BACHELOR IN BUSINESS ADMINISTRATION

SEMESTER 3

PRINCIPLES OF MARKETING – ASSIGNMENT 2

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 1) Customer-driven marketing strategy
Explain in details what market segmentation and market targeting is
Customer-driven marketing strategy
This is a marketing strategy that focuses on targeting a specific set of customers, retaining them by
meeting their needs, and using metrics to measure their satisfaction. Being customer-driven in your
marketing (and really, in every aspect of your customer’s journey) creates loyalty, because you
repeatedly show them that you care about their needs.
In order to succeed in the modern competitive marketplace companies, need to be customer
centered, i.e. They must fulfill the rapidly changing demands of the customer. Companies must
draw the customer from competitor business, make them brand loyal and grow them by
delivering greater value. Before anything a company must understand the needs and wants of its
customers, only then it can fulfill by using the marketing strategy. Thus the company must use a
careful market analysis.

Market targeting

Market targeting involves information of each market segment and then selecting one or more
segments to enter. The company must target segments in which it can best fulfill the needs of
consumers. Wise companies enter into a segment from which they can achieve success in gaining
customer loyalty and sustain it over time. A company might use the strategy “niche marketing” and
target only a few segments from which the major competitor over looked.

Market segmentation
Types of market segmentation

 Demographic segmentation
 Psychographic segmentation
 Behavioral segmentation
 Geographic segmentation

Demographic segmentation
Demographic segmentation is one of the most popular and commonly used types of market
segmentation. It refers to statistical data about a group of people.

Demographic market segmentation examples

 Age
 Gender
 Income
 Location
 Family situation
 Annual income
  Education
 Ethnicity

Where the above examples are helpful for segmenting business to customer audiences, a business
might use the following to classify a business to business audience:

 Company size
 Industry
 Job function

Another business to business example might be a brand that sells an enterprise marketing
platform. This brand would likely target marketing managers at larger companies (ex. 500+
employees) who have the ability to make purchase decisions for their teams.

Psychographic segmentation
Psychographic segmentation categorizes audiences and customers by factors that relate to their
personalities and characteristics.

Psychographic market segmentation examples

 Personality traits
 Values
 Attitudes
 Interests
 Lifestyles
 Psychological influences
 Subconscious and conscious beliefs
 Motivations
 Priorities

Psychographic segmentation factors are slightly more difficult to identify than demographics
because they are subjective. They are not data-focused and require research to uncover and
understand.

For example, the luxury car brand may choose to focus on customers who value quality and
status. While the business to business enterprise marketing platform may target marketing
managers who are motivated to increase productivity and show value to their executive team.

Behavioral segmentation
While demographic and psychographic segmentation focus on who a customer is, behavioral
segmentation focuses on how the customer acts.

Behavioral market segmentation examples

 Purchasing habits
  Spending habits
 User status
 Brand interactions

Behavioral segmentation requires you to know about your customer’s actions. These activities
may relate to how a customer interacts with your brand or to other activities that happen away
from your brand.

A business to customer example in this segment may be the luxury car brand choosing to target
customers who have purchased a high-end vehicle in the past three years. The business to
business marketing platform may focus on leads who have signed up for one of their free
webinars.

Geographic segmentation
Geographic segmentation is the simplest type of market segmentation. It categorizes customers
based on geographic borders.

Geographic market segmentation examples

 Zip code
 City
 Country
 Radius around a certain location
 Climate
 Urban or rural

Geographic segmentation can refer to a defined geographic boundary (such as a city or zip code)
or type of area (such as the size of city or type of climate).
An example of geographic segmentation may be the luxury car company choosing to target
customers who live in warm climates where vehicles don’t need to be equipped for snowy
weather. The marketing platform might focus their marketing efforts around urban, city centers
where their target customer is likely to work.

