BMW Case Study

This case study explores the consumer-buying process for BMW and how it assists the marketing team. It also delves into data analytics at BMW and its importance in understanding customer needs.

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BMW Case Study
Andrey, Wu
Columbia Southern University
MBA 5501 Advanced Marketing
Dr. Jon Crispin
August 29, 2021

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Introduction
Germany is known around the world for its great automobile industry and engineering
prowess. One of the famous car manufacturers with a long history that bring success and great
contributions to the German car industry must be mentioned, is BMW.
BMW is an abbreviation for Bayerische Motoren Werke or Bavarian Motor Works,
which was founded in 1916. BMW arose from the renaming of Rapp Motorenwerke, a German
aviation engine company based in Munich, the capital of the state of Bavaria in southern
Germany.
With vision of “efficient dynamics vehicle that preview tomorrow’s driving pleasure
using today’s technology” (BMW, 2013), and the mission “BMW group is the world’s leading
provider of premium products and premium services for individual mobility” (BMW UK
Limited, 2013). BMW's vision and mission are straightforward and achievable. It demonstrates
BMW's ambition to become the industry's most successful in unique and premium vehicle.
Today, The BMW Group is the world's leading manufacturer of premium vehicles and
motorcycles, as well as a provider of premium financial and mobility services, with 31
production and assembly facilities in 15 countries and a global distribution network.
From its establishment until now, BMW has always created the attraction and interest of
car market industry. Even as a story about the true meaning of the iconic BMW logo, it has been
a mystery and hot topic of discussion for decades. As mention by Fred Jakobs, Archive Director
of BMW Group Classic, “Many people believe the BMW logo is a stylized propeller. But the
truth is a little different.”

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Part 1
Examine and apply the consumer-buying process for BMW Case Study
Back in the 1980s and 1990s, we witnessed the transformation of the world's economies.
Since the 1980s, the world began to have quiet changes in the economic policy-making of major
countries such as the US, UK, Germany, Japan, etc. The world's major countries have created a
set of policies that are more cooperative, outward-looking, and market-friendly than ever before.
This was the starting point for the globalization process in the 1990s. The 1990s were the decade
of globalization, with unprecedented levels of international trade in products, services, and
financial capital.
The Five Stages Consumer-Buying Process
With the trend of economic globalization, the BMW Group quickly realized that along
with economic development, there would be a class of “professional yuppies” that quickly
became rich thanks to their business.
Problem Recognition
According to Maslow's hierarchy of needs, a person is born and raised with needs
belonging to five levels of different groups (Figure 1). BMW has developed product lines based
on these needs.
The Utilitarian – The First Two Groups of Needs. Maslow's hierarchy identifies the
first two groups are Physiological needs and Safety needs. The Physiological needs are a group
of regular needs like hunger, thirst, sex. Safety needs are about safety and protection. This group
of needs reach a tipping point and turn into a drive. With the BMW 1 Series, BMW did not miss
an opportunity to suit these group's necessities. Although the 1 Series cars still have outstanding

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production quality and performance, their costs and features are still in the affordable category,
suiting the needs of target customers' families.
Figure 1
Maslow’s Hierarchy of Needs
The Hedonic - The Next Three Groups. Including Social needs, Esteem needs, and
Self-actualization needs. BMW Group realizes that, after the basic needs are met, the targeted
customer will need to make social network with people who have the same living standards,
interests, and views. BMW has developed product lines of 3, 5, and 7 Series cars to meet many
different customer segments, but still, share the same identifying characteristics between these
models. The BMW front grille, with a kidney shape (Figure 2), is an example, helps customers
have a sense of social connection with fellow BMW owners. The marketing strategy to help
position the product according to BMW's social needs is also evident through the promotion of
the words Beemer and Bimmer, the slang terms for BMW's cars and motorcycles owners.
Figure 2
The BMW Kidney Grille Design by Time

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Note. Source BMW Group.
Information Search
Personal Sources. The company always focuses on building and taking care of loyal
customers by promoting Bimmerfest activities every year so that BWM's product owner
celebrates their cars. The loyal customer who loves this product can be family members, friends,
neighbors, or acquaintances of a potential customer. This is how BMW builds a source of
product information so that new customers can refer to and easily be persuaded to buy BMW
products from existing loyal customers.
Commercial Sources. Every year, BMW Group pays a lot for Selling expenses €5.3B
(BMW Group, 2021, p. 209), these expenses help build global commercial channels such as
advertising through magazines, developing websites of BMW, e-mails marketing, build
salespersons networks, promote dealers by promotion, packaging, displays, billboards.
Public Sources. In addition to commercial channels, social channels are also very
important for customers to refer to information as well as evaluate and choose products. BMW

