BMW AG

Marketing Plan
Robbie Johnson, Paul Vitale, Tim Lyons, Nathan Davis, and
Laura Rusbarsky

Executive Summary
Plan Overview:
We made sure to do the SWOT Analysis for BMW. Our strengths are our brand
recognition and reputation for quality while our weaknesses are our high repair
costs and vulnerability to currency fluctuation. Additionally, our opportunities are
increased media attention on the 2012 Olympics and the BMW Championships
golf tournament (both of which we sponsor) and our threats are the rising cost of
fuel and the severe economic downturn.
We examined several trends affecting BMW and the car industry as a whole.
Every automobile manufacturer must find ways to deal with increasingly
demanding regulations on emissions and fuel economy from the EPA. Further,
BMWs customers care about being cutting edge, so we must find ways to
thoughtfully integrate the latest technologies (navigation system, Bluetooth, HD
radio) into our cars.
In the end, we decided to select the Young Digerati as our target market. We
selected this group because they are wealthy enough to afford the BMW 5
Series. Also, they care about technology, and the BMW 5 Series is very
technologically advanced.
For our pricing strategy, we decided to use value-based pricing. Sure, BMWs
arent a necessity, but that doesnt mean that our customers arent concerned
with value. We need to make sure that our customers feel they are getting a lot
of value from our products and that means providing the most luxurious and
technologically advanced features possible.
To support our marketing plan, we did some research by referring to an
informative article from Marketing Management by Suzanne Hader called
Wooing Luxury Customers. In the article, she discusses many tips to getting
luxury customers and keeping them happy. BMW can certainly apply each and
every one of her ideas to make its business better and more profitable.
Plan Objectives:

Marketing: Increase market share of the midsize luxury sedan market by 3% by

April 2013
Financial: Increase sales revenue from the BMW 5 Series by 5% by April 2013
Societal: Reduce carbon footprint by 5% by April 2013

Current Marketing Situation

RESOURCES:

Human Resources: The BMW Group offers many benefits to its employees
including flexible working hours and competitive wages. It strives to help its
employees achieve a healthy balance between private life and work.
Additionally, upper level management is very well qualified and experienced.
For example, Frank-Peter Arndt, the head of production at the BMW Group,
has been with the company for about twenty years.
Financial Resources: Based on the 2010 Annual Report, the BMW Group
does have the financial strength to implement planned activities. 2010 was a
highly successful financial year. The BMW Group achieved record revenue of
euro 60,477 (19.3% higher than the previous year) as well as record earnings
of euro 5,094 before interest and taxes.
Informational Resources: Yes, the BMW Group does have the data needed to
understand its customers and the marketplace. It uses this information to
reach its target audience of tech-savvy, young, urban professionals through
advertisements on the Internet and television. In addition, the BMW Group
spends a large amount of its marketing budget on product placement in
James Bond movies such as Goldeneye and Tomorrow Never Dies.
Supply Resources: The BMW Group does have stable suppliers who are
committed to the company. Also, manufacturing takes place quickly and
flexibly because there is close cooperation between all of the plants.
Currently, the BMW Group has 17 production facilities in six countries
including Germany, Austria, Great Britain, South Africa, China, and the United
States.

Offerings: The BMW Group consists of three different business interests:

automobiles, motorcycles, and financial services. In the automobiles component, the
company runs three separate brands: BMW, MINI, and Rolls-Royce. Furthermore, in
the motorcycles component, the BMW Group has had great success with its strategy of
building the best motorcycles, setting high standards with regard to technology,
environmental protection and safety, and providing outstanding customer service in the
pre- and after- sales phase. Last, but certainly not least, is the financial services
component. This area provides the following services: financing and leasing, asset
management, dealer financing and company car pools.

Previous Results: According to the 2010 Annual Report, the BMW Group has
been doing extremely well thanks to the worldwide economic recovery. For instance,
the company sold 1,461,166 BMW, MINI, and Rolls-Royce brand cars in 2010 (13.6%
higher than the previous year). This is a good indication that the BMW Groups
marketing efforts have been successful. Additionally, sales are expected to increase in
the coming year partially due to strategic product placement in the new Mission
Impossible film, which has been enormously profitable worldwide.

Market Overview
DEMOGRAPHICS
Singles who want this car should make approx. $125,000 per year based on a 5-year
loan. He or she should spend up to 15% of income covering transportation costs (car
loan, fuel, maintenance, etc.).
Families most likely need 2 cars. Under that rule (only one as our BMW model) the
household net income will need to be $200,000 per year based on a 5 year loan.
They should spend 10% of income covering transportation costs. This would leave a
total of $32,500. Enough to buy another car and cover other transportation costs
Income
$125,000 per year or more
Marital status
Any
Household size
Any
Education
Bachelor degree, MBA, PHD
Age
30-45
Gender
Any
Race
Any
Occupation
Manager or professional, technology specialist, Healthcare
Geographic
North America, Asia, & much of Europe

SWOT ANALYSIS
Strengths
1) Well Known Brand
2) Status Symbol
3) Quality
4) A lot of add-on options
Opportunities
1) Increased media attention on Olympics
2) Increased media attention on BMW
Championships
3) Globally recognized brand
4) Established brand

Weaknesses
1) Import Parts
2) Repair Costs
3) Change in currency; price fluctuation
4) Ecological/gas friendly
Threats
1) Tariffs on shipping
2) Competitive Car Industry
3) Rising fuel costs
4) Severe economic downturn

Industry Analysis and Competitive (SWOT of two

competitors)
Audi A7

Strengths
1) Well Known Brand
2) Status Symbol
3) Quality
4) A lot of add on options

Weaknesses
1) Import Parts
2) Repair Costs
3) Change in currency; price fluctuation
4) Ecological/gas friendly

Opportunities
1) Increased media attention on Audi
through NY Yankees baseball
sponsorship
2) Globally recognized brand
3) Established brand