2) Market segmentation
Propose one new product and you are required to do market segmenting based on the categories
that you need. And choose which market segment will become your target market

Market segmentation
This is the activity of dividing a broad consumer or business market, normally consisting of
existing and potential customers, into sub-groups of consumers based on some type of shared
characteristics

In a modern market there are many types of customers, products and needs. The company will
determine which demand it can fulfill best and gain maximum benefits. Consumers are grouped in
various ways geographic, demographic, psychographic, and products are made to fulfill their needs
and wants. Market segmentation consists of consumers who adopt in a similar way to different
marketing efforts. In the car market for example wealthy consumers own the top notch cars but still
make up only one segment of the market. Then we consumers who are price conscious and make up
another market segment. It would be very difficult to fulfill the needs of both segmentations so
companies focus on the needs of one particular segment.

Proposed product: BMW series

My proposed product is the BMW series which is a good example of customer demographic
segmentation. This product manufacturer sells luxury car brands. This company would likely target an
audience that has a higher income.

3) Swot analysis

Explain in details what is swot analysis.

Do swot (strength, weaknesses, opportunities, threats) analysis for the product that you are going
to sell (refer to question no. 2)

SWOT (strengths, weaknesses, opportunities, and threats) analysis is a framework used to evaluate
a company’s competitive position and to develop strategic planning. SWOT analysis assesses
internal and external factors, as well as current and future potential.

Strengths describe what an organization excels at and what separates it from the competition: a
strong brand, loyal customer base, a strong balance sheet, unique technology, and so on. For
example, a hedge fund may have developed a proprietary trading strategy that returns market-
beating results. It must then decide how to use those results to attract new investors.

Weaknesses stop an organization from performing at its optimum level. They are areas where the
business needs to improve to remain competitive: a weak brand, higher-than-average turnover, high
levels of debt, an inadequate supply chain, or lack of capital.

Opportunities refer to favorable external factors that could give an organization a competitive
advantage. For example, if a country cuts tariffs, a car manufacturer can export its cars into a new
market, increasing sales and market share.

Threats refer to factors that have the potential to harm an organization. For example, a drought is a
threat to a wheat-producing company, as it may destroy or reduce the crop yield. Other common
threats include things like rising costs for materials, increasing competition, tight labor supply and
so on.

SWOT ANALYSIS OF BMW

This swot analysis of BMW goes further into the strengths, weaknesses, opportunities, and
threats this luxurious brand faces.
Strengths of BMW: a luxury not everyone can afford
A brand with a strong monetary value. This is one of the most important strengths behind BMW.
As a worldwide brand, it’s worth more than $40 billion in the united states. As a vehicle, it’s
third to only Toyota and Mercedes-Benzes.
It’s safe to say there’s a correlation between brand recognition and value. Having such a strong
brand value means it’s a clearly recognized, desired automobile for people all over the world.
When you see it, you know it. You want it. And maybe, you get it.
BMW is more than a car to pick up the kids after school. Or a vehicle for a quick grocery run on
a busy Saturday morning. BMW’s are a sign of prestige. Everything about the car — from the
exterior to the marketing — screams luxury. If you have a BMW, it must mean you’re atop the
social class. Not to mention the company has a near flawless record of building perfect vehicles
while maintaining its luxurious appeal.

With a brand so easily recognizable, BMW can push out related products without breaking their
marketing budget. Once you hear the name, it inspires confidence in consumers. Especially the
brand loyalists.

Weaknesses of BMW: a small selection in a compressed market

The BMW brand only has three names under them: Rolls-Royce, BMW, and mini. However, the
BMW cars outsell the other two by a large margin. In fact, three years ago, less than 4,000
models of Rolls-Royce were sold. The mini fared better at more than 2 million units sold. Still,
more than 90 percent of total sales of the BMW brand is from selling BMWs. Everything else
barely scratches the surface.

