Impact of COVID-19 on Consumer Behaviour in the Automobile Industry: A Case Study of BMW

CORPORATE STRATEGY
AND GOVERNANCE

TABLE OF CONTENT
INTRODUCTION...........................................................................................................................3
Aim..............................................................................................................................................3
Objectives:...................................................................................................................................3
Research Questions......................................................................................................................3
Background..................................................................................................................................3
Rationale......................................................................................................................................4
LITERATURE REVIEW................................................................................................................5
Theme 1: Concept of Consumer behaviour and its impact on the business organisations..........5
Theme 2: Accessing the developments in the automobile industry due to pandemic of
COVID-19. ..................................................................................................................................6
Theme 3: Change in the customer behaviour due to COVID-19 in context to automobile
industry of UK. ..........................................................................................................................7
RESEARCH METHODOLOGY.....................................................................................................9
DATA ANALYSIS........................................................................................................................11
DISCUSSION................................................................................................................................15
RECOMMENDATION.................................................................................................................18
Action Plan.....................................................................................................................................19
REFERENCES..............................................................................................................................21
APPENDIX....................................................................................................................................24

INTRODUCTION
Aim
To identify and examine the impact of COVID-19 pandemic on the behaviour of
consumers of BMW.
Objectives:
 To understand the concept of consumer behaviour and its importance for the business
organisation.
 To assess the developments in the automobile industry especially due to the pandemic
of COVID-19.
 To examine the changes in the behaviour of customers due to COVID-19 pandemic
especially in context of the BMW company and its impact on the same organisation
(How BMW plans to overcome COVID-19 crisis, 2020).
 To suggest the recommendations regarding the ways in which the corporate strategy
of BMW can be adjusted to meet the changing customer behaviour.
Research Questions
 What are the various concepts of consumer behaviour and its significance in the
business organisations?
 What developments can be assessed in the automobile industry especially due to the
pandemic of COVID-19?
 What are the changes in the behaviour of customers due to COVID-19 pandemic
especially in context of the BMW Company and what is its impact on the same
organisation?
 What recommendations can be suggested regarding the ways in which the corporate
strategy of BMW can be adjusted to meet the changing customer behaviour?
Background
Consumer behaviour plays a major role in the success of the organisation. The main issue
was identified in the time of pandemic of COVID-19 is that the consumers faced many problems
in buying the products and going to the markets as there were restrictions for going outside and
gather anywhere in groups. The buying habits of consumers got disrupted due to the COVID-19
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pandemic, social distancing mandates and the lockdown. The customers are striving hard to learn
new habits (Brookins, 2017).
BMW being a well-known company having history of century-long also faced many
problems as it became difficult to provide the optimal services to its customers. The people more
preferred to buy only the necessary items for which they have the most basic needs. The people
started shopping so consciously buying the local products and also through the online medium.
BMW is a multinational company which is referred to as Bayerische Motoren Werke AG is
headquartered in Germany and also deals in production of motorcycles and luxury vehicles
which made it the twelfth largest motor vehicles producer in the world (The BMW Podcast:
Changing lanes, 2021).
Due to the COVID-19 pandemic there is a great change in the behaviour of the
consumers which made the service and the sales the biggest issues at this time (Yan and et.al.,
2020). This resulted in the biggest loss for the company. This research will shed light on the
importance of the consumer behaviour and its impact on the success and downfall of the
organisations. Though COVID-19 resulted in various problems for the business organisations
like BMW but also this led to many developments also.
The companies became aware of the alternatives for providing services to the customers.
This developed the employees as well as the organisations (Donthu and Gustafsson, 2020). This
research will also focus on some recommendations which can be given to the company for
adjusting its corporate strategy which can help the company to provide proper services to the
customers in this pandemic of COVID-19 so that customer behaviour can be managed.
