BMW MARKETING INNOVATION

Since the competition started to imitate BMWs 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 allon Worldwide, and advertisement agency based in Minneapolis, M!, to come up
with a new campaign. allon developed the concept "The #ire$ series. allon%s responsibility
also included the way in which these movies were to be delivered to BMW%s target audience. &t
was also questionable whether the campaign should be the same throughout the world, or if it
should be locali'ed to adapt to language and consumer taste differences. &n order to attract highly
recogni'ed directors, as well as actors, BMW was willing to spend a large amount of money.
&n addition to coming up with a unique advertising campaign, BMW also wanted to
change their image. (ne of the goals was to ma)e BMW loo), not only cool, but li)eable, which
the brand needs to do to combat negative perceptions some people have based on old associations
with the *+s style yuppie arrogance.
Company Profile
BMW ,Bayerische Motoren Wer)e -)tiengesellschaft. was founded in /0/1 and has been
publicly traded since /010. The company produces, and mar)ets, a varied range of higher end
sporty cars and motorcycles. BMW has also manufactured the first passenger car running on
hydrogen ready for common use, although the production figures are limited by the lac) of a
respective filling station net. &n addition to cars and motorcycles, BMW operates an aircraft
engine division under the brand name of 2olls 2oyce.
The company has worldwide subsidiaries and manufacturing plants in 3ermany, -ustria,
the 45, the 4S-, Me6ico, Bra'il, South -frica, 7gypt, Thailand, Malaysia, &ndonesia, the
8hilippines and 9ietnam. The company also operates its own financing company, which offers
financing for vehicles. -utomobiles accounted for :*; of <+++ revenues= vehicle finance leasing,
/*;= motorcycles, >; and other, /;.
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This case was prepared by Martin #ellha)e, abian #enault, and @osh @acob of Temple
4niversity under the supervision of 8rofessor Masaa)i 5otabe for class discussion rather
than to illustrate either effective or ineffective management of a situation described
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The maBority of BMWs success is attributed to the development of a consistent mar)eting policy,
the %mar)et niche% strategy. The company has built its brand on four core values, which areC
Technology
Duality
8erformance
76clusivity
BMW has maintained these core values since the companys inception. Eoupled with WE2S
,BMWs advertising agency since /0:0., the company has adopted a consistent advertising
strategy. &n addition to the message of these values being portrayed in advertising campaigns, the
company e6plicitly e6presses one or more of these values in all BMW advertisements. #owever,
it is important to point out that BMW also relies on its sensitively to the environment, which is
clearly seen by how the companys advertisements evolved in response to economic,
environmental and competitive changes.
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This design philosophy, which runs through every BMW, has been communicated
through a number of T9 and print ads. The brand image has been built up by using over >++
color press advertisements, and more recently through a total of 1F different television
commercials. Throughout this campaign, BMW has remained consistent to its beliefs of focusing
on the substance of the cars themselves.
&n addition to the high profile national color press and television advertising, individual
dealers are encouraged to run their own local campaigns. Gocal press, radio and bus
advertisements are all available from BMW dealer mar)eting. -dditionally, brochures, price lists
and dealership pointAofAsale materials are made accessible through the corporate office. BMW
encourages its dealers to ma)e use of these services. 8roviding the dealers with a central source
for advertising, BMW ensures that all communications remain standardized as well as
maintaining BMWs brand values.
BMW has embar)ed on a global advertising campaign. What differentiates this
promotion is the fact that it remains consistent throughout the companys international
campaign across the 7uropean, 4S-, -sia, South -frica and the Middle 7ast mar)ets. &n
over /H countries there will beC
T9 spots
8rint advertisements
MegaAposters
2adio spots
7vents
&n all three @ames Bond films BMW, M3M and 7(! 8roductions Gtd wor)ed together on a cross
promotion proBect. This was accomplished worldwide with T9 commercials, print ads as well as
displays in BMW dealer showrooms.
