BMW Films ----Group 16

1. BMW Films ----Group 16 Songyan He Emily Walker Amanda Jones Mengjia Wang Elena Ratnikova

2. Company History • Founded in 1916 as an aircraft engine manufacturer • Produced first automobile in 1929 • Luxury/performance segment by 1980’s with three Series: 3, 5, 7

3. BMW in the US • Mid 1970’s: niche foreign car manufacturer • Late 1970’s: very popular luxury brand • Late 1980’s: luxury car market shift • BMW as the outdated brand • Competition: Acura (1986), Lexus & Nissan (1989) • 1992 BMW sales fall & very low customer satisfaction

4. Invigoration & Recovery in the US • INVIGORATION: • 1. Introduced new models within core Series • 2. Aggressive pricing strategy • 3. Reorganization of the dealer network • 4. Introduction of several new Series • Modifications for North America’s market • RECOVERY: • 1996-2001: BMW recovered in the market • 2001: record level of sales: 2% US market share

5. BMW 5 Short Films • About the film • $15 million • 25% of their media-spending budget, major competitors spent less than 50% on media advertising • To reach 40% increase in sale, increase share of mind • Only available online at BWMFilms.com • Problems • Wrong Segment • Too much budget on short films

6. Luxury or Mass-market • In case study, BMW targeted sales as high as 300,000 cars and planed to reach new sales goals of an additional 40% in the US • Damage the luxury image of BMW • Various series and models or Reduce models to keep simple as Mercedes-Benz • Raise quantity or price

7. BMW Current Customers >50 35 - 50 <35 Most profitable 7 Series 5 Series 3 Series

8. Current Customer Visitor Profile VS • 10% under age of 30 • Average age: 46 • Median income: $143,000 • Gender: 63% male • 25% under age of 25, • 60% under age of 35 • Average age: 31 • Median income: $88,000 • Gender: 88% male

9. Recommandation: Supplement the locations of Ads Why ? • To better targeting the middle-upper class • To targeting the current consumers How？ • Advertising in The Wall Street Journal, BusinessWeek, and finance.yahoo.com • giving them benefits in their customer service plans to heighten retention rates

10. Maintain BMW films Why ? • To attract the younger, urban and chic neighborhoods • To increase their share of mind and add to their future 3 Series consumer base How? • Release films less frequently (every 2 weeks now) • Produce films quarterly or less frequently

11. BMW’s Current Image • Producing more cars than sustainable for a small luxury company • Turning point • Do not enter mass market, maintain luxury image • Rise in customer’s perceived value of BMW cars

12. BMW: Luxury Brand ? • Luxury-something that is expensive and hard to obtain. • Cut down on the number of cars produced • P S1 S D Q

13. McKinsey’s study

14. Recommendation: Differentiation • Currently not much variety among 3, 5, and 7 Series Sedans 5 3 5 3 7 7

15. Why Differentiate? • Better target customers • Avoid cannibalizing brand and entering mass market • Maintain luxury

16. Differentiation • Break consumers into 3 segments • Segment 1: willing to pay low price = 3 Series • Segment 2: willing to pay moderate price = 5 Series • Segment 3: willing to pay high price = 7 Series • Use self-selection price discrimination

19. Thank You!