Marketing Report: Volkswagen and BMW Strategies and Analysis

This report provides a comparative analysis of the marketing strategies employed by Volkswagen and BMW, two leading companies in the automobile industry. The report delves into the marketing mix of both companies, examining their product offerings, pricing strategies, distribution channels, and promotional activities. It explores the marketing strategies adopted by each company, including their approaches to segmentation, targeting, and positioning. Furthermore, the report analyzes the external factors influencing the companies, utilizing Porter's five-force model to assess the competitive landscape and the BCG matrix to evaluate their product portfolios. The analysis covers current market offerings, identifies recommendations for each company, and concludes with a summary of key findings. The report offers a comprehensive overview of the marketing practices of Volkswagen and BMW, highlighting their strengths, weaknesses, and opportunities in the global automotive market.

Running Head: Marketing
Marketing
Report
System04104
6/26/2019

Marketing
1
Table of Contents
1. Introduction...................................................................................................................................3
2. Marketing Strategies and Marketing Mix of Volkswagen and BMW............................................3
2.1 Marketing Strategies of Volkswagen...........................................................................................3
2.2 Marketing Strategies of BMW.....................................................................................................4
2.3 Marketing Mix of Volkswagen....................................................................................................5
2.3.1 Product..................................................................................................................................5
2.3.2 Price......................................................................................................................................5
2.3.3 Place.....................................................................................................................................5
2.3.4 Promotion.............................................................................................................................6
3. Marketing Mix of BMW............................................................................................................6
3.1 Product.....................................................................................................................................6
3.2 Price.........................................................................................................................................7
3.3 Place........................................................................................................................................7
3.4 Promotion:...............................................................................................................................7
4. Factors in the Global Environment................................................................................................8
4.1 Porter’s five-force model of BMW..............................................................................................8
4.2 Porter’s five-force model of Volkswagen....................................................................................9
4.3 Current offerings of Volkswagen and BMW.............................................................................10
5. BCG Matrix of BMW and Volkswagen.......................................................................................11
5.1 BCG Matrix of BMW.............................................................................................................11
5.2 BCG Matrix of Volkswagen...................................................................................................11
6. Recommendations and Conclusion..............................................................................................12
6.1 Recommendations for Volkswagen...........................................................................................12
6.2 Recommendations for BMW.....................................................................................................13
References...........................................................................................................................................14

Marketing
2
1. Introduction
Marketing is generally beyond of advertising and sales promotion. Proper marketing for any
company determines the success or failure of the organisation and it gives an edge over other
competitors. However, marketing of automobile companies and their products are crucial as
there are numbers of innovations and new features added in the automobile products every
year and it attracts people towards the products (Ma, Zhang, Wang, and Li, 2014). Therefore,
advertising and marketing campaign helps the people to aware about the new products and
offerings of the company. The marketing strategies of every company ensure that company
will care for the needs of their customers, designed their product and services for the
customers, and acquire a large market share in the industry. This report helps to understand
different integrated activities of two giants in automobile industry: Volkswagen and BMW.
This report helps to understand the marketing strategies of BMW and Volkswagen in the
Automobile industry. This report also helps to understand the current marketing strategies
related to customer needs, competitive advantages, creating new opportunities, and
innovation that meet the current and future customer demands in automobile segments.
2. Marketing Strategies and Marketing Mix of Volkswagen and BMW
Both Volkswagen and BMW are marketing giants in the automobile industry and both are
world-class car manufacturing companies. These two are world’s most reputable and famous
brand in automobile industry that are known or their quality, reliability, and modern designed
cars. These companies are known for their high performing and expensive cars and both the
company enjoy a large number of customer s with great market share in all over the world
(Bode, Hübner, and Wagner, 2014).
2.1 Marketing Strategies of Volkswagen
Since Volkswagen operate its business in car segments with 12 independent brands, it
designed their marketing strategies in demographic, geographic, and psychographic segments
that best meet the demand of customers (Milne, 2015). It uses the different targeting strategy
for offering specific products to meet a special segment of customers. The positioning
strategy of the company helps the company to understand and recognizing the current brand
image of the company in the mind of customers and which type of image Volkswagen
created among its customers and people. Volkswagen is the largest car manufacturing