BMW -ilm
The best new film series, by the most cuttingAedge directors, are not playing at the local theater.
&nstead, these films are accessible through your home computer, as well as your local BMW
dealership.
Since its launch at BMWilms.com, "The #ire$ ,a film series consisting of five different
short films. has been singled out as the first high profile, bigAbudget, celebrityAladen &nternet
marriage of advertising and entertainment. &t has been reviewed, scrutini'ed, deconstructed and
cited as evidence of the perilous future for traditional advertising. !ew Ior) Times film critic
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,7lvis Mitchell. called the series "a marriage of commerce and creativity, straddling the everA
dwindling line between arts and merchandising.$ BMWilms is simply the latest and possibly
the hippest Web site to ma)e use of streaming video in order to lure prospective customers. ast
cars, mysterious passengers, Buddhist mon)s, roc) superstars, and sinister enemies are all part of
the film series, which are presented in installments by some of #ollywoods 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 BMWilms.com.$
-ctor Elive (wen ,star of the acclaimed British film JEroupierJ and, in the opinion of his
growing legion of fans, the ne6t @ames Bond. is "The #ire$ in the series title, a s)illed mercenary
driver who seems to speciali'e in ris)y assignments. While he is certainly a smooth operator
behind the wheel ,very "@ames Bond$ li)e., it is always the 4ltimate Kriving Machine that saves
the day. The car is definitely the star of the show.
7ach episode features a "driver$ ,in a BMW, naturally. who is on a mysterious nighttime
mission along with a mysterious passenger. 76amples 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 papara''i.
ilmgoers, thrill see)ers, and potential customers have the option of watching the
video using 2eal 9ideo or Duic)Time video players. -nother option is to download the
BMW ilm 8layer, a fairly simple process offered through the BMW web site, which
turns the computer screen into a miniature personal theater complete with "K9K quality$
pictures and sound. &nstalling this player allows the user to download and view the video
on the full computer screen while offline. &n addition to the fullAlength videos, BMW
also offers trailers for those customers with slower modem connections. These trailers
allow viewers the ability to have a "quic) pee)$ at the films.
The numbers of viewers to the site are souring each wee). (ne wee) following the
advertising blit' of the web site films, traffic to the site was up HH; to </F,+++ unique visitors
compared to only />*,+++ the previous wee). ,according to Web measurement, firm !ielsenL!et
2atings. This tremendous leap made BMWilms one of the &nternets fastest growing sites.
The films all have differentiating styles, however one thing that they all hold in commonC
the maBority of the action ta)es 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.
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BMW did not randomly decide to initiate a web based advertising campaign. The
company clearly did its homewor). &t is a well )nown among advertising firms that over *H; of
potential car buyers will conduct most ,if not all. of their initial research on the &nternet before
they ma)e a final decision on a purchase. Therefore, BMW has made it convenient for shoppers
by adding a lin) to their film site to BMW4S-.com. This site gives consumers basic information
about the car,s. as well as the location and phone number of the local dealerships.
3iven that the average BMW automobile starts at appro6imately M>+,+++, the companys
decision to design a classy film series, which can be viewed on a highAspeed &nternet connection
by an upscale, mostly male audience, is clearly targeted.
The simple concept of these films N BMW wants to sell carsO
-ilm !on!ep,
&n the spring of <+++, two factors were on the table at BMW. The first was concerns over T9
effectiveness, and the second was how to e6ploit the popularity of the &nternet. BMW wanted to
come up with an entirely new branding campaign= too many competitors were copying the "loo)
and feel$ of the BMW, the company needed to do something different to distinguish itself. (n a
more basic level, BMW was growing more concerned with its ability to reach its core mar)et via
traditional methods such as networ) T9.
The creative team of writer Kavid Earter and art director @oe Sweet, had recently
completed a proBect for Time6 with director Tim Burton. This mar)eting campaign incorporated
an &nternet portion that featured short videos specifically shot for the Web.
