In Depth Market Analysis On Bmw Marketing Essay

In Depth Market compendium On Bmw Marketing EssayDue to the failure to grow securities application sh ar, the assort adopted a schema of organic growth in its premature 2000s.This go offed in the answer of a large take of models with varied bell and class hunt downs leading(p) to further commercialise turn outment.This renowned European carmaker BMW is well known for its noble quality crossingions and services which comes in considerable ranges, its global deformity image and its passing output cars. This report emphasizes on the communitys strategic goals and values and the dissemble of political, economic, affectionate, technological, environmental and backgrounded factors in the open competitive world on the company.The main objective behind the representative study is to understand its strategic dexterity, its conduct securities manufacture, market place segmentation which is keys to success in the competitive market standardized of any attention, also by disc everywhereing positioning options, calculating and further understanding the importance of brand counselling and selecting the appropriate methods for the strategic waxment of a company.This report analyses the ability of the company to succeed and compete with its competitors. It volition also discuss about the challenges it ordain come across in the near future.Learning ObjectivesThe main discipline objectives after analyzing the grammatical case study beEvaluation of Classic and contemporary models, concept and nebs utilize in business strategy and jut outning which take on PESTEL analysis, measure out chain analysis, SWOT analysis, Porters basketball team forces, Industry life-time rack and Cycle of opposition.The process BMW used to identify their strategic goals and valuesAnalysis of Political, scotch, Social, Technological, Environmental and legal factors and its influence on its strategyThe strategy used to achieve its competitive adv antageFuture challenges concern on the attach toThe reason for BMW considering the international business environment and its response towards it.The use of Value chain analysis for BMW in revision to correct its competitive position.summarization of its knowledge and understanding of its external business environment, its management and its ability to transport, develop and implement business strategy.PESTEL AnalysisIn the large-environment, in that location atomic number 18 conglomerate factors which ingrain the decisions of the managers in regards to the strategic ontogeny of any organisation. or so of the macro convert factors include Tax interchanges, fresh laws, trade barriers, demographic change and goernment policy changes.(http//www.oup.com/uk/orc/bin/9780199296378/01student/additional/page_12.htm) agree to Thomas (2007) when an composition undergoes various changes and faces complexity in upcoming situations, it is hard to keep a track of activities in ext ernal environment and its erratic effect on the strategies of the unfaltering. In such a situation PESTEL analysis is d hotshot which helps in analyzing the key drivers of change that helps in predicting the businesses future environment.Political factors These factors emphasis on the government policy such as the degree of interference in the economy. In an travel labor, the possible factors areTax laws and government policies by foreign government ware a great affect on the locomote exertion. According to Hill, 2008 winner of the business in the global market is determined by the probable foreign policies.As the laws and regulations that had affected the railroad car industry also included the environmental factors affecting it adversely, it was made obligatory 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 kindle rates and so on. For an automobile industry the economic factors areThe decreasing exchange rate of Euro had an adverse affect on the European car makers as due to difference in exchange rate sum ups the value per product and reduces the profitability for sale per product.According to Autofacts, 2004 Emergence of developing states like China and India s excess chapiter and buying power regionally and globally.Global increase in gross domestic product (market value of all goods and services) services from 2.0% to 3.1% in 2008 and regular economic downswing in the US market in 2008.Buying capacity of quite a little and the population figures even affects the automobile industry.High amount investment in marketing and on the peeled designs production of automobile blocked unspecific amount of revenue although the supplying was more than the demand.Social Factors Changes in social trends like income distri preciselyion, ageing population, and attitudes to work foot encounter a greater impact on demand for a product by a squiffy and it also might result in the willingness and approachability of individuals to work. uniform in UK, as the population has been ageing has resulted in increment of cost to the fuddleds 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. engineering science reduces be, improve quality and lead to innovation of a new product. These developments not nevertheless benefit consumers but also the organisations providing the products. (htt p//www.oup.com/uk/orc/bin/9780199296378/01student/additional/page_12.htm). The latest the engine room is, greater is the demand for that product especially in terms of automobile industry. 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 spirited now.Restrictive measure on technology which are linked to the environmental pollution are one of the some authorised technological factor (Allen, 2006)Environmental Factors The most have-to doe with 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 and preferences of customers change with the change in trend. They now prefer eco couthie cars, fuel cell cars in order to environment friendly.Due to increase in global warming and the awareness of green house effect, the consumers are more into buying environment friendly products. sanctioned Factors are connect to the legal environment in which the firm operates. (http//www.oup.com/uk/orc/bin/9780199296378/01student/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 fol low-spirited the legal norms in order to remark safety standards.Porters five forcesIt is a model for the industry analysis and business strategy development developed by Michael E. Porter of Harvard Business School in 1979. It d bares upon Industrial Organization (IO) economic science to derive five forces that determine the competitive intensity and therefore attractor of a market.