Rationale
The main reason behind choosing this topic which is “The impact of the COVID-19 on
the behaviour of consumers” is that the businesses are facing lots of problems in delivering the
services to the customers and it was observed that people are less interested in buying the
luxurious items like cars, motor vehicles etc. and this is just because there is a great downfall in
the overall economy of the country and the people are preferring the most essential products
rather than the luxurious ones. The behaviour of consumers towards certain products and
services decides the overall sales of the company as well as the overall profitability (Vafainia,
2020). The company BMW was chosen for the research as the company is facing a rapid success
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since many years but observed rapid change in the behaviour and the choice of the customers due
to the pandemic of COVID-19. This research will not only benefit the company BMW but also
the other companies in the automobile industry to adjust their corporate strategies according to
the situations. This will also benefit the other researchers who wish to study or research about the
situation of COVID-19 and its impact on the buying behaviour of the consumers (Loxton and
et.al., 2020). This will also benefit the stakeholders who have interest in the companies and
supports the company in the decision making and financially so they will not be in stake to invest
in such companies who do not lose hope in such situations also. This will increase the trust in
these companies.
LITERATURE REVIEW
Literature overview basically deals in surveying the scholarly sources such as the books and
journals, theses, articles regarding the specific topic, subject or research question. This is a very
common method of collecting the secondary data which is not collected by the researcher itself
but is already written and published by certain well-known authors and publishers. This is also
known as secondary method of data collection which helps in gaining deep insights about the
topic of the research (Brodeur and et.al., 2020). The researcher collects the data such that it
critically evaluates the data gained. The whole data collected is divided into different themes
according to the objectives of the research which helps in segregating the data so that every
theme can be focuses systematically. The literature review helps in synthesizing the information
which is obtained from the literature into a sort of summary as it is not possible to contain the
whole literature.
This literature review will help in gaining in-depth insight about the consumer behaviour
towards the products in automobile industry and will critically evaluate the data obtained from
various already published books and journals, articles, research papers, blogs etc. This will help
the company BMW especially in coping up with the challenges faced in the form of the changed
consumer buying behaviour during the pandemic of COVID-19.
Theme 1: Concept of Consumer behaviour and its impact on the business organisations.
According to Tosun (2020), consumer behaviour is studying about the ways in which
individual customers, organisations or groups perform the processes of selecting, buying, using,
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disposing ideas, goods, services etc. for satisfying the needs and wants of themselves. These
basically deal in the actions of the consumers in the emerging markets and the motives behind
the actions. The authors also evaluated that this plays a major role in increasing the customer
base as well as overall sales of the company as in order to increase the profitability, the
customers must feel the need to buy certain products and must be attracted towards it.
Building blocks to the above points, Mchopa, William and Kimaro (2020), elucidated that
consumer behaviour plays a major role for the marketers of the company as they come to know
about the cause which forces the individuals to make the purchase of particular products and
services. This also helps in determining the products which are required in the marketplace. This
is how the company produces the products and promotes in the markets. Therefore, analysing the
consumer’s behaviour contributes in the satisfaction of the consumers and thereby increasing the
customer base in the company.
As per the view of Hasanat and et.al. (2020), consumer behaviour is affected by various
factors such as marketing which includes product design, promotion, positioning etc., personal
factors such as gender, age, education etc., psychological factors such as perception of product,
attitudes towards product etc., situational factors such as social surroundings etc., social factors
such as reference groups, social status etc. along with the cultural factors such as social class,
sub-castes etc. The author also examined that technology helps majorly in understanding the
consumer behaviours which helps the companies to develop and implement certain strategies
which helps in increasing the profitability of the companies.
Furthermore, Ding and et.al. (2020), stated that when the company produces product by
analyzing the consumer behaviour then the businesses become able to reap the profits and the
consumers are facilitated by getting the product or service of great quality which enhances their
life and the goodwill of the company. Consumers also do thorough research of the products and
the company before making a decision to make a purchase and using certain brands. These
affects the company as it is forced to use various methods and the advanced technologies to
examine the behaviour of the consumers.