The e6ecutives at BMW saw this as a way to differentiate the company from other
manufacturers. BMW wanted something done e6clusively for the &nternet, something not
only entertaining but also cinematic. - concept was born N a longer film that would be
shot in segments and distributed via the &nternet 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 &nternet would allow the company
to show what a BMW can do when pushed to the limits, under e6treme conditions and
circumstances. BMW would not be able to convey this type of advertising through
traditional T9 ads, without a few hundred disclaimers.
BMWilms has accomplished several obBectives= the most important being the
tremendous bu'' in both the entertainment and business press. This was important to BMW,
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since one of its goals was to ma)e the BMW loo) cool, without the old association with the
/0*+s style of yuppie arrogance.
- fact that was not prominently mentioned in much of the coverage of "The #ire$ was
the core creative concept along with )ey strategic thin)ing, Web development, as well as several
scripts, all came from one sourceC 8ublicis Troupes allon Worldwide in Minneapolis. "& thin)
were reinventing advertising,$ said Kavid Gubars, allon president and e6ecutive creative
director. Mr. Gubars added "Were not loo)ing to ma)e this a template, as though this is what
advertising is Pgoing to beQ. & thin) what technology affords you is that every client can get their
own customi'ed media approach, and this was really right for this client.$
"BMWilms.com is a good e6ample of blurring the lines between entertainment and
advertising,$ said @arvis Ma), senior &nternet analyst at !et2atings. "The site combines
#ollywoods intense car chase scenes and &nternet video to deliver a new spin on product
showcasing,$ added Ma).
"We thin) that a lot of the time when people view traditional advertising they view it
through a filter of disbelief,$ said @im McKowell, vice president of mar)eting for BMW of !orth
-merica. "When people watch entertainment or a movie, then theyre watching in an entirely
different way where they enBoy 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,$ McKowell said.
What if you do not have a computer, or if your computer is not hoo)ed to a T/
connectionR !ever fear, BMW has already begun buying infomercial time on the Bravo and
Speedvision channels to showcase their "#ire$ series.
Tar/e, Au3ien!e
&nitially, BMW had no real idea to whom the films would appeal. BMW e6ecutives )new they
would have everyone from high school students to :ASeries owners as viewers. BMWs guess was
that their central tendency would have been <HAyear olds, with a median income of M/++,+++.
BMW and allon research indicated that many were techAsavvy, and had fast, reliable access to
the web. Most important, *H; of buyers had researched the vehicle on the web before stepping
into a showroom.
C0ara!,eris,i!s of ,0e ,ypi!al BMW Tar/e, Au3ien!e
Societal values are changing rapidly. Society will increasingly ta)e its cue from 3eneration S%ers
and dotAcomers rather than the baby boomers who have dominated its thin)ing for most of four
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decades. -ssociated with that demographic shift will be a return to the appreciation of selfA
reliance and cooperation. SelfAreliance because the traditional safety platforms such as Social
Security and pensions will no longer e6ist, and cooperation because it involves group action that,
in turn, is the optimal strategy for the use of scarce resources. amily issues such as longAterm
health care, day care, and antiAdrug campaigns will remain dominant issues up until the end of the
decade.
3eneration S and dotAcom will have maBor effects in the future. This >+Asomething
3eneration S cohort will be recogni'ed for its entrepreneurial instinct since its members are
starting businesses at unprecedented rates. They are economically conservative, begin saving at
an earlier age, and see) the shallow information s)immed from a E!! or a 4S- Today rather
than absorb inAdepth reporting.
Members of the dotAcom generation, now entering their <+s, are proving to be even more
businessAoriented. Twice as many say they would prefer to own a business rather than be a top
e6ecutive. By a factor of H to /, they would rather own a business than hold a )ey position in
politics or government.
&n summary, the corporate and business culture of the baby boomers is a mismatch for
these advancing generations that thrive on challenge and opportunity. &t 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. &n addition, as both customers and employees, they will demand even more
advanced telecommunications and netAbased transactions. Eonsumerism 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 mar)eting battle will
see a halt in the decline of prices and a counterAprevailing shift to service improvement and
salesmanship.
