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Essay on BMW and its Position in the UK Market

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The most competitive consumer arena in the business world entails convincing the public to purchase a particular brand of vehicle. The decisions as to which model are a function of income, affordability and personal preferences, wants, needs or desires, however this portion of the equation is rendered moot unless the brand has been sold. More than in any other consumer area, the 'image' of a brand is a selling point that is generally accomplished years, even decades, before the actual purchase is made. In the automotive industry what a person drives is not indicative of what a person wants (or would like to drive). As is the case with most purchases, it is determined by the consumer's ability to afford the item, which is usually the primary consideration. Once that part of the equation has been determined (affordability) either by demographics (income) - credit - down payment - lease - etc., then other considerations such as needs (meaning if the purchase is to be a primary or secondary vehicle, and whether family [meaning children] are a part of this equation]), functionality, style, performance, re-sale value, as well as a number of other factors having a bearing on the final decision.

The question of the overall economic outlook, on a personal as well as global basis, is the larger parameter preceding the aforementioned brand decision. For some individuals the status of the current or future economic situation is not a boundary or inhibitor to purchase, however for the majority of consumers their perception of the stability of the economy, their jobs, finances, interest rates, along with other demographic and psychographic considerations do play a role in either price, method (purchase or lease), as well as timing (when they will or are considering obtaining a new vehicle).

In contrast to the decisions that consumers mull over in determining what vehicle to purchase, the decision(s) of an automotive manufacturer must correctly analyze competitor trends, traits, styles, pricing strategies, market preferences, technological innovations, emission legislation, performance, fuel mileage, and hundreds of other factors to design and field a vehicle at the right time, in the right market, for the right cluster of consumers. Not an easy task when it takes approximately 36 to 48 months to design a new vehicle and approximately 24 to 36 months to engineer changes to existing model lines. Meaning, automobile manufacturers basically have one chance to get it right, or suffer through a year of poor sales for a particular model and the resulting damage to their reputation in a unforgiving consumer and business market. This is compounded by the excellent reputation for innovation, technologically advanced vehicles, performance, and quality which the public perceives from vehicles made by Bavarian Motor Works (Bayerische Motoren Werke).

To get it right BMW had to correctly analyze over four years ago the state of global economics for 2005, the British economy, consumer confidence levels, competitive models - styles - pricing - features - performance - standard options - luxury options - colors - interior design and a multitude of other considerations. And all of the foregoing is made even more difficult as BMW is a premier marquee and as a leader of the pack, everyone is watching as well as analyzing your every move, looking for an opening or when you show a vulnerability. The market niche which BMW actually created, sport sedan vehicle, is the most competitive arena with almost every manufacturer fielding a 'sporty, or sports oriented' model in their line up. BMW's pricing puts it squarely in the largest combinations of consumer demographics spanning £18,000 on through £100,000 as a result of its broad model range.

Chapter 1 - Introduction

1.1 Research Objectives

In order to properly analyze whether or not the launch of the BMW 1 series and revised 3 series will aid the company to improve its position in the United Kingdom market, a broad range of variables will need to be reviewed in order to reach a determination of the prospect(s) for success. Factors such as; 1.
Global Economic Conditions for 2005 2.
United Kingdom Economic Conditions for 2005 3.
United Kingdom Consumer Confidence Forecasts for 2005 4.
Environmental Factors for 2005,

are key contributing elements in analyzing BMW's introduction strategy concerning the launch of these new models. Examination of these areas will provide the foundation via which to analyze market forces.

1.2 Company Background

BMW's history, in terms of the United Kingdom, extends back to 1928 when the company purchased a small automotive company named Fahrzeugwerke Eisenach that manufactured the Dixi 3/15 PS which was being produced under license from Austin, a British automotive company. The Dixi 3/12 PS was modeled directly on the Austin Seven which was an innovative sports sedan. BMW modified and refined the Dixi and the new model, named the BMW 3/15 PS DA 2, was introduced to the market in 1929. Continued improvements and design modifications resulted in what was essentially a completely new vehicle by 1933.

Originally organized as Rapp Motoren Werke by Karl Rapp in 1913, BMW started life as an aircraft engine design shop that was located near Munich. Austrian industrialist Franz Josef Popp purchased the company in 1917 and renamed it Bayerische Motoren Werke. The Treaty of Versailles, June 28, 1919 , directly influenced the entry of Rapp Motoren Werke (later to be known as BMW), into automobile manufacture as the terms of surrender by Germany resulting from World War 1 stipulated under Articles 198, 199 and 201 that any military or naval air forces were prohibited and it also stipulated the manufacture of or importation of aircraft. Rapp Motoren Werke, as a result of said ban, made railway brakes until its foray into automobiles in 1929. The hyperinflation arising as a result of the severe economic sanctions imposed by the Treaty of Versailles reared its head in the 1920's and helped to stagnate growth in Germany.

The 1930's saw the company build upon its reputation as a manufacturer of 'sports oriented' vehicles, meaning performance, handling, economy, reliability and styling. During this period BMW built the 326 sport sedan, 327 convertible and coupe, as well as the 328 roadster, the later in its racing version won events such as the Mille Miglia in 1939 (Italian road race). Once again conflict (World War II) interrupted the company's consumer vehicle production and when hostilities ceased in 1945 basically just the BMW name was all that remained. The company manufacturing plant in Eisenach was located in occupied East Germany under Soviet rule so it rebuilt the Munich facilities and started production of motorcycles and the tiny Isetta which was powered by a motorcycle engine. It took some time for the company to regain its automotive production stance as a result of the rebuilding of the German economy whereby few citizens could afford the price of an automobile, opting instead for motorcycles and motorbikes as their primary transportation.

By the late 1950's the company was again manufacturing full-fledged automobiles (versus the Isetta hybrid), starting with the 507 model with V-8 powered engines. The global prosperity denoted by the post war 50's provided the economic climate for the company to prosper. In 1962 BMW introduced its 1500 family sedan that featured a 4-cylinder overhead-camshaft engine, disk brakes in front and independent suspension on all 4 wheels. The renowned Autobahn with its unlimited speeds influenced the company to delve into performance. The 1500 model became the 2002 sports sedan and was the forerunner to the larger 6-cylinder Bavaria and the Ferrari looking 3.0 CS coupe. That 2002 model marked the beginning of the most successful automotive line ever, the BMW 3 Series.


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