BMWs new plan to increase sales - advertising!
08-02-06, 12:23 PM
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BMWs new plan to increase sales - advertising!
I thought about posting this in the debate section but figured the mods would move it. While we have an interesting change in the posters on CL, what they post, and the attitudes presented, avoiding the GS vs M vs 5 series vs E class vs.... threads are what drive a lot of us (no pun intended). So here is what ran in today's WSJ:
ADVERTISING
Brawny BMW Seeks 'the Idea Class'
By NEAL E. BOUDETTE and GINA CHON
August 2, 2006; Page B1
Over the last five years, BMW AG had its foot pressed hard on the gas, increasing sales in the U.S. by 62%, a rate that has outpaced just about every other auto maker. Now the German company is making a bold move in hopes of maintaining its breakneck pace.
For well over a decade, BMW has focused its marketing almost exclusively on its cars' German engineering and technical sophistication, and targeted its message to one very specific customer group -- upscale auto enthusiasts.
In a break with that formula, the company is promoting a corporate culture of independence and innovation. One advertisement in a new campaign that has turned heads in the auto industry highlights the design by architect Zaha Hadid that BMW chose for a striking glass-walled factory in Leipzig, Germany.
BMW hopes the approach will broaden its position in market share and appeal to a group the company calls "the idea class" -- upscale car-buyers who are swayed more by artistic values than horsepower.
Despite its aesthetic nature, the effort is all about business. BMW needs to fend off rising competitors like Nissan Motor Co.'s Infiniti brand and the Acura unit of Honda Motor Co. that offer credible performance vehicles for far less money. The company also aims to grab a bigger share of the U.S. market as part of an ambitious global plan to increase sales of BMW-branded vehicles to 1.6 million a year by 2010, from just over one million this year.
BMW's new ads promote the car maker's innovation.
"Our opportunity to grow exists in the U.S.," says Tom Purves, chief of BMW's North American sales arm, noting the company has less than 2% market share in the U.S. -- about half its share in Western Europe and well below the roughly 10% it has in Germany.
"Why can't we sell more in the U.S.?" Mr. Purves says. "If we doubled our market share, that's a huge volume increase for us and that's what we have in Europe. We thought that was possible, but we had to think about it in a different way."
BMW's new direction reflects the intensifying competition in the luxury-car segment, a key battleground that generates a big chunk of the industry's profit.
The baby-boom generation, which is now in its peak earning years, will drive increasing sales of luxury cars for the next several years, says Michael J. Jackson, chief executive of AutoNation Inc., the nation's largest chain of auto dealerships. "Luxury cars will be a crucial high profit opportunity."
BMW's shift in direction began last year, after an internal study revealed 1.9 million consumers bought luxury cars in 2004, and 1.4 million of them didn't even consider BMW. Of those, about 600,000 said they were looking for cars that are fun to drive -- which should be BMW's forte. "That is low hanging fruit," says Jack Pitney, BMW's head of marketing in the U.S.
Instead, many of these buyers ended up choosing Saab, the Swedish brand of General Motors Corp., or the Japanese luxury brands Infiniti, Acura and Toyota Motor Corp.'s Lexus unit.
One reason these buyers overlooked BMW is that they know little about the brand. Steven Bennett, an optometrist who owns two busy vision centers in Ann Arbor, Mich., admits he likes a car with some kick. "I like power. I like being first off the line," he says. He drives a Lexus LS430, which he bought in 2002 for $54,000. When he bought the car, BMW never crossed his mind. "I've never driven one. I've just never given them a thought."
Mr. Pitney says BMW realized it had to do a better job of reaching out to customers like this. Last fall it decided to switch advertising agencies and chose GSD&M, an Austin, Texas, agency. GSD&M suggested BMW target the wealthy group of high-achievers author Richard Florida described in his recent book, "The Creative Class."
This "idea class" is made up of self-motivated architects, professionals, innovators and entrepreneurs, and numbers about 1.5 million people. They typically are not car nuts although they buy luxury automobiles. They prize innovation, authenticity and, above all, independent thinking.
To appeal to them, GSDM crafted a series of ads to show that these values also run deep in BMW's corporate culture. "BMW is known for performance but there's so much more to this company," said Lee Newman, an agency executive who works on the BMW account.
