Since the
competition started to imitate BMW’s advertising messages of outstanding
quality, BMW decided to come up with a unique way of reaching its target
audience. The company did so by hiring
Fallon Worldwide, and advertisement agency based in Minneapolis, MN, to come up
with a new campaign. Fallon developed
the concept “The Hire” series. Fallon's responsibility also included the way in
which these movies were to be delivered to BMW's target audience. It was also
questionable whether the campaign should be the same throughout the world, or
if it should be localized to adapt to language and consumer taste
differences. In order to attract highly
recognized directors, as well as actors, BMW was willing to spend a large
amount of money.
In addition to coming up with a
unique advertising campaign, BMW also wanted to change their image. One of the goals was to make BMW look, not
only cool, but likeable, which the brand needs to do to combat negative perceptions
some people have based on old associations with the 80’s style yuppie
arrogance.
MW's
Revenue Sources
Marketing Overview
The
majority of BMW’s success is attributed to the development of a consistent
marketing policy, the 'market niche' strategy. The company has built its brand
on four core values, which are:
Technology Quality Performance
Exclusivity
BMW has
maintained these core values since the company’s inception. Coupled with WCRS (BMW’s advertising agency
since 1979), the company has adopted a consistent advertising strategy. In
addition to the message of these values being portrayed in advertising
campaigns, the company explicitly expresses one or more of these values in all
BMW advertisements. However, it is
important to point out that BMW also relies on its sensitively to the environment,
which is clearly seen by how the company’s advertisements evolved in response
to economic, environmental and competitive changes.
This design philosophy, which runs
through every BMW, has been communicated through a number of TV and print
ads. The brand image has been built up
by using over 300 color press advertisements, and more recently through a total
of 64 different television commercials. Throughout this campaign, BMW has
remained consistent to its beliefs of focusing on the substance of the cars
themselves.
In addition to the high
profile national color press and television advertising, individual dealers are
encouraged to run their own local campaigns. Local press, radio and bus
advertisements are all available from BMW dealer marketing. Additionally, brochures, price lists and
dealership point-of-sale materials are made accessible through the corporate
office. BMW encourages its dealers to make use of these services. Providing the
dealers with a central source for advertising, BMW ensures that all
communications remain standardized as well as maintaining BMW’s brand
values.
BMW has embarked on a global
advertising campaign. What differentiates this promotion is the fact that it
remains consistent throughout the company’s international campaign across the
European, USA, Asia, South Africa and the Middle East markets. In over 15 countries there will be:
TV
spots Print
advertisements Mega-posters Radio
spots Events
In all
three James Bond films BMW, MGM and EON Productions Ltd worked
together on a cross promotion project. This was accomplished worldwide with TV
commercials, print ads as well as displays in BMW dealer showrooms.
BMW Film
The best
new film series, by the most cutting-edge directors, are not playing at the
local theater. Instead, these films are
accessible through your home computer, as well as your local BMW
dealership.
Since its launch at BMWFilms.com,
“The Hire” (a film series consisting of five different short films) has been
singled out as the first high profile, big-budget, celebrity-laden Internet
marriage of advertising and entertainment.
It has been reviewed, scrutinized, deconstructed and cited as evidence
of the perilous future for traditional advertising. New York Times film critic (Elvis Mitchell)
called the series “a marriage of commerce and creativity, straddling the
ever-dwindling line between arts and merchandising.” BMWFilms is simply the latest and possibly
the hippest Web site to make use of streaming video in order to lure
prospective customers. Fast cars,
mysterious passengers, Buddhist monks, rock superstars, and sinister enemies
are all part of the film series, which are presented in installments by some of
Hollywood’s top directors. These films
are being advertised on television the same way that movie trailers are
advertised; the difference is that instead of the catch phrase “coming soon to
a theater near you,” this catch phrase reads “see it only on BMWFilms.com.”
Actor Clive Owen (star of the
acclaimed British film "Croupier" and, in the opinion of his growing
legion of fans, the next James Bond) is “The Hire” in the series title,
a skilled mercenary driver who seems to specialize in risky assignments. While he is certainly a smooth operator
behind the wheel (very “James Bond” like), it is always the Ultimate Driving Machine
that saves the day. The car is
definitely the star of the show.
Each episode features a “driver” (in
a BMW, naturally) who is on a mysterious nighttime mission along with a
mysterious passenger. Examples include
one incident where the driver is on the run with a small Buddhist boy, to
another episode that has an arrogant superstar diva (played by Madonna)
desperately wanting to escape the swarm of the paparazzi.