Threats
1) Tariffs on shipping
2) Competitive Car Industry
3) Rising fuel costs
4) Severe economic downturn
5) The BMW 535 X-drive

Jaguar XF

Strengths
1) Well Known Brand
2) Status Symbol

3) Quality
4) A lot of add on options
Opportunities
1) Globally recognized brand
2) Established brand

Weaknesses
1) Import Parts
2) Repair Costs

3) Change in currency; price fluctuation

4) Ecological/gas friendly
Threats
1) Tariffs on shipping
2) Competitive Car Industry

3) Rising fuel costs

4) Severe economic downturn
5) The BMW 535 X-drive

Product Overview
The BMW 5 Series is available in two models: sedan and gran turismo. The gran
turismo model is BMWs attempt to combine a car and an SUV. It resembles a tall, 4door hatchback. As you might have guessed, the sedan model far outsells the gran
turismo model. Regardless of which model you choose, there are 4 engine choices:
240 horsepower 2.0 liter 4-cylinder engine (528i)
4

 300 horsepower 3.0 liter 6-cylinder engine (535i)

400 horsepower 4.4 liter 8-cylinder engine (550i)
301 horsepower ActiveHybrid 6-cylinder engine (ActiveHybrid 5; sedan only)
Further, the 5-Series is available in rear-wheel drive or all-wheel drive (X drive). Colors
range from Alpine White to Jet Black. For the purpose of this project, we have decided
to focus on a single good the BMW 535i X Drive.

Keys to Success and Critical Issues

KEYS TO SUCCESS
Brand Image: BMW is a well-known, worldwide company. They have made
themselves into a status symbol with their pricey, well-made cars. They can be seen
in many movies and international events, which helps boost BMWs popularity.
Safety: BMW is a safe car. It has an advanced brake system that monitors the way
you are driving and all-wheel drive for inclement weather. Safety can be a make-it-orbreak-it feature in some customers minds, so these safety features are vital.
In The Community: BMW is constantly doing well within the community. They help
reduce waste by using innovative energy sources. They offer scholarships and fund a
division of a university that teaches students about automotive research. BMW is also
heavily involved in helping children through the Arts in South Carolina. All of this is
important because customers want to do business with good people, ideally. Having
a good image is crucial.
WARNING SIGNS
Laws: Over the years, laws will change and new laws will be made. BMW has to pay
attention to new laws that directly affect what they are doing. For instance, if a law
pertaining to fuel efficiency is created, BMW needs to make sure they are in
compliance or else face big fines.
Bad economy/events: When the economy takes a hit or a major event happens
somewhere in the world, chances are BMW will somehow be effected. If people
change their buying behavior, BMW needs to subtly change their marketing to keep
the customers that they currently have and lure more to them
Competitors: BMW should keep a watchful eye on their competitors. If, say, Lexus
makes a car with all of the same features of a BMW, but offers it a lower price, BMW
runs the chance of losing their potential customers to Lexus.

Environmental Analysis
Macro-Environmental Factors
Social-Cultural Trends
-BMW adds new and cutting edge features that customers can benefit from
-The company started with a quality product and uses consumer feedback to add or
improve the car from year to year. Consumer reports are a great resource to use
because it takes feedback directly from the consumer and it can be easily attained by
the manufacturer.
TECHNOLOGICAL TRENDS bmw.com
New features in car(s)

iPod and USB adaptor

audio system with auto store technology

HD radio

BMW Assist Safety Plan with Bluetooth

How car interacts with new technology such as smart phones

USB adaptor for music
Bluetooth
smart phone apps
roadside assistance
GPS
Unlock car in case of lock out

ECONOMIC ANALYSIS
North America: Economy recovering from recession could be near a top
Europe: Economy 9-months behind Americas economy. Not a good time to be
investing in marketing luxury items just yet.
Asia: Economy is bottomed out and may be a good time to invest. Skill sets are
rising in China and demand for higher pay is increasing. The more workers are paid,
the more they will spend.
Fuel costs are rising
Cost of insurance is getting higher
Encourage the marketing plan to consist of a 5-year (60-month) loan or a 3-year (36month) lease to reduce buyer long-term commitments and increase company profits.
ECOLOGICAL ANALYSIS
Fuel shortages are inevitable, but unlikely in the immediate future
Manufacturing pollution laws are becoming more stringent
6

Emissions laws
Need to increase miles per gallon, hybrid, plug-in option try to avoid horsepower
reduction
Green energy considerations
POLITICAL AND LEGAL TRENDS
EPA fuel economy is improving for the BMW 5 Series

City - 19

Highway 29

Micro-Environmental Factors
Suppliers could directly influence our marketing strategy in a number of ways. First of
all, if there is a shortage of raw materials, our suppliers might be unable to produce the
items we buy from them to add to the car. Perhaps it is the plastic molding for the trim
of the bumpers. There is no way we would ever sell a car that was not 100% built and
we would not heavily and financially promote car sales if we couldnt keep up with
demand. We would have to delay the introduction of the strategy a few weeks or
months so that our suppliers could catch up. Supply management might want to
consider alternatives. There could be a worker strike that seizes production. Tornados,
tsunamis, earthquakes, and the breakout of war could also impact production.
Channel Members could certainly impact the way the customer centers receive the
cars. Channel members mainly consist of transportation forms from where the car is
put together to the sales lot. Luckily, there is not really a distributorship and the primary
storage facility is located on each sales lot in front of public view. There could certainly
still be delays in shipping as well as at customs. Since BMW cars are made overseas,
each car sent to the US gets loaded onto a ship and transported. Each car must go
through customs, which is not a channel member but more of a hurdle to cross.
Inclement weather, natural disasters, war, a truck-jacking, and breakdowns could also
impact the delivery dates of the cars to the sales lots. Unfortunately, it would be too late
to postpone the strategy implementation if many of these issues occurred. Plus, some
of these issues may only impact one sales lot or just a small portion of their inventory for
a limited time.
BUSINESS RELATIONSHIPS
Design Relationships
Design Works USA is a leading company in design strategy and development. They
have been working with companies for 35 years and were acquired by BMW AG in
1995. Ever since they have been working with BMW on new and innovative designs for
BMWs vehicles. BMW has enjoyed a loyal customer base and produced quality
vehicles.