One ad listed other luxury brands and their corporate parents, suggesting rivals like Cadillac and Acura have to make compromises to cooperate with their mass-market sister brands, Chevrolet and Honda. The ad showing the Leipzig plant asked, "Would a parent company let us build this?"
The ads are intended to say that BMW, as an independent company, can put its ideas into reality, Mr. Purves says. "It should appeal to the idea class that we are independent, that we are free to do something."
Going beyond straight advertising, BMW recently said it is now sponsoring a PGA Tour golf tournament that will be called the BMW Championship, one of four tour playoff tournaments. The golf sponsorship completes BMW's three-pillar sports strategy, which also includes sponsorships in Formula One and the America's Cup. The BMW golf tournament will be held at golf courses in Chicago and other cities in the Midwest, where BMW hopes to increase sales, Mr. Purves says.
BMW is back on my list of possibilities but I have to say there is something that just makes me very unenthused about BMWs. They used to be marvelous cars in the ride/handling balance and that is not the case anymore as they have gone for more performance and adopting technology like run flats but they are still probably the best combination out there. But as a past BMW owner there is something somewhat depressing about the BMW image to me and that is something I don't need in my life. I am an entrepeneur and a "professional" so I fit the demographic they want to go after and I am a past owner as well. I know one thing for sure, the architecture of their assembly plant in Germany is not going to get me into one of their cars. Neither is their sponsorship of an America's Cup boat or a Golf Tournament. Infiniti has had their try at esoteric advertising and it wasn't a great success. In honesty, this looks more like something GM would have done.
ADVERTISING
Brawny BMW Seeks 'the Idea Class'
By NEAL E. BOUDETTE and GINA CHON
August 2, 2006; Page B1
Over the last five years, BMW AG had its foot pressed hard on the gas, increasing sales in the U.S. by 62%, a rate that has outpaced just about every other auto maker. Now the German company is making a bold move in hopes of maintaining its breakneck pace.
For well over a decade, BMW has focused its marketing almost exclusively on its cars' German engineering and technical sophistication, and targeted its message to one very specific customer group -- upscale auto enthusiasts.
In a break with that formula, the company is promoting a corporate culture of independence and innovation. One advertisement in a new campaign that has turned heads in the auto industry highlights the design by architect Zaha Hadid that BMW chose for a striking glass-walled factory in Leipzig, Germany.
BMW hopes the approach will broaden its position in market share and appeal to a group the company calls "the idea class" -- upscale car-buyers who are swayed more by artistic values than horsepower.
Despite its aesthetic nature, the effort is all about business. BMW needs to fend off rising competitors like Nissan Motor Co.'s Infiniti brand and the Acura unit of Honda Motor Co. that offer credible performance vehicles for far less money. The company also aims to grab a bigger share of the U.S. market as part of an ambitious global plan to increase sales of BMW-branded vehicles to 1.6 million a year by 2010, from just over one million this year.
BMW's new ads promote the car maker's innovation.
"Our opportunity to grow exists in the U.S.," says Tom Purves, chief of BMW's North American sales arm, noting the company has less than 2% market share in the U.S. -- about half its share in Western Europe and well below the roughly 10% it has in Germany.
"Why can't we sell more in the U.S.?" Mr. Purves says. "If we doubled our market share, that's a huge volume increase for us and that's what we have in Europe. We thought that was possible, but we had to think about it in a different way."
BMW's new direction reflects the intensifying competition in the luxury-car segment, a key battleground that generates a big chunk of the industry's profit.
The baby-boom generation, which is now in its peak earning years, will drive increasing sales of luxury cars for the next several years, says Michael J. Jackson, chief executive of AutoNation Inc., the nation's largest chain of auto dealerships. "Luxury cars will be a crucial high profit opportunity."
BMW's shift in direction began last year, after an internal study revealed 1.9 million consumers bought luxury cars in 2004, and 1.4 million of them didn't even consider BMW. Of those, about 600,000 said they were looking for cars that are fun to drive -- which should be BMW's forte. "That is low hanging fruit," says Jack Pitney, BMW's head of marketing in the U.S.
Instead, many of these buyers ended up choosing Saab, the Swedish brand of General Motors Corp., or the Japanese luxury brands Infiniti, Acura and Toyota Motor Corp.'s Lexus unit.
