Niche Marketing of BMW
BMW launched new car named “New Mini” in 2001 and was targeted for the small growing car segment of the market . It was designed with some resembles to the original Mini. The New Mini car was more luxurious and more valuable for the target market. The aim of this car would help BMW to capitalize on the small car segment. BMW positioned itself as to be for individuals who were not interested in following the crowd. The case also focused on the unique promotional strategy of the new Mini which resulted in higher demand for the mini than the supply. Problem Statement
The problem statement of this case is identifying and evaluating the strategies for success of New Mini in targeting and positioning in the niche market About BMW & New Mini With the three brands, BMW, MINI and Rolls-Royce Motor Cars, the BMW Group has its sights set firmly on the premium sector of the international automobile market.
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To achieve its aims, the company knows how to deploy its strengths with an efficiency that is unmatched in the automotive industry. From research and development to sales and marketing, BMW Group is committed to the very highest in quality for all its products and services.
The company’s success to date is proof of this strategy’s correctness. Profile of MINI Situation Analysis Competitor analysis The direct competitors of BMW’s new MINI include- VW beetle, VW Golf GTI, Fiat 500, BMW 1-Series, Audi A3, Mazda MX-5 (Miata), Mazda 3, Alfa Romeo Mito etc. During the beginning of twenty first century there was a high demand growing for efficient compact cars due to increasing cost of fuel and growing environmental awareness. And the premium compact sector was getting crowded by those above mentioned companies. BMW then introduced the idea of new MINI.
The new MINI came up with a balanced synthesis of luxury, trendy, fashionable, fun and excitement with the original mini. Here goes the positioning cue for some other competitors’ brands- BRAND CUES Audi A3 Luxury Fiat 500 Sport Volvo C30 Safety VW Golf-Beetle Practical Dodge Calibeer American BMW MINI Fun & Eco-friendly What was the Success/failure reason for new MINI? After the introduction of new MINI the company had a very successful first year in terms of sales. In the U. K alone 30000 cars were sold and in USA popularity grew higher.
Now if we consider the reasons for this outstanding success, we may find the following issues- >The original mini continued to serve the demand of market for small and sophisticated car from after its introduction in 1960s till the end of 1990s. But there was an untapped market of young class who could have chose the mini if it appears with trendy and fashionable style maintaining the looks of mini. BMW first realized this. >Beside, after the emergence of twenty first century, eco-friendly product drew much attention of young generation.
BMW MINI also tuned its focus towards eco-friendly mini car. >People also became aware of cost of fuel as it got expensive after 1990s. So, BMW came up with the idea of fuel-efficient mini car. >In addition to this, BMW’s marketing department used persuasive advertising campaign to promote the brand. The adventurous nature of promotion campaign created hype in the market among young people which in turn brought higher revenues. These are the bottom-line reasons for amazing success of BMW’s new MINI. Goal of BMW’s MINI
The goal was to carve out a niche market within the small car segment by appealing to young people who wanted a funky and more stylish alternative to mass-market small cars. Initially, BMW had a success story due to precise tuning with the demand of market. But as time rolls by, BMW would no longer sustain this benefitted position against its competitors if it doesn’t initiate some sensible promotions for its product. To be market leader in the mini car market, BMW MINI need to redefine the mini car concept just it did previously before it gets saturated.
Continuous innovation and added features will make it more compatible with the growing demand of customers. It can identify some other niche markets within the mini car segment and craft its marketing tools suitably for these niches. SWOT ANALYSIS OF BMW GROUP A SWOT analysis will be used to see the various Strengths, Weaknesses, Opportunities and Threats of the BMW Group. Strengths: 1. Strong marketing strategy. 2. Customers recognize the strong brand name of BMW Group Company. 3. Strong brand image i. e. BMW, MINI Cooper and Rolls Royce. 4. Every 2 to 3 years BMW introduces its new version of cars i. e. constant innovation and technology. Weaknesses: 1. There is an increasing number of duplicate spare parts of BMW and MINI Cooper. 2. The manufacturing costs of BMW cars are very high as compared to its competitors. This is also a reason for high pricing of BMW cars. 3. Not a mass market company like Toyota and their volumes are small. Opportunities: 1. There is an opportunity for BMW Group to increase further innovation and technology in their cars due to increasing competition in car industry. 2. BMW Group should also look to make new collaboration with other car manufacturers i. e. introducing new brands. 3. BMW Group should also look to produce cheaper cars by new innovation and technology. 4. Expansion of the BMW Group in Asia Pacific, Asia, Africa and Australia. Threats: 1. Recession which has affected businesses in every part of the world. 2. To maintain the same level of innovation and performance. 3. The growing competition in the automobile industry i. e. competitors of BMW Group include Mercedes, Audi, Jaguar, Ford, Lexus. 4. The earnings of the BMW Group are Dollar dominated, so the increasing strength of Euro is another threat for the company.