&n the end, however, fi6ed 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, Jas 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 mar)eters can compete effectively.J
Gorraine 5etch, the director of planning in charge of Gevi%s trendy Silvertab line
e6plained, JThis audience hates mar)eting that%s in your face. &t eyeballs it a mile away, chews it
up and spits it out.J
-s e6pected, branded items with dominant reputations will remain powerful and in
demand.

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Mar1e,in/ C0annels
In,erne,
-uto manufacturers have ta)en some innovative approaches to draw &nternet users to their web
sites. #owever, it is surprising how quic)ly innovative becomes ordinary. Slide shows, flash
animation, and surround video are now commonplace on most manufacturers sites. &n 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.
F1*61+ banners are sold on a runAofAsite ,2(S. basis, meaning, they will appear on every
search results page and on an equal rotating basis with other advertisers% banners. -dvertising
rates for F1*61+ ad banners are computed on a costAperAthousand ,E8M. impression basis and are
currently priced at 4S M/+ to M/H E8M. lashing banners and other methods cost slightly more
based on the website and technology involved.
or online ads, each advertiser is given passwordAprotected access to 2ealATime
advertising statistics, including how many impressions were served, how many clic)Athroughs
were achieved, and what clic)Athrough rate was achieved. The industry standard for the clic)
through rate is anywhere from +.<H; to <;, for sites li)e E!!, TK !et, or Iahoo. Iour actual
clic)Athrough rate will depend on the appearance of your ad, and what it offers in terms of a
mar)eting message and call to action. @ust li)e running a television commercial during prime
time, or placing a fullApage ad in JTimeJ maga'ine, these ads do not necessarily cause people to
pic) up the phone and order a product at that very moment. Whereas a webAbased process which
guides the consumer through a systematic process is to ma)e a purchase more li)ely.
Specifically, these types of ads build name recognition for the company and establish it as a maBor
force in the industry. Then, when consumers are ready to buy, your company will come to mind.

Television
The /000 -merican -ssociation of -dvertising -gencies Eommercial 8roduction Eosts Survey
revealed that the average cost of a >+ second national commercial for an automobile was a
whopping M>*0,+++. The percentages of viewers of MS!BE and Bravo who are in BMWs target
income brac)et constitute <+.H;. The percentage of viewers in BMWs target age group ,<HA>F.
is <1.H;.
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Prin,
The advertising rates in a periodical li)e Time Maga'ine ranges from M<H+,+++ for a fullApage
mono to M>1+,+++ for a fullApage color ad. The average age of a Time Maga'ine subscriber is FH
and they have a median income of M10,+++. This audience is of twice the age and half the income
of BMWs intended target mar)et. Time Maga'ine is one of the premier periodicals on the mar)et
at this time.
4V4 Promo,ions5-ree6ies
The cost of producing a K9K master is between MH+,+++ and M/++,+++Uplus the cost of
producing any bonus materials. K9K player penetration in the 4S today is appro6imately at
<H,1++,+++ units. This trend is supposed to increase and the K9K is supposed to become the ne6t
9#S.
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Compe,i,ive Analysis
&n /00:, BMW was in danger of losing its longAstanding lead in the import lu6ury car segment.
Mercedes, Ge6us, and -udi were coming on strong with great new products and new mar)eting
campaigns designed to dethrone BMW. !early half of those considering a lu6ury car ran) Jfun to
driveJ as their number one reason for purchasing the car. #owever, for the first time since BMW
had been trac)ing its image, consumers ran)ed BMW at virtually the same level as Mercedes or
Ge6us on attributes li)e Jfun to driveJ and Jresponsive handling.J
BMWs three biggest competitors have launched new advertising campaigns that
highlighted what traditionally had been BMWs greatest strengthC performance. Therefore, BMW
was not able to distinguish itself anymore as the only company that boasted the unparalleled
standard of quality as before.
