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Market Segmentation - Essay Example

This report aims to examine the market segmentation, positioning and targeting of BMW (automobile company) and Jack Daniels (dark spirits producer). BMW will first be examined giving information about the company and where it is now and any recommendation that we feel are appropriate. We will then examine Jack Daniels in exactly the same way. 1.2 BMW Company Profile BMW was formed in 1917, from the merger of two small aero engine makers. Their famous blue and white symbol stems from the colours of the Bavarian Luftwaffe and is said to resemble the view of the one of their plane through a propeller.

BMW is renowned for its sporty, sophisticated & luxury image which has been built up since the 1970’s with many motor sport victories ranging from Touring Car to Formula 1. BMW Group’s worldwide mission statement is: “To be the most successful premium manufacturer in the industry.”3 BMW’s Marketing Mix To examine BMW we must first look at the marketing mix. A company’s marketing mix is made up of four main points these are Price, Product, Promotion and Place. Through these points we can examine the specifics of a company to gain an insight into their segmentation, targeting and positioning. BMW use a variety of different promotion techniques, most obviously advertising. BMW advertising has always focused entirely on their cars with same advertising company, WCRS being the used since 1979.

A broad range of advertising is used by this agency such as television for branding campaigns and new car launches, the press with Tabloid weekend colour supplements, regional publications and magazines. Outdoor campaigns such as high impact motor shows are used for product launches and branding. Sales literature, brochures, price lists and POS materials are other marketing activities that they are involved in. They have also started advertising online with pop-ups and web links to related pages. 2002 has seen BMW use the radio for national advertising for the first time which in turn has helped local Dealerships hold individual campaigns in their local press, on the radio and with bus advertisement

BMW also uses other promotion techniques. They employ methods such as associating the BMW brand to a variety of films, TV plays and documentaries. In these the heroes only drive the best-equipped cars, in this particular case, BMWs. This agreement is mutual where the producers want to use certain brands of cars and the car manufacturers want to achieve a greater degree of publicity. This mutuality allows BMW to obtain global publicity reaching millions of viewers as well as utilizing subliminal communication. A perfect example is the BMW association is the ‘James Bond’ films from 1983, 1994, 1997 and 1999. E.g. In ‘The World in not Enough’ James Bond drove the new Z8 before the car had been launched and in ‘Austin Powers 3 – Goldmember’ the Mini Cooper was used.

Other ways they place their products include upmarket dealer showrooms, association to Formula 1 (giving an impression of being dynamic and innovative), and the Americas Cup (standing for high performance and technology). 1.7 Place & Distribution BMW use upper market Dealerships & Imports for non-dealer networked countries they have four car manufacturing plants in the UK these are Bracknell in Berkshire, Oxford Plant, Oxford Hams Hall Plant, and Goodwood in West Sussex. They also supply financial services based in Hook – Hampshire, Swindon Pressings Ltd – Swindon and Wiltshire. They have 156 dealers in the UK who are franchised to sell BMW cars, additionally 148 dealers are franchised to sell Minis. Worldwide BMW operate in 100 different countries with over 4,400 dealers which are authorised to sell both new and used cars, parts and after sales service products.

1.8 BMW Segmentation BMW uses segmentation to identify specific buying characteristics. To do this it must look at the geographic, demographic, behavioural, socioeconomic, and beneficial characteristics of society. Geographically, the main markets for BMW are Europe & North America as these areas are both heavily industrialised and thus their residents are financially positioned to buy upper market cars (these areas account for 64% of BMW sales.).The demographics of people able to purchase a BMW are men and women aged 30 – 50 years old6. Behaviourally these people have a successful image, want a clean modern look, and the feel good factor of an established dealer network. The benefits required by these people are exclusivity, performance, reliability & quality.

Individuals with A, B, & C1 socio-economic status and salaries of �25,000 plus would be most likely to be interested in BMW automobiles.1.9 BMW Targeting BMW use a differentiated strategy, this means that they target specific automobile markets. These markets suit different people within the segmentation stratosphere. The markets that BMW actually target are Sports Convertibles (Z3, 3 series, and new Z4), Executive (3 series, 5 series), Super Executive (7 series), Touring / Estate (3 series, 5 series), Grand Tourers (Z5), Super sports (M series), and 4X4 (X5).

2.1 BMW Positioning The image that BMW has positioned its self as is exclusivity, performance, technologically advanced, quality automobile producer. The markets BMW position them selves in are very competitive. This is due to the number of other automobile manufacturers that produce cars of a similar quality, price, and image. The main manufacturers that BMW compete with are Mercedes, Jaguar, Audi, VW, Alfa Romeo, Lexus, Ford, Range Rover, Porsche, TVR and Opel (Vauxhall in the UK).

Most of these manufacturers use differentiated strategies to produce large ranges of cars as well. The difference is that each of the companies relies on different brand images to sell their cars. E.g. Mercedes is seen as a luxury, reliable and quality producer but does not have the ‘performance factor’ that BMW does but on the other hand Alfa Romeo is renowned for being stylish and performance breed but unreliable car. The positioning of these companies and their brands has been built up over many years but BMW has stamped their mark upon the public in a positive way. This has lead to continuing sales growth through out the international car markets. This has also allowed them to move into new markets to challenge the market leaders. E.g. Range Rover and the BMW X5(4X4).

Conclusion BMW strategies seem to be correct due to continued and growing market share, high profitability, and increasing brand strength. The recommendations that may be made to BMW are that they should be careful not to over stretch themselves into many other markets as their brand image may become too diluted. This would mean that they may go through a down turn in sales in future years as the brand becomes less prestigious. History shows that this has happened to major producers before with the likes of Rover group in the late seventies and early eighties when they were partly nationalised and controlled the whole UK motor industry. The truth to be told is that BMW is German and thus is more likely to be better organised than the British dinosaur in the late seventies and eighties.