In Depth Market Analysis On Bmw Marketing Essay

In Depth Market Analysis On Bmw Marketing EssayDue to the failure to grow grocery store sh atomic number 18, the group select a st come outgy of organic emersion in its early 2000s.This mattered in the launch of a large number of models with varied harm and class ranges stellar(a) to further market development.This re todayned European carmaker BMW is well known for its high feature products and services which comes in wide ranges, its planetary brand doubling and its highly output cars. This report emphasizes on the comp some(prenominal)s strategic goals and values and the equal of political, economic, complaisant, technological, surroundal and motiveed factors in the present combative world on the comp some(prenominal).The master(prenominal) objective behind the case study is to understand its strategic cap dexterity, its target market, market partition which is keys to success in the competitive market like of any pains, also by discovering positioning options, c alculating and further understanding the importance of brand management and selecting the appropriate methods for the strategic development of a guild.This report analyses the ability of the union to succeed and compete with its competitors. It will also discuss about the challenges it will come across in the near future.Learning ObjectivesThe main reading objectives after analyzing the case study areEvaluation of Classic and Contemporary models, concept and tools white plagued in wrinkle strategy and planning which include PESTEL analysis, rank stove analysis, SWOT analysis, Porters five forces, Industry life cycle and Cycle of competition.The process BMW used to identify their strategic goals and valuesAnalysis of Political, Economic, Social, Technological, Environmental and legal factors and its influence on its strategyThe strategy used to achieve its competitive advantageFuture challenges impact on the CompanyThe reason for BMW considering the international byplay envi ronment and its response towards it.The use of Value chain analysis for BMW in set out to improve its competitive position.Summarization of its knowledge and understanding of its external business environment, its management and its ability to change, develop and implement business strategy.PESTEL AnalysisIn the macro-environment, in that respect are various factors which affect the decisions of the managers in regards to the strategic development of any organisation. almost of the macro change factors include Tax changes, mod laws, trade barriers, demographic change and governing policy changes.(http//www.oup.com/uk/orc/bin/9780199296378/01student/additional/page_12.htm)According to doubting Thomas (2007) when an organization undergoes various changes and faces complexity in upcoming situations, it is hard to keep a track of activities in external environment and its erratic effect on the strategies of the firm. In such a situation PESTEL analysis is done which helps in analyz ing the key drivers of change that helps in predicting the businesses future environment.Political factors These factors emphasis on the giving medication policy such as the degree of interference in the economy. In an railway car industry, the possible factors areTax laws and government policies by foreign government have a great affect on the automobile industry. According to Hill, 2008 Success of the business in the global market is determined by the seeming foreign policies.As the laws and regulations that had affected the automobile industry also included the environmental factors affecting it adversely, it was made mandatory for all the car manufactures to consider the environment while making their manufacturing process.Economic factors include factors affecting an organization on economic ground like exchange rates, taxation changes, inflation, and interest rates and so on. For an automobile industry the economic factors areThe decreasing exchange rate of Euro had an adver se affect on the European car makers as due to inconsistency in exchange rate increases the price per product and reduces the profitability for sale per product.According to Autofacts, 2004 Emergence of developing states like China and India s excess detonating device and buying originator regionally and globally.Global increase in GDP (market value of all goods and services) services from 2.0% to 3.1% in 2008 and regular economic downturn in the US market in 2008.Buying capacity of people and the population figures even affects the automobile industry.High amount investment in marketing and on the new designs production of automobile blocked spacious amount of revenue although the supply was more than the demand.Social Factors transplants in social trends like income distribution, ageing population, and military capabilitys to naturalize tramp have a great impact on demand for a product by a firm and it also might result in the willingness and availability of individuals to work. Like in UK, as the population has been ageing has resulted in increment of greets to the firms who are committed to pension payments for staff who are living longer.