge over its competitors.

The central goal of the launch was to expand the BMW franchise. But we feel that it was not necessary for BMW to stress so much on the American culture and settling into their minds and hearts because that may have hampered its recognition and success in other parts of the world. Rather, it could have addressed the general public all over the world.

BMW knew it had 345 dealers and their goal was to expand the franchise. It produced only 150 pre-production cars for use in pre-selling promotions which were circulated among the dealers. This gives the public an internal picture of the BMW’s confidence level in the Z3’s success. It may have wanted to pre-produce more cars than the number of dealers for pre-selling promotions.

The BMW/MGM agreement was orally sealed in January 1995 and formally signed in July 1995. This elongated time period of gap may have created opportunities for their counterparts to break or disturb the agreement. Another thing is BMW did not pay anything to MGM to place its product in the movie. This may be because of its reputation in the global automotive market. So, the exchange between BMW and MGM was very simple. We feel that the agreement should have been more complex and strong enough to last long their relations as it was a one time opportunity.

The final pre-launch marketing plan included some complimentary elements of the program. One of them was “Neiman Marcus Catalog Offer”. BMW and Neiman had set a 20-unit sales goal over the three and a half month Christmas selling period. Later they increased it to 100. Neiman’s had received 6000 customer orders or waiting list applications by Christmas. So, we thought BMW should have analyzed the situation and predicted at least a figure that was close to the number of orders it had received by Christmas. Doing so, it would not have disappointed the 5900 customers who might have changed their minds to buy a different car and spread the word-of-mouth. The last element was the Radio DJ program which was decided by the management one and a half weeks before the D-Day. We thought that there should have been more complimentary elements scheduled till last day before the D-Day. The one and a half weeks gap before the launch may have created some opportunities for its competitors to counter their plan.

2 comments:

M S said...

Thanks for this brilliant analysis! But you should ve focused more on Non-Traditional marketing.

chetan said...

very gud analysis.......