bmw's portfolio diversification
DESCRIPTION
In this case, we have looked at the possibility of BMW's Portfolio Diversification with its possible entry in the Indian market with Luxury busesTRANSCRIPT
Introduction of Luxury Buses in
India
Group 5Atman, Siddharth, Milin,
Mona, Prasan
The Team
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Mona Sharma Prasan Arora
Milin ParekhAtman Shah
Siddharth R
BMW Background
BMW stands for Bavarian Motor Works is a German automobile, motorcycle and engine manufacturing company
Founded in 1917 and headquartered in Munich, Bavaria, Germany
Initially, BMW started off manufacturing aircraft engines and subsequently after WWI moved onto automobiles
Accolades
In June 2012, BMW was ranked the #1 most reputable company in the world by Forbes
The BMW Group is ranked #61 in the list of Forbes Fortune 100 Companies (2012)
Sources: http://www.forbes.com, http://www.bmw.com 3
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BMW’s Portfolio
Source: http://www.bmw.com
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Strategy & Product PositioningSTRATEGY
BMW should diversify its portfolio by opting for a line extension
Create a new brand in the luxury bus market to take advantage of a growing market
Leverage its iconic brand identity
ZERO Cannibilization – New Product
Strong promotion should ensure an improved brand image
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Strategy & Product PositioningPOSITIONING
Market: Initially focus on India, and later expand to Asia (China, Vietnam, Malaysia, Indonesia)
Product Competitors: Volvo, Mercedes Benz, Tata
Service Competitors: Indian Railways
Pricing: On par with the likes of Volvo and Mercedes Benz
Customer Interface: Bus operators, Government Corporations
End Consumer: Urban population having medium levels of disposable income
Network: Urban area connectivity
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India’s Transport SystemAir, Rail & Road
With respect to the average middle class Indian
Airways – Time saving but extremely expensive
Railways – Cheap, but erratic and extremely crowded
Roadways – Reasonably priced but lack of options
The Golden Quadrilateral and the NSEW Corridor and the emergence of the luxury bus market has changed the landscape
India has the 2nd largest road network in the world (4,320,000kms)
India planned to spend approximately US$500 Billion according to the 11th Five Year Plan to modernize its highway network
Source: http://www.nhai.org, http://web.worldbank.org, KPMG Report 2011
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Luxury Bus Market in IndiaCurrently 41% Indians use buses as their primary mode of transport (NHAI Report 2010)
The bus penetration is amongst the lowest in India at 0.75 bus for every 1000 people (NHAI Report 2010)
India - 2nd largest luxury bus market, after China selling over 46,000 buses in 2011
The luxury bus segment, is expected to grow by 20 per cent, year-on-year
With increasing urbanization, the demand for luxury buses is growing at a rapid rate
Hartmut Schick (Global Head, Daimler Buses) expects it to reach 80,000 units by 2020
Source: http://www.hindustantimes.com/News-Feed/Auto/Indian-bus-market-will-almost-double-by-2020-Daimler
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BMW’s footprint in India#1 brand in the premier car segment in India
Market share rose up from 9% in 2006 to 42% in 2011
3 Series, X1 and 5 Series are CKDs while the rest are CBUs
Assembly plant in Chennai
Will start sourcing components from Indian vendors by 2013
Confidence in Quality – BMW Service Inclusive (BSI)
Extensive dealer network
Promotions: Golf tournaments, wine tasting events and fashion shows
Source: http://www.team-bhp.com/forum/commercial-vehicles-india/117459-detailed-look-tatas-divo-starbus-ultra-buses
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BMW’s Competitors in India
Volvo is the current market leader with 76% market share
Volvo entered India in 2001, & waited for the industry to mature
Volvo manufactures its buses in India at their Hoskote plant near Bangalore, with another plant to be started soon
1st mover advantage helped Volvo set regulations such as variable bus lengths, number of seats, etc.
Making India a hub for Asia, heavy localization
Launched Multi-Axle variant in 2010
Source: Business Today - How Volvo changed the way Indians travel
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BMW’s Competitors in India
Claim to fame: Invented the bus
Mercedes-Benz has 13 per cent market share globally in the luxury bus market
Manufacturers buses in India through a local JV partner in Sutlej Motors
Priced at (Multi Axle) – Rs. 9 Million (Ex New Delhi)
Source: http://www.business-standard.com/india/news/mercedes-plans-to-enter-city-bus-market-in-india/397023/
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BMW’s Competitors in India
Launched Tata Divo in India in Dec 2011
Designed by Hispano Carrocera of Spain, a Tata subsidiary
The Divo brand and design is sold all over the world by Hispano
Tata enjoys a phenomenal brand recognition and after sales
Priced at Rs. 7 million (Ex – Mumbai)
No multi-axle option available
Source: http://www.team-bhp.com/forum/commercial-vehicles-india/117459-detailed-look-tatas-divo-starbus-ultra-buses
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Referenceshttp://www.forbes.com
http://www.bmw.com
http://www.hindustantimes.com/News-Feed/Auto/Indian-bus-market-will-almost-double-by-2015-Daimler
http://www.business-standard.com/india/news/mercedes-plans-to-enter-city-bus-market-in-india/397023/
http://www.nhai.org
http://web.worldbank.org
http://www.business-standard.com/india/news/mercedes-plans-to-enter-city-bus-market-in-india/397023/
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WHY BMW ?
Despite volatile business conditions, the BMW Group experienced the best year in 2011 selling 1.67 million vehicles in 2011
BMW Group is world’s leading premium manufacturer in terms of sales volume
Manufacture extremely fuel efficient and powerful diesel engines
WHY LUXURY BUSES ?
Rising population in countries like India, China
Rising oil prices
Inefficient government ticketing systems
Improving road conditions
Increasing tourism
Sources: BMW Annual Report 2011 , Group5_Gutfeel