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Theme 2: Accessing the developments in the automobile industry due to pandemic of
COVID-19.
According to Sharma and et.al. (2020), the automobile industry was facing rapid progress
before the COVID-19 pandemic which also resulted in the setting of new records. But with the
beginning of March with the start of Covid-19 pandemic, series of blows and surprises were
faced by the industry of automobiles. The travel restrictions, lockdowns and the fallout affected
the industry. The people were not allowed to meet the dealers to buy the vehicles. Therefore, the
industry of automobiles 2020 faced the worst situation since the 2008 financial crisis.
Furthermore, this was also observed by García-Madariaga and Rodríguez-Rivera (2017),
that the automobile industry was totally depended on the supply chains which made the complete
scenario worse than ever. There were many regulations due to the pandemic in every country.
The people lost their jobs during the pandemic so they preferred saving the money and avoided
making large transactions such as purchasing the vehicles which decreased the demand of the
vehicles. This decreased the overall sales around 25.7% of the companies. The people started
preferring using the digital platforms during stay at homes and purchasing the goods online.
On the other hand, Maulana (2020), interpreted that the public transportation was
completely banned because of the fear of transmission of infection which increased the demand
of the private vehicles which also increased the sales of the companies like BMW. The deals also
adapted the online methods for reaching to the customers which also helped in delivering the
products to the homes of the customers. This also gave the opportunities to the companies like
electric vehicles which gave them a very good experience.
Supporting the above contradiction, Nazir and et.al., (2020), stated that the lockdowns
contributed in reducing the CO2 emissions which is the biggest benefit from the perspective of
the environment. This also made the company to look at its hidden potentials like the companies
made electric cars which were demanded more than the vehicles which were diesel powered or
gasoline powered. Though the trend for the electric vehicle will be depended on the initiatives of
the government for promotion, but the companies got many opportunities to excel themselves in
the emerging automobile industry.
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Theme 3: Change in the customer behaviour due to COVID-19 in context to automobile industry
of UK.
As per the view of Stoll and Mehling (2020), the behaviour of the customers changed as
they became economically down which restrict them to buy the expensive vehicles. The people
started preferring the necessary items instead of using the luxurious products and items. This
change in the consumers resulted in the loss of many automobile companies like BMW.
On the contradictory note, Kumar and et.al., (2020), explained that the companies got the
opportunities to research on the autonomous vehicles due to the increase in the practice of social
distancing among the people. This will also help in gaining new ideas and research which can
result in setting new standards in the automobile industry for the coming years. The thorough
research and development is needed. For example the research on the biggest automobile
company can be done which is BMW. The Porter’s 5 Force Model and the Ansoff Matrix in the
context of BMW can be used to analyse the industrial changes in 2020.
This could be observed from various internet sites that BMW is the leading brand of
luxury cars which also owns brands of premium cars such as RollsRoyce and Mini Cooper. The
company is able to take large competitive advantage due to its strong production network, global
sales and distribution etc. The Porters 5 Forces have a special relevance in the automobile
industry and the companies like BMW.
This can be examined that the BMW deals with more than 12,000 suppliers in more than
70 countries (Tardivo, Martín and Zanuy, 2020). The bargaining power of the suppliers is
moderate due to the size and financial strength of BMW. Its presence is globally and partnering
with BMW can give high profitability to the suppliers. The bargaining power of the customers is
moderately high due to intense competition and moderate due to its product quality, brand
equity, technological innovation and experience of the customers. The threat of the substitutes is
moderate because of the customer loyalty and higher popularity of the BMW which force the
customers to stick to the same company instead of shifting to others (Pratap, 2019). The threat of
new entrants is very low in this case because the new players have to invest a large capital
investment for building production, making networks in supply and distribution which is
considered as the barrier to the entrants. The competitive rivalry is very high as though the
company is on its leading position but if there is lack of continuous innovation and R&D then
this can lead to loss of market share.
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