Marketing
3
company in the Europe that is handling more than 12 brands such as Audi, Porshe, Ducati,
Lamborghini, Bentley, Skoda etc. (Avery and Bergsteiner, 2011).
As company’s mission is “mobility for everyone,” it focuses on target both upper income
segment people and lower income segment of people with its different brands. Although
company is known for its expensive cars but it has also some non-expensive cars such as
Volkswagen and Audi to target, the middle income and upper middle income class of people
(Siano, Vollero, Conte, and Amabile, 2017). Company has strong brand portfolio that gives
an edge over other competitors. The strong co-creating and their efficient ecosystem and
operation support system helped the company to be on the top of the market and
competitively ahead from other brands. The low operational cost and economies of scale in
its operational and manufacturing strategy helped the company to manufacture cars on very
low operating costs. This helps the company to spend more money on its branding and
advertising strategy and enables it one of the more popular brand in the world (Goel, 2015).
2.2 Marketing Strategies of BMW
The current business strategy of BMW is to establish itself as the powerful brand image. This
strategy of the company laid the foundation of company’s growth and success. The
company’s major focus is on customer satisfaction, innovation, product quality, innovation,
exclusivity, and reliability. These can be also treated as the core value of the company. The
company’s slogan is “ultimate driving machine” and “sheer driving pleasure” shows its
intention and nature of strategy it adopts in the automobile industry (Avery and Bergsteiner,
2011). The company also defined its strategy so clearly as it focuses on identifying the
opportunities and encouraging growth. The company knew very well what it represents and
where the strength lies of the company. The company making the best use of every
opportunity it has and company is always really to face new challenges and designed its goals
in such a way that fulfil the customer needs and demands. The mission statement of the
company is defined as “To be the most successful premium manufacturer in the car industry”
(Jun and Park, 2016).
The success of the company is very much depends on its marketing and advertising strategy.
As its slogan indicates that BMW provides best driving pleasure which no other car company
provides. The company always focuses on latest innovation and design in the car
manufacturing process and it also depends on strong car advertising strategy. BMW always

Marketing
4
rely on WCRS for its advertising campaign, which focuses on best marketing and advertising
strategy for BMW and work for the company since 1979 (Jun and Park, 2016).
2.3 Marketing Mix of Volkswagen
Volkswagen adopts various strategies to stay competitive in the market and known for its best
marketing strategies in all over the world. The marketing mix of the company is as follow:
2.3.1 Product
If anyone can recall the era of the Beetle car, then people can say that Volkswagen and Beetle
car synonymously are known together and had a great history. Although, Volkswagen is
known for its most expensive and innovative designed cars. Currently, the company produces
many brands such as Audi, Skoda, Volkswagen (sirocco, Tiguan, Touran, Eos, Beetle etc.).
The products of Volkswagen are known for comforts, advanced features, size, seating,
capacity, engine configurations, etc. The company is known for offering various variants of
cars in the market. Volkswagen is also known for manufacturing and sell of Electric vehicles
that is now more attractive segments for people. The Polo and Gold model car of Volkswagen
won the prestigious European Car of the year (Nairn, Partner, and Generals, 2016).
2.3.2 Price
Volkswagen is known for its pricing strategies and it sells more than 34500 vehicles per day
(Bohnsack and Pinkse, 2017). Volkswagen set its product prices within the competitive prices
in developing nations and it charges high prices in those economies where it is known as a
premium brand in Automobile industry. Volkswagen termed as one of the premium brand in
automobile industry and known for its high quality cars and premium prices of the cars. The
company uses the psychological pricing strategy to sell its cars. However, the quality of its
products and innovative technology helps the company to attract people towards its product.
The pricing strategy of the company also set by the company in such a manner that it could
target both premium customers and low budget customers (Bohnsack and Pinkse, 2017).
2.3.3 Place
Volkswagen cars are almost available everywhere in all over the world. The company has
assembling facilities in all over the world including Germany, India, Czeck Republic, Poland,
Spain, Indonesia, Mexico, USA, China etc. Volkswagen established a manufacturing and
assembling plant in the Indonesia for the large vehicles (Bohnsack and Pinkse, 2017). The
company designed its marketing strategy according to the demand, need of customers, and set