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has also built or indirectly well-supported mass media and social media channels such as the
Facebook/BMW fan page with more than 20M like and following accounts. Many forums or
video channels like Bimmerpost, Reddit/BMW, ShopLifeTV are built by loyal customers or
BMW support to attract customers in many countries. These channels help customers consult
information or share product knowledge together.
Experiential Sources. BMW believes that once customers have experienced their
products, they will quickly choose. Therefore, the company has built a lot of free experience
programs at the dealership as well as professional driver training classes that can be registered on
the website www.bmw-drivingexperience.com, to facilitate customers. BMWs experience the
product and improve their driving skills.
Evaluation of Alternatives
When comparing different car brands, consumers consider a variety of factors such as
safety, quality, price, fuel efficiency, technology, design, comfort, environment, brand image,
resale value, and so on.
Figure 3
Screen Display of an iDrive System

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To provide customers with a choice of products similar to competitors, in addition to
driving experiences and performance, BMW enhanced their product by adding electric
components to control seats, airflow, lights, night vision, etc. These enhancements were
integrated in a system called iDrive (Figure 3), which help them to improve the comfort and
luxury to attract consumers from their competitors like Mercedes and Jaquar.
Purchase Decision
The decision to buy a car is a decision that requires a lot of consideration, as the value of
a car is relatively high compared to the income of most buyers, and the length of time that car
will be with them is also important. quite long, up to several years. In addition, the decision to
buy a car is also influenced by social and psychological factors.
According to Laurent and Kapferer (1985, p. 43), to decide to choose a car, customers will pay
attention to four factors.
The Importance of Product to The Buyer. The need to travel is one of the basic human
needs. Buying and using a car to serve the needs of going to work, school, and going out is an
indispensable need of every family. BMW not only provides a car, but they also add to their
product a lot of factors such as features, versatility, safety. Through this, they increase the
importance of the product to the buyer.
The Functional Risk. One of the important information affecting customers' car-buying
decisions is the ability to operate, the risks of damage, the safety of the car. BMW has captured
this mentality and is very focused on researching and producing cars that represent safety,
stability, high performance, and, above all, prestige.
BMW gave them sporty sedans with exceptional performance and a brand that stood for
prestige and achievement.

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(Kotler, P., & Keller, K. L.,2016, p. 273)
Psychology Risk. Car consumers' next concern is how well the car fits themselves.
Unlike the early generation of BMW buyers, most BMW customers today are less concerned
with the bragging rights of the BMW brand and are instead concerned with the design, price,
size, and style of the vehicle. That is why BMW has created many different product lines from
premium cars such as SUVs, convertibles, and roadsters to serve customers who like to express
themselves. Or cheap product lines for families and most consumers like 1 Series or X1 SUV.
Emotional Value. BMW has been very successful in conveying the excitement of
driving BMW cars to consumers. Through advertising campaigns, the message that has remained
consistent over the years is the tagline “The Ultimate Driving Machine,”. Or more recently the
clear assertion “We only make one thing, the ultimate driving machine.”. These values make
BMW stand from its competitors.
Postpurchase Behavior
Not only focusing on expanding the new customer base, but BMW has also researched
and found a great demand in the existing customer group, which they call "upper liberals"
(Kotler, P., & Keller, KL, 2016). p. 273). BMW has launched a high-performance luxury X
Series, which are bigger cars for active lifestyles and growing families, targeting the customer
segment who bought the cars of 3, 5, 7 Series in the past.
Not stopping there, BMW continues to study customer behavior through regularly
conducting the survey to discover what consumers dissatisfy with BMW. They discovered a shift
in what buyers anticipate from BMW products. That is, customers are less concerned with