What this means is, BMW relies heavily on their BMWs to sell well. If they didn’t, the company
would be drowning. And not in profits.
The company focuses primarily on luxury vehicles. You won’t find a line of trucks or vans here.
It’d be smarter to diversify their offerings; still provide vehicles, but in the range of lower to
middle class. At the moment, if you can’t afford a luxury car, BMW has nothing to offer you.
Instead, you’ll turn to a different brand, like Subaru or ford, to meet your needs.

People still buy cars based on reliability and price. These are the people who need their car to
take their family to and from a dance recital. BMW achieves this (and more). But it’ll never be a
vehicle a middle-class family can easily drop a down payment on.

If the economy takes another hit, BMW might flounder. Consumers’ buying needs would shift;
instead of luxury, they’d search for a cheap and study vehicle. Until ideals switch back, BMW
would be sitting there. Waiting. Because they’ve nothing simpler or cheaper to offer in their
short line of options. And if money isn’t an issue but consumer taste changes, BMW isn’t in a
place to offer something other than the one thing they’ve relied on for decades.
Debt is another issue. In 2015, BMW’s debt had reached all-time high. They threw funds
towards electric vehicles and technological investments. As automated driving slowly crested the
news, BMW threw themselves in as fast as possible. But progress has been slow. With huge debt
hanging over their heads, the brand can’t invest in other ventures at a whim like they could
several years ago.

Opportunities of BMW: autonomous driving and gas price spikes

Gas prices increases mean consumers will be looking for smaller vehicles. When the prices were
lower, having a bigger vehicle like suvs or trucks were practical. Now, with the prices rising,
owning a smaller vehicle makes more logical sense for consumers. BMW never built a line for
medium to larger vehicles, so until now, their vehicles weren’t top of mind. Thanks to increased
fuel prices though, their sales may see a sudden jump.
We’re also seeing more information about autonomous vehicles. Although the focus has
been mostly on tesla and google, neither of these brands are selling models to the public.
Although the monetary value of this market isn’t precise, BMW believes it’ll be the way of the
future in the coming years. That’s why they’ve pushed into supporting the change with their
funds.
People crave new models of cars. A newly released vehicle is expected to match recent
technological advancements. Brands need to release cars more frequently to meet consumer
demands. BMW is in a good place to fill this need.

Having the best of the best technology is an expectation when buying a luxury car. It’s
something smaller to medium cars can’t compete with as easily because adding new tech would
increase prices. Their customers aren’t equipped to pay more for a few gadget increases, but
BMW’s clientele is.

Threats of BMW: environment friendliness at a price

BMW faces competition from worldwide brands.
It was already competitive operating in the west. However, now we’re seeing an increase in
vehicle production from international brands. We’re also witnessing an increase in technological
changes.

New companies are entering the scene, meeting the expectation of luxury and technological
advancements. Tesla is achieving both as they focus on autonomous driving cars. Although
BMW is investing in these changes, they’re not at the forefront. Not like google and tesla.

Policy changes in the government are raising the costs for vehicle development. More emphasis
is placed on improving the environment by limiting greenhouse gas emissions. Brands, like
BMW, may need to come up with another way to meet government demands without suffering
from rising production costs. Since the market is so competitive now, recouping costs isn’t such
an easy feat.
And production of vehicles in the united states may slow down in the coming years. Although
new vehicles increase sales every year, the market growth is stagnating. Oversaturation means
there are too many options and not enough people buying. BMW isn’t an exception.