(http//www.oup.com/uk/orc/bin/9780199296378/01student/additional/page_12.htm)For an automobile industry the factors could beAs a result of recession, the buying behaviour of consumers seems to be changed.Automobiles environmental issues and its harmful emissions (Johnson,2005)Change in demand for a new product in terms of the launch of a new brand can be one of the social factors.Technological Factors New products are created due to new technologies. Technology reduces costs, improve quality and lead to innovation of a new product. These developments not only eudaemonia consumers but also the organisations providing the products. (http//www.oup.com/uk/orc/bin/9780199296378/01student/additional/page_12.htm). The latest the technology is, greater is the demand for that product especially in terms of automobile i ndustry. Examples areThe cost of manufacturing increases with the adoption of new technologies.Due to increment in the use of technology, the ratio of competitors is too high now.Restrictive measure on technology which are united to the environmental pollution are one of the most important technological factor (Allen, 2006)Environmental Factors The most concerned factors here are environmental issues and global warming which affects the environment. It even includes the change in climate and weather. In terms of automobile industry, the factors can beThe taste perception and preferences of customers change with the change in trend. They now prefer eco friendly cars, fuel cell cars in magnitude to environment friendly.Due to increase in global warming and the awareness of green kinsperson effect, the consumers are more into buying environment friendly products.Legal Factors are related to the legal environment in which the firm operates. (http//www.oup.com/uk/orc/bin/9780199296 378/01student/additional/page_12.htm)Some of the examples can be employment law, health and safety law. In the automobile industry, the legal factors areRules and regulations in regards to pollution control all over the European countries.The import export duty tax and the ethics in regards to the manufacturing process vary from country to country.The firm is bound to follow the legal norms in order to maintain safety standards.Porters five forcesIt is a framework for the industry analysis and business strategy development developed by Michael E. Porter of Harvard Business drill in 1979. It draws upon Industrial Organization (IO) economics to derive five forces that determine the competitive intensity and therefore attractiveness of a market.(http//en.wikipedia.org/wiki/Porter_five_forces_analysis). It is a tool to rate the nature of competition by calculating the factors inside and outside an industry. It is done in order to develop business strategy and do an analysis of industr y.(http//alfrancobakerhughes.files.wordpress.com/2010/02/porters-five-forces2.jpg)The quintuple ForcesThreat of new entrants The threat for a new entrant in an automobile industry is the minimum due to high investment in order to set up manufacturing plants and assembly liners. The time taken to be recognized by the consumers is even more than any other industry. Above are the few barriers that there is hardly a threat of new entrant in the world of Automobile.Threat of substitutes Although BMW is one of luxurious and renowned brand but can face a threat of substitutes due to other berthful brands like Audi, Toyota, Mercedes and so on. The other brands too as a wider choice due to enormous range of products.Bargaining antecedent of suppliers BMW got a long relationship with its supplier and also got a tightly controlled distribution system. Suppliers have high bargain power because suppliers can dictate the cost of raw material. Long relationship with suppliers result in reduce d cost of raw materials.Bargaining power of buyers The bargain power of buyers is high due to availability of huge range of products as BMW and its competitors fall into exclusive car range. Consumers can choose a product on the hind end of price.Competitive rivalry As most of the big automobile companies are globally establishes, their target market is the same attracting the same group of customers. This results in greater competition especially in the markets of Asia, Europe and US.The key drivers of changePestel analysis helps us to overview the macro environmental factors. The factors which can have a high impact on strategy are identified with the combination of the above i.e. Pestel analysis, Porters five forces and drivers of change. The drivers of change help managers make effective decisions. Some of them areConsideration of environmental issuesChange of customer demand for goods quality cost of ownership.Improvement in the use of technology and preference design due to change in taste and preferences of consumers.Trend of using small cars.The Industry life cycleIt is composed of five set ups from the launching of the product to its declination. The horizontal surfaces are development stage, growth stage, shakeout stage, adulthood stage and decline stage. The world-class stage is the start up of a company with the innovation of its assets. Secondly, during the growth stage there is a minimal threat to new entrants and high growth with low bargaining power of buyers. Thirdly, in the shake out stage the firm focuses on its managerial and financial activities and is a stage of slow growth. Fourthly, the maturity stage faces high barriers to entry with increase in competition. At this stage the highest is the sales with high market share but with time, the growth s pass bys and stage of declination comes.Considering the case study, BMW is in the maturity stage of industry life