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bragging rights and want a wide range of designs, sizes, prices, and styles to choose from. This
enabled BMW to make numerous significant adjustments in product development and achieve its
current level of success.
How Consumer-Buying Process Assist the Marketing Team
Segmenting and Targeting Consumer. Based on the analysis of human needs, BMW's
marketing team was able to identify key criteria for product formation, namely design, size,
features, price, and style.
BMW Group has developed products based on three brands MINI, BMW, Rolls-Royce.
These products have covered the entire needs of the car market with the criteria to meet the
needs of users (Figure 4).
Define Features and Build Product. With MINI, the company positions this as a small
car product that is still in the premium segment with a personalized design, serving customers
who like lifestyle, and for the whole family. Despite having overlapping product features with
BMW, the MINI, with its impressive design, has always won the hearts of many customers who
love a stylish car (Kiley, D., 2004, p. 232).
Unlike MINI, BMW has many products belonging to different customer segments. BMW
products serve a wide range of users and for many purposes such as the home (1, 2, 3 Series), the
business person (3, 5, 7 Series), or a combination of purposes such as family and lifestyle but
still emphasizing sportiness and high-performance like the X Series.
With Rolls-Royce, the BMW Group has positioned this as a uniquely defining luxury
product that they have invested all their resources in to serve the highest class of customers.

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Rolls-Royce customers always demand the highest quality products and above all, Rolls-Royce
has helped them assert their social status.
Figure 4
Product Segmentation with Maslow’s Hierarchical of Needs
Building Consumer Loyalty and Expand Customer Base. Understanding customer
needs has helped BMW build many loyalty programs to help maintain and develop its loyal
customer base. BMW-sponsored annual loyalty campaigns like BimmerFest help the company
create more brand loyalty, and reward their loyal customers.
In addition, forums and fan pages of bimmer on social networks also help BMW develop
information channels, attract more interested customers as well as learn and become their
customers.
How Data Analytics Works at BMW
As analyzed above, the decision to buy a car is a high-involvement decision of many
external and internal factors for consumers, so Data Analytics requires to be done on a data set.
diverse and multidimensional.
RR
BMW
MINI

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Before conducting Data Analytics, data will need to go through steps such as Data
Collection, Data Segmentation. The data collection can be done on the touch-points of the
business with the customer and is classified in to four categories: Transaction Data,
Services/Products Usage Data, Web/Mobile App Data, Social Channels Data. In addition, the
following data factors also need to be collected: Cultural, Social, Personal, Psychological data.
Data Analytics results will help improve customer satisfaction, increasing customer
loyalty, and retention, optimizing the product portfolio to better satisfy consumer needs.
Cultural Factors
Cultural factors are important data that help to accurately position the customer's image
and desires. These data include cultural characteristics of the country in which the targeted
customer is located, or the subcultures of the customer in a multiethnic culture, or social classes
that targeted customer is owned. Cultural factors will help BMW identify the size, color, or name
of the product.
Social Factors
Social Factors are data related to reference groups, cliques, family, roles, and status. The
Social Factors will help BMW identify the factors that influence targeted customers from the
communities they live in or belong to. The results of social factors analysis will help BMW
design and manufacture products that are pervasive and persuasive.
The realization of a growing market of “baby boomers” and “professional yuppies” who
wanted a car that represented their success in the 1990s led BMW to design sporty and high-
performance sedans (Textbook, p. 273).
Personal Factors

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Collecting personal factors analysis BMW will have information including age, stage in
the life cycle, occupation and economic circumstances, personality and self-concept, lifestyle,
and values. This information plays an important role in developing highly personalized products,
creating marketing campaigns with the right customer psychology.
As shown in the Textbook (p. 273), in the 1990s, BMW conducted customer research and
discovered that consumers were less concerned with the BMW brand's bragging rights and
preferred a wide range of designs, sizes, pricing, and styles.
Psychological Factors
Factors that form psychological factors include motivation, perception, learning,
emotions, and memory. The results of psychological factors analysis will help BMW identify the
factors that contribute to the decision to buy its products. From there the company can create
products with outstanding features that can beat their direct competitors in the purchase decision
stage.
Review BMW’ Segmentation & Targeting Activities
BMW is a car company with a global market. Since the 1980s, BMW has researched and
developed products to approach the global market, following the globalization trend of the world
economy. The customer segments that BMW is interested in extending beyond a country or a
territory.
BMW Done Well
BMW succeeded in combine different variables to segment consumers.
Demographic Segmentation. Based on the results of market research, BMW realized the
growing market of “baby boomers” and “professional yuppies” in the 1990s. The company