Filmgoers, thrill seekers, and
potential customers have the option of watching the video using Real Video or
QuickTime video players. Another option
is to download the BMW Film Player, a fairly simple process offered through the
BMW web site, which turns the computer screen into a miniature personal theater
complete with “DVD quality” pictures and sound.
Installing this player allows the user to download and view the video on
the full computer screen while offline.
In addition to the full-length videos, BMW also offers trailers for
those customers with slower modem connections.
These trailers allow viewers the ability to have a “quick peek” at the
films.
The numbers of viewers to the site
are souring each week. One week
following the advertising blitz of the web site films, traffic to the site was
up 55% to 214,000 unique visitors compared to only 138,000 the previous week.
(according to Web measurement, firm Nielsen/Net Ratings) This tremendous leap made BMWFilms one of the
Internet’s fastest growing sites.
The films all have differentiating
styles, however one thing that they all hold in common: the majority of the
action takes place in a BMW while the participants are in the middle of a car
chase. There is no limit to the actual
number of BMWs that you will see; one, two, three, even more Beemers are seen
speeding down alleyways and streets, screeching around corners.
BMW did not randomly decide to
initiate a web based advertising campaign.
The company clearly did its homework.
It is a well known among advertising firms that over 85% of potential
car buyers will conduct most (if not all) of their initial research on the
Internet before they make a final decision on a purchase. Therefore, BMW has made it convenient for
shoppers by adding a link to their film site to BMWUSA.com. This site gives consumers basic information
about the car(s) as well as the location and phone number of the local
dealerships.
Given that the average BMW
automobile starts at approximately $30,000, the company’s decision to design a
classy film series, which can be viewed on a high-speed Internet connection by
an upscale, mostly male audience, is clearly targeted.
The simple concept of these films –
BMW wants to sell cars!
Film concept
In the spring of 2000, two factors
were on the table at BMW. The first was
concerns over TV effectiveness, and the second was how to exploit the
popularity of the Internet. BMW wanted
to come up with an entirely new branding campaign; too many competitors were
copying the “look and feel” of the BMW, the company needed to do something
different to distinguish itself. On a
more basic level, BMW was growing more concerned with its ability to reach its
core market via traditional methods such as network TV.
The
creative team of writer David Carter and art director Joe Sweet, had recently
completed a project for Timex with director Tim Burton. This marketing campaign incorporated an
Internet portion that featured short videos specifically shot for the Web.
The
executives at BMW saw this as a way to differentiate the company from other
manufacturers. BMW wanted something done
exclusively for the Internet, something not only entertaining but also
cinematic. A concept was born – a longer
film that would be shot in segments and distributed via the Internet as a
series. This series would combine
product placement with entertainment.
Most importantly, it would allow BMW to push the envelope when it came
to scripting the series. The Internet
would allow the company to show what a BMW can do when pushed to the limits,
under extreme conditions and circumstances.
BMW would not be able to convey this type of advertising through
traditional TV ads, without a few hundred disclaimers.
BMWFilms has accomplished several
objectives; the most important being the tremendous buzz in both the
entertainment and business press. This
was important to BMW, since one of its goals was to make the BMW look cool,
without the old association with the 1980’s style of yuppie arrogance.
A fact that was not prominently
mentioned in much of the coverage of “The Hire” was the core creative concept along
with key strategic thinking, Web development, as well as several scripts, all
came from one source: Publicis Troupe’s Fallon Worldwide in Minneapolis. “I think we’re reinventing advertising,” said
David Lubars, Fallon president and executive creative director. Mr. Lubars added “We’re not looking to make
this a template, as though this is what advertising is [going to be]. I think what technology affords you is that
every client can get their own customized media approach, and this was really
right for this client.”
“BMWFilms.com is a good example of
blurring the lines between entertainment and advertising,” said Jarvis Mak,
senior Internet analyst at NetRatings.
“The site combines Hollywood’s intense car chase scenes and Internet
video to deliver a new spin on product showcasing,” added Mak.
“We think that a lot of the time
when people view traditional advertising they view it through a filter of
disbelief,” said Jim McDowell, vice president of marketing for BMW of North
America. “When people watch
entertainment or a movie, then they’re watching in an entirely different way
where they enjoy the fantasy, and hopefully remember it and share it with
others.” “We thought maybe instead of
doing advertising we should be doing entertainment and doing something fun and
interesting on the Web,” McDowell said.
What if you do not have a computer,
or if your computer is not hooked to a T1 connection? Never fear, BMW has already begun buying
infomercial time on the Bravo and Speedvision channels to showcase their “Hire”
series.