Marketing
5
its prices in regards to the local competitors. For example, in India, Company uses the export
engines and local engines to increase localization plant and make it cars cheaper in the local
market with local resources. This strategy of the company helps to set competitive prices in
the market and increase its market share (Baccarella, Scheiner, Trefzger, and Voigt, 2016).
2.3.4 Promotion
Volkswagen is always more aware and known for its promotional campaign. Volkswagen is
an aggressive advertiser in compare to BMW and known for its best advertising strategies.
The Volkswagen uses the 360 branding strategy to promote its products along with its parent
company as well (Walker, Stanton, and Salmon, 2011). The company spend huge amount of
money every year on promotional activities. It can be said that the strategy of advertising of
company was also successful as it able to increase its market share in all around the world. In
Asian market, company is able to increase its market share with rate of 4% per annum as it
focuses on branding and promoting its products through social media, YouTube and other
channels of advertising. However, the most effective way of advertising of the company is
Television ads and Newspaper advertisements, which cover a huge size of population all
around the world (Lieven, Mühlmeier, Henkel, and Waller, 2011).
3. Marketing Mix of BMW
BMW is one of the premium car manufacturing companies in the world. However, the
marketing mix of the company focuses on the 4Ps (product, place, price, and promotion) and
the strategy of the company revolve around these four P’s of marketing mix.
3.1 Product
BMW started its business with manufacturing of motorcycles and aeroplane engines before
entering in the car manufacturing. However, the company then entered in various car
segments and focuses on key brands of car manufacturing. The company started its products
with basic models of cars but soon after it enters in advance engineering of car
manufacturing. The company knows its potential and the numbers of cars sold by the
company each year is in huge numbers. The company produces its products in four segments
(Morrone, Russo, and Calace, 2015). The first segment is luxury segments in which it sells
high premium and luxury cars and target upper income group of people. In the second
segments, it focuses on high quality products, which also target the high-income group of
people. In the third segments, it produces excellent brand pull that targets the lower segment
people and target to those people who have low income or middle-income group of people.

Marketing
6
3.2 Price
It is no doubt that BMW is one of the premium car companies and it enables the company the
charge high premium prices for its products from the customers. The pricing strategy of the
company affect with the demand of the products and can depends on various factors such as
models of the car, series number, customer demands, and quality of the product
(Zaichkowsky, 2010). BMW also launched many low prices cars that targets to those people
who belong to the low and middle-income group people. However, the pricing strategy of the
company attracts the premium and niche market of automobiles. However, the new 3-Series
of vehicle is a low budget car of the company that attract people towards the BMW brand.
Apart from this, BMW also provide financial assistance to its customers to buy cars (Nairn,
Partner and Generals, 2016).
3.3 Place
BMW is one of the global car manufacturing countries in the world and it established its car
manufacturing plants in various cities in various countries (Bohnsack and Pinkse, 2017). The
first facility of the company was located in Munich. However, to meet the global demand of
customers, it established various car manufacturing and production facilities in number of
cities in all around the world. Apart from this, the company also conducts many marketing
campaign that helps the company to establish relationship with its dealers and cover its global
reach in automobile industry. Currently, BMW has more manufacturing facilities over 10
countries and all its plants manufacture’s more than 2,500,000 vehicles per year (Buil, De
Chernatony and Martínez, 2013).
3.4 Promotion:
BMW has a great advertiser of its products and other offerings. The company spends a huge
amount on car advertising in different nations. The company also adopts various promotional
activities and strategies to aware, advertise its products among the people, and encourage
them to buy its car. The company focuses on aggressive advertising strategy and use almost
all media of advertising such as T V ads, Newspaper, Magazines, billboards, print media,
You tube and social media advertising etc. These strategies help the company to create brand
awareness about the company among the people (Buiga, 2012).

Marketing
7
4. Factors in the Global Environment
To analyse the global scenario for both companies it is required to analyse the company’s
strategy through Porter’s five-force model. Porter’s five-force model was first given by
Michael Porter in 1979, which is a strategic analytical model that analyses the various forces
that affects the business operation of the company (Milne, 2015). The porter’s five-force
models of both the companies are as follow:
(Source: Bohnsack and Pinkse, 2017)
4.1 Porter’s five-force model of BMW
Threat of New Entrants: The competition in the automobile industry is very tough and it is
really tough for new entrants to enter in the market because it requires huge capital. However,
it cannot be denied that it is impossible to enter in the automobile industry rather it can be
said it is very tough for a new brand company to give strong competition to already a branded
and famous company like BMW. It means the threat of entering new player in the market is
really tough and give immense competition to BMW in its starting days is again very hard
(De Mooij and Hofstede, 2010).
Bargaining power of Buyers: In current times, most of the customers depends on the
reviews and consider the reviews of magazines and social media before buying any product.
These reviews help the customer to provide lots of information and knowledge about the
products and enable them to compare one product to another product. A slight different in the

