BMW's Marketing Paradigms - Essay Example

?Answer Introduction Marketing is the mainstay of all businesses, and BMW has successfully exploited marketing paradigms to create a niche market position. In the highly competitive environment of global business, identifying and evaluating consumer behaviour becomes a critical element of an effective market strategy. It facilitates in satisfying customers’ needs by recognizing the trend and pre-emptying their changing preferences by providing them with desired products and services. Hence, understanding of consumer psychology plays a vital role in the development of marketing strategy and planning. As such, BMW’s market strategy will be evaluated and analyzed for optimal performance. Pros and cons of BMW’s market strategy BMW has been a leading auto manufacturing company that has maintained its niche market leadership through strategic market plans. The target segmentation and highly creative advertising have been its major elements of success. BMW has introduced different variants of its luxury cars to cater to the different segments of the market. The selective target marketing has helped it to exploit the requirements of people coming from myriad backgrounds. With the evolving times, people’s purchase behaviour underwent dramatic changes. While initially social class represented the high end BMW cars, consumers’ changing demands, vis-a-vis design variety, size, price, and style choices became the major factors in buying decisions. BMW started with 3, 5, and 7 series that only varied in size and not design. But 1980s was distinct in its populace of baby boomers, yuppies, and other fast upcoming segments of the market; the representatives of these segments had money to flaunt and expected new products and services from manufacturers. The competition of the market was also a vital factor that necessitated BMW to widen its product line and launch new variants with unique designs and features that could complement and supplement the changing requirements of new set of consumers. Various scholars assert that analysis of consumer psychology is an essential ingredient of the market strategy (Kotler & Keller, 2012). It helps to understand and identify the changing trend in the customers’ needs and requirements so as to develop appropriate strategy to maintain a competitive advantage. Shultz (2001) strongly believes that it is the end-users who now control the markets rather than the marketers. The fast changing demography of increasing pluralistic society has significantly impacted the market strategy. The socio-psychological paradigms have emerged as crucial elements that influence buying decisions. Personal choices representing people’s changing social status and family compulsions have become important issues. Indeed, according to Assael (1998), family is considered to be the most important consumption and decision making unit. A big comfortable family sedan may be required by affluent families for their family outing, or sleek and sophisticated fast paced machine may be the choice of new breed of young turks. The BMW’s decision to develop more categories within its various series was, therefore, not only necessary but also an extremely important ingredient of its strategic plans. It helped to penetrate new market and maintain its competitive advantage in the market. Moreover, consumption pattern and lifestyle are intrinsically linked to the changing cultural paradigms in the contemporary environment of rapid globalization. Ennis (2009) argues that culture impacts the changing lifestyle of people and, consequently, influences their consumption pattern of the product. It is especially true for persons who are the main decision makers and control the finances. Furthermore, Kotler, Brown et al. (2010) assert that in the contemporary environment of globalization, brand creation and brand equity hugely facilitate in maintaining competitive leverage as the products are same. The brand provides the customer with a quality product which satisfies his or her needs and establishes a market credibility that promotes customer loyalty resulting in the repeated purchase behaviour. Most importantly, it helps the people to adopt life styles that reflect their values, tastes, and personal preferences. BMW has also used advertising and its various tools to promote its products with high degree of success. It has maintained its promotional tagline of the “ultimate driving machine”. Baker and Hart (2007) assert that as businesses basically are people-centric, people must become an intrinsic part of advertising and market. BMW has used the principle in its advertising. Its advertisements highlight BMW products as holding some value for the consumers and, therefore, target selected segments to influence their purchase behaviour. Conclusion Indeed, the behavioural patterns of the people in the purchase decision making process provide vital clues for marketers to evolve strategic plans. It was, therefore, an important aspect for BMW’s market strategy to cater to the select target segments. It judiciously exploited the emerging opportunities of advancing technology and globalization. Consequently, the changing designs and the features helped the company to meet the needs of the select target consumers. Answer 2 Introduction Recessive economy and economic downturn of 2008 and 2009 was a significant factor that had adversely impacted the productive outcome of businesses across the globe. Financial meltdown had posed considerable challenges to the survival of businesses and had necessitated creative input and highly innovative business strategies to compete. Indeed, the flexibility in their business goals and objectives along with dynamic strategies that could incorporate the changes had become key factors for their survival. Indeed, while the lowering sales and reduced productivity were