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January 2014

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BMW Movies
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agenda
AGENDA
Introduction : Clive Owen the Hire
Synopsis : What is the case about
Elements of discussion
Company analysis
Product line and customer base
The competitive set
Company analysis : general conclusions
Goals of the BMW Films campaign
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INTRODUCTION


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http://www.bmworld.fr/videos/index.html

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INTRODUCTION


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Ambush
The follow
Powder keg Chosen
Star

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Synopsis
What is the case about ?
In August 2001, Jim Mc Dowell , VIP of marketing at BMW North
America , is debating how to respond to the success of the companys
latest marketing campaign , BMW Films

The campaign features five short films ( collected title the hire ) that the
viewers can access by going online to bmwfilms.com

To date , response to the films , which were directed by a cadre of top
Hollywood directors , has been overwhelmingly positive .


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Synopsis
What is the case about ?
The question facing McDowell now is , what should BMW do for an
encore ? McDowell is currently considering four options
To milk the five films by making them available to a wider
audience
To develop more installments of the hire series
To develop a full length feature that would play in movie theatres
around the country
To do nothing and simply move on to the next idea
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Elements of discussion:
Was the BMW films a good idea ? How successful has the campaign been?
What was the motivation behind the idea ? Who was the target market for
the BMW Films campaign ?
How is the typical North American BMW Customer ? How doe BMW us
Customer base compare to that of its competitors ?
How healthy is the BMW Brand in North America , relative to previous years
? What are the current weaknesses in the BMW brand . How to establish a
BMW Growth strategy ?
What should McDowell do ? Which options should he pick ?
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Company Sales history in the USA:

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Company analysis :
At the time the case is set , BMWNA is one of the strongest luxury brands in the
USA
Sales momentum : the highest in the company history , topping 213 000
units in the US alone. BMW has even surpassed Mercedes Benz to become
N2 luxury brand behind Lexus ( 224 000 units).
BMW share is higher than ever amongst customers for luxury cars : 16% of
luxury car have a stated preference for BMW vs 11% for Mercedes and Luxus.
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Company analysis :
At the time the case is set , BMWNA is one of the strongest luxury brands in the
USA
Brand credibility : The BMW brand is positioned on a dual benefit prestige
and performance , and the brand has acquired significant credibility along
both of theses dimensions . Its status has been cemented as a luxury brand
through its ultimate Driving Machine campaign , which has consistently
conveyed images of affluence, style and prestige while its performance
reputation has been established through an emphasis on superior handing ,
technological innovation and German engineering
http://tier10lab.com/2013/09/26/throwback-thursday-tbt-bmw-ultimate-driving-machine/
http://www.youtube.com/watch?v=EvNTeflUMlc
http://www.youtube.com/watch?v=XTu2PpfzFsI



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Company analysis :
At the time the case is set , BMWNA is one of the strongest luxury brands in the
USA
Product momentum : Over the past few tears , BMWNA has launched several
new , eye catching models , including the flashy Z3 roadster , the high
performance M roadster , the pricey Z8 roadster and the X5 sport utility
vehicle. This expansion of the BMW product line has generated significant
buzz for the German car maker , fueling the perception that BMW produces
the worlds most exciting luxury cars and is a leading innovator in product
design .
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Company analysis :
At the time the case is set , BMWNA is one of the strongest luxury brands in the
USA
Marketing momentum : The company has earned a reputation for innovative
marketing , largely as a result of its award winning launch campaign for the
Z3 roadster which incorporated a number of non traditional elements
including a high profile product placement in the James bond film Golden
eye .
http://www.youtube.com/watch?v=0AQwyily4Fc
http://www.youtube.com/watch?v=vHzgcYFhK5k
http://www.youtube.com/watch?v=Gs-KRSWwE3o
http://www.youtube.com/watch?v=lxIVo-JI7gU


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Product line and Customer base
Product line : the core of the BMW line is its Sedans, with three distinct series
Series 3 , 5 , 7
With an inverse relationship between margins and volume across the series
The 3 series is BMWs mother , lowest margin sedan but top selling series
The 7 series is the highest margin vehicle , but less than 20000 s units a year
in North America.
Customer base : Although BMW customers may share a number of
psychographic and lifestyle characteristics , the company customer base clearly
contains some demographic sub segments

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Product line and Customer base
Customer base : contd
The average customer is 46 years old , there is quite a bit of spread around this
number ; over half (53%) of BMW customers are in the late 40s, 50s,60s; this
includes 8% who are over the age of 65
Although the median income level of a BMW customer is 143 k$ a quarter of its
customers (23%) have incomes below 100 k$ and a quarter have income levels
above 200 k$
Although the average BMW customer has no children , about a third ( 32%) do
have children below the age of 18
3 Series : under 35 single , no kids , income <100k$, getting started on high
potential career
5 series : 35 to 50 , married , income 100k$ to 200k$ , actively building
successful career
7 series ; over 50, married , grown kids , income > 200K$ , at the peak of their
profession

