T-306 Solution

Section (B)

Case Study: BMW Brand in North AmericaFor the year 2007, BMW of North America (BMW LLC), the North American arm of a leading German luxury car manufacturer BMW AG, reported sales of 293,795 BMW branded vehicles. This represented a growth of 7.1 percent compared to 2006. Even in 2006 the BMW branded vehicles had posted a growth of 3 percent compared to 2005. These were good figures for a brand that many industry-watchers felt was not as big in North America as it was in Europe. In fact, between 2001 and 2005 the sales of BMW branded vehicles in North America had increased 62 percent, far more that any competitor and its new products were also well received. So, when the management at BMW LLC started on effort to reposition the BMW brand in North America with a new promotional campaign, it took many analysts by surprise.

The senior management in the company felt that for BMW Ag to realize its ambition of increasing the global sales of BMW branded vehicles to 1.6 million by 2010, the company's North American arm had to become a major growth driver they felt that there was tremendous scope for growth considering that BMW's market share in the automobiles market in North America was less than 2 percent. However, an in-house research conducted by BMW LLC, in 2005 revealed that a large percentage (75 Percent) of luxury car buyers in the US did not even consider BMW vehicles at the time of purchase. The management attributed this situation of BMW's overemphasis on "performance driving" over the last 33 years.

This one dimensional focus on performance had led to the customer perceiving BMW as a brand that "lack humanity". The management also felt that the brand was still strongly associated it with the yuppie phenomenon of the 1980s. According to the management, these were major disadvantages as the buyers were looking for brands that stood for larger values. This insight gained from the in-house research, promoted BMW LLC to opt for a new advertising agency, GSD&M, in November 2005. Subsequently, in May 2006, the company launched a new Advertising campaign to reposition the BMW brand. With the new campaign, the company promoted itself as a "company of Ideas".

The marketing communication was a huge departure form the company communications in the past. The series of new ads no longer stressed BMW's performance, but strove to project its design prowess and corporate culture that fostered innovation. In doing so, the company said that they wanted to take their brand beyond yuppies and attract a wider section of the affluent class. The ad campaign was design with the objective of building demand for BMW by reaching out to consumers who had not until then considered purchasing a BMW vehicle. At the same time. It wanted to make the existing BMW loyalists proud of the company success story. According to the company, the dynamic campaign was aimed at the creative class consumers who shared many of BMW's principles an independent spirit, a drive to challenge conventional wisdom, and an appreciation for a brands' ability to offer both substance and style. Though the ads received rave review from various quarters, some analysts felt that BMW was losing its soul by moving away from the theme of "driving" and "performance".

According to marketing expert Al Ries (Ries), BMW owned the word "driving" and this had been etched in the minds of consumers over a period of three decades with the tagline "the Ultimate Driving Machine." Critics contended that when a strong niche brand like BMW tries to diversify and expand its core customer base, it may cause confusion among customers. They felt that in trying to be everything to everyone, BMW might dilute what its brand stood for. They felt that BMW should stick to what it was best at "the ultimate driving machine" and leave the softer aspects to Mercedes, Lexus and Cadillac.

But others felt that there was nothing wrong with BMW trying to expand its customer base. They argued that since BMW held the second position in the luxury car segment in the US market and its sales had been on the rise over the past decade, all those people buying it could not have been only yuppies. With a change in perception, more people would eventually start considering BMW. They felt that as long as BMW did not really change its core philosophy that it builds the ultimate driving machine, it would not los it existing customer base. The debate notwithstanding; the BMW brand continued its growth trend in the North American market in 2006 and 2007. However, with the company remaining tight-lipped regarding the impact of the "company of Ideas".

2007 ( ..) 293795 . 71 2006. 2006 3 2005. - . 2001 2005 62 . .. .

AG 16 2010 2 . .. 2005 (75 ) . " " 33 .

" ". . . .. gsd & / 2005. / 2006 . "".

. . . . . . -- -- ' . "" "".

Al ries (ries) "" " ." . . -- " " . . . . . 2006 2007. - lipped "".

Q3. Apply One of SSM or VSM method for providing the insights in the case situation. Apply all the steps involved in the method as relevant.

(Note: as the marks are distributed for the steps involved in a method, so the student are advised to comment the relevance of these steps with necessary discussion / Model drawing. Don not waste time in discussion of the stage of the method.

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