cycle. Although its growth is stagnant, its products like 1,3,5,7 series were standardized due to its huge market share and brand identity. Despite high barriers to entry in the maturity stage, BMW asset was a relatively high market share and precondition as a manufacturing excellence.SWOT AnalysisIt is a tool to analyze the familiar strength and weakness with the external opportunities and threats. It helps in better understanding of how the internal strength and weakness with current strategy are capable of dealing with the changes in the external environment.StrengthsIn order to maintain good supply chain management, BMW maintains strong relationship with suppliers.As BMW uses the most advanced technology, it helps in enabling design, quality and price to prospective consumers.BMW has a good position in the market in terms of brand and gratitude factor.It can rely on its strength in order to gain competitive advantage with the help of its well adapted labor force.Brand imageHigh turnoverHighly qualified Labor force.WeaknessLow cost products of com petitors and its perception of high price.BMW had an image of world serious and conventional in comparison with the other competitors.Environmental issues.Consumer sophistication and understanding.OpportunitiesThe number of products sold was increased inspite of most of the countries being hit by recession.Its attitude of advanced technology towards its products and its flexibility in development and manufacturing.Affordability due to interest rate being less.Its popularity increased among the developing countries like India and China.World wide recognized brand image.Introducing and developing a new product in the market with more advanced features.ThreatsEconomic downturnDifferent Legal factors of contrary countries.increase in the number of entrants in the industryCompetition level increasing day by day and its going to be hard to survive for a company who doesnt go along with the change in trend.Increment in the supply costs.Cycle of CompetitionThere was a strong competition betwixt all the competitors in the market with time and in order to overcome the hurdles which could have resulted in the loss, BMW had a rise in its turnover with the use of adequate technology. Core capability and competitive advantages are not permanent in nature as per the concept of cycle of competition. For example BMWs strongest competitors Toyota group. According to kiley (2004), Toyotas whole assets including apparatusry, profit margins etc create threats for BMW as Toyota has established product in the small market region. Therefore, the available option for BMW is to compete through its core capability and competitive advantages. By implementing the use of scientific technology that BMW restores to, higher economies of scale can be achieved.BMW is one who serves from a small car to a bigger car like that from a mini to Rolls Royce. This is one which serves from a luxury segment to the premium segment which is not in case of all its competitors.strategic driftStrategic d rift refers to the change in strategy. Despite the occasional incremental development from cultural and historical factors, the reason for drift to occur is when company environmental changes negatively affect its operations.BMW emphasises on brand development that is a result from changes in the market. Strategic drift is better off explained when considering an example of acquiring of English brand Rover was due to the companys take up of increasing production.ResourcesA resource is described as any physical entity that needs to be consumed first to get benefits out of it. (http//en.wikipedia.org/wiki/Resource). There are two kinds of resources- Tangible and Intangible Resources.Tangible Resources are the physical assets like Labour force, machinery, finance within a firm and Intangible resources are the non physical assets like information, status and knowledge.The resources which BMW possesses areIt has highly qualified labour force composed of young and professional profession als.In 2003, BMWs financial resources the turnover was of 41.53 billion Euro, gross margins of 3.2 billion, 7.4% profit margins and annual surplus of 3.2 billion Euro.Supply chain and dealership managementEffective market segmentationIts universally designed physical resourcesIts relationship with the its suppliers, quality of products, reliability and dealings makes them building strong relationship with their suppliers so that helps them in high bargain power of supplier.Brand image getting stronger due to its reliability and inevitable product quality.By the contribution of economies of scale, product/process design, experience and supply chain, cost efficacy at BMW is possible (Gerry, Scholes and Whittington, 2008)Supply costsEspecially in terms of production and purchase of raw materials, supply costs play and important reference within an organization. It is considered to be an important asset when input cost decides about the success of a company. With a work force of 10400 0, BMW has set up different locations like China, USA, UK, South Africa and Germany in order to manage its supply cost. It was guaranteed that the supply cost will be reduced if the transportation cost of raw materials is reduced. fatherThe two primary things while considering experience in an organization are attainment of cost efficiency and control of costs. There is also a need to generate competitive advantage through experience by the firm itself and its unit costs.BMW has been in the automobile sector since the Second World War. Acquiring of the accumulative experience is expected to lower its unit costs. There is a need of increment in the unit produced annually from the established assembly units in this competitive market with the reduction in the cost. This reduction atleast guarantees capability of survival although the competitive advantage may not be achieved. merchandise/Process Design point of intersection design is concerned with the efficient and effective generati on and development of ideas through a process that leads to new products.