Question Answer By focusing on every sub-segment of the luxury car market rather than to pursue every segment of the automobile market, BMW has a more concentrated strategy 1. Explain how BMW might have gone about identifying the niche market opportunity that existed for the New MINI? Ans. BMW identified the sub segments of the customers with very specific needs and characteristics. It identified that some customers seek fun and sports, some customers are fashionable and trendy. Depending on these needs and characteristics, the new MINI was designed as bigger, safer, and more luxurious than its predecessor without losing the character, fun and excitement of the original mini andcreate a car that was up to date. 2. How can firms like BMW benefit from selling niche market products like the New MINI? By doing more with less-using technological innovations to reduce fuel consumptions, designing and engineering for optimum recyclability, without compromising fun and by offering customization BMW can- Enhance the brand loyalty: there are several associations and clubs: Enhance Brand Image: Differentiate its customers from the crowd;
Positioned it-self against the other car manufacturer. Increase the sales thus increase the profit margin; Establish the credibility: Streamline marketing costs and efforts: no longer need to advertise to a broad general target and can be narrower and more specific with marketing communications. Qs No 3: The new Mini was priced at 11000 in the UK when it was launched in 2001. Discuss whether BMW should consider increasing price in the future? Price: The prices of BMW Group are based on a differentiated strategy. This means that they charge extra for premium quality.
This difference in prices is due to each cars different engine size, gear levels, fuel consumption, sports version Pricing Strategy of BMW: The pricing strategy that the BMW Group adopts is based on several key trends. One most important trend of BMW is labeled as “premium-tization”. Premium-tization trend of BMW causes polarization of markets. This trend triggers the consumers to demand and pay much higher prices for the perceived quality. BMW should increase price gradually. As MINI is positioned based on 1. Fun 2. Cheeky. 3. Stylish. 4. Customizable. 5. Minimalism.6. Up market positioning relative to old mini Qs No 4: To be successful niche market product must be differentiated. Explain how BMW went about creating the product differentiation needed to ensure the new mini’s success? DIFFERENTIATION STRATEGY: The success of any company regardless of the industry relies on its ability to offer value to the end customers. This value should be recognized by customers, and it should be different from the rest of the competition. The automobile industry consists of numerous brands, which have different strategies to capture the market.
Due to the recent global recession phenomenon some brands have strategized to offer low cost vehicles, with exceptional fuel efficiency. This strategy enables these companies to attain monumental sales in the global markets and gives them the ability to capture the growing markets of developing countries. This strategy however is essentially a differentiation strategy, as it does not offer a new or different product. The automobile companies simply enter the fierce market brands competing on the basis of cost leadership.
The current lifestyle of the majority of individuals living in the modern society permits them to change their vehicles on a consistent basis. People no longer treat automobiles as a fixed asset, which is a long term investment. Cost however is not the only factor that influences the automobile sales throughout the world. The modern society has grown to become environmentally conscious and high- tech. They demand vehicles which are not only equipped with the latest technological innovations; they also posses environment friendly technology
The primary reason for BMW’s success in the global market has been its ability to offer innovative automobile vehicles. The company has managed differentiate itself from the rest of the competitors; due to its focus on introducing the latest cutting edge technology to the market, before anyone else. The management at BMW believes that a car must grow and evolve similarly to a human being, and in this process continues advancements in the technological breakthroughs are essential. The company believes that the technological progress is the most viable strategy for sustainable growth