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knows these people wanted a car that represents their success. From that result, BMW designed
the first sporty and high-performance sedans line named 3, 5, 7 Series.
The "professional yuppies" in the early stages, who already owned the famous 3, 5, and 7
Series sedans continued to be targeted and offered by BMW to the new X Series many years
later. BMW was very successful when it realized that these "upper liberals" were more
successful, married, and had many high-class recreational activities such as golf, skiing, and
cycling. Therefore, the X Series is a larger vehicle, meeting lifestyles and family needs, and they
are still luxury SUVs with high performance.
Behavioral Segmentation. BMW did a lot of research and as a result, they improved the
product according to the customer's desire, increasing the variety of design, size, price, and style
choice. Don't just focus on building BMW as a high-value brand.
In addition, capturing the desire to connect and share the passion for cars, BMW sponsors
the annual Bimmerfest events. These activities have helped the company successfully build
loyalty and develop new customers for the BMW brand.
Psychographic Segmentation. BMW divide consumers into the group by personal trait
and value.
With the group of “upper conservatives”, BMW has successfully identified this group of
customers who are rich but do not like sports cars and are customers who prefer traditional
values. That's why BMW designed the 7 Series with an emphasis on comfort and luxury. BMW
has succeeded in knocking out competitors in this segment.
With the group of "upper liberals", BMW has been very successful in responding to the
liberal and liberal tendencies of this customer group with the X Series SUVs. With its large size
and versatility to meet the needs from outdoor entertainment to efficient and luxurious operation.

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With the “modern mainstream” group, BMW created the lower-priced 1 Series SUV to
target family-focused and active, but still wanted a sporty design and luxury brand. This strategy
of theirs has also been very successful when expanding the customer base, which was previously
a factor that prevented them from coming to BMW.
With the "post-moderns" group, BMW is also very successful when introducing
convertibles and roadsters to target this high-income group, those who like glitz and luxury.
BMW Could Improve
Use Geographic Segmentation. Use geographic segmentation which targets customers
in the region, country, cities, etc. BMW could redesign the product to lower down the cost by
optimizing the options on the cars. Reduce engine capacity to lower down the VAT tax on some
countries.
Create Low Price Product. Most BMW products are named at high prices. The
expansion of the low-cost product segment will help BMW capture a higher market share and
better retain customers with the BMW brand.

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Part 2
Situational Analysis
External Environment Analysis (PEST)
Political and Legal Analysis.
In 2020, the issue of Covid-19 will have many adverse political and economic
consequences for countries around the world. However, it is predicted that the economic and
political situation in European countries and the United States will improve in 2021 due to the
plan to expand vaccination by the end of 2020. Consumer sentiment is predicted to be more open
and willing to spend again.
Many laws, as well as severe standards on environmental protection, safety, and taxation,
affect the automotive industry. Investment in production in line with the aforesaid regulations
and requirements is always in the plans for a car firm that targets premium and high-quality
segments. However, tax regulations in small-land countries that tend to limit private vehicles,
such as Singapore, can make a BMW 335i convertible five times more expensive after taxes than
in the United States (Aquino, 2013). These will have an impact on customer segmentation and
sales revenue.
Economic Analysis.
GDP increased. According to the IMF's forecast (April 2021), the United States' GDP
would grow at a rate of 6.4% this year, after a fall of -3.5% in 2020 (Figure 5). The growth of
GDP, forecasting from 2021 and years after, is a sign of a solid recovery in the US economy.
These will also come up with the increase of the consumer confidence index in 2021 (Figure 6).
Consumer, with high confidence index, is ready to pay for big-ticket purchases like automobiles.

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Figure 5
World Economic Outlook Database 2021 (USA Economic Data)
Note. Copyright 2021 by IMF.
Figure 6
Key External Drivers 2013-2026
Note. Copyright 2021 by IMF.
High Income, High Demand. The projected growth of GDP from 2021 onwards is also
an indicator of expected high incomes of consumers. In addition, the consequences of state
lockdown restrictions and working from home starting in 2020, plus the possibility of

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community transmission of the Covid-19 virus via public transport will also boost demand for
personal car purchases as the market warms up.
Figure 7
Autos Industry - Historical Data and Forecast in The United States
Note. Copyright 2021 by Fitch Solution.
Favorable Inflation and Interest Rate. From 2021 onwards, the unemployment rate is
predicted to fall. After a steep fall in 2020, the inflation rate will return to a steady condition in
2018, higher living costs, pay increases, and greater spending needs.
Inventories and Supply Chain Disruptions Risk. Although, sales of light commercial
vehicles are forecast to remain positive and recover in the coming years. According to Figure 7,
the number of cars produced in 2020 decreased sharply by -18.9%, and the number of vehicles
sold also decrease at a high level of -14.7%. This led to a large inventory. In addition, shortages
of semiconductors and shipping containers due to supply chain disruptions, also pose a risk to
new sales in 2021.
Figure 8
Passenger And Light Commercial Vehicle Sales (United States)

