BMW Marketing Study: China Market Analysis and Strategy

This report presents a comprehensive analysis of BMW's marketing strategies in the Chinese market. It begins with an introduction to BMW, its history, and its entry into the Chinese market, highlighting its growth and success. Part A of the report focuses on the marketing mix of BMW in China, examining the product, price, place, promotion, people, process, and physical evidence aspects. Part B delves into the environmental factors affecting BMW using a PESTLE analysis, covering political, economic, social, technological, legal, and environmental factors. The report discusses BMW's adaptation to the Chinese consumer preferences, its pricing strategies, distribution channels, and promotional activities. It also analyzes the internal factors, such as people and process, that contribute to BMW's success in China. The report concludes with a summary of the key findings and a discussion of the overall marketing approach of BMW in the Chinese market.

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BMW MARKETING STUDY
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Table of Contents
Section A.........................................................................................................................................2
Introduction......................................................................................................................................2
Part A- Marketing mix and marketing strategy of BMW in China.................................................3
Product.........................................................................................................................................4
Price.............................................................................................................................................4
Place.............................................................................................................................................5
Promotion....................................................................................................................................6
People..........................................................................................................................................6
Process.........................................................................................................................................7
Physical evidences.......................................................................................................................7
Part B- Environmental factors affecting BMW (using PESTLE)...................................................8
Macro environmental analysis.........................................................................................................9
Table 2: PESTLE analysis.............................................................................................................12
Conclusion.....................................................................................................................................13
References......................................................................................................................................14

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Section A
Introduction
Bayerische Motoren Werke popularly (BMW) is a German luxury car making company,
with headquarters in Munich, Bavaria. It was founded in 1913 by Karl Friedrich Rapp who soon
left the company due to several difficulties and was overtaken by Australian industrialist Franz
Josef in 1917 (Sha, Huang and Gabardi 2013). In the present day, the company employs over 1
million employees in over 40 countries around the world. Being counted as one of the big three
German luxury car brands the other two being Mercedes and Audi respectively, the brand enjoys
massive customer demand and is considered as a status symbol for the wealthiest segment of the
society worldwide.
BMW entered the market of China in 1994 and in 2003, it entered into a combined
project with a leading Chinese automotive component manufacturing company Brilliance China
Automotive Holdings Ltd. After which it started operating as BMW Brilliance Automotive Ltd
(BBA) (Atwal and Williams 2017). The company grew rapidly in the emerging Chinese market.
from 800 cars in 1994 it sold 900 cars each day in 2013. In July 2013, BMW announced that
China is likely to surpass the US market, and added that sale in China were 182,800 units as
against 172,787 units in US. The company attributed the success to the growth in demand in the
smaller cities of China (Armstrong et al. 2015). As per McKinsey report on China’s market,
China was found to be the second major luxury car marketplace after US. The report also
suggested that the Chinese have an typical annual income of US $16,074 and are eager to splurge
on a luxury car. Based on this report, McKinsey anticipated China’s market to reach 2.25million

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units by 2016 and 3 million units by 2020 and predicted that China would overtake US as the
world’s biggest shopper of luxury cars by 2016 (Elijayar et al. 2017.).
Part A- Marketing mix and marketing strategy of BMW in China
The business approach of BMW collection is founded strongly on having a robust brand
image. The strategy forms the key reason behind the achievement of the group. The belief it
upholds is that maintaining core values is important, such as improvement, machinery, quality,
performance, reliability, individuality, and customer satisfaction. The slogans such as “Sheer
driving Pleasure” and “ The Ultimate Driving Machine” gives the world an idea of the marketing
strategy it has been adopting ever since its foundation. The strategy can be clearly defined as
identifying potential and encouraging growth. The mission state is to be the most efficacious
premium producer in the car industry. The Chinese customers have been difficult to be satisfied
by foreign companies and it was crucial for BMW to understand this to get a strong market hold
in the country. The key to success was that BMW realized that China had a certain preference for
long wheel-based cars as they feel this marks a strong account on their accent in life. Keeping in
mind this aspect, the marketing mix of BMW for China was set.
Before studying the marketing mix of BMW in China, it is important to understand the
meaning of marketing mix. It refers to set of ideas, tactics and actions that a company use to
promote its product or services. The 4Ps of marketing are Price, Product, Promotion and Place.
Price means the value of the product or service, which depends on the cost of production,
targeted market and various other factors (Pries and Seeliger 2014). Product refers to the items
that are sold. Place means the point of sale. Promotion includes all the marketing strategies of the
product or service like advertising, press reports, trade commissions and so on.

