Project ReportLaunching the BMW Z3 Roadster

Group B3

Aditya Kaundinya (143/47)Aditya Malla (155/47)Karan Mehta (140/47)Kerishma Malik (145/47)Gurchetan Singh (151/47)Kaivalya (138/47)Kishore (147/47)Kishore (177/47)Ritesh (149/47)

Introduction

BMW Z3 is the 1st BMW car which is being manufactured in North America, a market which has contributed only 16% to BMW’s revenues. At the same time, the American customer has found itself very difficult to relate itself to a foreign brand. Here lies the challenge for BMW and the marketing efforts behind the Z3 campaign are aimed at changing this perception of the American customer and ingrain BMS’s brand image in the hearts of Americans.Phase1 which was not a “run of the mill” marketing campaign created a huge buzz and was deemed a huge success. The campaign revolved around the placement of the BMW Z3 in the James Bond Movie, GOLDENEYE as Bonds new car. Several other non-traditional elements such as being part of the Neiman Marcus Christmas Catalog, product appearance on the Jay Leno show, and launch at Central Park ensured an “out-of-the-box” prelaunch. The challenge now is to “leverage the buzz” and design Phase II marketing strategies which will convert the interest generated into revenues for BMW.

Strategic Significance of the Launch

The launch is especially significant for BMW because the success of the entire U.S. operations of BMW crucially hinged on it. Moreover, BMW hopes to position the BMW brand firmly in American culture and settle into the hearts and minds of the American public through the launch. It was also meant to promote the vehicle as a cultural icon in America. Further, the launch demonstrates that BMW is firmly committed to the US market.

Moreover, it was the first time that a BMW car was being made in a location outside Germany i.e. Spartanburg, South Carolina. BMW aims to replace “made in Germany” as a quality symbol by “made by BMW”. Also, since it was the first vehicle to be manufactured outside of Europe, BMW could cushion itself from price and exchange rate fluctuations.

Another, important strategic move by BMW was to reposition itself as being stylish and fun to drive as well as uphold their reputation for driving performance. BMW aimed to be perceived as a little less serious and tradition bound. This was done by targeting the youth segment of the U.S. car market.

Finally, BMW wanted to show that it is a successful global company, build up an order bank, plus leg up on rivals, Mercedes and Porsche.

Non Traditional Marketing (NTM) Approaches used by BMW

Keeping in mind the specific strategic needs of BMW, the launch team focused on NTM strategies as it demanded something different, attention-grabbing and unconventional, given the physiographic segmentation of the market for the car. BMW decided to go ahead with movie placement of Z3 in MGM’s James Bond Golden Eye film in fall 1994. BMW also collaborated with Nieman Marcus Christmas Catalog offering a Special Bond Edition Roadster. Both the Z3 and the catalog insertion were featured on Today Show. BMW’s new website had special segments including Golden Eye film segment, the Today Show clip featuring the catalog offer and a “Build Your Own Roadster” module allowing visitors to custom build their own Roadster. The most prominent PR event was the Central Park Launch which formally introduced Z3 to the public. Apart from that, the Z3 also appeared on Jay Leno’s Tonight Show, on leading radio stations as part of the Radio DJ Program and on “Go: an American road story” Video. It also entered into association with Atlanta Olympic Games as the official international automotive sponsor. The dealer promotional package showcased a private screening of the Bond film and car before the box office film opening.

The Z3 Launch- Measurement of success

There are several parameters to judge the success of the Launch campaign of BMW Z3.Firstly word of mouth for Z3 has been favorable. Initial product orders far exceeded expected number. More than 9000 cars were ordered by December, ‘95 as compared to the projected figure of 5000. The Neiman Marcus Christmas Catalog Promotional Campaign attracted 100 customer orders in two days and 6000 in 3.5 months while BMW has initially set a 20 unit sales goal over the period.The “Build Your Own Roadster” module tripled hit rates of BMW’s new website from an average of 35, 000 hits to 125,000 hits. Apple Computer, whose technology was employed to build the module, used the BMW module in their own corporate advertising, devoting 25-30 seconds to BMW in its TV spot aired during the academy awards in March 1996. The Central park Launch attracted extensive coverage in both broadcast and print, including mention on Hard Copy, This Morning’s Business, The Money Wheel and all major network news programs. The DJ Program had three times the word-of-mouth effect of other publicity programs.BMW got 6000 spots instead of the promised 3800. BMW’s TV and print Advertising also proved to be successful with 15%proven advertising recall, which was 50% higher than the 10% proven recall Mercedes achieved with an estimated launch budget three times as large.