Target
Audience
Initially, BMW had no real idea to
whom the films would appeal. BMW
executives knew they would have everyone from high school students to 7-Series
owners as viewers. BMW’s guess was that their central tendency would have been
25-year olds, with a median income of $100,000. BMW and Fallon research
indicated that many were tech-savvy, and had fast, reliable access to the web.
Most important, 85% of buyers had researched the vehicle on the web before
stepping into a showroom.
Characteristics
of the typical BMW Target Audience
Societal
values are changing rapidly. Society will increasingly take its cue from
Generation X'ers and dot-comers rather than the baby boomers who have dominated
its thinking for most of four decades. Associated with that demographic shift
will be a return to the appreciation of self-reliance and cooperation. Self-reliance because the traditional safety
platforms such as Social Security and pensions will no longer exist, and
cooperation because it involves group action that, in turn, is the optimal
strategy for the use of scarce resources. Family issues such as long-term
health care, day care, and anti-drug campaigns will remain dominant issues up
until the end of the decade.
Generation
X and dot-com will have major effects in the future. This 30-something
Generation X cohort will be recognized for its entrepreneurial instinct since
its members are starting businesses at unprecedented rates. They are
economically conservative, begin saving at an earlier age, and seek the shallow
information skimmed from a CNN or a USA Today rather than absorb in-depth
reporting.
Members of the dot-com generation,
now entering their 20s, are proving to be even more business-oriented. Twice as
many say they would prefer to own a business rather than be a top executive. By
a factor of 5 to 1, they would rather own a business than hold a key position
in politics or government.
In summary, the corporate and
business culture of the baby boomers is a mismatch for these advancing
generations that thrive on challenge and opportunity. It is more than cash that
they want. They understand the need for lifelong learning because that is the
way life has always been for them. In addition, as both customers and
employees, they will demand even more advanced telecommunications and net-based
transactions. Consumerism is still growing rapidly. Because consumers will
increasingly have access to and information about pricing, services, delivery
time, and customer satisfaction through the internet, the consumer marketing
battle will see a halt in the decline of prices and a counter-prevailing shift
to service improvement and salesmanship.
In the end, however, fixed pricing
will fall out of favor as goods and services are sold through online
auctioning. The proponents of the need for improved customer service will be
proved right. To quote the report, "as prices fall to commodity levels and
online stores can list virtually every product and brand in their industry
without significant overhead, service is the only field left in which marketers
can compete effectively."
Lorraine
Ketch, the director of planning in charge of Levi's trendy Silvertab line
explained, "This audience hates marketing that's in your face. It eyeballs
it a mile away, chews it up and spits it out."
As expected, branded items with
dominant reputations will remain powerful and in demand.
Marketing
Channels
Internet
Auto
manufacturers have taken some innovative approaches to draw Internet users to
their web sites. However, it is surprising how quickly innovative becomes
ordinary. Slide shows, flash animation, and surround video are now commonplace
on most manufacturer’s sites. In addition, contests have become so common that
the possibility of winning a free car may not be enough to hold a viewer for
more than a few minutes.
468x60 banners are sold on a
run-of-site (ROS) basis, meaning, they will appear on every search results page
and on an equal rotating basis with other advertisers' banners. Advertising
rates for 468x60 ad banners are computed on a cost-per-thousand (CPM)
impression basis and are currently priced at US $10 to $15 CPM. Flashing banners and other methods cost
slightly more based on the website and technology involved.
For online
ads, each advertiser is given password-protected access to Real-Time
advertising statistics, including how many impressions were served, how many
click-throughs were achieved, and what click-through rate was achieved. The
industry standard for the click through rate is anywhere from 0.25% to 2%, for
sites like CNN, ZD Net, or Yahoo. Your actual click-through rate will depend on
the appearance of your ad, and what it offers in terms of a marketing message
and call to action. Just like running a television commercial during prime time,
or placing a full-page ad in "Time" magazine, these ads do not
necessarily cause people to pick up the phone and order a product at that very
moment. Whereas a web-based process which guides the consumer through a
systematic process is to make a purchase more likely. Specifically, these types of ads build name
recognition for the company and establish it as a major force in the industry.
Then, when consumers are ready to buy, your company will come to mind.
Television
The 1999
American Association of Advertising Agencies Commercial Production Costs Survey
revealed that the average cost of a 30 second national commercial for an
automobile was a whopping $389,000. The percentages of viewers of MSNBC and
Bravo who are in BMW’s target income bracket constitute 20.5%. The percentage
of viewers in BMW’s target age group (25-34) is 26.5%.
Print
The
advertising rates in a periodical like Time Magazine ranges from $250,000 for a
full-page mono to $360,000 for a full-page color ad. The average age of a Time
Magazine subscriber is 45 and they have a median income of $69,000. This
audience is of twice the age and half the income of BMW’s intended target
market. Time Magazine is one of the premier periodicals on the market at this
time.