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Product
The BMW group is associated with the luxury segment of society and the company puts
constant effort to maintain the premium quality of the product. The BMW offers premium
sedans, SUVs and sports cars, which are all a symbol of luxury and class. The BMW sells its
vehicles under three brands, such as BMW, mini and Rolls Royce. Every car in the series has
different characteristics. The cars boast of powerful engines, speed and a safety. However, the
popularity and sale of BMW cars are much more than their motorcycles. An important area
where BMW differs from German counterparts like Audi and Mercedes is that while these two
companies are tied to different companies due to which they have to use parts of their products
from these companies, BMW has no such limitation and is free to use any parts they feel for the
best of their cars. Safety and luxury are the crucial points of the BMW cars. Innovative and
unique ideas are introduced at regular intervals as per the needs n demands of the customers.
Recently BMW has entered the hybrid and electric segment of motor vehicle in their new model
BMW i8. Its consumers praise the top quality material usage (Li, Xiao and Liu 2015).
Price
The pricing policy of the BMW Group has adopted is decided on the basis of more than
one key trend. One significant drift of BMW is labeled as "premium-tization" that causes
division of markets. This trend activates the clients to request and pay much advanced prices for
the apparent quality. BMW is the finest luxury car brand in the market and their cars are a
position symbol. The BMW associated brands like Rolls Royce and mini cooper are priced at a
bit higher range than standard BMW product range. While studying the domestic and
international pricing policy it becomes clear that BMW has fixed its pricing strategy in a way,

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which would attract both the high and middle-income group (Murray 2014). The brand charges
different prices for different models. This difference is due to the difference in engine size, fuel
consumption, and gear levels and so on. Geographical pricing is another important aspect of
BMW group. Recently BMW has adopted a competitive pricing strategy in its market in India
and Brazil where smaller models are priced at 25lacs which enables buyers to own a luxury
vehicle at a much lesser price (Gao and Krogstie 2015). BMW also offers financial services to its
customers. BMW is increasing the number of models it makes in China and inventing lower
priced models specifically designed for the Chinese market. BMW is producing tailor made
products to suit the demand of Chinese market rather than just copying designs from Europe and
US.
Place
The official website of BMW says that they have 156 traders in UK who are officially
selling BMW cars. BMW functions in over 150 nations with over 6000 traders who are allowed
to sell both new and used car parts. In China alone, there are around 60 BMW dealerships in
2015. The worldwide distribution system involves about 3310 BMW, 1550 mini and 140 Rolls
Royce dealerships (Heinonen 2014). BMW boasts of highly skilled professionals who work hard
to maintain the company image. Since it is a global producer, it has manufacturing conveniences
in many cities. Their first facility was located in Bavaria, Munich. However, with increasing
worldwide clients, they started to setup facilities in different cities. In 2015, BMW had
manufacturing facilities in about 10 countries producing about 2430000 vehicles. Recently
BMW has set up manufacturing facilities in emerging economies, which is helping them to
expand their market.

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Promotion
BMW has earned its reputation by offering trustworthy after sale service and warranties.
In 2012, Forbes ranked BMW as the most reputable company. BMW ads focus on the look of the
car as much as it does on the technology (Ho 2015). This is because the company knows that the
target market of the car expects a certain quality from the car, which would make them, stand
apart from the masses. The company has been a market leader for almost a century. Their
promotional strategy focuses on aggressive advertising with the help of media channels like
billboards, print ads, TV to create and maintain incessant brand presence. BMW has been a
benefactor in various rally racing events and other events including sports cars. They promote
and participate in international rally and races. They are a successful F1 race team. These events
have helped in their reorganization globally and it has helped them to reach new markets. BMW
hired iconic Indian cricketer Sachin Tendulkar and West Indies cricketer Darren Sammy as their
ambassadors (Hwee 2015). In 2010, BMW launched its joy of BMW campaign in China, which
used Chinese painting, cultures and calligraphy to suit the local Chinese market. As per reports,
BMW is willing to increase its expenses on online marketing to attract the younger buyers who
are more interested in the latest features of the cars than its status value.
People
After entering the Chinese market, the strategy of BMW is to provide the people of china
with the best quality and luxurious service through their products and for that, they are focusing
extensively on this fifth factor of the marketing mix strategy (Huang and Sarigöllü 2014).
According to the Chinese website of BMW, they have supported their employees with several
working incentives and benefits and are proving them with comfortable amenities so that they
can work in a peaceful and sustainable environment. According to the Gallup news report, these

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strategies has led the employees of the company to involve in the production, marketing and
research and development for the innovation and expansion of the company in china (Yu and
Srinivasan 2017). On the other hand, people, who are associated with the company as buyers are
also in the focus for the development of the company. As the competition level of luxurious cars
production in china has increased, according to the China Daily reporter Yan (2017), the
company is utilizing the opportunity to train its staff and workers to develop their skills and
development. Further, this will help the organization to serve its customers with the best and
innovative products in the market.
Process
Process is the important aspect for the growth and development of any company as this provides
the organization with a clear roadmap, through which ultimate excellence can be achieved. In
this marketing mix, the execution of the process occurs and a well-tailored process helps the
organization to lead its workforce towards productivity and innovation (Sinapuelas, Wang and
Bohlmann 2015). For BMW china, the process starts from manufacturing, assembling,
marketing, dispatching and sales and it becomes important for the company to focus on each
process equally as without that sustainable growth will both be achieved and the bestselling cars
of the company will carry the entire baggage of consumer expectation. According to the news
organization Xinhua net, Xuequan (2017), the company is trying to apply the process of its
headquarter Germany in the Chinese organizations with the total investment of 7.6 billion Yuan;
so that the process can be parallel to the process of German headquarter.
Physical evidences
It is an important aspect for any kind of service industry, just to understand the level of
acceptance between the common people and the feedback or view of consumers about the

