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Prepared By: Group 5 1. 2. 3. 4. 5. Srilasya G. (11FN-037) Mudit Gupta (11DM-077) Vikas Marwaha (11FN-115) Soumya Ghosh (11DM-156) Rohit Iyer (11FN-082)
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Marketing Mix.. BCG Matrix and PLC for BMW 3 Series in India Survey Questions and Responses. Conclusion .. Recommendation. Exhibit 1: BMW 3 Series monthly sales data Exhibit 2: BMW Advertisement- Joy is life. References......
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This indicates
Indian auto industry is expected to grow at 17% to 19% on an average, sales of luxury and super-luxury cars are expected to grow exponentially.
Luxury
car
segment accounts only for 3-4% of total car sales in India. But what lures the
international majors is the fact that this segment is growing at 25%-plus (2009 sales), much higher than 15-17% growth registered by the small passenger car segment over the past few years. This growth of luxury car sales is driven majorly by increased wealth-creation within average Indian population and the desire of individuals to join the millionaire-club by flaunting their wealth. 2.1 Luxury car majors in India Mercedes-Benz, BMW and Audi put together have around 85% market share. The German car brand Mercedes-Benz had first-mover advantage as it had started operations in India in 1995 and there was no direct competition in this category. So, it remained Numero Uno luxury car brand in India for more than a decade. But, market dynamics have
changed significantly after the entry of BMW in 2006 followed by Audi in 2007.
luxury
cars
has
been reorganized
due
to
the
new
entrants. This has resulted in new equations being forged amongst the various players, driven primarily by a rapidly swelling millionaire-club having diversified choices and preferences. In 2006, BMW had 9% market share which has now grown to 42%, catapulting BMW as the number one luxury brand in terms of sales. Audi which started its operations in 2007 has had the fastest growth-rate amongst the three and has now captured 20% of the luxury car market. So, the Indian luxury car market is favorable for new entrants who are capable of grabbing the untapped opportunities by following the customer-oriented approach and having ability to induce demand by innovation at each level of marketing mix.
3. BMW in India BMW entered the Indian car market in the year 2006 with the launch of its first BMW model. The company established a sales subsidiary in Gurgaon in 2006 to develop its dealer network. In 2007, BMW set up its first state of the art manufacturing unit in Chennai. The company's India based manufacturing units cater to the local markets. Currently BMW has a network of 25 dealers across the country and plans to increase it up to 40 by the end of 2012 mostly in Tier II cities. The company imports most of its critical components from its overseas supply base; with only 10 per cent content sourced from the domestic market, which includes seats, leather and door-panels.
BMW (SUV)
1. Political: Land allocation policies: Land-use conversion is time consuming and becoming complex. It directly affects BMW, which is planning to increase its production capacity of Chennai plant. Taxation: The government may reduce taxes on smaller, fuel-efficient cars while raising them on older, oil-thirsty vehicles. BMW is directly affected because selection of their vehicles have a high performance petrol engine, which means customers will think twice when buying one The consumer protection act: The consumer protection act makes it illegal for BMW to provide cars in a dangerous form. Therefore BMW needs to make sure that all their cars are thoroughly checked and awarded that they are safe before the on set of purchase in a dealer showroom. Local politics: Local politics plays a big role in land and property acquisition.
3. Socio-Cultural Factors: Young Consumer: India being one of the youngest countries in the world has significant presence of youth. This offer a big opportunity for BMW. These young people have grown up with internet and are exposed to better living standards. Also, they start making money at an early age. These young people who consider spending more money for performance and quality. Availability of Easy Credit: Presence of car loans has increased the purchasing power of the customers.
4. Technological Factors: Supply Chain Management: Over the years supply chain has been strengthened by incorporating technology. It has made possible high participation of the manufacturer and dealers in the market flow of cars. Demand Forecasting: Soft wares are available for demand forecasting, merchandising and seasonality management which if effectively used can change fortunes. Data Mining: There has been a great surge in data mining activities for better understanding of market demand patterns and consumer buying behavior to arm themselves with the best offerings. Customer Support Activities: Better customer support and grievance addressing has been possible due to EDI (Electronic Data Interface), QR (Quick Response) and ECR (Efficient Consumer Response) systems.
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5. Environmental Factors: Customer awareness towards environment: Customers are becoming more aware towards environment. By demonstrating concern towards environment, BMW can generate good will. Environmental policies: Environmental policies are becoming more stringent than before. By reducing the carbon emission and designing more efficient cars, BMW can get benefit from government. Global warming: More and more people and getting aware about the issue of global warming. BMW can provide superior and eco friendly design like electric cars, cars using bio fuels to generate goodwill and acceptance.
