A Comprehensive Brand Audit of BMW in the United Kingdom

Posted: January 18, 2024

A brand audit is an important function in brand management as it helps companies to gain a fundamental understanding of how the brand is currently performing. The following paper provides a brand audit of BMW in the United Kingdom. BMW is a leisure motor vehicle designer, a manufacturer, and seller. The paper also comprehensively illustrates BMW’s brand strategy such as brand identity, brand image, brand equity, brand resonance, and brand association, and brand positioning within the automotive market. Promotional activities and strategies, as well as the targeted customers of BMW’s brands, are well illustrated and explained. The paper provides the competitive landscape of automotive industry in the UK. Major competitors that BMW’s brand faces include Ford Company, Volkswagen, and General Motors. Finally, recommendations are given based on the previous analysis for BMW to remain competitive. Conducting a brand audit for BMW in the UK was significant because it led to the provision of a comprehensive overview on the health of the brand. In addition, the brand auditing is important because it helps BMW determine its position within the automotive industry and plan its corrective strategies. In addition, it empowers BMW to distinguish its weaknesses and strengths. Moreover, it provides the company with the possible growth opportunities that can be achieved through brand repositioning or brand extension. Lastly, it can help the company get up to speed with how consumers and potential consumers perceive its brand. The most important (the internal and the external) stakeholders of the BMW brand in the UK have been analyzed.

1.0 Introduction

BMW is an acronym for Bayerische Motren Werke. The company is headquartered in Munich, Germany and is one of the major manufacturers of luxury automobiles in the world. Through a continuous branding effort, the company has built significant brand equity over its years of operations. Moreover, as a manufacturer of luxury cars, BMW manufactures both functional and traditional cars (BMW, 2015a). Class, style, and performance have contributed to BMW’s success in becoming one of the leading automobile brands in the world since 1917. To add on, with more than 11 million fans in Facebook, the brand continues to be appealing to a wide market base. BMW’s design, innovative brand improvements, and performance are few of its most prominent success factors. One of BMW’s recent achievements includes its partnership with the 2012 Olympic Games in London, where the company provided more than 3,000 vehicles. This successfully demonstrates how the company’s brand management is at an advanced level (BMW, 2015b). Furthermore, BMW is currently planning to introduce its ‘I’ series; a brand that promises to take advantage of the improvements in the electric vehicles market. Products belonging to the I series are fuel efficient, environmentally friendly and unique with in their high standards of luxury and performance. According to research conducted by Shukla (2011), BMW is ranked above Toyota, Mercedes, Honda, and Nissan in terms of brand value.

2.0 Brand Strategy

According to Lei, Dawar and Lemmink (2008), branding refers to the marketing practice or activity of building a symbol, design or a name that helps identify and differentiate a particular product from other products of similar function. BMW’s brand resonance arises with the company’s production of high-quality luxury product and through targeting the appropriate market. One of BMW’s building blocks is its user demographics, which have enabled it to create a large and loyal customer base. On average, BMW’s customers are 46 years old with two-thirds of the customers being married males. Due to the high quality that the company pursues, BMW has achieved a loyal customer base.

2.1 Brand Identity

BMW’s brands are easily identified due to their workmanships, design, and overall performance. To many individuals across the world, BMW always means much more than just a prestige car. It can also be the ‘ultimate driving experience' to some people and statements such as ‘I am a BMW kind of a girl or man' are becoming more popular. In such messages, the individuals involved in the scenario are likely to be adults with an average age of 46 years old. (Papasolomou & Kitchen, 2011). According to Henseler, Ringle and Sinkovics (2009), a brand should always have a significant aesthetic value. BMW’s products are of exceptional high quality, uniquely made, and carefully handcrafted for individual purchasers (Doyle & Stern, 2006). It has a high aesthetic value, as most individuals prefer to buy BMW cars as wedding gifts for their spouses.

2.2 Brand Image

BMW’s group includes a range of brands such as Mini Cooper, Rolls Royce, and BMW. The three brands are known for their great investment in high technology and use of innovative approaches. This increases a customer’s satisfaction when driving any of BMW’s cars. Moreover, the strong brand image that BMW holds in the UK market can be attributed to the successful advertising strategies that the company implements. While BMW’s brand has the image of ‘sheer driving pleasure,’ the Mini’s brand is known to be friendly and spontaneous in every aspect.