One reason these buyers overlooked BMW is that they know little about the brand. Steven Bennett, an optometrist who owns two busy vision centers in Ann Arbor, Mich., admits he likes a car with some kick. "I like power. I like being first off the line," he says. He drives a Lexus LS430, which he bought in 2002 for $54,000. When he bought the car, BMW never crossed his mind. "I've never driven one. I've just never given them a thought."
Mr. Pitney says BMW realized it had to do a better job of reaching out to customers like this. Last fall it decided to switch advertising agencies and chose GSD&M, an Austin, Texas, agency. GSD&M suggested BMW target the wealthy group of high-achievers author Richard Florida described in his recent book, "The Creative Class."
This "idea class" is made up of self-motivated architects, professionals, innovators and entrepreneurs, and numbers about 1.5 million people. They typically are not car nuts although they buy luxury automobiles. They prize innovation, authenticity and, above all, independent thinking.
To appeal to them, GSDM crafted a series of ads to show that these values also run deep in BMW's corporate culture. "BMW is known for performance but there's so much more to this company," said Lee Newman, an agency executive who works on the BMW account.
One ad listed other luxury brands and their corporate parents, suggesting rivals like Cadillac and Acura have to make compromises to cooperate with their mass-market sister brands, Chevrolet and Honda. The ad showing the Leipzig plant asked, "Would a parent company let us build this?"
The ads are intended to say that BMW, as an independent company, can put its ideas into reality, Mr. Purves says. "It should appeal to the idea class that we are independent, that we are free to do something."
Going beyond straight advertising, BMW recently said it is now sponsoring a PGA Tour golf tournament that will be called the BMW Championship, one of four tour playoff tournaments. The golf sponsorship completes BMW's three-pillar sports strategy, which also includes sponsorships in Formula One and the America's Cup. The BMW golf tournament will be held at golf courses in Chicago and other cities in the Midwest, where BMW hopes to increase sales, Mr. Purves says.
BMW is back on my list of possibilities but I have to say there is something that just makes me very unenthused about BMWs. They used to be marvelous cars in the ride/handling balance and that is not the case anymore as they have gone for more performance and adopting technology like run flats but they are still probably the best combination out there. But as a past BMW owner there is something somewhat depressing about the BMW image to me and that is something I don't need in my life. I am an entrepeneur and a "professional" so I fit the demographic they want to go after and I am a past owner as well. I know one thing for sure, the architecture of their assembly plant in Germany is not going to get me into one of their cars. Neither is their sponsorship of an America's Cup boat or a Golf Tournament. Infiniti has had their try at esoteric advertising and it wasn't a great success. In honesty, this looks more like something GM would have done.
08-02-06, 12:43 PM
#2
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Probably my living in Mexico can give a good context.
Maybe about 10 years ago in the U.S., I might have considered buying a another BMW. I once had a beautiful 1990 325i convertible. 10 years later, Japanese vehicles would be the first thing I would look at for a luxury car or SUV. The point of quality combined with great design really stands out in my mind where as 10 years ago the quality concept was there with the Japanese luxury vehicles, but I remember looking at Acura, Lexus and Infiniti and thinking they were a little plain in their designs (just my opinion). That has indeed changed.
In Mexico, Acura and Infiniti are simply babies in the market...no Lexus.
When my neighbors are looking to get a luxury car it winds up being a decision between an Audi, BMW and Mercedes. BMW wins this most of the time. When I ask them why, they look at the features, design and price and BMW fits what they want. Could a Japanese luxury vehicle do better. Sure. What lacks down here is what really helped the Japanese luxury vehicles up in the U.S., a sense of quality.
BMWs are great cars but I just can´t ping quality to them anymore. I don´t think any amount of advertising is going to do that.
Maybe about 10 years ago in the U.S., I might have considered buying a another BMW. I once had a beautiful 1990 325i convertible. 10 years later, Japanese vehicles would be the first thing I would look at for a luxury car or SUV. The point of quality combined with great design really stands out in my mind where as 10 years ago the quality concept was there with the Japanese luxury vehicles, but I remember looking at Acura, Lexus and Infiniti and thinking they were a little plain in their designs (just my opinion). That has indeed changed.
In Mexico, Acura and Infiniti are simply babies in the market...no Lexus.
When my neighbors are looking to get a luxury car it winds up being a decision between an Audi, BMW and Mercedes. BMW wins this most of the time. When I ask them why, they look at the features, design and price and BMW fits what they want. Could a Japanese luxury vehicle do better. Sure. What lacks down here is what really helped the Japanese luxury vehicles up in the U.S., a sense of quality.