6. Legal Factors: Custom Duties: Customs duties are levied on import of parts in India. Prolonged Judicial Process: For settling property disputes, it consumes lot of time. Labor Laws: The rigidity in labor laws has led companies to increasingly resort to outsourcing and contracting of labour. Labor strikes are quite frequent now. Since BMW plans to expand its existing capacity, rigid labor laws can adversely affect it.
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Threads
Environmental issues
Associated with highly expensive products. Not able to atract vast pool of middle class people in India
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1. Threat of new competition Luxury car segment is very attractive segment which is growing at high rate even during economic slowdown. By giving higher returns this segment is attracting new firms like Audi. Audi has already acquired 20 % market share within just past two years. Also, the capital and d
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BMW imports most of its parts from Germany and manufactures the remaining parts at its Chennai manufacturing plant. Because of this the thread from bargaining power of the suppliers is low for BMW. Apart from it BMW also has an exclusive dealership chain which has helped it to control the entire supply chain effectively. Thus the thread from suppliers is low for BMW.
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Budget Car Segment Over 60 % of the market Preferred price range below Rs. 2.2 lakhs
Compact Car Segment Around 15 % of the market Preferred price range: between Rs. 3 lakhs and Rs. 4.5 lakhs
Family Car Segment Around 10 % of the market Preferred price range: between Rs. 4 lakhs and Rs. 5 lakhs
Premium Car Segment Real world-class car and people who are ready to pay for it Preferred price range: flexible but around Rs. 6 lakhs is acceptable price.
Super Luxury Saloon A tiny segment BMW mainly sells this segment of the market.
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S. No. 1
Base Type
Segmentation Criteria
Explanation
Segments
Geographic
City
Different tier of cities Tier 1, Tier2, Tier3, Metros have different needs,
buying patterns, culture and other differences. For example cities with high income and population density are more suitable for luxury car maker like BMW
Demographic
Age
Different
age
groups
less than 18 years 18 years to 28 years 28 years to 42 years 42 years to 60 years more than 60 years
have requirements from a car. Pattern of usage and criteria of selection is different for different age group Income Purchasing power and Different income levels have different spending capacity. lower cannot cars. People income buy with level luxurious
Earning less than 20 lacs 20 lacs to 50 lacs 50 lacs to 1 crore More than 1 crore
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due to time constraints Industrialists, Self employed and timing variations of work. Gender Buying patterns vary a Male,Female lot between male and female. Generally male are more prone to
purchase sports car 3 Psychographic Lifestyle Within the high income Usage oriented, Style
bracket, we can further oriented, Outlook oriented, divide by buying pattern Performance oriented. of customers. use as Some these status
symbols, some use them as utility vehicles, and some use them for long distance drives. 4 Behavioral Loyalty Status People with low or None, Medium, Strong,
medium loyalty for other Absolute luxury cars are more prone to switch to BMW.
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S. No.
Base Type
Segmentation Criteria
Segments
Target Segment
1 2
Geographic Demographic
City Age
Tier 1, Tier2, Tier3, Metros less than 18 years 18 years to 28 years 28 years to 42 years 42 years to 60 years more than 60 years Less than 20 lacs 20 lacs to 50 lacs 50 lacs to 1 crore More than 1 crore worker,
and
Occupation
Unskilled
Industrialists, Self employed Gender 3 Psychographic Lifestyle Male, Female Usage oriented, Male Style Style oriented, Outlook Performance
oriented, Outlook oriented, oriented, Performance oriented. 4 Behavioral Loyalty Status None, for luxury makers other Absolute car Medium, oriented.
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age group male in Quality, high income group High in metros and tier 1 Performa cities performance style lifestyle, with nce, and highly
Positioning Statement: To young working male customers in high income group, who are conscious about style, performance and quality, BMW is the best quality, performance car. With BMW, you can make driving a fun and luxury a way of living. Positioning Diagram for BMW: High Quality
BMW cars
Low Price
High Price
Low Quality
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BMW provides dynamic, sporty, innovative and aesthetic brand to the target customers. The product design ensures the superior performance, features and quality. Main features of BMW cars are:
Halogen headlights with complex Superior surface lenses Luxury trim: alloy & leather on shifter, wood/woodgrain on doors and wood/woodgrain on dashboard Design
Interior Features
Cargo Cover Cargo Net Cup Holders Leather-Wrapped Steering Wheel Premium Interior Trim
Safety
Brake Assist Child Safety Seat Anchors Driver Air Bag Engine Immobilizer Front Fog Lights Head/Curtain Airbag Internal Emergency Trunk Release
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while driving Tires and Wheels Alloy Wheels Robust tires, enables driving on rough roads.