2.3 Brand Associations

Brand emotional associations refer to the connections that customers of BMW develop and establish based on the factors they believe are compatible with their beliefs, personalities, and mindsets (Delgado-Ballester & Luis Munuera-Alemán, 2005; Vahie & Paswan, 2006). In most cases, the association is intangible in nature and relates to BMW’s features such as status, values, aspirations, prestige, and personality types. Brand emotional association is a significant tool in brand management used to create emotional connections with BMW customers worldwide. The class and prestige of owning a BMW creates an instant emotional connection between the brand and the customer. BMW believes that brand loyalty can only be achieved once it meets the emotional needs of its customers. For that reason, the company considers itself not only as a manufacturer of cars, but also as a creator of emotions and associations. Furthermore, BMW has been a brand that has helped create beliefs and personality, thus creating stronger emotional associations than functional associations. According to Hawkins and Mothersbaugh (2009), brands having stronger emotional associations normally create high switching costs for their customers, as the brand becomes part of the customers’ experiences and lives. According to Chen (2010), the emotional associations should always be built carefully since they have a significant influence on the success of the brand. In addition, it can be more challenging to establish clear emotional differentiators because emotional associations have a stronger impact on the customer. the customers of BMW, therefore, have emotional relationships with the brand.

2.5 Brand Salience

According to Kapferer (2012), Van der Lans, Pieters and Wedel (2008) brand salience refers to how customers think about a given product during the purchasing process; the more salient a brand is, the more it is considered. According to Chevalier and Mazzalovo (2008), brand salience refers to the level and depth of awareness concerning a particular brand. The BMW brand has top-of-mind brand awareness in the minds of its customers. Whenever one thinks of buying a luxury car, the first thought that normally comes to the minds of potential customers is BMW, meaning it has a strong brand salience (Mazzalovo, 2008).

2.6 Brand Positioning

According to Buttle (2009), a brand positioning statement is how a customer perceives a particular brand. A brand such as BMW should always create a central image on its overall perception, as the perception is usually permanent. The marketing positioning strategies of BMW are aimed at the affluent upper class. Correspondingly, the company’s activities focus on the premium sector of the global automobile market. BMW’s positioning strategy is indicated in its mission statement; it is a provider of premium products and services for all individuals around the world. Moreover, the company’s focus on engineering excellence and technology has continued to drive and expand the company’s profits (Fill, 2005).

2.7 Brand Equity

According to Boo, Busser and Baloglu (2009) brand equity refers to the power that a brand derives from its goodwill and popularity. Brand equity is earned over time, and it can translate into higher sales volume and profit margins against other competing companies. BMW aims to target a customer base that has a strong desire for fast and sleek gadgets. Most middle and upper-class consumers of automobile products are willing to pay for the premium products offered by BMW rather than the average quality offered by competitors. Therefore, BMW has positive brand equity with its consumers.

3.0 Target Market

BMW’s marketing policy does not try to compete in all segments in the automotive industry, but instead, states clearly that it is targeting the premium segment. The company selectively avoids the production of high volume and middle-priced vehicles to establish a distinctive brand image towards middle and upper class individuals in the United Kingdom (Kay, 2006). BMW products are targets the middle to high income earners and especially individuals between 21 and 35 years. Since BMW products and innovative and adventurous, the targeted age group is suitable because the individuals are also adventurous and likes trying new things. The targeted market, according to Cui, Trent, Sullivian, and Matiru (2003), show great self-reliance, independence, and autonomy. It is expected that BMW products will satisfy their needs and preferences.

4.0 Promotional Strategies

4.1 Promotion

For a considerable period, BMW has associated its promotional strategies with the concept of offering the ultimate driving machine. However, in the past few years, new models of BMW have also been linked with the notion of joy. Through this strategy, the company focuses on the human perception of joy across all the demographic categories of the population. The company strives to show its customers, the marvelous experience they could have as being a part of the community when driving BMW models. In addition, the company promotes its products as having joy and success, which are some of attributes that cannot be found in its competitors such as Audi and Mercedes. This promotional strategy has helped the company enhance its reputation and prestige in the sports utility vehicle section (Burmann, Zeplin & Riley, 2009). The company’s great after-sales services and warranties play a role in building BMW’s reputation. Most of the cars manufactured by the company are sold with a five-year limited warranty and a 12-year limited rust perforation warranty (Papasolomou & Kitchen, 2011). The company also has several other promotional activities such as BMW Roadside, BMW Assist, and BMW Time Traffic information, which offer BMW’s consumers with timely help. Through adverse advertisements, the BMW Group was able to distinguish its products from the ones offered by competitors. According to Burmann, Zeplin and Riley (2009), advertisements refer to the profession or activities that result in the production of information that a customer needs concerning particular product or service. BMW uses a set of advertising channels to communicate important messages and information to its targeted consumers. For example, the company’s X5 horse-trailer promotional activities have increased the car’s popularity. To add on, the company changes its promotional activities every year as it strives to change and improve its promotional strategies (Keller, Parameswaran & Jacob, 2011). After the company had used horse-trailer advertisements, BMW introduced the Please do not repair advertisements and Serengeti and Eagles campaigns. In 2012, BMW introduced the ultimate driving machine campaigns, which helped expand the company’s brand image to a wider market base. The company engages in both print and broadcasted advertisements to reach its targeted market. For example, it displays advertising banners in specific locations in London to reach a specific group of targeted customers in the region. The company’s point of sale terminal has been improved by the addition of images, audios, and videos that motivates salon visitors to purchase BMW’s products (Keller, 2009). The social media platforms that the company uses to promote its products include Facebook, Google+, and YouTube. It uses these platforms to inform its consumers and users about newly designed and manufactured products, improvements, and services (Chaffey, Ellis-Chadwick, Mayer & Johnston, 2009).