Financial Relationships
Liberty Mutual is an insurance company that works with companies and individuals
around the United States. They provide quality insurance. BMW is working with Liberty
Mutual offering insurance programs to BMWs customer base. Additionally, BMW Bank
of North America is based out of Utah. They work with BMW to provide their customer
base with lease and financing packages for when they purchase a BMW vehicle. They
offer credit lines and credit cards to customers that have bought a new or pre-owned
vehicle.
COMPETITOR ANALYSIS
Essentially any vehicle is a competitor because the number 1 reason to buy is to travel.
Compare and contrast themselves to other car companies
Lexus, Audi, Mercedes-Benz, Jaguar
Most specific competitors include:
2012 Audi A7
2012 Jaguar XF
The 2012 Jaguar XF runs about $1800 cheaper, base price. It gets 16 mpg in the city
(5 less than BWM) and 23 mpg on the highway (7 less than BMW). BMW is obviously
the GREEN CHOICE, which gives us an upper hand on the competition.
2012 Audi A7 costs $4,400 more on average at the base price. It gets 18 mpg in the
city (3 less than BWM) and 28 mpg on the highway (2 less than BMW). Both cars have
about the same mileage per gallon, but BMW is still slightly more fuel-efficient and
saves a few dollars at the pump.
BMW lacks slightly with horsepower, in comparison to its biggest competitors. BMW
535 x-drive has 300 horsepower which is a very powerful car. Audis A7 has 310
horsepower which really isnt noticeable. Jaguar, however, has 385 horsepower which
is significantly more. That is also what is causing the Jaguar to get poor mileage. Our
eye on the market leads us to believe our customers want a fast car, one that can pass
other cars quickly when desired, but that is also eco-friendly and safe for traveling with
the whole family.
The BMW and the Jaguar seat 5 persons where the Audi only seats 4. BMW also
provides more comfort space overall than the competition. This means that our car, the
BMW, is designed to fit you and your family comfortably. Further, Jaguar beats BMW
and Audi in the matter of having some additional standard equipment including a DVD
player and a navigation system. We offer those items as upgrades. Moreover, BMW
happens to weigh more, but has better fuel economy funny how better technology
8

prevails. In addition, our BMW is shorter in length and is also narrower in width so it
makes it easier to park, especially in smaller parking spaces. This will also help
protect/prevent your car from others unintentional door dings and butt bumps. All the
other equipment listed are pretty much standard between all 3 cars.
Customers: The customers who buy from our competitors generally do so due to the
price of the Jaguar XF, the extra horsepower of the Audi A7, or brand familiarity. When
people are happy with the purchase of their first luxury car, they will generally purchase
their second luxury car from that same company. If they had breakdowns, issues with
warranty, or issues with customer service, they will consider different alternatives.
Those who buy from our competitors are generally thin, healthy people (Not that our
customers arent healthy). We believe that they exercise more, eat healthier, and fit
snug into the seats of our competitors. They also must be either short or like sitting next
to the steering wheel because those cars have much less leg room.
Competitive Strategy: Our competitors competitive strategies are very similar to our
strategy primarily because they sell luxury cars as well. However, they design cars with
smaller interiors, which are comfortable as long as their customer is thin. Their strategy
promotes smart choices, healthier life styles (which directly relates to their customers),
safer cars, and safer for the environment. Their strategy is sound as long as it is not
compared next to ours.

Marketing Strategy
Mission: The mission statement up to the year 2020 is clearly defined: the BMW Group
is the worlds leading provider of premium products and premium services for individual
mobility.
CONCENTRATED MARKETING PLAN
For this marketing plan, we will use a concentrated marketing coverage plan. We chose
this plan because we are only using one segment and we believe choosing one strategy
to target that market will be the most beneficial. The concentrated marketing plan
identifies the most attractive segment and focuses all its marketing on that segment.
This will allow BMW to sell the selected car to the target market that would be the most
likely to buy. While other markets are important too, it is vital to select a target market
that we know will buy such an up-and-coming product. While the undifferentiated and
differentiated marketing coverage plans would also work, they wouldnt target the key
BMW customers and potential customers like the concentrated marketing plan would.
PLAN OBJECTIVES
1. Marketing: Increase market share of the midsize luxury sedan market by 3% by April
2013
9

2. Financial: Increase sales revenue from the BMW 5-Series by 5% by April 2013
3. Societal: Reduce carbon footprint by 5% by April 2013
Determining Marketing Plan Direction = Growth Strategies
- Branching out sales to India and introducing the X1
o http://www.articlesbase.com/cars-articles/bmws-growth-strategy-forindia-bmw-x1-to-be-launched-in-india-3330298.html
Setting Marketing Plan Objectives = Financial Objectives
- http://www.bmwgroup.com/e/0_0_www_bmwgroup_com/investor_relations/ir_
services/reden_praesentationen/_pdf/InvestorPresent_May_2011.pdf
- http://www.autoblog.com/2007/09/27/bmw-plans-for-future-2-million-by-2020new-models-and-fourth-b/
Planning Marketing Support = Customer Service
- customer service numbers available for every country online
TARGET MARKET
Overview of Possible Segments and Niches
1. Blue Blood Estates
a. Description: People in the Blue Blood Estates segment are wealthy and
older with kids. They have million-dollar homes, manicured lawns, and
high-end cars. They are the nations second-wealthiest segment in the
United States, earning six-figure incomes. The total number of U.S.
households in this segment is 1,131,860 (0.97%), and the median
household income is $126,538 (2010 statistics). Lifestyle traits include:
shopping at Thomasville, playing tennis, reading Architectural Digest, and
watching video-on-demand.
b. Geography: We have decided that people in the Blue Blood Estates
segment tend to live on the west coast in cities like Los Angeles, Seattle,
Las Vegas, San Francisco, and San Diego.
c. Viability: Blue Blood Estates is a viable market because the people in this
segment are wealthy enough to afford the BMW 5-Series. Also, they have
children, so they are more likely to choose the 5-Series sedan over a less
practical coupe or convertible. Additionally, they care about image and
status, and the BMW 5-Series is a status symbol.
2. Young Digerati
a. Description: People in the Young Digerati segment are a wealthy and
younger family mix. They are tech-savvy, affluent, highly educated, and
ethnically mixed. They tend to live in fashionable neighborhoods on the
urban fringe with trendy apartments and condos, fitness clubs and clothing
boutiques, and casual restaurants and bars. The total number of U.S.
10