10.2 Price The pricing Strategy for BMW can be understood by determining the price demand sensitivity. The demand for the luxury cars are generally price insensitive. However, the pricing for various models of BMW shows that some models of BMW are price sensitive since they cater upper middle class customers. BMW X1 BMW 3-Series BMW 5-Series BMW X3 BMW X5 BMW Z4 BMW 5-Series GT BMW X6 Rs. 22,61,879 Rs. 24,63,678 Rs. 37,91,967 Rs. 41,39,233 Rs. 55,25,867 Rs. 62,51,563 Rs. 65,66,659 Rs. 69,69,227
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For Price Range above 40 lacs, demand is mostly in elastice. Models in this price range: BMW X3/X5/Z4/BMW 5 series GT/ BMW X6/M3/ M5/M6/ BMW series 6/ series 7
Price
For Price Range between 20 lacs to 40 lacs, demand can be elastic. Models in this price range: BMW X1/ BMW 3 series/ 5 series
Demand
Thus from the above curve it is clear that most of the models of BMW lies in the higher price band (above 40 lacs) and they are mostly in the region of demand inelasticity with price. It is because of this, BMW always focuses on quality and performance rather than price. It customers are willing to pay more for superior quality.
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Competition oriented pricing However within the lower price band segment they follow competition oriented pricing. For example: The Volvo S60 D5 price in India is Rs 37 lakhs, BMW 320D is at Rs 35.7 lakhs and Mercedes C220 CDI price in India is Rs 33.2 lakhs
BMW Financial Services BMW Financial Services India operates as a Non-Banking Finance Company (NBFC) in India to offer solutions for Retail Financing for BMW customers and multi make customers, Financing for Fleet owners and Commercial Financing for BMW Dealerships and multi make dealerships. BMW Financial Services India offers Insurance solutions to its customers through its cooperation partner. BMW Financial Services has been successfully operating in India as a part of BMW India with its three business lines: Retail finance Commercial finance for the BMW India Dealerships Insurance solutions through cooperation partners for BMW customers.
Packages and options for customers BMW also provide add on feature options for customers. This helps the customers to add the features based of his/ her price range.
Pricing strategy for BMW X1 With its aggressive price tag, the BMW X1 (22.4 lacs) will not only target customers from luxury car manufacturers like Mercedes and Audi, but also find buyers in consumers who are looking to upgrade from a Toyota Fortuner or a Hyundai Santa Fe, which are available at lower price tags.
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Advertisement
BMW Studio
Direct Marketing
Promotion
1. Advertisements: For very many years, BMW branding centered around Drive, and the manufacturer proudly promoted itself as the Ultimate Driving Machine. This tagline became synonymous with BMW, but since 2008 it began to shift its emphasis on to Joy. It provides a behind the scenes look at the making of the famous d
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This commercial doesnt aim to promote individual vehicles, instead it tells potential consumers the story of the whole brand.
The viewer feels as though being part of this community must be a very positive and magical experience as it appears to make everyone involved extremely happy.
The BMW Club of India BMW provides facilities and luxurious lifestyle to its customers by providing facilities like BMW club of India. The BMW Club of India is a not-for-profit organization whose activities are funded primarily through membership fees. The BMW Club is arranges a wide variety of social,
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Direct Marketing Strategy BMW is one prominent user of the direct marketing strategy. It has employed this style of advertising to boost its brand position. BMW spends huge some of money on direct marketing which the hope of having a massive impact on future sales.BMW sponsors online podcasts to get its branding across as well as it invests in email marketing. BMW also uses software for Data cleansing to improve the quality of its distribution lists so that the right people with in-date addresses are targeted.