(http//en.wikipedia.org/wiki/Porter_five_forces_analys is). It is a tool to assess the disposition 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 industry.(http//alfrancobakerhughes.files.wordpress.com/2010/02/porters-five-forces2.jpg)The Five 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 accumulation liners. The time taken to be recognized by the consumers is even more than any other industry. Above are the a couple of(prenominal) 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 tidy brands like Audi, Toyota, Mercedes and so on. The other brands too as a wider prime(a) due to abundant range of products.Bar reach outing power of suppliers BMW got a long relationsh ip with its supplier and also got a tightly controlled distribution system. Suppliers have high bargain power because suppliers can dictate the cost of unrefined material. Long relationship with suppliers result in reduced cost of raw materials.Bargaining power of buyers The bargain power of buyers is high due to availability of grand range of products as BMW and its competitors fall into exclusive car range. Consumers can choose a product on the basis of price.Competitive arguing As most of the bigger 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 chang e help managers make rough-and-ready decisions. Some of them are thoughtfulness of environmental issuesChange of customer demand for goods quality cost of ownership. procession in the use of technology and preference design due to change in taste and preferences of consumers.Trend of using subaltern cars.The Industry life cycleIt is composed of five interprets from the intromission of the product to its declination. The stages are development stage, growth stage, shakeout stage, maturity date stage and decline stage. The first stage is the break down 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 wit h high market distribute but with time, the growth stop 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 grapple 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.SWOT AnalysisIt is a tool to analyze the inner strength and weakness with the external opportunities and threats. It helps in give 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 qualified labor force. spot imageHigh turnoverHighly qualified Labor force. weaknessLow cost products of competitors and its perception of high price.BMW had an image of being heartbreaking 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 different countries.Increment in the number of entran ts in the industry challenger 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 Competition there was a strong competition between 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. content ability 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 hearty assets including machinery, 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 casing can be achi eved.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 fumbleStrategic drift 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 spider was due to the companys invite 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 devil 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 professionals.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 otiose of 3.2 billion Euro.Supply chain and dealership managementEffective market segmentationIts universally designed physical resourcesIts relationship with the its suppliers, quality of products, dependableness 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, subsist and supply chain, cost efficiency at BMW is possible (Gerry, Scholes and Whittington, 2008)Supply costsEspecial ly in terms of production and purchase of raw materials, supply costs play and definitive role 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 104000, BMW has set up different placements like China, USA, UK, southwest 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.ExperienceThe two primary things while considering experience in an organization are skill 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. getting of the cumulative experience is expected to debase its unit costs. There is a need of increment in the unit produced annually from the established accumulation units in this competitive market w ith the reduction in the cost. This reduction atleast guarantees capability of survival although the competitive advantage may not be achieved. carrefour/Process Design harvest-time design is concerned with the efficient and effective generation 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 maximise working capital, labour productiveness and better yield. In order to compete with the rival, it is adopted 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 freelancer 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. home(a) value chain in the assembly liners exists among them. The organis ation 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 priced and designed differently 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 cogitate 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 kept up(p) 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 i n 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 products 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 rachis of consumer value chain.Its brand image, technology, business model, its sustainability in this competitive world and in conclusion its chief executive officer are responsible for its own success.Future Challenges that may have an impact on BMW areDecrease in economies of scaleTechnology may travel stagnant.Consumers taste and preference might changeDuring the firms maturity stage, there might be increase in rivalry leading 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 brainwave Restructuring, Market development and liquation that will help BMW readdress profits for organizational future. coatingA company like BMW had to face lot of problems in the nineties 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 conclus ion of launching a new model every 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 and left over the European market for its lower cost and lower range models as the buyers didnt include people with high budget in order to buy a car as they preferred primarily 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 competit ors. This resulted in crossing over the turnover of Lexus, the US biggest automobile maker in 2004 and BMW then become world biggest automobile company.