households in this segment is 1,403,157 (1.21%), and the median

household income is $91,104 (2010 statistics). Lifestyle traits include:
ordering from expedia.com, going water skiing, reading The Economist,
and watching the Independent Film Channel.
b. Geography: We have decided that people in the Young Digerati segment
tend to live on the east coast in cities like Boston, Washington, D.C., New
York City, and Miami.
c. Viability: Young Digerati is a viable market segment because the people in
this segment are wealthy enough to afford the BMW 5-Series. Further,
they live in a trendy neighborhood, so they need a trendy car like the
BMW 5-Series. Moreover, they are tech-savvy, so they would enjoy all the
infotainment options like the premium stereo and the navigation system.
3. New Empty Nests
a. Description: People in the New Empty Nests segment are upper midmature without kids. They have grown-up children recently out of the
house. They are upper-middle income older Americans with active and
activist lifestyles and no interest in a rest-home retirement. This is the topranked segment for all-inclusive travel packages, and their favorite
destination is Europe. The total number of U.S. households in this
segment is 1,243,807 (1.07%), and the median household income is
$75,295 (2010 statistics). Lifestyle traits include: shopping at
Bloomingdales, attending opera performances, reading Tennis, and
watching The News Hour with Jim Lehrer.
b. Geography: We have decided that people in the New Empty Nests
segment tend to live in the Midwest and the south in cities like Chicago,
St. Louis, Austin, Dallas, and Houston.
c. Viability: New Empty Nests is a viable market segment because the
people in this segment have more disposable income now that their kids
are out of the house. In addition, many of them are recently retired with
money to spend on themselves.
Select the Market
Young Digerati: We have decided to select the Young Digerati as our target market for
several reasons. First of all, they are wealthy enough to afford the BMW 5-Series.
Also, they care about technology, and the BMW 5-Series is very technologically
advanced. Furthermore, they care about image and status, and the car is a hip, trendy
status symbol. Lastly, we want to get customers while they are young, so they will
become lifelong BMW customers. Hopefully, the Young Digerati will purchase pricier
BMW cars like the 6 Series and 7 Series as they age.
PERSONA
11

Meet Jason. Jason has just moved to Boston, MA, to take a position with a prestigious
IT/marketing company. He snagged this job because of his successes in IT and webbased media in his last job and his recently obtained masters degree. He just bought a
newly renovated condo with his wife of two years right outside of the city. They are
expecting their first child in six months. Jason and his wife picked this area to live in
because its not only a short commute to both of their workplaces, but it is very close to
trendy restaurants, bars, and designer boutiques. Jason is very tech-savvy. He always
has the latest and greatest gadgets from the newest iPhone to the best entertainment
center. Before they decided to settle down, Jason and his wife loved going water skiing
and scuba diving. They live their lives on the edge and think of themselves as trendy
and affluent.
With a baby on the way and a new job, Jason needs a safe yet impressive car. He is
looking for something techy, but also for something that exceeds his expectations in
safety specs.
YOUNG DEGERATI- DEMOGRAPHIC VARIABLES
Young Digerati are tech-savvy and live in fashionable neighborhoods on the urban
fringe. Affluent, highly educated, and ethnically mixed, Young Digerati communities are
typically filled with trendy apartments and condos, fitness clubs and clothing boutiques,
casual restaurants and all types of bars--from juice to coffee to microbrew.
US Households: 1,403,157 (1.21%)
Median HH Income: $91,104
Lifestyle Traits
Order from expedia.com
Go water skiing
Read The Economist
Watch Independent Film Channel
Audi A3
Urbanicity:

Urban

Income:

Wealthy

Income Producing Assets:

High

Age Ranges:

25-44

Presence of Kids:

Family Mix

Homeownership:

Mix, Owners

Employment Levels:

Management

Education Levels:

Graduate Plus

Ethnic Diversity:

White, Asian, Hispanic, Mix

12

GEOGRAPHIC VARIABLES
Location:
Country: United States of America
Region: East Coast
States: Massachusetts, New York, New Jersey, Washington D.C., Pennsylvania,
Virginia, West Virginia, North Carolina, South Carolina, Georgia, Florida, Texas
Cities: All major cities inside specified states
Climate: Cloudy and wet, cold and snowy. This car will be fun, comfortable,
and safe in any climate and on any road conditions.
PSYCHOGRAPHIC VARIABLES
Lifestyle: Full time employee, full time dad. Very active lifestyle
Activities: often attends sporting events, opera and theater, business parties, networking
events. Active in community and church, coaches kids sports
Interests: Driving, Reading, stock trading, attending plays and sporting events, watching
CNBC and ESPN, exercising often, eating at fine restaurants, and drinking only the best
import red wine
BEHAVIORAL AND ATTUDINAL VARIABLES
Benefits perceived: horsepower, great fuel economy, high technology, luxury, high
comfort, and status through brand.
Rate of usage: Drive everywhere to work, the kids schools and sports, groceries,
church, dinner, parties, date night, short family trips. Drive Often, Drive Proud.
User Status: Powerful, important, upper-class, demands respect, someone to know
Loyalty status: buy once, buy for life
Attitude towards product/service: Will rave and promote car and the fact of ownership.
Owners free and unsolicited praise will sell more cars.
Technological orientation: customers will want the best a BMW. BMW will offer the
best; most advanced technology in cars including increased fuel economy, collision
impact safety devices, seat comfort design with heating and cooling, music and sound,
engine and sound, transmission shifting and options, and hundreds of extra accessories
that could make their car fit their every need.
Price sensitivity: Not the cheapest car line, but not our most expensive car line either.
Our customers are willing to pay more for perceived personal status. They want status,
prestige, luxury, reliability, and everything else that is associated with our brand. In a
poor economy, our customers are more price-sensitive. However, new (non-target)
customers of previously more expensive models may be more willing to settle for buying
this model in economic downturn because it costs less than their current cars, has
mostly the same technology but, most of all, because it IS still a BMW.
13

