International Marketing of Bayerische Motoren Werke - Essay Example

?Topic: INTERNATIONAL MARKETING 7th December Word count: 2612 Introduction Stiff competition that has engulfed business atmosphere at the local and international level, has forced many companies to emulate wide range of marketing strategies with an aim of putting at bay their competitors. One of the key tools that have been adopted by firms that are focused to succeed in the international market is the marketing mix. This entails the 4Ps (Price, Promotion, Product and Place). Consumers in the global market are not only focused at getting their products at the right time, but also they are interested in getting products that are equivalent to their money. In this regard, majority of global companies have taken initiative to produce quality brands that meet the needs of their customers. A major factor that has enhanced the performance of international companies is the advanced technology especially in the marketing communication. For example, companies dealing with competitive products have now engaged social sites such as face book and twitter in their promotion and advertising strategies. This paper analyses the marketing strategies that BMW, one of the top 100 global brands in the international market has adopted thus attaining a competitive edge. Product Bayerische Motoren Werke (BMW) is a Germany-based firm that is well known for the production of luxury automobiles thus making it to attract large number of customers both in Germany and in other parts of the world. Having been established in 1910s, BMW has embarked on the production of wide range of brands that are competitive in the market. Some of the major models that the company has produced in the market include BMW C1, BMW 1series, BMW 3 series, BMW 5 series, BMW 6 series, and BMW 7 series, BMW X 3, BMWX 5, BMW X 6 and the BMW Z4, BMW M5, BMW M6, and BMW Z4. In this way, the company has effectively met the needs of its customers. One of the key elements of the marketing mix in any company is product. This is based on the fact that it is through a product that a firm meets the requirements of its consumers. For example, a car that has a problem in starting or when it accelerates will not be favoured by customers. To ensure that BMW occupies a significant position in the minds of its consumers, the marketing managers have developed quality brands that are easily recognised in the market. Presently, BMW has the following brands: BMW 3 Series that includes Sedan, Compact, Coupe and Touring. BMW 5 Series including Touring and sedan. BMW 6 series such as Convertible and Coupe.BMW X5, BMW Z4, BMW X3 among others. In its efforts to market the products, BMW adopt the aspect of life cycle. This is done by ensuring that the company brands do not reach maturity at the same time. For example, once a product reaches it maturity, the company produces another model with more features thus ensuring that its customers are retained. In its effort to remain competitive, BMW has embarked on expanding its product portfolio. This includes also re-designing and re-launching of the main models. Price Price is another aspect of marketing mix that companies cannot overlook. Despite the quality of the products, consumers are more attracted to low prices without compromising the quality of the brands. The prices of BMW brands range between ?16,000 and ?60,000. Some of the key factors that affect the prices of the company models include the version as well as the engine size. Based on the competition-oriented pricing that is adopted by BMW, the prices of most of its series almost is similar to those offered by competitors such as Alpha Romeo, VW among others. As a result, customers consider the high quality and the new features that are offered by the BMW brands. Place Based on the fact that companies are focused at making their products accessible to all customers, it is essential to ensure that effective mode of distribution is put in place. Being a company that has a wide market segment, BMW employs experienced market dealerships. Additionally, the company has four production facilities in UK an aspect that makes it to provide quantity that meets the demand of its clients. In the UK market, BMW has established 156 dealers who have been given the duty of selling the company brands while the minis are sold by extra 148 dealers located in various cities within UK (Miles, 2003). In the international market, BMW has employed approximately 4,000 dealers in more than 100 states. Through the dealers, the company is able to effectively sell new cars from the production facilities located in UK, used motor vehicle as well as offering customer’s services including repairs and maintenance. To ensure timely delivery of its brands, BMW utilises one level distribution channel as follows. Manufacturer Dealers Consumers. Promotion To ensure that strong customer awareness is achieved, BMW undertakes various promotional strategies. The major company that has been used by BMW to advertise its brands is WCRS. Other avenues that the company adopts in its promotion and advertising includes magazines, weekend colour supplements, brochures, sales literature, television and road side shows. Since its establishment, BMW has used a number of slogans in its advertising. These includes ultimate driving machine, 7 Series is designed not only for peace and quiet but also peace of mind, BMW the smart choice among others. In its efforts to reach large number of audience in the global market, BMW is renowned for using celebrities and actors such as James Bond. In this way, it has presented itself as quality brands that are