(http//en.wikipedia.org/wiki/Product_design)The main reason for product design is to tap working capital, labour productivity and better yield. In order to compete with the rival, it is select in order to gain competitive advantage.BMW has earned reputation in the global market as an engineering excellence due to its excellent performance in product/process design.Value Network for BMWBMWs assembly locations and manufacturing unit is independent on each other according to the value network. Each of the assembly units has a separate supplier of raw materials needed to manufacture the product. inner value chain in the assembly liners exists among them. The organisation also possesses a channel value chain which is formed on the basis of design, location and price such as the product varies from a mini to Rolls Royce. As per the target market, market segmentation is done and accordingly the product ranges are pr iced and designed other than as per the value chain criteria. The pricing strategy differs from location to location where BMW is focussing at. Like the price for the products in related to automobile industry in Asian market is cheaper than UK or US.BMW Success FactorThere are various factors responsible for BMW success. These include Product quality, Product cost and experience. Firstly, the product quality is important to be maintained as per the customer satisfaction point of view. The excellence of a product helps in identifying the brand of a product. For a company like BMW, it is important to maintain its quality for further success. Secondly, the product cost is always high but its quality of the products gets balanced it in front of its competitors and justifies the reason for the price to be high. The third success factor is Experience for BMW in the automobile industry. Its presence in the industry for so many years has helped in establishing its brand image for its produ cts together with the advanced supply chain which helps in delivering of the right product at right time.Hereby its said by Radinger, 1996 that the BMW s channel value chain of price, location and design is the backbone of consumer value chain.Its brand image, technology, business model, its sustainability in this competitive world and lastly its CEO are responsible for its own success.Future Challenges that may have an impact on BMW areDecrease in economies of scaleTechnology may become stagnant.Consumers taste and preference might changeDuring the firms maturity stage, there might be increase in rivalry spark advance to price wars tooUps and downs of Currency rate will have impact on the prices of products sold in different countries.High fuel prices and increment in the cost of raw materials.BMW possesses the strategies like Product development, Market penetration Restructuring, Market development and liquation that will help BMW readdress profits for organizational future.Concl usionA company like BMW had to face lot of problems in the 1990s as there were so many competitors in the Automobile industry and also due to the fact of global recession. After all this hassel, there came a good part in its company which proved to be a turning point for the company as the new CEO started a strategy of internal growth through market and product development in the year 2002. Due to the failure to grow market share, the group adopted a strategy of organic growth in its early 2000s.This resulted in the launch of a large number of models with varied price and class ranges leading to further market development. This strategy of internal growth and product development also brought them to a conclusion of launching a new model both 3 months from 2003 through to 2005 and this plan was implemented which gave consumers choice from Mini to Rolls Royce.. The two biggest market the company targeted on were US and Asia in order to find buyers of their top and high range models a nd left over the European market for its lower cost and lower range models as the buyers didnt include people with high compute in order to buy a car as they preferred mainly basic car model. BMW is in the maturity stage as of industry life cycle. Although its growth is stagnant, its products like 1,3,5,7 series were standardized due to its huge market share and brand identity. Despite high barriers to entry in the maturity stage, BMW asset was a relatively high market share and status as a manufacturing excellence.The company acquired the image of manufacturer of an Ultimate driving machine as they worked upon their weakness and landed up innovating new ways in order to distinguish itself with its competitors. This resulted in crossing over the turnover of Lexus, the US biggest automobile maker in 2004 and BMW then become world biggest automobile company.