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Note. Copyright 2021 by Fitch Solution.
Socio-cultural Analysis.
Focus on Eco-friendly Car. BMW's target customers are people who are increasingly
aware of the consequences of climate change and are environmentally conscious. They focus on
environmentally friendly vehicles: hybrid cars and cars that run on electricity or fuel cells.
Customers' decisions for specific product lines are influenced by this tendency. BMW, as a
luxury automaker, must regard environmental considerations as an integral aspect of developing
products that fulfil high emissions regulations and environmental mandates.
Prefer Affordable and Dynamic Car. As show in Figure 9, although GDP is forecast to
increase in 2021, but the consumer experience through the Covid-19 crisis make them to reduce
demand on luxury product lines, and choose car of crossover or pickup models for enhanced
convenience and dynamism.
Figure 9
The United States Light Vehicle Market by Segment

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Note. Copyright by Statista 2021.
Technological Analysis.
A Green and Advantage Engine. BMW uses technology to obtain a competitive
advantage in engine manufacture, and as a result, the company has won numerous prestigious
engineering honors. With increased awareness of global environmental issues, BMW has the
opportunity to pursue a new manufacturing route by incorporating "green" technology into its
business strategy. BMW intends to provide the most innovative product after conducting
extensive research on hybrid electric cars and hydrogen cars. BMW will continue to place a
strong emphasis on creating new clean technologies in the near future to ensure that its products
remain innovative and improved.
Enhance Comfort, Safety and Luxury by Technology. Besides the high-performance
and green engine, BMW also increases comfort, safety, and luxury to its products by adding
electronic control options for the windows, seats, night vision, lights, push-button start, and
combine to a multi-control system name iDrive. These technologies help BMW stand-out from
the other competitors.

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Internal environment analysis
Revenue. BMW's Group revenue in the five years from 2015 to 2019 witnessed growth
and stability compared to the previous five years. In 2020, despite the economy being hit hard by
the Covid-19 crisis, BMW Group sales still hit a 2020 high (€98.99B), despite a 5% drop from
2019 (€104.21B), but still higher than 2018 revenue (€97.48B) (Figure 10).
Stable sales during the crisis show that BMW has strong resources and good sales. With
positive economic predictions in 2021, BMW's business and revenue is expected to achieve high
growth.
Figure 10
BMW Group’s Global Revenue
Note. Revenue in million euros. Source BMW. Company overview Statista.
According to Statista statistics (Figure 11), BMW's largest market in Asia is China,
accounting for 33.5% of BMW Group's total 2020 sales.

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Figure 11
Break Down BMW Group’s Worldwide Automobile Sales
Note. FY 2020. Copyright by Statista.
Financial Performance. Based on financial statements, BMW Group, despite having
good revenue during the crisis, has high interest and tax expenses compared to previous years
with the same revenue.
As mentioned above, although BMW Group's sales revenue remains high in 2020,
equivalent to 2018 revenue, when considering the EBIT index in 2020 (€4.83B), it shows that a
large decline in profit compared to 2018 (€8.93B) and 2019 (€7.41B) (Figure 12). This shows
that BMW used a lot of premium financing during the Covid-19 pandemic.
Figure 12
Global EBIT of BMW Group

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Note. Copyright by Statista 2021.
Although profits are less, BMW still retains a good image and market value in the eyes of
investors. BMW's stock value recovered well after a sharp decline in Mar 2020, the time of the
global Covid-19 outbreak, BMW shares gradually recovered and reached the highest level in
June 2021 with a value of €94.74 per share (Figure 13).
Figure 13
BMW’ Stock Performance (25th Aug 2021)

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Note. Source Google Finance.
Sale Volumes. As shown in Figure 14, BMW's large revenue comes mainly from the
Automotive (71%) segment, showing that the car business is still BMW's main business.
Besides, motorcycle by-products account for a low percentage of sales to total revenue (2%). The
Financial Services segment (27%) is the only segment that brings revenue growth compared to
2019.
As for cars, in 2020, the number of cars sold in all 3 product segments witnessed a
decline with BMW -7.1%, MINI -15.8%, and Rolls-Royce -26.4% respectively. compared to
2019 (BMW, 2021, p. 144-145). It shows that during the crisis, the popular car segment still
maintains stable sales compared to luxury cars or small cars.
Figure 14
BMW Group Revenues by Segment
Note. Source BMW.
Market Share. BMW needs to focus on developing the market better. With product
positioning focusing on premium and luxury segments, BMW's market share in the world will

