BMW Marketing Case Analysis
Case Analysis of BMW
Problem:
While the worldwide performance of BMW had continually improved around 1990s, its position in the U.S. had not improved. BMW experienced the steady unit sales decline in the United States from its 1986 peak of 96,000 units to 53,000 in 1991. Thus, Karl Gerlinger, the president of BMW North America, needed to find a solution to carry BMW to a leading position in the U.S. market.
Before achieved the final goal, Gerlinger had to focus on three issues: first, he must find out how to satisfy the consumer behavior changes; second, make an appropriate strategy to reposition the pricing policies; third, process the reform of dealership network.
Marketplace Analysis:
In the early 1990s, the sales volume in United States automobile market declined dramatically. The same thing is happened on the luxury/ performance segment of the market, which is BMW competed in. Based on the Exhibit 2, we could figure out the main reasons for the unit sales reduction were 1987 Tax Reform Act, stock market crash, Luxury Tax imposed and Gas Guzzler Tax. Those facts changed the social values and consumer buying behavior to some extent.
For the first issue, BMW faced great competition in the late 1980s, due to a series of “Luxury Tax” Acts and penalties of fuel efficiency standard, it was more expensive for customer to own a car, so the consumer behavior changed at that time. They tended to be more value-oriented purchasing. What’s more, new competitors entered the luxury segment and reshaped the market, such as Acura, Infiniti and Lexus. By established reputation for reliability and dealer service, they won high scores at the top of the J.D.Power Customer Satisfaction Survey and established a new concept of the luxury car: a reliable car with good value. However, BMW was pursuing a prestige image at the same time. So only the Japanese car caught what the consumer thinking.
Secondly, with the price increased driven by changes in the value of the DM,
Problem:
While the worldwide performance of BMW had continually improved around 1990s, its position in the U.S. had not improved. BMW experienced the steady unit sales decline in the United States from its 1986 peak of 96,000 units to 53,000 in 1991. Thus, Karl Gerlinger, the president of BMW North America, needed to find a solution to carry BMW to a leading position in the U.S. market.
Before achieved the final goal, Gerlinger had to focus on three issues: first, he must find out how to satisfy the consumer behavior changes; second, make an appropriate strategy to reposition the pricing policies; third, process the reform of dealership network.
Marketplace Analysis:
In the early 1990s, the sales volume in United States automobile market declined dramatically. The same thing is happened on the luxury/ performance segment of the market, which is BMW competed in. Based on the Exhibit 2, we could figure out the main reasons for the unit sales reduction were 1987 Tax Reform Act, stock market crash, Luxury Tax imposed and Gas Guzzler Tax. Those facts changed the social values and consumer buying behavior to some extent.
For the first issue, BMW faced great competition in the late 1980s, due to a series of “Luxury Tax” Acts and penalties of fuel efficiency standard, it was more expensive for customer to own a car, so the consumer behavior changed at that time. They tended to be more value-oriented purchasing. What’s more, new competitors entered the luxury segment and reshaped the market, such as Acura, Infiniti and Lexus. By established reputation for reliability and dealer service, they won high scores at the top of the J.D.Power Customer Satisfaction Survey and established a new concept of the luxury car: a reliable car with good value. However, BMW was pursuing a prestige image at the same time. So only the Japanese car caught what the consumer thinking.
Secondly, with the price increased driven by changes in the value of the DM,