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BWM Industry Analysis

Bus 419 Project November 24, 2008 Report by: Kali Bills, Kyle Brazil, Kristin Ruehle, Gary Weeks

Introduction BMW, also known as Bayerische Motoren Werke, translated as Bavarian Motor Works, was started in Munich, Germany and is now one of the leading automobile exporters in Europe. Originally, in 1913, Karl Rapp began rst producing aircrafts under this name. However, after the Traty of Versailles, the country was no longer allowed to make aircrafts and so switched to rail brakes, and eventually to motorcycles during the 1930s. After meeting Fahrzeugwerke Eisenach they began making automobiles and specialized in designing large tour cars and sports cars. By 1960s the company changed its focus to sports sedans and compact touring cars, and even was competing with Mercedes in the luxury car industry. Their blue and white logo represents ofcial Bavarian colors, based on the Rapp Motorwerke logo. BMW directs their automobile for people who love driving fun and sporty vehicles, yet are still elegantly designed. They make their design spacious and versatile. Most customers represent the modern family with a few children. They also have a separate model geared toward people with more active lifestyles and who do many outdoor activities. BMW works to ensure they hit their target market with much satisfaction and cater to peoples needs and wants with their variety of vehicles.

Improving the Strength and Nature of Our Customer Relationships We must rst run an analysis using personal, functional, and commitment data. Analysis: Correlate personal, functional, and commitment data to nd the relative percentages of personal and functional as related to commitment. Run linear regression, with personal and functional as independent variables and commitment as dependent to nd total variance explained by personal and functional as related to commitment. Correlate personal, functional, and performance variables and rank them to nd predictors. Create Relationship Model

Relationship Model Personal Predictors: 1. Fixed It Right the First Time 2. Friendly Staff 3. Price of Service Functional Predictors: 1. Fixed it Right the First Time 2. Clearly Explained Service 3. Friendly Staff Findings: 48% of commitment is explained by personal relationships. 52% of commitment is explained by functional relationships. Personal and functional predictors can explain 77% of commitment.

Personal: 48% Commitment: 77%

Functional: 52%

Fixed it right the rst time is a key predictor for both personal and functional relationships.

Recommendations: Looking at the model we can see that if we want to improve our personal relationships we should focus on improving xing it right the rst time, having a friendly staff, and our price of service. To improve our functional relationships we should concentrate on xing it right the rst time, clearly explaining services, and having a friendly staff. Normally we would want to focus on the area with the highest percentage explaining commitment but both categories are very similar and two of the top predictors are included for both personal and functional. In order to strengthen our personal, functional, and commitment scores we must focus closely on improving xing it right the rst time and having a friendly staff. In order to achieve this BMW should invest higher levels of training for all staff, including service and sales. How is BMW doing versus our competitors on relationships? Analysis: Compare means with brands as independent variable and personal and functional as dependent variables. Compare means with brands as independent variable and commitment as the dependent variable. Divide 100 by commitment mean and use as multiplier. Multiply each brand score by multiplier; these are commitment scores.

Relationship Map

Findings: Lexus has the highest commitment score (113), while BMW is average (100), and Mercedes (99) and Cadillac (99) are slightly below par. BMW is located in the top right quadrant, which is where we want to be, but Lexuss relationships are stronger and they are higher up on the map. BMWs personal relationships are slightly stronger than their functional relationships.

How can BMW strengthen the nature of their relationship with customers? Analysis: Find the key predictors of commitment by running a correlation with the performance attributes. Record those numbers, they will be used on the X-axis for importance Next run a means comparison to nd the top predictors for commitment With that, we found our GAP scores by subtracting the BMW mean from the total mean. Then we input those numbers into a Prescriptive Quad Map by graphing the GAP scores on the Y-axis and the correlations numbers on the Y-axis.

Prescriptive Quad Map Commitment

Findings:

Price of service, convenient location, and timely service are the most important to customers.

We are best performing when it comes to our price of service, having a friendly staff, and xing it right the rst time.