Mer!e3es
The range of cars from the giant company KaimlerEhrysler is a traditional rival of BMWs. &n
<+++, they sold /,/HH,+++ units and had revenues of F>.: billion euro. Mercedes strength would
be its global presence, strong brand presence, product range and its technology leadership.
Mercedes mar)eting campaigns have always been subdued and low )ey. Mercedes allocates <H
per cent of its annual mar)eting budget to innovative &nternet strategies, recogni'ing the power of
the &nternet for delivering effective and precise mar)eting campaigns. When the car manufacturer
launched the new Mercedes E Elass Sports Eoupe, it positioned the online campaign right at the
top of its mar)eting mi6. @oining in a winning partnership with MS!, another global brand with
similar values, Mercedes sponsored -A#as eagerly awaited homecoming concert.
.e7us
Spar)ed by a decision from Toyota Ehairman 7iBi Toyoda in /0*> to challenge the best lu6ury
vehicles, Ge6us has since grown into one of the world%s most inspiring automobile companies.
Ge6us is a division of Toyota Motor Sales, 4.S.-., &nc. They are trying to leverage the @apanese
technology to add brand value to their vehicle. Ge6us is -mericas top selling lu6ury marquee.
The tough tas) for Ge6us is to lose the VEheap but 2eliable Toyota image. The annual sales of
Toyota vehicles in the 4S have been on the order of M0+A0> million in recent years.
-ccording to Ehris Eonrad, Ge6us national advertising manager, Ge6us is targeting its
youngest buyers ever with the &S >++, roughly :H; male, between the ages of >H and F+, married,
highly educated with annual household incomes of M/++,+++. The current average age of a Ge6us
owner is H+, with the median age of the brand%s hottest selling vehicle, the 2S >++ sportAutility, at
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F*. The estimated M>< million campaign for the car bro)e recently on national T9 and will
continue for the ne6t si6 months. Team (ne, 7l Segundo, Ealif., created the two national T9
commercials. ive T9 spots for regional dealer ad groups and two maga'ine ads. The agency
also created billboards and si6 commercials that will be proBected on buildings in three cities.
Their online presence even for this campaign is limited, though

Ge6us is one of the
advertisers launching a richAmedia campaign on the 76cite !etwor), which includes WebErawler
and Elassifieds <+++.
Au3i
-udi is an international developer and manufacturer of highAquality cars. &n <+++, the company
sold more than 1H+,+++ -udi models. The sales revenues of the -udi 3roup totaled >0 billion
Keutsch Mar)s. The -udi 3roup has slowly but surely been encroaching on the BMW and
Mercedes mar)ets. They have been trying to promote the e6clusivity of their cars.
2ecently, -udi of -merica has embar)ed on its most ambitious onlineAmar)eting effort
ever. The 7uropean car importer )ic)ed off the JKouble Ta)eJ JadvertainmentJ online
sweepsta)es as part of its M<H million launch of the redesigned <++< -F sedan. 9isitors to the site
can try to solve mysteries after viewing clues from three short episodes involving the -F. They
can also register to win pri'es while learning about the car and its features. The grand pri'e is a
threeAday trip for two to the -udi Kriving 76perience at the 8ano' Kriving School in -tlanta,
3-. The sweepsta)es, run by Kon @agoda -ssociates, Melville, !.I., allows prospects to enter up
to eight times. JThe main thing is to educate and entice users to go to dealerships,J said Steve
3lauberman, presidentAE7( of 7nlighten, the privately Aheld -nn -rbor, M&, creator of the site
and sweepsta)es.
4is!ussion 8ues,ions
/. Should BMW be using a uniform global promotion strategyR
<. Should BMW show their new mar)eting campaign on the &nternet e6clusively, or as part
of the media mi6R
>. &mplications of Mar)eting to Kot Eomers and 3en SersR

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