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The Competitive set :
The luxury /performance category has become increasingly competitive over
the past couple of decades
Differentiation in this category has become more nuanced as players have
sought to distinguish themselves along a growing number of dimensions that go
beyond luxury nor preference
They include such dimensions as excitement , fun, comfort, safety , exclusivity,
ruggedness, quirkiness.
BMW has a sportier , more playful , image than Mercedes Benz and Lexus ; it
tends to attract younger customers than its two main rivals
Mercedes has a more prestigious , luxurious image , it appears to attract
more affluent customers than BMW
Lexus scores higher along the comfort and value dimensions , it appears to
appeal to less affluent , more pragmatic customers than BMW .
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The Competitive set : Brand switching pattern
High luxury end with Mercedes being the biggest threat
55% of BMW customers who trade in their cars defect for a different make
18% replace their BMW with a Mercedes 10% Mercedes
6% replace their BMW with a Lexus 3% Lexus
4% replace their BMW with a Porsche 2% Porsche
Low luxury end , with Ford, Volkswagen, Toyota , Honda
35% of BMW defection for mainstream brands
Given this competition , overall level of brand loyalty displayed by BMW is
relatively high
45 % of BMW customers who dispose of their BMW end up purchasing new
BMW , versus a 52% higher loyalty rate by Mercedes
Note that SUV account for a significant % of BMW defection 26% BMW
defection towards SUV : Truck category due to life stage : search for a
different type of car.
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Company analysis ; general conclusions
In 2001, based on this analysis of BMWNA ,
A healthy brand , which has overcome a rocky sales history to achieve
impressive results over the past five years ; in addition, despite the
challenge associated with sustaining a unique position in the increasingly
crowded market, BMW has managed to create meaningful brand
differentiation from its competitors
A highly attractive , increasingly segmented customer base Although BMW
customers tend to share a number of lifestyle characteristics , the company's
customer base has become more segmented over time . It currently ranges
from up and coming young professionals with five figre salaries to highly
successful older individuals with salaries well into the six figures
Strong brand loyalty : Despite the fact that BMWNA faces strong competition,
from mass market and luxury market, the company has been able to achieve
strong brand loyalty by migrating customer up its product ladder and
encouraging life stage defectors to return to the brand once a particular life
stage has passed .
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Goals of the BMW films campaign
Key idea is to do some absolutely pure branding , i.e. focus on long term
strategic objectives rather than push a particular model of series
To avoid a future sales dip in a trend / fashion driven sales cycle , achieving
aspirational mindshare among the elusive young driver segment , even
though many in this segment may not necessarily be in the short term
market for a luxury car
To avoid alienating or offending older luxury car buyers while engaged in this
campaign to aggressively target youth
To reinforce BMW s prestige / performance brand cach in the context of a
product line that is rapidly expanding
To further identify and develop the marketing competencies necessary to
compete effectively against players with bigger marketing budgets .

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Goals of the BMW films campaign
To target young drivers :
The campaign reached a market segment that
was younger , less affluent and more male than
BMWs existing customer base
More visitors to the website were non BMW
owners ( 82%) and 68 % were non luxury drivers
From a demographic perspective, the campaign
appeared to be quite successful in attracting the
demographic target
The idea behind the campaign was to make
viewers find the film to let customers to tune it all
In order to meet unpredictable taste of young
customers , decision to outsource creative
control over the films to Hollywood directors .
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Goals of the BMW films campaign
To avoid backlash from older luxury car buyers :
Second challenge : aggressively target youth without alienating older ,
more conservative , luxury car buyers Most of the films are risky (
provocative content ,potential to offend- intense violence of a man dying
on the bloody back seat of an X5, or blatant vulgarity Madonna lying on
the ground in soiled leather pants );
Both films clearly are not associated with selling high-end luxury
/performance car s.
Films were placed on websites , likely to gain awareness among
people spending a lot of time online ; this group would tend to skew
toward younger , as opposed to older, drivers.
Films placed on the internet , they require significant effort o
download ; the logic is that older luxury car buyers would neither
have the time nor the inclination to put forth this effort
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Goals of the BMW films campaign
To avoid backlash from older luxury car buyers :
The films were promoted through television ads that looked like standard 30
movie trailers , only consumers who were attracted to that particular type of
content would access the films. The logic was that if a consumer was put off by the
high octane nature of the trailer , he/she would be unlikely to visit the website to
view the film in its entirety.
By limiting distribution to the internet , BMW was able to create a highly
provocative campaign that contained content that could never have happened In a
traditional advertisement. The campaign managed to avoid alienating older
potential customers for the simple reason that most of these customers never even
knew that the campaign existed
Because of the limited distribution method , a self selection process was created
that filtered out those most likely to be offended by the content .
That means that although the films contained the most innovative material the
company ever produced , many consumers with the highest immediate potential
profitability for BMW, the premium target , would never see it
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Goals of the BMW films campaign
To reinforce BMW Brand cach :
The third objective was to reinforce BMW Brand cach , particularly in
light of BMWs product line expansion.
In addition, the films bolstered BMW s reputation for being a leader in
innovative marketing by generating tremendous buzz for the company
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Goals of the BMW films campaign
To develop innovative marketing competencies :
The fourth objective was to develop innovative marketing competencies that
would allow the company to compete effectively against players with much
bigger marketing budgets
Some differences between the Z3 launch campaign and the BMW films
campaign : The golden eye placement was to integrate the product into the
movie s backdrop , minimizing the likelihood that viewers would realize they
were watching an advertisement; the goal was to catch unsuspecting
consumers with their guards down , with zero effort on the part of viewers
http://www.allocine.fr/article/dossiers/cinema/dossier-
18592389/?page=12&tab=0
In contrast the central idea behind the BMW films was to create a magnetic
pull toward the film without engaging in any deception regarding the source of
the promotion ; attract viewers willing to expend significant time and effort to
seek the promotion out , with the knowledge that the films were sponsored by
BMW. highly focused market and significant commitment from viewers
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Goals of the BMW films campaign
To develop innovative marketing competencies :
It could thus be argued that he BMW Films campaign involved a level of
non traditional marketing sophistication that extended far beyond that
required in the Z3 launch campaign : in the Z3 Golden eye situation,
execution of the idea required almost total abdication of creative control
to the James Bond producers while in the BMW films, situation was
involved in the script writing process , the selection of producers etc.
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Goals of the BMW films campaign
To develop innovative marketing competencies :
Interesting to consider whether another car manufacturer would have
executed a project like BMW Films
Mercedes is not a brand that targets technology enthusiasts Internet
campaign has no sense for that brand
Lexus , conservative , pragmatic image , films being inconsistent with Lexus
brand meaning
Volkswagen less conservative , more independent brand positioning , but
unlikely to have attracted the same level of top tier Hollywood talents.
Porsche , difficult for the niche company to pull together the resources to
execute such an ambitious project
The success of the BMW films to be attributed to the fact that BMW has
the right image, the right internal resources , the right target customer
and the right strategic goals to make the campaign work