4) Marketing Mix
Propose 4Ps marketing mix strategy to sell the product. The strategy must be based on the
condition in question no. 2 and no. 3

Marketing mix of BMW

Understanding 4ps of marketing mix of BMW
BMW, also known as Bavarian motor works is a German multinational company which currently
produces luxury automobiles and motorcycles, and also produced aircraft engines until 1945.
The company boasts a solid marketing mix which has remained strong all these years. The article
talks about the 4ps of marketing mix of BMW and the strength of its product, price, place and
promotion strategies.
a) Product mix of BMW
BMW boasts a strong product line and offers different products and services under its product
and service brand line.
Product brand: under the product brand, BMW offers a premium range of cars and motorcycles.
BMW i: the BMW i is a sub-brand of BMW founded in 2011 to design and manufacture plug-in
electric vehicles. The company launched the BMW i3 all-electric car and BMW i8 plug-in
hybrid in november 2013 and june 2014 respectively.
BMW m: BMW m was initially created to facilitate BMW’s racing program and with passing
time it began to supplement BMW’s vehicles portfolio with specially modified higher trim
models, for which they are now most known by the general public. These m-badged cars
traditionally include modified engines, transmissions, suspensions, interior trims, aerodynamics,
and exterior modifications to set them apart from their counterparts.
Mini and john cooper works: mini cooper is one of the subsidiaries of BMW group and as the
name suggests mini cooper, offers a range of small cars catering to individual needs and desires.
Rolls Royce: Rolls Royce is a luxury automobile maker and a subsidiary of BMW. Rolls Royce
phantom, cullinan, ghost, wraith and dawn are the products that Rolls Royce offers under its
brand.
BMW Motorrad: it is the motorcycle brand of BMW. BMW Motorrad has produced
motorcycles since 1923 and achieved record sales for the fifth year in succession in 2015.
Service brand:
BMW provides a host of services under its BMW Group service brand:
Drive now: This is a car sharing service wholly owned by the automotive manufacturer BMW.
Drivenow service began in Munich, Germany in June 2011. As of October 2017, drivenow
operated over 6,000 vehicles in nine European countries.
Reach now: This is a carsharing service operated by BMW Group in Seattle, Washington,
Portland, Oregon and Brooklyn, New York. It is similar to drive now but is focused on north
American cities starting with Seattle.
Park now: A service offered by BMW Group that enables the users to find and book the parking
spots close to their destination. Users can use the park now app and can find and book their
favorite spot without any hassle.
Charge now: The BMW Group is supporting electro-mobility with chargenow, by making it
easy to find a public charging station. With charge now app, customers can easily locate a
nearest charging point for their e-vehicle.
b) Price
Pricing strategy of BMW
The target audience of BMW are the upper middle class and affluent customers and price their
products accordingly. BMW is a high-end luxury car and motorcycles company and uses
premium pricing for its products.
Great quality always comes at a premium price
Premium pricing: BMW has priced its products at a “premium” as compared to its rivals. BMW
Group also have mini cooper and Rolls Royce as their sub-brands and are priced a bit more than
the standard BMW product range.
BMW is known for providing a pinnacle driving experience and has established luxury pricing to
classify itself into the “desirable” segment of the market. This pricing strategy is not just
confined to the cars, the pricing of the spares and service costs of BMW automobiles are also a
bit higher than other competitor brands.
Recently, BMW has started using a dynamic pricing strategy in markets like India, brazil etc.
where they see a significant potential for growth. BMW offers smaller models and basic variants
at competitive pricing in these markets, enabling buyers to imagine the possibility of owning a
luxury segment vehicle.
Place:
BMW has a massive dealer network across the world for the sale of its automobiles. The cars are
sold directly to customers through BMW showrooms. Resonating the essence of the brand of
being a luxury premium brand, even the showrooms are situated at prime and posh locations in
urban cities.
c) Promotion: promotion mix of BMW
Promotion plays an important role in the marketing mix of BMW, the company uses a proper
mix of ATL, BTL and digital channels for creating awareness and promoting their products.
BMW is also active in sponsoring various rally racing events and other sports events.
These are some common traits which are communicated by the brand through its ads and
communication. These includes Class, elegance, technological advancement, speed, luxury
driving experience
BMW uses high-end magazines like Forbes, fortune, Bloomberg BusinessWeek etc. for the
placement of their print ads and prime locations for putting up their hoardings and billboards.