BMWs are great cars but I just can´t ping quality to them anymore. I don´t think any amount of advertising is going to do that.
08-02-06, 12:59 PM
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Originally Posted by Lexmex
Probably my living in Mexico can give a good context.
Maybe about 10 years ago in the U.S., I might have considered buying a another BMW. I once had a beautiful 1990 325i convertible. 10 years later, Japanese vehicles would be the first thing I would look at for a luxury car or SUV. The point of quality combined with great design really stands out in my mind where as 10 years ago the quality concept was there with the Japanese luxury vehicles, but I remember looking at Acura, Lexus and Infiniti and thinking they were a little plain in their designs (just my opinion). That has indeed changed.
In Mexico, Acura and Infiniti are simply babies in the market...no Lexus.
When my neighbors are looking to get a luxury car it winds up being a decision between an Audi, BMW and Mercedes. BMW wins this most of the time. When I ask them why, they look at the features, design and price and BMW fits what they want. Could a Japanese luxury vehicle do better. Sure. What lacks down here is what really helped the Japanese luxury vehicles up in the U.S., a sense of quality.
BMWs are great cars but I just can´t ping quality to them anymore. I don´t think any amount of advertising is going to do that.
Maybe about 10 years ago in the U.S., I might have considered buying a another BMW. I once had a beautiful 1990 325i convertible. 10 years later, Japanese vehicles would be the first thing I would look at for a luxury car or SUV. The point of quality combined with great design really stands out in my mind where as 10 years ago the quality concept was there with the Japanese luxury vehicles, but I remember looking at Acura, Lexus and Infiniti and thinking they were a little plain in their designs (just my opinion). That has indeed changed.
In Mexico, Acura and Infiniti are simply babies in the market...no Lexus.
When my neighbors are looking to get a luxury car it winds up being a decision between an Audi, BMW and Mercedes. BMW wins this most of the time. When I ask them why, they look at the features, design and price and BMW fits what they want. Could a Japanese luxury vehicle do better. Sure. What lacks down here is what really helped the Japanese luxury vehicles up in the U.S., a sense of quality.
BMWs are great cars but I just can´t ping quality to them anymore. I don´t think any amount of advertising is going to do that.
08-02-06, 01:45 PM
#4
euro rides on the heritage of being uncontended in the luxury market for X amount of years. Now Acura Infiniti and Lexus are in the game and its totally different. In time once people start seeing how much of a value the japanese luxury makers are and if BMW and MB dont do anything about it, its big trouble for them. Japanese luxury reputation is building very quickly. Japanese proved that you dont need hertitage to make a quality luxury car, brands that are less than 20 years old are already competiting with the old kings of that market
08-02-06, 02:19 PM
#5
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Originally Posted by RON430
I appreciate the response. 1990 was a great time to get a bimmer. I have a bit of a different perspective. I run with an older crowd that don't qualify for the gear head moniker very much and there are a surprisingly significant number of people that either look at bimmer and decide not to buy it or, as the article said, don't even consider it. I just never thought about it until I read the article. But one thing is for sure, I do not buy a bimmer for their advertising. I wonder how this is going to work out. I think the guy who wrote the article or the guy at bimmer are showing their lack of knowledge when they say that there are a lot of sales going to Acura or Infiniti that are theirs for the taking. I guess we will wait and see if emotion advertising increases their sales.
At the time I got my BMW, they really did stand out. I remember looking at the 325i convertible and thinking wow, I like this. I just don´t get that same feeling anymore. The Nissan 300ZX, still, even over 15 years later, still does give me that wow factor. The coordination of advertising and vehicle is a delicate balance.
08-02-06, 03:19 PM
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Originally Posted by Lexmex
I think with advertising it has to be done right depending on the vehicle. Advertising won´t help a vehicle that does not have a certain kind of pizzaz.
At the time I got my BMW, they really did stand out. I remember looking at the 325i convertible and thinking wow, I like this. I just don´t get that same feeling anymore. The Nissan 300ZX, still, even over 15 years later, still does give me that wow factor. The coordination of advertising and vehicle is a delicate balance.