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not be in the group with a high market share, where automakers with many products in many
segments such as Toyota or Volkswagen dominate.
However, compared with direct competitors, BMW's market share (2.62%) is still lower
than Mercedes' market share (2.94%) (Figure 15). The diversification of BMW's products shortly
may help them increase their market share compared to competitors.
Figure 15
Global Automotive Market Share
Note. Data 2019. Source Statista.
Human Resources. BMW has good strategies and policies in human resources such as
recruiting, training, retaining, and developing talents. These HR policies helped them maintain
their core team and weather the 2020 crisis.
At the end of December 2020, the total number of office employees of BMW AG was
84,668 people, a decrease of more than 2,000 people compared to the same period in 2019 of
86,700 people (BMW Group, 2021). This adjustment is to meet the business and financial

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situation of 2020. However, BMW Group still maintains stability thanks to the strategy of
focusing on maintaining the core team and using temporary personnel to operate. apparatus, as
well as save costs.
BMW Group considers the diversity of personnel in the organization as their power. They
do this by setting goals for the long-term advancement of women at all levels of the company. In
addition, the ratio of age groups is also maintained by them to create harmony in the organization
(Figure 16).
Figure 16
BMW AG Employees By Age Group, Divided Into Functions And Gender
Note. Copyright by BMW Group.

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Proof of the right HR strategies is that BMW Group continues to be honored to receive
the world's top-ranked automotive manufacturer in the current ranking of the World's Most
Attractive Employers 2020 as rated by the well-known study provider Universum.
SWOT Analysis
Strengths.
Strong Brands Reputation. According to Interbrand data, BMW will be the world's third
most valuable vehicle brand in 2020, with a value of 39.76 billion dollars (Figure 17). Because
brand equity is linked to brand awareness and a positive reputation, the BMW brand is one of the
most recognized in the automobile industry. High brand awareness enables the company to
deliver products and services to the market more quickly and at a lower cost of advertising.
Figure 17
Top 10 Auto Brands: Best Global Brands 2020
Note. Source Interbrand’s 2020.
Engineered Perfection and Ultimate Driving Experience. BMW competes primarily in
the premium car sector against Mercedes-Benz, Porsche, and Audi. The firm boasts about its

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automobiles cutting-edge technology, exclusive elegance, and remarkable comfort, all of which
are backed up by excellent build quality. Only a few of the company's competitors can match the
BMW's price per performance ratio.
Focus on Green Technology. BMW has a huge advantage because it has accumulated
decades of experience in the field of hybrid and all-electric technology. Started planning to
produce electric cars since the 1970s, until now almost all versions of BMW 2 series, 3 series, 5
series, 7 series and X series versions have a Plug-in hybrid version. In addition, from 2013,
BMW develops models that will be fully electric and are very popular today such as BMW i3, i8,
i4, iX, iX3 (BMW Group, 2021).
Global Operations. BMW has more than 30 factories and assembly plants in 140
countries and has a global sales network.
High Volumes and Market Share in China. Besides German and American markets,
BMW has succeeded in another big automobile market, China, by collaborating closely with a
local Chinese automaker. BMW's market performance and future sales growth are assured thanks
to their excellent collaboration in China.
Weakness.
Low Diversity of Product Portfolio. Compared to a direct competitor like Mercedes,
BMW does not have a high product diversification. BMW has no pickup trucks, light, heavy
commercial vehicles, or buses in its product portfolio. In addition, BMW also does not own any
auto brands that target lower- or middle-income consumers who cannot afford luxury cars.