different from competitors. In the same way, the company in collaboration with international actors has embarked on production of films for example The Hire, especially during the launching of new models. Such films have effectively attracted potential customers especially through the internet. BMW brands have adopted appropriate strategies in their marketing process. For example, through product diversification, the company has recognised that customers have varied tastes thus ensuring BMW target a wide market segment. Similarly, the company pricing strategy is effective in the sense that despite its high quality products as compared to its competitors, it offers similar prices as the rivals. In this way, customers are eager to purchase the company brands since they have more features that customers are looking for. As a result of the adoption of the films as a promotion tool, BMW sales increased by 12% in 2001 as compared to 2000 financial year. Through the popularity of the films that are accessible in the internet, the company enhanced the perception of its customers an aspect that led to creation of strong desire to purchase its products among its customers across the globe. This is an indication that the promotional strategies that BMW has emulated are key tools that have ensured the competitive position of the company in the automobile industry. Internationalisation process theory BMW is a well established company based on its quality brands sold across different parts of the world. Through its efforts to increase the number of customers in the international market, the company has adopted Uppsala model in its Internationalisation process. Uppsala model, being one of the traditional tools of entering the international market depicts the way local companies intensify their operations to become established in the foreign markets. One of the aspects of this model that BMW adopted is to have a control of the domestic market before going global. Through the extensive promotion in the Germany market and the production of quality brands according to the demand of Germany based consumers, BMW was able to effectively address the needs of the domestic market since its inception (Laermer, 2007). Additionally, Uppsala model maintains that firms should initiate their foreign operations by fast entering near markets. In this regard, BMW was keen on understanding the needs of the neighbouring market an aspect that made it to acquire extensive marketing experience of entering other countries that are geographically away. In its efforts to ensure that its brands are effectively distributed in the international market, BMW has established distribution centres and sales subsidiaries across many countries. In this way, the company has met the increased demand of its brands especially in the developing countries. One of the advantages of using the Uppsala model by BMW is that it will create a strong perception to the customers located outside Germany based on its ability to control the domestic market. Through the acceptance of BMW as an automobile company that meets the needs of its local customers, the company has the advantage of easily selling its brands without many challenges in the foreign market. Foreign direct investment theory Another essential model that BMW has adopted in its global operations is the foreign domestic investment theory. According to this model, companies are identified as global company by establishing physical investment in other countries. As indicated earlier, BMW a Germany firm has opened a number of production facilities in UK thus making it to be in line with the theory of foreign domestic investment. In the same way, BMW has established foreign affiliates that are under the control of the headquarters in Germany. In this way, the company management has established strong policies that are followed by the company subsidiaries located in different regions. Based on the foreign investments that the country has established in many countries, BMW has created large number of employment opportunities thus improving the living standards of many households. Additionally, the company has improved the economy of many countries. One of the key advantages that BMW will experience as a result of emulating the foreign domestic investment theory is the support of foreign governments. As many countries are in the process of improving their economies as a result of the recent economic downturn, governments are eager to invite foreign companies as a way of creating employment and increasing GDP (Mishkin, 2004). Similarly, BMW sales will highly increase as the purchasing power of the consumers located in developing countries improve. In this way, the company will acquire high revenue that will enhance its performance and expansion in the third world countries. Diamond model Diamond model is a key tool that BMW has adopted. Being an economical tool that was established by Michael Porter, the model depict why firms acquire competitive advantage in their industries. In its effort to face off competitors in the automobile industry, BMW has analysed six major marketing factors as stipulated by the diamond model. These factors includes factor conditions, demand conditions, government polices, supporting industries, firm strategies as well as opportunities available (Sullivan and Steven, 2003). By integrating the six factors, the company has achieved a competitive edge thus increasing its annual revenue and sales. As a result of the application of the Diamond model, BMW has effectively faced the threats that exist in the automobile industry. This is evident by the pricing strategies that the company