Collaboration with e-bay In May 2011, eBay Advertising and BMW announced a new advertising campaign to support the leading car makers first venture into e-commerce. The campaign employed a variety of different targeting techniques to provide relevant advertising to users and drive sales conversions for BMW, including: Category targeting: High impact brand advertising on the eBay Motors homepage Keyword targeting: eBay shoppers searching for BMW or relevant searches of automotive parts and accessories were served BMW branded adverts to direct them to the BMW store Behavioral targeting: raised the awareness of the BMW store by targeting shoppers who have already visited the Vehicle Parts & Accessories category on eBay and fit the target demographics of BMW car owners Re-targeting: advertisements served to eBay shoppers who had already visited the BMW.co.uk website and re-engage with users who showed an interest in BMW
Film Advertising BMW is one of the prominent users of film advertising where they are combining the ideas of producing a series of short films and using the Internet in an advertising campaign. BMW
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Other Innovative marketing activities BMW Golf Cup International organized golf tournament across ten cities Kolkata, Bangalore, Chennai, Hyderabad, Delhi, Chandigarh, Pune, Mumbai, Ahmedabad and Gurgaon. It invited its customers, prospects and opinion leaders to take part in this tournament and provided the right mix for an exclusive social interaction. Formal dining and wine tasting events at leading BMW dealerships across India. Communication of the rich heritage of BMW Eras through association with leading fashion designers and events such as the India Couture Week. Indulging customers in lifestyle events such as Culinary Workshops and Art Exhibitions at the BMW Studi. The BMW Art Cars exhibition that was held at the Jahangir Art Gallery in Mumbai. Conceptualized the BMW Studio on Janpath as a venue where our customers can indulge with the brand in an exclusive environment.
10.4 Placement
Customers
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Dealership in India BMW India is the pioneer in bringing luxurious dealerships to India. BMW India has set a decisive course by setting up BMW dealerships of international standards across the country. BMW India has also set very high standards in service quality and customer care. BMW knows the importance of dealership in sales generation. Thats why they select the dealers based on criteria like: Dealer location ensures that the potential customers get the best of strategic advantages. The ambiance and the customer service should be such that the customer feel welcome at the car dealers place. Build up the reputation and contribute towards the growth of the company's market share. Should act as a catalyst to promote the sales
By end of 2012, BMW India will aggressively expand its dealer network by increasing the number of outlets to 40 across major metropolitan centers and emerging markets in India (from the present 25 outlets). Currently, BMW India is present at 19 cities in the Indian market; New Delhi, Mumbai, Gurgaon, Indore, Chandigarh, Bangalore, Hyderabad, Chennai, Pune, Kolkata, Bhumneshwar, Ahmadabad, Surat, Kochi, Coimbatore, Jaipur, Raipur, Goa, Ludhiana.
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From the above curve it can be observed the BMW 3 series is more or less entering the maturity phase from the growth phase. Based on PLC we can plot the BCG matrix for BMW 3 Series. Relative Market Share
High
Stars
Question Mark
Market Growth Rate BMW 3 Series Cash Cows Low High Low Dogs
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Gender
Monthly Income
Female 43%
Male 57%
less than 20 lacs 9%
18-28 23%
28-42 36%
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Compared to other cars that are available, would you say that BMW is:
Speed 22%
Brand 25%
No 32%
Price 17%
Yes 68%
Analysis of Survey Results Key points from the survey about the customers: Majority of Indian Customers still believe cars as a status symbol.\ While purchasing a luxury car, people are more concerned with brands, speed and safety rather than price and warranty.
Majority of the users of BMW are satisfied from its performance and consider it superior from other brands.
Before purchasing new car like BMW, majority of people are concerned with good looks and driving experience.
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Month Feb07 Mar07 Apr07 May07 Jun07 Jul-07 Aug07 Sep-07 Oct-07 Nov07 Dec07 Jan-08 Feb08 Mar08 Apr08 May08 Jun08 Jul-08 Aug08 Sep-08
Oct-10 Nov116 10 Dec109 10 44 64 77 96 88 116 156 189 Jan-11 Feb11 Mar11 Apr11 May11 Jun11 Jul-11 Aug11
Oct-09 Nov90 09 Dec72 09 80 86 101 114 98 Jan-10 Feb10 Mar10 Apr10 May10
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2005,
http://www.pmalink.org/awards/reggie/2002reggiewinners3.asp www.bmweducation.co.uk/company history www.bmw.co.uk/models www.bmw.co.uk/prices www.bmweducation.co.uk/companyfacts.shtm www.bmweducation.co.uk/statistics \ Kotler, P. and Armstrong, G., (1989) Principles of Marketing, Prentice-Hall International Edition. David Jobber, Principles and Practice of Marketing 5th Edition www.just-auto.com http://www.supercarworld.com/cgi-bin/overview.cgi?BMW
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