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When economic conditions deteriorate, consumer tastes shift, or the brand receives a lot
of unfavorable attention, BMW's automobile brand portfolio is less diverse, with few segments
and product differentiation, putting the company at a disadvantage.
High Prices. Advanced technology, exciting driving experience, comfortable equipment,
and high build quality are the factors that BMW wants to create to attract customers. However,
the downside of the high-quality product strategy is the high production costs. This leading to the
ability to consume and market share difficult to compete with competitors. On the other hand,
BMW's Hybrid cars with the message of fuel-saving but Fuel cell production costs are very
expensive, which also makes future BMW products challenging.
Several Lawsuits. BMW is involved in a number of cases, including one in South Korea
alleging obstruction and another in Europe alleging cooperation over pollution. Consistently
breaking the law is a serious flaw since it makes it harder for customers to trust the organization.
Controversial Recalls. BMW reputation also suffers by product recalls. To repair
dangerous Takata airbags, BMW is recalling about 357,000 older vehicles in the United States
and over 1.4 million worldwide. (The Associated Press, 2020).
Opportunities.
Self-Driving Vehicle Market Growth. In the future, autonomous automobiles will be
available. BMW can create the groundwork to capitalize on future demand (PR Newswire,
2020).
Chances on the Emerging Markets. Sub-Saharan Africa has the potential for 3 to 4
million new automobiles, according to Thomas Schaefer, Head of Volkswagen Africa, up from

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roughly 420,000 in 2017. BMW can take advantage of underserved emerging markets. (Bavier,
J., 2019).
Offer Eco-friendly Mobility. The number of environmentally concerned consumers is
steadily growing, as is the desire for greener transportation solutions. BMW, as one of the global
leaders in electric vehicles, is well positioned to capitalize on this demand (Jolly, J., 2019).
Innovative Automobile Ownership Options. With the passage of time, the image of car
ownership is evolving. Younger generations demand more economic flexibility throughout their
lives. The Shared Economy and asset leasing has resulted as a result of this. Vehicle
manufacturers are changing their offers to meet these alternative ways of asset ownership, with
flexibility and value being top priorities for this younger demographic.
Threats.
Manufacturing Costs Rise Unexpectedly. A wide range of conflicting and complex
factors have an impact on auto manufacturing. Due to an increase in production costs, BMW's
second-quarter earnings fell by 48% in 2019. (Taylor, E., 2019)
Competition In the Global Automotive Market. Despite the fact that the global
automotive market is already very competitive, it is becoming much more so as a result of
surplus car production, rapid technical advancements, new entrants, and saturation of the main
markets.
Low Demand on Premium and Luxury Brand. Because BMW focuses on the premium
and luxury market, the economic downturn will have a greater impact on BMW than on
automobiles aimed at the mass market.

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Through its ownership of MINI and Rolls Royce, BMW has concentrated its market in
the premium and ultra-premium sectors. If market forces have an impact on these segments, it
will have a detrimental impact on a major portion of BMW's existing product offers.
Covid-19 Pandemic Effect. Due to a paucity of raw materials, manufacturing has come
to a halt, and BMW and other carmakers have lowered their financial forecasts as a result of the
virus. BMW's strong profitability could be wiped out if this trend continues (Carbrey, R., 2020).
Furthermore, supply disruptions, such as semiconductor and shipping container
shortages, as well as old-year stocks, represent a threat to sales in 2021.
Problem of BMW
Low Diversity of Product Portfolio. As analyzed in the SWOT section, the important
reason why it is difficult for BMW to grow sales and increase market share is the lack of product
diversification. This is also BMW's biggest problem to date.
2020 witnessed a sharp decline in sales, compared to 2019, for the three main revenue-
generating product lines of the BMW Group with corresponding reductions as follows: BMW -
7.1%, MINI -15.8% and Rolls- Royce -26.4% (BMW, 2021, p. 144-145). The large reduction in
the difference between the two segments BMW and Rolls-Royce shows that there is still a large
gap between these two product segments.
With the epidemic situation expected to have a long-term effect, leading to the possibility
of consumers reducing demand on luxury product lines, they will choose products in the lower
luxury segment, and this will be the way to keep Customers are loyal to their products.
Figure 18
Luxury Car Brands Global Sales 2020

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Notes. In million units. Copyright by Statista.
Compared with two direct competitors, Mercedes and Audi, in 2020, BMW still holds the
second position behind Mercedes (Figure 18). Unlike BMW Group, Daimler Group (Owner of
Mercedes) chooses a strategy of diversifying product lines and segments.
According to Figure 19, Daimler Group's total revenue in 2020 decreased by 11%
compared to 2019, however Daimler Group's EBIT in 2020 reached €6.6B, an increase of 53%
compared to 2019. In the Cars & Vans segment, thanks to the product segment Diversity, with
many products using the same parts resulting in low production costs, brings an increase in EBIT
from -€0.1B in 2019 to -€5.17B in 2020 for Daimler Group. Meanwhile, BMW Group has a
2020 EBIT of €4.83B, down -34.83% compared to 2019 (BMW Group, 2021, p. 11).
Figure 19
Daimler Group Annual Report 2020