POSITIONING FOR COMPETITIVE ADVANTAGE

- Use advertising in ways that keep BMW a household name
o Commercials, billboards, magazine ads
- Sponsor high profile events
o Olympics and BMW Championships
- Promote the new and exciting features of our own cars opposed to highlighting
the downside of other cars
Meaningful Differentiation
- Affordable luxury
- Attainable status symbol
- Quality/dependable product
Positioning and Marketing Leverage
- BMW College Graduate Financing Plan
o Allows recent college graduates to get lower interest rates as well as opt
out of the safety deposit when leasing
o Promotes younger ambitious individuals to buy BMW, hopefully creating
new lifelong customers
www.bmw.northamerica.com
An alternative to the Hyundai Assurance Plan. Instead of targeting people who may
face unforeseen financial problems in the future, they are targeting young adults with a
college degree, a higher paying job than before, and a bright future.
STRATEGY SUMMARY
Direction: Our marketing strategy will involve national advertising, special events, and
promotions to entice new and existing customers to visit our stores or booths at special
events. If we can get our audience to come in and meet our staff, sit in our car, and test
drive it, they will surely want to buy it.
Goals: Our goal is to maintain our high standards with regard to technology,
environmental protection and safety, and providing outstanding customer service in the
pre- and after- sales phase. We will continue to maintain brand loyalty among current
BMW owners, minimizing migration to competitive brands.
Objectives: Our objectives are to increase market share of the midsize luxury sedan
market by 3% by April 2013, increase sales revenue from the BMW 535 x-drive sales by
5% by April 2013, and reduce our carbon footprint by 5% by April 2013. Our goal is to
sell this car at a competitive price, with technologically advanced electronics and
increased fuel mileage without sacrificing horsepower.
ASSESSING AND TARGETING SEGMENTS
Segment Evaluation
14

1. Market Factors: The size of the market is sufficient (1,403,157 U.S. households
in 2010) and larger than the New Empty Nests and Blue Blood Estates
segments. Likewise, there is a potential for growth as the segment ages. Our
hope is that they will purchase larger and pricier BMWs as they near retirement.
Similarly, the price elasticity is a bit lower because its a luxury good. The
wealthy arent as affected by recessions.
2. Economical & Technological Factors: There are fairly large margins on luxury
automobiles. Also, BMW will need to be careful that it doesnt go overboard with
the technology. In the past, the company has tended to make it too complicated.
The detested iDrive, basically a nob on the center console used to control many
of the cars different systems through a screen, is a good example.
3. Competitive Factors: The competition in the segment is intense, but not as
intense as the full-size, luxury sedan market that the BMW 5 Series older
brother, the 7 Series, competes in. Cars like the Mercedes Benz S-Class and the
Audi A8 dominate that market. Similarly, the BMW 5-Series has a sufficient
degree of differentiation. It has an effective combination of sportiness, luxurious
features, and safety (airbags, stability control, available all wheel drive). The
BMW 5 Series is the ultimate driving machine as opposed to Lexus, which aims
for comfort and isolation instead of sportiness.
4. Business Environment Factors: Economic fluctuations must be taken into
account. We are currently in recession, which softens demand for luxury goods
a bit. Additionally, the U.S. government imposes strict CAFE (corporate average
fuel economy) standards, so BMW may have to spend extra money to make sure
the 5 Series is fuel efficient enough to meet the federal regulations. Finally, there
are all kinds of safety requirements, so extensive crash testing must be
conducted.

Marketing Mix
PRODUCT FEATURES, BENEFITS, AND SERVICES
EPA Fuel Economy: City: 19 21 Highway: 29 31
Available Engines: 300-hp, 3.0-liter I-6 (premium)
Available Transmissions: 6-speed manual w/OD, 8-speed automatic w/OD and automanual
The selected BMW also has many available features in handling & control and comfort
& convenience. See Appendix 1 for a complete listing.
QUALITY AND DESIGN
We asked our customers what they wanted and from the results plus market research,
we made the perfect car. This car was designed based on the needs of our customers.
It has better fuel mileage than the similar sedans of our close competitors and it still has
15