has adopted. In addition, BMW has the advantage of enhancing innovation in the automobile industry. As the demand for the modern motor vehicles increase, majority of customers are keenly looking for new features that are provided by the BMW brands. In this regard, the innovations that the company has adopted has played a major role in creating a strong customer-product relationship that is essential in increasing the sales of BMW in the local and international markets. Country of origin effect Country of origin (COO) entails the country of the manufacture and the production where a product originates (Han, 1989). In the international marketing, a country of origin has an implication on the purchasing behaviour of the consumers. For example the image of the COO plays a vital role in the customers mind (Shimp and Sharma, 1987). From the marketing point of view, COO entails the way to differentiate the company products from those of the competitors within a particular industry. It is vital to note that similar products from different countries are perceived differently by the consumers. This is an aspect that most countries have adopted thus ensuring that their local firms are competitive. Having been established in Germany, BMW has the one major advantage in the sense that Germany is best in engineering. In this way, customers have positive perception towards the machines and motor vehicle produced in Germany. Despite the fact that other countries have adopted innovations and modern technology in the production of motor vehicles, cars manufactured in Germany are highly demanded in the international market. Germany strong economy Being the BMW COO, Germany has a strong economy that makes it possible to provide skilled manpower. In this way, the quality of its products is perceived to be of high quality by the customers in the global market (Usunier, 2006). In the same way, Germany government is focused at supporting other developing countries. In this way, BMW has taken into consideration the poor financial position of its potential customers thus ensuring that its brands are affordable by majority of customers in the developing countries. Technology development in Germany As mentioned earlier, Germany is well known for its advanced engineering sector. Based on the implication of the technological innovations in the contemporary lives of the consumers, technological development highly influences the consumer purchasing decision. As the competition in the various industries increase, Germany has adopted extensive technology that is used by global customers as the bases of their purchasing pattern (Rogers and Everett 2003). In this regard, products produced by Germany are highly demanded not only by the young consumers who are technology savvy but also by the executives who like to drive comfortable cars with modern features. Germany political stability Political factors of the country of origin have an impact on the purchasing pattern of consumers in the international marketing. For example, countries that adopt dictatorship, monarchy and other forms of infamous leadership do not create a positive image on the minds of consumers in the international market. Based on the political stability and good leadership in Germany, customers across the world are keen to purchase the products produced in this country. This is based on the fact that vices such as corruption, misuse of resources, nepotism and racial discrimination are not experienced in Germany. In this regard, the brands produced by BMW are seen as of high quality since they are results of team work that encompass patriotic engineers, good leaders, motivated employees and workers from all races of the world. Conclusion To attain a competitive edge, BMW has effectively utilised the aspect of marketing mix that include price, promotion, product and place. Despite the stiff competition that the company is facing especially in the developed countries, BMW has adopted adequate strategies in its promotion and advertising strategies thus enhancing strong customer awareness and loyalty. Through the use of famous actors such as James Bond, the company has not only created a positive perception in the local market but also in the international market. To attain the competitive position, BMW has adopted Uppsala model, Foreign Domestic Investment as well as Diamond model. Through these models, the company has effectively internationalized its operations thus facing off its rivals. Having originated from Germany, BMW has benefited from the high technology, strong economy, developed engineering sector as well as political stability that are associated with Germany. With the use of the social sites including face book and twitter, BMW has the opportunity of increasing its sales since majority of the users are middle aged consumers as well as business executives who greatly value BMW models. This implies that BMW should consider allocating more resources to cover advertising through the social sites as a way of reaching high number of potential customers in the developed as well developing economies. References Aaker, D. 2008. Strategic Market Management. London: Sage. Blomstermo, A and Dharma, S. 2003. Learning in the internationalisation process of firms. London: Sage. Han, M. 1989. Country Image: Halo or Summary Construct? Journal of Marketing Research, 26(2): 222-229. Laermer, R. 2007. Punk Marketing. New York: Harper Collins. Miles, R. 2003. Organizational Strategy, Structure, and Process. Stanford: Stanford University Press. Mishkin, F. 2004.The Economics of Money, Banking, and Financial Markets. 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