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Note. Copyright by Daimler Group.
The lack of product segments like Daimler Group will not create an advantage for BMW
Group because there is no availability of suitable products when market trends change due to
economic factors or unexpected epidemics. Moreover, today's customer tastes change very
quickly due to cultural or political trends. Diversifying segments as well as products will help
BMW not be dependent on one product type.
Alternative Solutions
Diversify product portfolio by price segment and investing in research & development.
Product
Diversify products by dividing the product portfolio into different segments based on the
cost and selling price of the product.
Research and manufacture products to serve young customers with youthful colors,
promoting dynamism and compactness. Allows users to configure their products for increased
personalization, giving users a unique product experience.
Focus on product rejuvenation, shorten the new product introduction cycle.
Produce products with small engine capacity to take advantage of more favourable VAT
policies in countries taxing by cylinder capacity (OECDiLibrary, 2020).
Looking for fuel cell technology and electric motors with low production costs to
compete with rivals such as Mercedes, Audi.

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In addition, it is necessary to increase the localization rate of products by using materials
suitable to the characteristics of the territory, which will help the product have a suitable price,
avoiding damage factors due to weather conditions. or geographical features.
Price
BMW has to find a way to reduce prices, especially in these difficult times. BMW’s
greatest rivals Mercedes and Audi are all either cheaper or on par with BMW. Audi is
comparably cheaper than BMW whereas Mercedes is on par with BMW on prices but taking into
consideration the user interface of Mercedes the price is justified. BMW should look back at into
their design stages and find a way of cutting back costs without compromising on quality in
order to have better priced cars and stay ahead of the competition.
Place
Co-assembly with local factories in regions or countries with large car markets, long-term
business development potential for convenient transportation, distribution, and quick access to
users fast.
This also reduces costs thanks to tax support from the countries where the factory is
located because BMW has created jobs and brought investment capital into that country.
Promotion
Cooperate with banks to jointly sell products with low-interest financial packages in
markets with high loan interest rates.
Build many discounts for young customers or buy cars with business goals.
Offer additional maintenance packages or options that users prefer.

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Recommendation
BMW Group needs to focus on maximizing the profits of the company by reduce the cost
of producing and looking for new product to diversify automobile products.
Reduce The Cost
To maximize the profits, BMW Group needs to continue to improve processes, increase
flexibility, reduce fixed costs and variable expenditures, and exploit the digitalization
opportunities for improving efficiency and customer orientation.
Take a look at direct competitor Daimler Group in Figure 20, with 2020 revenue down -
11% and unit sales down -15% compared to 2019, but their pre-tax profit increased by 53%
compared to 2019. last year. This is possible thanks to Daimler Group having a reasonable policy
to reduce and optimize costs before the crisis in 2020.
Figure 20
Daimler Group Annual Report 2020
Note. Source Daimler Group 2020.
The low-priced product strategy also keeps customers with their brand when the market
is affected by economic factors. Lowering product costs also helps BMW Group attract young
customers, retain them with entry-level products and continue to sell higher-end products to them
when they are more successful in the future.

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Diversify Product Portfolio
In order to diversify products, BMW Group needs to invest in Research & Development
to find new products and improve existing products to suit the needs and budgets of users.
Diversifying product segments based on selling price, by allocating options to its
products, BMW can create products with affordable prices for different customer segments,
making it easier for them to choose. Choose the product that suits your financial ability.
Produce products with small engine capacity but still keep high performance to maintain
a good customer experience while taking advantage of more favorable VAT policies in countries
taxing by cylinder capacity (OECDiLibrary, 2020).
Looking for fuel cell technology and electric motor with low production cost but still
high efficiency, to meet the trend of environmental protection and to compete with rivals such as
Mercedes, Audi.
Conclusion
BMW Group is the leading premium car manufacturer and seller in the world. The sales
of BMW Group are rising day by day. But one great threat for BMW Group is the increasing
competition in the automobile market. BMW Group has got piercing competitors like Audi,
Mercedes-Benz being the two nearest to BMW Group in competition in the premium car
industry.
Choosing the right pricing strategies, researching and developing new products with
smart and advanced technology as well as protecting the environment will be the factors that
help BMW Group continue to expand the market share, increase the revenue and outperform
competitors.

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