all the power you would expect a BMW to bring. Being a family, yet professional car, it
seats five, has lots of head and shoulder room and leg space for all 5 occupants. The
features have advanced technology as well as the long list of extra options buyers can
choose from. This car also comes in very sleek colors that really accent the curves.
Above all, the car has a very high safety rating so our customers know they are
protected. The warranty on this car is also exceptional. All these features bring an
emotional quality.
Our service is also part of our product. As customers shop or their cars are in for
maintenance, they are pampered with free lattes and hors dourves. We also provide
free Wi-Fi so they can stay busy with work if they need to. Our sales professionals are
courteous and will be able to share the most complete information about the car and
features as well as all our BMW line.
This car is a representation of our brand. Staying within a certain expectation is
essential for marketing this car. We wont be advertising this car in a bathroom
advertisement; we will be doing event sponsorships with the Olympics and advertising
with free test drives at specific trade shows. We will promote the product only in the
most professional manner, because after all, our customers are professionals within
their line of work and in their life as a father/parent.
Although our car is a 5-person sedan, it still looks like a BMW with the sleek curves, the
accenting paint color options, and actually has an extra little sporty look to it. Very eye
friendly. It is one of those cars people see on the road as wow, I want that car. The
design of the interior is sleek also. The transmission shifter is a customized new design
that takes much less space. There are no more keys to fiddle with, just a button, and
the front bucket seats allow you to sink in and get fully comfortable.
PACKAGING AND LABELING
This one is a bit tricky because a car is different than say a breakfast cereal when it
comes to packaging and labeling. However, even though the BMW 5-Series does not
come in a cardboard box, the design of the car could be considered the packaging.
After all, there are certain design elements such as the logo and front grille that
distinguish the 5-Series from competitors and communicate BMWs brand. Additionally,
the stickers on the driver side window informing the potential buyer of the fuel economy,
options, and price of the car might qualify as labeling. For instance, BMW would
certainly be able to make the stickers more appealing to the buyer by drawing attention
to all the wonderful options the car has rather than the price.
BRANDING AND POSITIONING
16

BMW has evolved its brand positioning. In case you havent noticed their most recent
advertising, the brand is now espousing the Joy that comes from owning and driving a
BMW, while stepping away from the brands well known focus on driving power and
performance, famously captured in the slogan The Ultimate Driving Machine.
The Power of Brand Equity
BMW implemented a program in recent years targeting recent college graduates.
This programs allows people who fall into this category to purchase a BMW 535
at a lower interest rate, lower lease payments, or $0 down payment.

Once they have purchased their first BMW at a young age, the company then
offers the customer their Ultimate Service Plan.

The goal is to provide customers with the best possible car experience from purchase to
all repairs ensuring that they will be repeat customer for life.
PRICING
BMW could be either dynamic or negotiated pricing depending on the sales person.
Dynamic because the car can fluctuate between prices or negotiated because the
buyer and seller can come up with a reasonable price for both parties.
VALUE BASED PRICING
BMW is definitely a value-based product brand. Cost can be an issue if it is priced
unrealistically against the cars of close competition, but overall most of our customers
are not concerned with price as a contribution factor. BMWs are luxury cars and are
elastic expenses. But when the economy is weak, our car becomes a hot pick as a
secondary choice for BMW customers who buy the higher luxury cars. BMW
customers are not only purchasing their car due to legroom, high technology, and
comfort nor just for the reasons of high horsepower and great fuel mileage. They are
buying BMWs because of the brand name and the quality and reliability the brand
name stands for.
EXTERNAL PRICING
1. Customers: Since it is perceived as a luxury automobile, BMW customers are
willing to pay around $60,000 for a 5-Series. However, if BMW decided to
increase the price of the 5-Series to $90,000, the company would most likely lose
some customers because $90,000 is beyond the acceptable range for that type
of product. For $90,000, BMW customers expect to buy the larger 7 Series.
2. Competitors: Regarding the BMW 5 Series, its main competitors are the Audi A6
and the Mercedes-Benz E-Class. As a result, BMW must ensure that the 5
Series has a similar price.
17

3. Legal, Regulatory, and Ethical Concerns: In addition to applicable laws and

regulations, BMW should consider the ethical dilemmas in pricing. For instance,
what are BMWs ethical responsibilities regarding full disclosure of prices for
upkeep, updates, or replacement parts?
INTERNAL PRICING
1. Product Strategy: If sales of the Audi A6 increase dramatically, BMW could
lower the price of the 5-Series to defend its market share.
PRICING ADAPTATIONS
Segment Pricing
BMW uses segment pricing in their pricing strategy by offering programs for recent
college graduates. With a recent degree or diploma and a letter from a current or future
employer, graduates that qualify can receive the best pricing and financial offers that
BMW has. This is particularly good for the demographic chosen because of their young
age. Many may have already graduated from college, but many more may be going to
law school or going back to get their Masters. BMW wants to hook a younger market so
they can be life-long customers. By helping graduates, they are making that possible.
Discounts
BMW offers several different discounts depending on what and how the customer is
purchasing. For example, in a lease, BMW offers a $1,500 dollar credit and a reduced
interest rate of 2.9% for 36 months. Leasing, especially starting out, is a good idea for a
young person like those in the target demographic. BMW offers discounts because, to a
buyer, it is enticing. A good deal has the potential to persuade a customer to choose
BMW over, say, Mercedes-Benz.
Promotions
Although the manufacturers themselves do not usually have promotions available, the
dealerships where the customer will purchase the vehicle will. They may range from
trade in promotions to free service for buying a new BMW.
Online Presence
The Internet has dramatically changed the car market because of the ability to
compare different cars within different price ranges to see which is more compatible
for the consumer. Also, websites like cars.com can include all the features you want
in your car and how it compares to the competitor. Having the ability to car shop
online in your home is a lot more convenient than going to a dealership and walking
around.
1) BMW is a brand known for their quality and craftsmanship. As a well-established
luxury car company, their pricing system would be considered inelastic. Instead of
18