At the time I got my BMW, they really did stand out. I remember looking at the 325i convertible and thinking wow, I like this. I just don´t get that same feeling anymore. The Nissan 300ZX, still, even over 15 years later, still does give me that wow factor. The coordination of advertising and vehicle is a delicate balance.
You point out that coordination between advertising and product and I don't think you could have made any more valid point. I think some things that the luxury brands have done, like MB introducing the A class, have just cheapened their brand. If there were another 500,000 bimmers sold every year, a lot of the cache for the brand would be gone. And of course the more you try to paint yourself as a free thinker can come back to haunt you if there is a big recall lurking out there. The non gearheads are easily swayed by a big recall and will then view the brand as being more about touchy feely than solid autos. I haven't seen any of these new ads but I am wary of the BMW management that thought this was the way to increase sales. Still sounds like GM to me.
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08-02-06, 04:19 PM
#8
Originally Posted by RON430
There were a couple of things in the WSJ article that were pretty astounding. The biggest for me was the consumers in that price range that didn't know about BMW. I don't think I actually believe that. Maybe it is because there are more bimmers in silicon valley then chevies but I find it hard to believe that there are 600,000 potential sales for BMW in the US from a group of luxury car buyers that don't know there is a brand named BMW. I don't know where that number came from but it just sounds bogus. The second is that this notion that I find really arrogant from BMW that they just can't comprehend someone looking at their car and not deciding to buy it. One thing I know, there will never be any car model from any manufacturer that will get all the sales for that type at a given price point. Just won't happen.
You point out that coordination between advertising and product and I don't think you could have made any more valid point. I think some things that the luxury brands have done, like MB introducing the A class, have just cheapened their brand. If there were another 500,000 bimmers sold every year, a lot of the cache for the brand would be gone. And of course the more you try to paint yourself as a free thinker can come back to haunt you if there is a big recall lurking out there. The non gearheads are easily swayed by a big recall and will then view the brand as being more about touchy feely than solid autos. I haven't seen any of these new ads but I am wary of the BMW management that thought this was the way to increase sales. Still sounds like GM to me.
You point out that coordination between advertising and product and I don't think you could have made any more valid point. I think some things that the luxury brands have done, like MB introducing the A class, have just cheapened their brand. If there were another 500,000 bimmers sold every year, a lot of the cache for the brand would be gone. And of course the more you try to paint yourself as a free thinker can come back to haunt you if there is a big recall lurking out there. The non gearheads are easily swayed by a big recall and will then view the brand as being more about touchy feely than solid autos. I haven't seen any of these new ads but I am wary of the BMW management that thought this was the way to increase sales. Still sounds like GM to me.
Lexus has it easy since they have mighty Toyota behind. You think there would be RX400h and GS450h if there was not Toyota Prius/Camry/Highlander, and all the future models? They spent billions upon billions on developing Hybrids.
As GM and Ford prooved to us, you cant rely on your suppliers to bring your state of the art technology.
08-02-06, 05:28 PM
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Originally Posted by 4TehNguyen
In time once people start seeing how much of a value the japanese luxury makers are and if BMW and MB dont do anything about it, its big trouble for them.
Alternatively, if Japanese luxury makers can't sustain a 'value' proposition (and it's looking increasingly like they can't), and if BMW/MB do more to improve their already dominant position in sedans and do better in SUVs and crossovers...
The game is wide open and it's great for consumers.
Japanese luxury reputation is building very quickly. Japanese proved that you dont need hertitage to make a quality luxury car, brands that are less than 20 years old are already competiting with the old kings of that market
08-02-06, 06:38 PM
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Originally Posted by CHIS350
A good portion of people I see in M3s are the "trust fund kid" types. I can't imagine that being good for BMWs image. How can they get around THAT?
08-02-06, 06:42 PM
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Originally Posted by bitkahuna
Why is it bad for BMW's image? What would you have the "trust fund kid" types drive, a Camry?
08-02-06, 06:50 PM
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Originally Posted by RON430
Seems like there's the bimmer ad. Did you get wealthy without working? Are you spoiled? Do you believe yourself to better than anyone else? Need something to drive to your Bridezilla audition? Then we have a bimmer for you.
08-02-06, 08:32 PM
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Yeah but more than a typical percentage of Saab owners are gay (not that there's anything wrong with that! ). Does that mean Saab should do something to counter that? I don't think so. 
). Does that mean Saab should do something to counter that? I don't think so.