5.0 Competitive Analysis

BMW faces direct competition from luxury car makers worldwide including Japan, European Union countries, and the United States (Worthington, Russell-Bennett and Härtel, 2010). The major competitors of BMW in the USA include Ford, Chrysler, General Motors, Buick, Lincoln, and Cadillac. Moreover, the company’s competitors in Japan include Toyota, Honda, and Lexus. As for Europe, the company faces stiff competition from Mercedes-Benz, Jaguar, and Audi.

5.1 Market Share

Currently, BMW is experiencing stiff competition from Volkswagen, Ford Motor Company, and General Motors. Volkswagen contributes to a total of 21.4 percent of the total new car industry in the United Kingdom, followed by Ford Motor Company with 13.3 percent. General Motors is behind with a total market share of 11.7 percent and lastly BMW, which occupies 7.8 percent of the share. It estimated that by 2019, the UK’s new car industry would be valued at $121 billion, In terms of market share, the United Kingdom’s market volume is forecasted to have 2,754.1thousand units. The increase is expected to represent a growth of 12 percent from 2014.

5.2 Market Rivalry

5.2.1 Threat of New Entry

The United Kingdom’s new car market is difficult to enter by new players because the key industry players control a large market share and can practice monopolistic strategies that keep away potential entrants. In addition, consumers prefer certain established brands such as BMW, Ford Motors, and General Motors. To add on, the high-fixed costs involved in the production of new cars makes new startups rare in the United Kingdom. Moreover, as the major players in the market have successfully achieved economies of scale, new entrants will find difficulty in competing. This can act as a negative factor when entering the market (Roy, 2011). Generally, the future of the new car industry is optimistic which can attract potential new entrants. Also, new car manufacturers may be encouraged to target a niche market and provide products that specifically meet the needs of that market. For example, BMW is threatened by the possible entry of Tesla Motors as it provides high-end electric cars. Furthermore, technology can increase the intensity of rivalry in the United Kingdom car manufacturing market (Schroeder, Salzer-Mörling & Askegaard, 2006). For example, Apple incorporation is planning to enter the automobile market through its highly electric powered and self-steering cars.

5.2.2 Threats of Substitutes

The major substitutes of cars and brands offered by BMW include used cars as well as other forms of personal cars such as trucks and the public transport system. As a luxury car manufacturer, the BMW brand faces stiff competition from passenger service vehicles that are normally considered as cheaper (Shukla, 2011). With the increase in health and environmental awareness, people are favoring other methods of commuting such as walking, bus and train.

5.2.3 The Rivalry Level

According to Till, Baack and Waterman (2011), the new cars’ industry is dominated by a few but well-established companies. As manufacturers seek to increase their market share inorganically, the industry has increasingly become consolidated. However, BMW’s brand differentiation as a luxury car has somewhat reduced the level of rivalry it faces from major well-established companies (Mangold & Faulds, 2009). Many companies are currently investing in and manufacturing luxury car brands to increase their sales. Traditional car manufacturers have also extended the range of the brands they offer. In most cases, such cars are readily available at prices that most consumers in the United Kingdom can afford.

5.3 Major Competing Brands in the United Kingdom

For the last four years, there has been a healthy growth in the United Kingdom’s automotive industry. It is expected that the market will continue to grow until 2019. The UK market was adversely affected by the financial crisis of 2008/09. Last year, the industry generated the most amount of sales compared to the year after a great recession. The United Kingdom’s auto market registered total revenue of $93.2 billion with a compound annual growth rate of 9.8percent between 2010 and 2014. The compound annual growth rate for market consumption grew by 5.2 percent. In addition, the volume of the auto industry is expected to grow by 5.5 percent by 2019.