raising and lowering pricing based on the economy or gas prices, they simply offer
more. Ensuring that their vehicles have higher MPG ratings, as well as offering the
customers extended warranty plans. These give consumers a bonus, or an extra
reason, to choose BMW over their competitors.
2) With the use of the Internet, consumers have the opportunity to get a feel for each
car manufactured by BMW before they set foot into a dealership. If they would like to,
they even have the option of customizing their new car from the comfort of their
home, giving consumers ultimate control.
The Internet also allows potential consumers to research cars they may be interested
in, discovering any potential flaws as well as any concerns or disappointments
current car owners my have with the product. In order to keep buyers happy and the
demand for their product high, customer service is a must. Happy customers will
have positive things to say, luring others in to make a purchase as well
Other Channels
The car dealers play the final role so-to-speak. The car dealers have several
important roles:
1. They make the cars easily available to the public
2. The sales persons are experts in providing information about the vehicles
features to the customers and enabling qualified customers to test drive our
vehicles
3. The sales people are part of the information highway; they provide
knowledge from BMW corporate to the customer and they relay customer
feedback back to BMW corporate (360* feedback). This way BMW will
continue to build cars that fit the customers needs.
4. They keep inventory accessible to the public in all available color
combinations and other styles/features and product placement featuring
specific cars to increase sales in the show room.
5. Aside from the cars quality fulfilling the needs of our customers, our sales
staff and hospitality (hors dourves, lattes, and free Wi-Fi) will welcome
customers to open their hearts (and wallets) to BMW.
6. In the event there are service or warranty work, the dealerships also provide
the repair and maintenance work. The mechanics are professionals at fixing
these cars and they make managing service work simple.
7. The dealerships will also allow customers to borrow cars while their car is
being worked on. If they do not have a BMW for customers to borrow, they
will transport them to an un-named rental car company and will pay for a
luxury car for their customers, not the standard cheap car like their
competitors do. Our customers have spoken. We have listened and will
always listen.
19

There are 17,725 new car dealers currently in the United States, 338 of
which are owned by BMW. Of the total car dealers in the United States, only
4% (709) of them sell BMWs even if they are not owned by BMW. This
helps us expand our car sales into other markets without investing capital.
For example, our marketing plan is to sell our cars in major cities like
Chicago and Los Angeles. If a car dealer in Lake Ozark is willing to sell our
car, we are willing to sell it to them at a competitive rate. BMW will not own
a dealership there so we will have no capital investment outside of our target
audience.
(http://www.autoblog.com/2011/08/25/number-of-u-s-car-dealer-rises-for-firsttime-in-a-decade/)
Used car dealerships are likely to buy and sell any brand that they can
afford. Having used BMWs at as many dealerships as we can is best for
maximum exposure. It is out of our hands at that point, but we still need
consumers to buy used BMWs so that our prime customers can upgrade to
newer models.
Service
At BMW, we want to make sure our customers have the best experience possible when
they bring their car in for service. We will work with our dealers to make sure the
customer lounge is well equipped with bottled water, orange juice, soda, coffee, fresh
fruit, pretzels, and free Wi-Fi. We want our customers to feel like they can still be
productive while they wait for their cars. Additionally, as mentioned above, we will
always try to provide a loaner BMW if one is needed. We refuse to loan a non-luxury
car like a Toyota Camry. Our customers deserve a first-class experience.

Internal Marketing
Internal marketing is all about marketing to your managers and employees. It is
important to make sure everyone within the organization is on board with the new
marketing plan. The marketing team cant implement the marketing plan alone. Many
different departments are involved, and they all must work together to make the
marketing plan a reality. Through internal newsletters, Web pages, training, and
marketing meetings, we will ensure every employee understands the objectives and
goals of our new marketing plan. We also want to keep the communication channels
open, so those working on the frontlines can tell senior management if the marketing
plan is working or not. Employee feedback is one important metric we can use to
measure the success of the marketing plan.

Marketing Research
20

Reference Information:
Hader, Suzanne. Wooing Luxury Customers. Marketing Management 17.4 (2008):
27-31. Business Source Premier. Web. 14 Apr. 2012.
Article Summary:
The challenge luxury brands face is finding ways to provide a luxurious customer
experience at every juncture. Here are some guidelines for doing it right:
Whenever possible, use market research and psychographic and
ethnographic profiling to pinpoint your target customers and understand
why they buy. Luxury customers want to feel like the brand is speaking to them
alone, so know your audience better than your competition.
Aim for brand engagement and sales will follow. Luxury customers are wary
of being sold to, so offer rich experiences that wrap the purchase in an emotional
connection based on shared values like privacy and quality.
Hire people who already have a heart for service, then train and empower
them to act on behalf of your brand. For example, Ralph Laurens sales staff
is empowered to make split second decisions to make the customer happy
without having to check with a manager.
The brand may be what piques the luxury consumers attention, but its the
service that forges and solidifies the bond. The bond, and the high degree of
trust that goes with it, is the reason why luxury consumers are willing to pay so
much more.
Develop programs to reengage dormant and ex-customers. The luxury
population is so small that its often easier and cheaper to woo back a former
customer than to engage a new one.
Embrace online commerce-now. Luxury consumers are ready and willing to
spend large sums of money online, so develop a website that makes it quick and
easy to shop.
BMW would do well to implement every one of these strategies especially the one about
service solidifying the bond between the consumer and the brand. Since buying a car
often involves many trips back to the dealer for maintenance, we want to make sure our
service is top notch. That way the consumer will be more likely to buy more BMW cars
in the future.

Financials
The information below was found on census.gov.
SALES REVENUE FORCAST
Total Potential Market
48,794,937 x .33 = 16,102,329
Total Available Market
21

16,102,329 x .75 = 12,076,746

Sales Forecast in Units
12,076,746 x .179 = 2,161,737 cars
Sales Forecast in Dollars
2,161,737 x $54,800 = $118,463,187,600
MARKETING EXPENSE BUDGET
Budget
--4,554 million Euro. Up from 4,020 million Euro in 2010
Net Profit/Loss 2011 (Automobiles Only)
--4,991 million Euro
BREAKEVEN ANALYSIS
Costs and Breakeven: Costs typically establish the theoretical floor of the pricing
range, the lowest price at which the organization will avoid losing money. For planning
purposes, youll need to know your costs and how to calculate the break-even point
the sales level at which revenue covers cost. The total costs of a product consists of
fixed costs overhead expenses such as rent and payroll, which do not vary with
volume plus variable costs expenses such as raw materials, which do vary with
volume. Since I was unable to locate the exact numbers, here is my best guess on the
break-even analysis:
Average Per-Unit Revenue: $54,800
Average Per-Unit Variable Cost: $40,000
Estimated Fixed Costs: $100,000,000
Units Breakeven: 6,757
Sales Breakeven: $370,270,270

