BMW's Z3 Roadster marketing strategy and phase two recommendations

¶ … automobile industry is highly competitive. BMW had temporary set-backs caused by competition from Lexus, Acura and Infiniti in the late 1980s, but rebounded to claim a significant position in the luxury/performance segment. BMW expects its new Z3 Roadster to engage in competition with other luxury car import manufacturers such as Porsche and Mercedes. The automotive industry is mature and market share is critical to survival. Consumers are less brand-loyal than in the past, and every market segment has an increasing number of choices. To increase sales and gain ground in the market share battle, companies must improve their ability both to acquire first-time customers and to develop customer loyalty to their current brands.

Prior to Phase I marketing efforts for the Z3 Roadster, BMW was a very traditional company.

It advertised through traditional media, mostly print and television, and in traditional ways. BMW was thought of as being a serious and tradition-bound company with customer perceptions that BMW meant German manufacturing with resulting quality engineering and driving performance. BMW cars were branded as "Ultimate Driving Machines."

The Z3 Roadster required a major revamping of BMW's marketing efforts and Phase I was undertaken to make several changes. First, traditional marketing would not be sufficient for the new vehicle because the Z3's target market was defined in psychographic terms rather than in demographic terms. Non-traditional media would be more cost efficient for the psychographic segmentation and would deliver a broader audience. The Z3 was marketed as a fun and stylish vehicle while preserving the BMW driving performance reputation. And, Phase I replaced "Made in Germany" with "Made by BMW" to reflect that the Z3 was manufactured in Spartanburg, South Carolina.

Statement of the Problem

While Phase I was a great success for BMW, the company needs to more fully assess some of the shortcomings of this initiative. And, because Phase I ended well before the actual launch of the new Z3 Roadster, a Phase II marketing strategy needs to be defined that will begin in January 1996. This new phase should compliment and extend the success of Phase I as well as incorporate lessons learned.

Phase I has adequately assessed the need for both traditional and non-traditional elements with a 40/60 split, respectively, between the two. This case study has down played demographic segmentation because of the different psychographic characteristics of its expected buyers that fall across multiple demographic segments. However, it appears that demographic considerations need to be considered more strongly in the selection of traditional advertising vehicles. For example, all traditional television and print advertising is currently on a national basis, but it's likely that there are certain local markets, namely large cities, make good advertising targets through the use of local newspapers. Also, there's a noticeable lack of focus on Generation Xers in the traditional advertising efforts. Although this group is tough to reach through traditional advertising, there are traditional vehicles that reach out to this group.

The non-traditional elements of Phase I also present several ongoing issues for BMW as well. Throughout many promotions, BMW had lost control of its brand. Although nothing bad came of it, this was a very risky strategy and BMW can consider itself lucky. For example, in the James Bond Promotion, BMW did not even have a guarantee that the Z3 Roadster would even be shown in the movie. And, in the Radio DJ Program as well as the Tonight Show with Jay Leno, BMW did not have ability to direct the context or usage of its car.

While the goal of Phase I was to reach a broad range of consumers, many aspects of the marketing campaigns were limiting. The Neiman Marcus Christmas Catalog targeted only Neiman Marcus customers and the New York Central Park press launch reached New York City residents. The "Go: An American Road Story" Video required interested parties to call in to receive the video rather than BMW proactively sending the video out to a target audience.

The BMW Internet site was innovative for its time and recognized the growing importance of the Web as an importance advertising channel. Hindsight tells out that eighty-five percent of BMW purchasers would use the Internet before purchasing a BMW by the year 2000. But, the BMW Internet site represents one of only many possibilities for gaining mind share through the Internet.

BMW has done an amazing job of creating "word-of-mouth" marketing buzz through traditional and non-traditional advertising. But, Phase I was not a complete integrated marketing communications plan that synthesized the strategic roles of a variety of communications disciplines including advertising, direct marketing, sales promotion, and public relations to provide maximum communication impact.

Part of the reason was because Phase I occurred well in advance or product availability. But, Phase II will need to focus on rounding out Phase I's advertising and public relations with more concrete promotional strategies at dealerships. This means more than marketing buzz, it means making potential buyers act on their interest by providing motivations to purchase.

Plan B

Plan B. calls for a 60/40 split for traditional and non-traditional advertising elements. The philosophy behind this recommendation is that "marketing buzz" will need to be followed by more concrete demographic targeting to be effective. Under this proposal, more segmentation would be performed in both traditional and non-traditional advertising. It is consistent with the traditional recommendations made in Plan A with more local targeting, but would call for an even bigger focus on Generation Xers and late Baby Boomers as well as males and females. And, event sponsorship stays, but with endorsements for events tied to specific groups and genders. Some examples are sponsorship of women's and men's gulf tournaments and tennis matches, rock concerts, and fashion shows. Plan B, like Plan A, would also try to achieve an integrated marketing communications plan.

Plan C

Plan C. changes the advertising split to 20/80 between traditional and non-traditional elements. The philosophy behind Plan C. is that Phase I was successful largely because of the non-traditional part of the campaign. Therefore, the non-traditional element should be increased even more. The budget would not allow for the increase in demographic targets in traditional advertising. Thus, there would be no local advertising as called for in Plan A and a scale back of existing elements such as lifestyle cable programming and Traveler. For non-traditional advertising, Plan C. would combine the event strategies in Plan A and Plan B. with a focus on untargeted and targeted events. Plan C. would still seek brand control as an objective and would also strive for an integrated marketing communications plan.