5.3.1 General Motors

General Motors (GM) designs, manufactures, and sells automotive products globally. Through its partners, the company produces vehicles in more than 30 countries. General motors, just like BMW, is a worldwide and household brand name that is supported through a series of brands such as GMC, Chevrolet, Buick, Cadillac, Opel, Vauxhall, Alpheon, Wuling, and Jiefang (BMI Research, 2015). In 2014, the company operated more than 20,706, authorized dealers worldwide. Moreover, BMW operations in more than 120 countries and its major presence was mainly in the United Kingdom, Germany, Brazil, Korea, the United States, and Canada. GM operates through five major business segments: the GM north amerce; GM international operations; GM Europe; GM south America; and GM financial. In 2013, the company sold 9,715,000 vehicles, generating total revenue of $155,929 million, and a net income of $3,949 million.

5.3.2 Ford

Ford is one of the oldest brands and car manufacturers globally. The company designs, manufactures, and sells cars, trucks, and utility vehicles. Ford’s affiliated brands include Lincoln and Ford. Through its subsidiaries, the company provides vehicle-financing services (Pike, 2007). The company’s brand is known worldwide due to its operations in more than 65 countries spread across North America, South America, Europe, Asia-pacific, and Africa. Furthermore, Ford produces a range of brands for small, medium and premium segments. Other brands manufactured by Ford include buses, trucks, sport utility vehicles, full-size pickups, and trucks. In 2013, Ford produced 6,354,000 vehicles and sold 6,330,000 vehicles worldwide, generating total revenue of 144,077 million and, a net income of $3,187 million.

5.3.3 Volkswagen AG

Volkswagen is the parent company for the Volkswagen group. It manufactures both commercial and passenger vehicles. The company also manufactures large-bore diesel engines that can be used for the marine turbocharges, chemical reactors, and stationary application. Although the company is not a direct competitor to BMW’s luxury brands, it is the major producer of passenger and commercial vehicles such as taxies (BMI Research, 2015).Volkswagen sells its products under a series of brands such as Audi, Volkswagen, Porsche, MAN, SEAT, Skoda, Bugatti, Lamborghini, and Scannia. In 2014, the company sold 9,728,250 vehicles, which were marketed under various brands such as the Passat/Santana, Up!, Vento, Clasico, Voyage, Golf, Polo, Tiguan, Scirocco, Sharan, Eos, CC, Magotan, Routan, Santana, Phaeton, Parati, and Sharan. During the fiscal year that ended 2014, Volkswagen AG generated a total of $268,754 million, with a net income of $14,582 (BMI Research, 2015).

6.0 Conclusion and Recommendations

Despite the stiff competition BMW faces from major competitors such as Mercedes Benzes, Ford, and General Motors, the company remains to be one of the strongest brands in the UK automotive industry. It has a strong brand image and a positive brand salience and equity. Above all, the company has established an important brand association with its customers who remain loyal. The brand is also positively positioned in the hearts and minds of individuals. Through effective marketing and promotional strategies, BMW has built strong products that are associated with high quality, luxury, and prestige. The BMW targets the middle to high income individuals, especially individuals between the age of 21 and 35 years. BMW should not be concerned about new entrants as entry to the UK car market is expensive for new car manufacturers and there are only a few companies offering prestigious and luxurious cars. Based on the analysis, the following recommendations are provided to help improve the company’s image as a premium manufacture of cars. First, the economy is not stable and there is a decline in the buying capacity of luxury cars. Therefore, the company should not over price its luxury cars far much beyond its competitors as consumers may decide to opt for the competitors’ products (Aaker& Biel, 2013). Secondly, BMW could refer to its immediate competitors such as Tesla Motors on how to effectively change the buying experience of a consumer. Moreover, the company can strategically place its products around malls in the UK. Lastly, while marketing to generation Y, Cui, Trent, Sullivan and Matiru (2003) suggests that marketers should take care of the following five factors related to the generation: values, personality, lifestyle, trust, and connections. In terms of connection, BMW should provide enough information to this group because they are considered as optimistic and always craving for constant connection and communication with their peers. Therefore, social media can be used to reach these customers. In terms of values generation Y tends to be more socially aware and confident, valuing social responsibility and equality. For this reason, BMW should take more CSR tasks to be more appealing and a preferable choice. In terms of personality, this generation love hanging out with each other and above all, love convenience. For this reason, BMW should take its sales online through the use of sites such as eBay and Amazon.

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