Convenient locations and timely service are important to customers yet we do no perform well on those aspects.

Recommendations: If BMW wishes to improve commitment we should focus on adding more convenient locations and making our service times quicker. While BMW dealerships are typically located in higher income areas that may not necessarily be where the purchaser lives. BMW could look into establishing service only centers in between dealerships that are great distances apart. In order to reduce service times we may look into doing such things as taking fewer appointments per hour, restructuring or expanding the layout of the service department, and hiring more staff. How can BMW increase customers loyal behavior? Analysis: Find the key predictors of loyal behavior by running a correlation with the performance attributes. Record those numbers; they will be used on the Y-axis for importance. Next run a means comparison to nd the top predictors for commitment With that, we found our GAP scores by subtracting the BMW mean from the total mean. Then we input those numbers into a Prescriptive Quad Map by graphing the GAP scores on the x-axis and the correlations number son the y-axis.

Prescriptive Quad Map Loyal Behavior

Findings: Service price, location, and timely service are the most important things to customers. We perform highest on xing it right the rst time, explaining the service, and having a friendly staff. Style and reliability are moderately important to customers and we perform poorly on both. Recommendations: If we want to improve our customer loyalty we need to improve the style of cars and their reliability. This focuses on the engineering of our vehicles.

While we are known for our precision engineering it may not be the bestdesigned or longest lasting. New research should be done to nd the most attractive designs while maintaining our heritage. We should also work on improving the quality of our parts to ensure longer reliability. What are the household incomes of consumers purchasing our cars as well as our competitors? Analysis: Create four, evenly distributed, income categories. Run cross-tab analysis to compare percentages of income levels for each company in our competitive set. Create Bar Chart.

Findings: Most BMW purchases are done by people who make from $100,000$200,000+. BMW fell below average on all other income brackets.

Recommendations: BMW should focus most of its attention to making sure that their wealthier clients are comfortable. However, if we want to increase our client base we will need to provide more options for customers that make less than $100,000. This could in a variety of ways. First we could offer a broader range of cars starting a lower price point. Another option would be to offer better nance options or rebates to make it easier for consumers in the next bracket down ($70,000-99,999) to afford our vehicles. Are there differences between older and younger buyers when it comes to dealer and brand commitment? Analysis: Run compare means analysis with YoungOld as our independent variable and brand and dealer commitment as the dependent variable. Create bar chart.

Findings: Overall both young and old value brand commitment more than dealer commitment. Young respondents value brand commitment slightly more than old respondents. Old respondents value dealer commitment more than young.

Recommendations: Dealer commitment with both old and young customers needs improvement. BMW should focus on having dealerships form more personal bonds with their customers. After the purchase of a new or preowned vehicle a dealer should do a one month, 6-month, then yearly

check-up with the customer to ensure their satisfaction. Each dealership could also spend special offers to its customers on services and ofcial BMW merchandise. The offers on merchandise could also help to strengthen the brand commitment as people who own more BMW products will feel more connected to the brand. Conclusion There are a few crucial steps that BMW can take in improve customers relations. To improve our relationships with already committed customers o We need to focus on our personal relationships by improving certain aspects such as xing it the rst time, having a friendly staff and the price of our service. o We also must improve our functional relationships focusing on xing it right the rst time, clearly explaining our services and having a friendly staff. Since xing it right the rst time and having a friendly staff help explain both personal and functional relationships these are two aspects that we should focus the most heavily on to make sure we sustain and improve customer commitment. Our commitment map shows us that our functional relationships are slightly stronger than our personal relationships. To further improve our customer commitment, we mush focus on adding more convenient locations and making our service times quicker.

To advance our customer loyalty, we need to improve the style of our cars and their reliability.

Paying attention to household incomes of our customers has proven to be very important. o We should focus more of our attention to making sure out wealthier clients are comfortable, while at the same time providing more options for our lower income customers. o BMW should focus on improving dealer commitment with both old and young customers.