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Goals of the BMW films campaign
Economic efficiency :
In terms of campaign evaluation, final issue is to check the economic
efficiency; one of the goals was to get maximum bang for it smarketing
buck
Registration of the bmwfilms.com website to view the films; assuming
cost of the films was 15 million $for 2 millions viewers =7.5$ per
viewer
By comparison, an average prime time TV commercial is 13 cts per
viewer
Integrating the pass along factor let say 3 times , i.e. 6 millions
viewers , 15 million $/6 millions=2.5$ per viewer.
The campaign is not economically efficient compared to the cost of a
prime time campaign .
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Goals of the BMW films campaign
Economic efficiency :
But consumers with traditional ad are uninvolved and apathetic with
respect to the ad while visitors to the BMWfilms site were involved ,
enthusiastic , excited and hungry for additional movies.
Free advertising was generated by the campaign : the level of press
activity was ten times what was anticipated; films reviewed in dozens of
major media outlets
In sum a traditional media campaign can cost about 1.5 million $ to
develop the creative and 15 million $to buy the media .
What BMW did was to reverse the standard advertising equation: rather
than sink the its ad budget into its media buy at the expense of production
values , it did the opposite , spending on Hollywood talent to create
Hollywood caliber content .In exchange , the company got a much smaller ,
highly targeted audience that was willing to spend 7/8 minutes completely engaged
with the content.
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Goals of the BMW films campaign
What happened ?
The BMWNA marketing team received a number of 2002 industry awards for
the BMW films campaign , including nine Clios and a Super Regie award
The campaign spawned several copycats efforts
Mid 2002 Mercedes Benz produced a commercial that appeared to be a
film trailer for a fictional film called Lucky Star
http://www.youtube.com/watch?v=YoCLxp2W9xE
Chrysler and Ford were two brands that jumped into the film making arena
sponsoring film projects designed to support some of their newer model
cars
As for BMW it was decided to follow up with three new short to keep the
series alive. Clive Owen reprised his role as the hired driver , the hostage ,
, beat the devil and Ticker
http://www.bmworld.fr/videos/index.html



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RANK BRAND CAMPAIGN AGENCY
VIEWS
(millions)
1 Volkswagen 'The Force' Deutsch Los Angeles 80.3
2 Volkswagen 'The Dog Strikes Back' Deutsch Los Angeles 43.3
3 Volkswagen 'The Fun Theory' DDB Stockholm 35
4 Kia 'Share Some Soul' David & Goliath 29
5 Honda 'Matthew's Day Off' RPA 26.7
6 Chrysler 'Imported from Detroit' Wieden + Kennedy Portland 26.4
7 Ford 'Fiesta Movement' Team Detroit 25.1
8 Toyota 'The Sienna Family' Saatchi & Saatchi Los Angeles 23.8
9 Chrysler 'It's Halftime in America' Wieden + Kennedy Portland 23.7
10 Toyota '#WishGranted' Saatchi & Saatchi Los Angeles 23.4
Top 10 viral auto ads of all time
Source: Visible Measures, AutoNews

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INTRODUCTION


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Ambush
Star
Hostage Beat the devil
Ticker

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INTRODUCTION


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Making of Driving techniques