What are the differences between TM & NTM?

While TM is highly disciplined, structured and based on strategic planning; NTM is more flexible, reactive, uncertain and focused more on execution than planning. The target market is ascertained by segmenting the market on the basis of demographics under TM. NTM, on the other hand, focuses more on the psychographic segmentation of the market. Moreover, budgeting for TM is controlled and predetermined as the advantage of past experience and hind sight is present. In the case of NTM, many costs are unknown due to the uniqueness of the media chosen. The budgets for NTM must be more flexible to accommodate the reactive feature of NTM. NTM also demands development of new methods to measure performance as it is difficult to evaluate using conventional methods that have been used for TM. Finally, TM requires marketing/advertising skills of strategic thinking, creativity, and project management; NTM, whereas emphasizes on creativity, resourcefulness, ingenuity, strong negotiation and flawless execution. The process of communication for both also differs and is summarized below-

Traditional marketing Non-Traditional marketing

Awareness

Liking

Preference

Desire

Purchase

Exposure

Buzz

Infatuation

Purchase

Is the advertising in traditional advertising media effective?

There is some evidence that TM is gradually becoming less effective. Mercedes, for example, was able to achieve a 33% lower recall, using TM, than NTM, which had one-third the launch budget. Overall, BMW with its focus on NTM, achieved one of the lowest launch expenditure per unit sold (0.001035491) in the given period. Even though TV Advertisement in the US still comprises of 43% of the Advertising expenditure, marketers have started looking at other avenues to reach the consumers. Today, when consumers watch videos on IPODs, movies on Play station Portables and listen to Radio on the Internet, new non-traditional marketing techniques have become of paramount importance to generate interest.

What are the risks, benefits and challenges in NTM campaigns and why is NTM more effective?

NTM relinquishes control over the target market, message and media to quite an extent. Under NTM, the other party decides how to use your product. For instance Arby’s wrappers in serial murderer’s house SILENCE OF THE LAMBS, wife burns husband’s Mercedes WAITING TO EXHALE…??There is no prediction of outcome and no pretesting. BMW’s estimate of 20 units was a far cry from the actual 6000 orders received through the Niemen Marcus Christmas Catalog. There are several unknown and variable costs due to the uncertainty and flexibility of the approach. Moreover, carrying on the buzz once created by NTM is difficult to sustain as NTM is a temporary medium. It should also be realized that NTM is NTM only if it’s a novel marketing strategy.However, NTM also provides several opportunities.Cross Promotions: Brands can partner up to promote their products conveying same/similar value propositions to the customer such as BMW and MGM in this case.Opportunity for “Free” Press: If executed successfully, NTMs result in a huge public interest or ‘Buzz’ visible in the form of events/activities/forums. The Buzz grabs the attention of the Press/Media thus resulting in ‘Free’ publicity for the brand. Leveraging/Piggy backing: As in the case of MGM/BMW; BMW was able to leverage the cross promotion deal with MGM to get Pierce Brosnan to feature in their ad-campaigns without paying the celebrity’s usual endorsement fee.

NTM leverages the Social Circle, creates a buzz about the product, leads to infatuation with the product and hence, a much faster way of achieving sales.

Scope for NTM also becomes wider due to the waning Impact of TM, rising cost of Media Ads, Loss of control. For instance audiences usually zap to other channels during commercial breaks. Moreover, TM is monotonous and unable to grab attention

What to do in phase 2?

With good results from the NTM followed in the phase-1, we intend to continue using NTM even in our next phase, introducing some new strategies of advertising. We recommend the following methods:

DVD/VCD launch of golden eye with a poster of Z3 in the DVD pack and a print of Z3 on the DVD cover to promote the car among different groups simultaneously. This would help reach all the movie watchers.

Introduce the car in NEED FOR SPEED/GRAN TURISMO so that it reaches out to youth in America.

Keep the preordered customers updated through mails, newsletters, magazine issues etc. So that they remain enthusiastic about the car and also word of mouth would be an indirect marketing strategy.

Use of Z3 as pilot car in F-1to familiarize Z3 also among the F-1 enthusiastsContinuous buzz, we need to keep changing the NTM used from one to another so that target group doesn’t get vexed up seeing the same thing every time.

As traditional methods have shown good results in phase-1, along with the NTM’s we can also rely on Print/TV ads.