PROFIT AND LOSS ANALYSIS

-4,991 million Euro for 2011

Controls
IMPLEMENTATION
To implement a marketing plan effectively, BMW has to own the plan, support it and
adapt it when needed. Being able to measure the company and get feedback is so
crucial when putting together the marketing plan along with producing new products in
the future.
22

Successful Implementation of a marketing plan:

Owning the plan
Detailed Action plans
Compensation
Management Involved
Work force and management teams
Supporting the Plan
Time to succeed
Resource allocation
Communication
Required skills and machinery
Adapting to the plan
Continuous Improvement
Innovation
Feedback Measurements
Persistence
Adaptive Roll out
MARKETING ORGANIZATION
Since BMW is an international organization, they strive to have excellent international
management skills. Although they have a more hierarchical structure, like shown in the
image below, BMW strives to communicate with all levels of the company to really let
everyone know their mission and vision for BMW.

http://www.bmwmoa.org/club/about_the_bmw_moa/operations/operations_overview

23

CONTINGENCY PLANNING
Contingency plans are something a marketing plan can fall back on. If there were a
major disaster within the company or some harm has been done to the company than
they have contingency plans as a back-up.
BMW is so well known worldwide that even if a disaster were to occur in one country
they have another market to fall back on. The BMW 535i x-drive can be a substitute for
another one of BMWs luxury sedans and they have another automobile that can take
its position.

24

APPENDIX 1
Handling and Control
ABS & driveline traction control
Coil rear springs
Stability control
Gas-pressurized rear shocks
Front double wishbone suspension
Rack & pinion steering
Front anti-roll bar
Steering cooler
Coil front springs
4-wheel disc brakes
Gas-pressurized front shocks
Front and rear vented disc brakes
Multi-link rear suspension
18.0 " silver aluminum wheels
Rear anti-roll bar
P245/45VR18.0BSW run flat AS tires
Design and Dimensions
Body-colored front and rear bumpers
Turning Radius 19.6 ' turning radius
Chrome grille
Payload 1,058 lbs. payload
Clearcoat monotone paint
Front Legroom 41.4 "
Maximum Cargo Volume 14.0 cu.ft.
Rear Legroom 36.1 "
Exterior Length 193.1 "
Front Headroom 40.5 "
Exterior Width 73.2 "
Rear Headroom 38.3 "
Exterior Height 57.6 "
Front Shoulder Room 58.3 "
Wheelbase 117 "
Rear Shoulder Room 56.2 "
Front Tread 63 "
Interior Cargo Volume 14.0 cu.ft.
Rear Tread 64 "

25

Comfort and Convenience

4 doors
Express open/close sunroof
Dual heated mirrors, driver power remote mirrors, passenger power remote w/tilt down
mirror
Dual illuminated visor vanity mirrors
Auto-dimming day-night rearview mirror
Seating capacity of 5
Front bucket seats
Power adjustable front head restraints
Center front armrest
(8-way power) driver seat
(8-way power) front passenger seat
Rear bench seats
Adjustable rear head restraints
Center with pass-thru rear armrests
Driver seat memory
Leather front seat trim
Leatherette door trim insert
Full cloth headliner
Carpet floor trim
Carpeted front & rear floor mats
Genuine wood/metal-look instrument panel insert
Leather/metal-look gear shift knob
Lighted glove box
Dome light w/fade
Front & rear reading lights
Full floor console
Front and rear cupholders
Covered bin instrument panel storage
2 seatback storage pockets
Console refrigerated/cooled box
Dual door bins
Rear door bins
Cargo concealed storage
Carpeted cargo floor trim
Carpet trunk lid/rear cargo door trim
Cargo tie downs
Cargo light
Dual zone front air conditioning
Automatic air conditioning
26

Rear HVAC with separate controls

Air filter
Underseat ducts
Automatic air recirculation
AM/FM/HD/Satellite-capable, seek-scan
Radio steering wheel controls
Single in-dash mounted CD
MP3 decoder
12 speakers
Amplifier
Graphic equalizer Radio theft deterrent
Window grid diversity antenna
Cruise control with steering wheel controls
Power with 2 stage unlock door locks
Keyfob (all doors) remote keyless entry
Power trunk/hatch/door release
Rear child safety door locks
Fuel filler door release included with powerdoors
4 12V DC power outlets
Driver foot rest
Retained accessory power
Ashtray
Wireless phone connectivity
Tachometer
Engine temperature gauge
In-dash clock
Exterior temperature
Systems monitor
Trip computer
Trip odometer
1 1st row LCD monitor
Power telescopic tilt steering wheel
Leather steering wheel
Power front windows
Power rear windows
Front and rear 1-touch down
Light tinted windows
Variable intermittent front windshield wipers
Heated front windshield jets
Rain detecting wipers
Speed sensitive wipers
27

Rear defroster

References
28

"Market Segmentation. Market Segmentation Research. Marketing Segmentation. Market

Segment Research. Prizm from Claritas." Prizm Market Segmentation, Market
Segmentation Research, Market Segment Research, Market Segments, Consumer
Market Segments, Customer Segmentation. Web. 16 Apr. 2012.
<http://www.claritas.com/MyBestSegments/Default.jsp>.
"New 2012 BMW 5-Series 535i XDrive Sedan Competitor Pricing Comparisons." New 2012
BMW 5-Series 535i XDrive Sedan Competitor Pricing Comparison. Web. 16 Apr. 2012.
<http://www.motortrend.com/cars/2012/bmw/5_series/535i_xdrive_sedan/3283/compari
sons/?sVehicle.JATO=700870620120118>.
"Number of U.S. Car Dealer Rises for First Time in a Decade." Autoblog. Web. 16 Apr. 2012.
<http://www.autoblog.com/2011/08/25/number-of-u-s-car-dealer-rises-for-first-time-in-adecade/>.
"US Census Bureau." Census Bureau Homepage. Web. 16 Apr. 2012.
<http://www.census.gov/>.

29