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company and its products. BMW is concern about its physical evidences as well and tries to find
out the things its consumer thinks about the company or its luxurious cars (Huang and Sarigöllü
2014). for this purpose the organization is doing marketing campaigns where the consumers can
register their feedback a well as in the official website of china, there is a feedback section
introduced by the higher authorities so that the common perception about the organization about
the company can be properly understood. Furthermore, according to the feedback, the BMW has
already launched the car sharing programs in china so that the craze of small and electric based
cars can be hyped among its consumers (Sinapuelas, Wang and Bohlmann 2015).
Part B- Environmental factors affecting BMW (using PESTLE)
The current study focuses upon the marketing management of BMW, which is a
Shenyang, based leading automobile company. It is presently operated under the joint venture
between BMW and Brilliance Auto. The joint ventured regulates the manufacture, circulation
and sale of the BMW cars in the China mainland. The company is profoundly focusing on
increasing itself in developing markets such as China, India and Brazil. The CEO had
emphasized that the strategy of expansion in such developing and emerging markets would be
done after critical analysis of the environmental factors in those countries. BMW has been
constantly improving its merchandises and facilities to provide the clients with the best in the
class experiences. The recent BMW M carbon fiber aerodynamics package can effectively
improve the performance of air movement. The high performance brake system kit with
lightweight sports ventilated brake disc allows applying brakes at a short distances even at high
thermal loads (bmw.com 2018). Some of these features make BMW one of the most sought
after brands.

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However, there are a number of factors affecting the survival of the brand within
the global market. The factors could be divided into micro and macro environmental factors. An
analysis through these factors helps in the development of an effective marketing strategic
policy. There are a number of factors which provides BMW a competitive advantage over
similar market players such as global distribution channels, which makes them easily accessible.
The implementation of state of the art engineering techniques in the making of the automotive
vehicle along with continuous R&D evolution makes it a market leader in the premium segment
of care sales (bmw.com 2018).
The suppliers controls a large part of the business process by tightly regulating the
supply of the core raw materials, which goes into making the products (Shiu et al. 2017).
Therefore, solely depending upon a single core supplier can make the organization vulnerable. In
this respect, the BMW has more than one supplier base, which provides them with a competitive
advantage over some of its contemporary market players. Additionally, BMW conducts its
manufacturing process close to the source, which prevents any additional expense (Reinhardt et
al. 2017).The customers and their attitude also affect the strategic positioning of the brand in the
global market. However as argued by Lee et al. (2015), putting sufficient liberty in the hands of
the Customers can result in unnecessary cost-cutting which in turn generates negative revenue,
leading to huge market layoffs.
Macro environmental analysis
The analysis of the external market could be done using a PESTLE. Here, the
PESTLE refers to –Political, economic, communal, technical, lawful and environmental factors.
Attributes Effect

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Political  Enforcement of legislation related to CO2 emission can
affect the survival of the company in the china mainland.
 Investment in the lack of political stability is subject to risk.
 BMW may face high tax burdens due to the adverse
spending patterns of the customers (Trocchia et al. 2015)
 Changes in the government policies and regulations applied
upon the sales of automobile products and services due to
increased environmental concerns.
Economical  The effect of the GDP fluctuations on customer spending
can affect the annual revenue earned by the company
 Global inflation rates and change in the exchange policies
might also affect the profitability margins of the company
 Increasing level of debt
 Could potentially lose out on a larger customer base due to
excessively high prices
Social  Changing in the buying patterns of the customers (Otani and
Yamada 2017)
 Increased rate of awareness regarding the adverse health

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effects of Co2 emissions
 Poor automotive brand portfolio with little product
differentiation which the customers may find boring within
the changing market
Technological  The new and sophisticated design will help in attracting new
age customer base inclined to the use of technology
 New embedded technologies will help in controlling the
rate of environmental pollution
Legal  The increasing debts from the investment returns can result
in additional legal obligations on the company (de Araújo
2015)
 Ineffective compliance management can led to legal breach
which could result in untoward consequences
Environmental  Emergence of consumerism activism can lower the
purchase of the product due to increased realization
regarding high carbon foot print generation
 Increasing demand of products sourced from sustainable
resources
Table 2: PESTLE analysis
(Source: author)