Marketing
8
price or quality may change the decision of customers to buy BMW cars. Therefore, customer
has more bargaining powers in automobile industry and they have many more options in
same price range of BMW (Petrescu, Korgaonkar, and Gironda, 2015).
Bargaining Power of Supplier: Suppliers play an important role in manufacturing company
and determines the business operation and profitability of the company. BMW has many
suppliers that provide interiors and car equipment, but very few of them can regulate or affect
the price of BMW cars. BMW is known for its superior quality and innovative cars, thus it is
very specific about its suppliers and their cost. The achievement of BMW and sales of cars
also determines the profit and loss of its supplier companies (Bohnsack and Pinkse, 2017).
Threat of Substitute products or services: It is very tough for the people or customer to
think about the substitute of BMW as it is one of the strong brand name in the automobile
industry. However, the threat can be considered from leading car-manufacturing companies
or from motorbike companies such as sports bikes. The threat can also come from
government agencies, as they want to a limited range of fuel emission and pollution from the
vehicles of BMW.
Rivalry among exiting firm: There are so many global companies that give strong
competition to BMW cars such as Volkswagen, Audi, Ducati, Mercedes Benz, etc. These all
are working on hybrid cars and providing fuel-efficient cars to the customers. Even Tesla is
also competing with all these companies with electric car models and it is really a worry for
the other car manufacturing companies. Therefore, competition in this industry is very tough
and to face the competition, it is requirement of BMW should focuses on innovation and
latest technology (Petrescu, Korgaonkar, and Gironda, 2015).
4.2 Porter’s five-force model of Volkswagen
Threat of New Entrants: It is really difficult to enter in the automobile industry and give
challenge to the Volkswagen for a new player. It is also difficult for a new industry to achieve
economies of scale in this industry and give competition to the Volkswagen. This helps
Volkswagen to operate its business dominatingly in the market. Capital requirement in this
industry is also high and so hard to access the distribution networks. These all factors make it
really difficult for new player to enter in the automobile industry and give competition to
existing player (Rieger, 2010).

Marketing
9
Bargaining power of Buyers: There are so many different cars with some unique features
available in the market. Therefore, the customer has large number of choices in the same
industry. Although with some extent, the product different is very low and small difference in
price does not matter for customers, if they want to purchase specific brand of products.
Although, it can be said that bargaining power of customer is significantly low in this
industry (Kalro, Sivakumaran and Marathe, 2017).
Bargaining Power of Supplier: There are many suppliers of same raw material and
equipment parts in Automobile industry. Because of large number of suppliers available in
the market, Volkswagen can easily switch one supplier to another supplier and if the products
are suitable for the quality of Volkswagen car, it can change the supplier when needed
(Rieger, 2010).
Threat of Substitute products or services: There are few substitutes available for the
Volkswagen cars such as sport bikes and few other players, which are operating their
business in low profit margins. Therefore, it is really difficult for the other substitutes to
replace totally the Volkswagen cars. Volkswagen is a brand name in the automobile industry
and it is difficult for any other alternative to take place of Volkswagen (Lyons, Mondragon,
Piller and Poler, 2012).
Rivalry among exiting firm: There are very few competitors available in the automobile
industry, which give tough challenge for the Volkswagen in this industry. It can also be
noticed that because of few small competitors and they have a small market share, the market
share and unit of sales per year of Volkswagen is marginally affected.
4.3 Current offerings of Volkswagen and BMW
Volkswagen is currently offering 12 brands to its customers including Volkswagen passenger
cars, SEATT, SKODA, Audi, Porsche, Scania etc. Volkswagen also provides customer
support services like financial services including dealer and customer financing, leasing, and
insurance activities etc. The company also cares about the quality of cars and pollution level.
The company aims to make mobility sustainable with electric drive and digital and
networking autonomous driving. The company is currently using those technologies, which
emitted very less pollution with focus on providing clean and quiet intelligent and safe
vehicles to the people (Eder and Linde, 2011). It focuses on completely new driving skills for
people. BMW has collaboration with other car companies like McLaren, Toyota, Daimler

Marketing
10
Benz, and Peugeot & Citroen. The company aims to reduce vehicle emission and provide best
technological and innovative car to the people. Although company is providing best
technology in its cars and bikes, which is world class and it has a brand name all over the
worlds (Morrone, Russo, and Calace, 2015).
5. BCG Matrix of BMW and Volkswagen
5.1 BCG Matrix of BMW
5.2 BCG Matrix of Volkswagen

Marketing
11
6. Recommendations and Conclusion
For the Volkswagen and BMW, recommendations can be given on the basis of Ansoff
Matrix.
6.1 Recommendations for Volkswagen
(Source: Petrescu, Korgaonkar, and Gironda, 2015)
Market Penetration: As the demand of the low budget cars of Volkswagen is more in the
market, the company should focus on delivering more cars in the market. The demand of
Volkswagen cars are continuously increasing because of its aggressive advertising of
products and it force the company to think about the market penetration with large number of
manufacturing cars. The company can also increase its number of dealers in the market that
will further help the company to sell its car comfortably (Petrescu, Korgaonkar, and Gironda,
2015).
Product Development: As Volkswagen is one of the branded cars in the automobile
industry, it should focus on innovation and latest technology in its cars such as electric
vehicles. In the emergence of Tesla, the competition in the automobile industry is
continuously increasing and all the car manufacturing companies are looking for latest
technology in their cars and develop new products according to future market demand.