DVD
Promotions/Freebies
The cost of
producing a DVD master is between $50,000 and $100,000—plus the cost of
producing any bonus materials. DVD player penetration in the US today is
approximately at 25,600,000 units. This trend is supposed to increase and the
DVD is supposed to become the next VHS.
Competitive Analysis
In 1997,
BMW was in danger of losing its long-standing lead in the import luxury car
segment. Mercedes, Lexus, and Audi were coming on strong with great new
products and new marketing campaigns designed to dethrone BMW. Nearly half of
those considering a luxury car rank "fun to drive" as their number
one reason for purchasing the car.
However, for the first time since BMW had been tracking its
image, consumers ranked BMW at virtually the same level as Mercedes or Lexus on
attributes like "fun to drive" and "responsive handling."
BMW’s three biggest competitors have
launched new advertising campaigns that highlighted what traditionally had been
BMW’s greatest strength: performance.
Therefore, BMW was not able to distinguish itself anymore as the only
company that boasted the unparalleled standard of quality as before.
Mercedes
The range
of cars from the giant company DaimlerChrysler is a traditional rival of BMW’s.
In 2000, they sold 1,155,000 units and had revenues of 43.7 billion euro.
Mercedes’ strength would be its global presence, strong brand presence, product
range and its technology leadership. Mercedes marketing campaigns have always
been subdued and low key. Mercedes allocates 25 per cent of its annual marketing
budget to innovative Internet strategies, recognizing the power of the Internet
for delivering effective and precise marketing campaigns. When the car
manufacturer launched the new Mercedes C Class Sports Coupe, it positioned the
online campaign right at the top of its marketing mix. Joining in a winning
partnership with MSN, another global brand with similar values, Mercedes
sponsored A-Ha’s eagerly awaited homecoming concert.
Lexus
Sparked by
a decision from Toyota Chairman Eiji Toyoda in 1983 to challenge the best
luxury vehicles, Lexus has since grown into one of the world's most inspiring
automobile companies. Lexus is a division of Toyota Motor Sales, U.S.A., Inc.
They are trying to leverage the Japanese technology to add brand value to their
vehicle. Lexus is America’s top selling luxury marquee. The tough task for
Lexus is to lose the ‘Cheap but Reliable’ Toyota image. The annual sales of
Toyota vehicles in the US have been on the order of $90-93 million in recent
years.
According to Chris Conrad, Lexus’
national advertising manager, Lexus is targeting its youngest buyers ever with
the IS 300, roughly 75% male, between the ages of 35 and 40, married, highly
educated with annual household incomes of $100,000. The current average age of
a Lexus owner is 50, with the median age of the brand's hottest selling
vehicle, the RX 300 sport-utility, at 48. The estimated $32 million campaign
for the car broke recently on national TV and will continue for the next six
months. Team One, El Segundo, Calif., created the two national TV
commercials. Five TV spots for regional
dealer ad groups and two magazine ads. The agency also created billboards and
six commercials that will be projected on buildings in three cities.
Their online presence even for this
campaign is limited, though Lexus is one of the advertisers
launching a rich-media campaign on the Excite Network, which includes
WebCrawler and Classifieds 2000.
Audi
Audi is an
international developer and manufacturer of high-quality cars. In 2000, the company sold more than 650,000
Audi models. The sales revenues of the Audi Group totaled 39 billion Deutsch
Marks. The Audi Group has slowly but surely been encroaching on the BMW and
Mercedes markets. They have been trying to promote the exclusivity of their
cars.
Recently, Audi of America has
embarked on its most ambitious online-marketing effort ever. The European car
importer kicked off the "Double Take" "advertainment"
online sweepstakes as part of its $25 million launch of the redesigned 2002 A4
sedan. Visitors to the site can try to solve mysteries after viewing clues from
three short episodes involving the A4. They can also register to win prizes
while learning about the car and its features. The grand prize is a three-day
trip for two to the Audi Driving Experience at the Panoz Driving School in
Atlanta, GA. The sweepstakes, run by Don Jagoda Associates, Melville, N.Y.,
allows prospects to enter up to eight times. "The main thing is to educate
and entice users to go to dealerships," said Steve Glauberman,
president-CEO of Enlighten, the privately -held Ann Arbor, MI, creator of the
site and sweepstakes.
Discussion Questions
- Should BMW be using a uniform global promotion strategy?
- Should BMW show their new marketing campaign on the Internet exclusively, or as part of the media mix?
- Implications of Marketing to Dot Comers and Gen X’ers?
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