a natural outcome of the recession, the businesses were confronted with the major concern of survival through development of new strategies and objectives to identify new opportunities of growth. Consequently, BMW’s market strategy, despite recession, was not too selective in its segmentation of the target market. In fact, it was one of the key ingredients that helped it to maintain its position. Recessive Trend and BMW’s Market Strategy Recessive trend was distinct in its economic impact both on the consumer’s purchase decision and operational and manufacturing efficiency of the firms. The lack of resources, increased unemployment, and reduced capacity of buying led to the crisis. Drucker (1999) says that leadership initiative and business performance are linked to an external environment. At the same time, strong leadership becomes the key enabling element to sustain the performance through difficult times (Shapiro, Slywotzky & Tedlow, 2000). BMW’s strong leadership was important factor that helped to ascertain the importance of the select target marketing to maintain its leverage. The differentiation strategy that highlighted the features of its variants in different category of automobiles was developed through analysis of consumer behaviour and paradigms of consumer psychology. This was a hugely important issue because it helped to meet the challenges of the changing dynamics of contemporary business. The customer purchase behaviour is complex, and its subtle process defines the perceived need for products or services that is impacted by a personal choice and external factors. The wide variety, especially the low priced 1 series and X3 SUV, had targeted the mainstream population or a common man. It was a good move that helped to further penetrate the market and the target select segments of the mainstream population, the representatives of which desired niche product without compromising on their pockets. The select target marketing was a critical aspect of BMW’s strategy in recessive times mainly because it helped to exploit the psychology of people who could be influenced to change their purchase decisions. Lee et al. (2002) stress that the consumer experiences satisfaction vis-a-vis consumption, possession, maintenance, life cycle, and the after sales service of the product purchased. If the consumption meets the perceived expectations and value of the product, it results in customer satisfaction that motivates a repeat purchase. On the other hand, if the perceived value and general benefits are not met, it will result in dissatisfaction and erosion of brand credibility. Through select segmentation strategy, BMW strived to meet the individual needs of the select target and, thereby, create and maintain its market credibility in tough economic conditions. Most importantly, select target segmentation helped it to incorporate the salient changes of the environment like sustainability of products and green practices that have increasingly become intrinsic part of social consciousness. Porter (1985) claimed that business “grows fundamentally out of the value a firm is able to create for its buyers that exceeds the firm’s cost of creating it” (p. 3). His assumption of the elements of criteria for competitive advantage was a vital ingredient that facilitated BMW to promote select target marketing as its major enabling element of the competitive advantage. It was a value creating strategy that was accompanied by unique features of the cars in their different variants that helped the company to maintain its market position. Arnould et al. (2004) affirm that motivated behaviour is provoked by a desired goal that is need driven. When people buy products as a lifestyle statement, they have a motivated goal. It also determines how people like to spend their time and money and to what extent are they ready to change their personality to suit their changing environment. Luxury brands and fashions indicate the changing lifestyles of individuals who like to keep up with the changing times. Interestingly, the individual choices and purchase behaviour also tend to be influenced by the external factors like advertisements and social media. With select target marketing, BMW was better equipped to influence the buying behaviour of customers. Conclusion Segmentation strategy of BMW was, therefore, not too selective, but mainly strived to satisfy the needs of the select target market. It was financially viable and helped to meet the challenges of the recessive environments. It also encouraged motivated behaviour to become the deciding element in the overall purchase decision of the customers. References Arnould, Eric, Price, Linda, & Zinkhan, George. (2004). Consumers (2nd ed.). NY: McGraw-Hill. Assael, H. (1998). Household Decision Making, in Consumer Behaviour and Marketing Action (8th ed.). Cincinetti: South-Western College Publishing. Baker, M.J., & Hart S.J. (Eds.). (2007). The Marketing Book (6th ed.). NY: Butterworth-Heinemann. Drucker, P. (1999). Management Challenges for the 21th Century. NY: Harper. Ennis, Sean. (2009). Marketing Management. UK: University of Strathclyde Business School. Kotler, P., & Keller, K. L. (2012). Marketing Management (14th ed.). Upper Saddle River, New Jersey: Pearson Education. Kotler, P., Brown, L., Adam, S. & Armstrong, G. (2010). Marketing (8th ed.). Australia: Pearson Education. Lee, Dong-Jin, M. Joseph Sirgy, Val Larsen, & Wright, Newell D. (2002). Developing a subjective measure of consumer well-being. Journal of Macro marketing, 22(2), 158-169. Porter, M. E. (1985). Competitive Advantage. New York: The Free Press. Shapiro, Bensen P., Slywotzky, Adrian J., & Tedlow, Richard S. (2000, August). Why bad things happen to good companies. Strategy and Business, 2nd quarter. Shultz, Don E. (2001, February). Bid farewell strategy based on old 4Ps. Marketing news, 35(4). Read More