Bmw Case Questions

1. What was BMW's position in the market in 1986? Who was buying BMW and

what were they buying?

BMW was in a leadership position in the U.S. market as it peaked at 96,000 units sold. Its worldwide performance had continually improved. It was the "high flying" brand of the 1980s, the ultimate "yuppie" status symbol.

Generally, younger affluent customers, the most demanding market segment, are buying BMW's. More specifically, people that make a median income of 100 thousand to over 200 thousand dollars and people with median ages from 39 to 46 are purchasing BMW's. The trend is that the customer who is younger who makes a lower income buys a lower series of BMW.

2. What caused the unit sales decline from 1986-1991? Could BMW have prevented

it given its position in 1986?

The U.S. car buyers' values changed value-orientation and BMW's marketing and new product development did not change to meet this change. The three external events that affected this change were: The 1987 Tax Reform Act, The Stock Market Crash of 1987, and The Luxury Tax imposed gas guzzler tax doubled.

BMW definitely could have prevented the sales decline by aligning their marketing strategy to value-orientation while they were a leader. They are in a highly competitive industry where it is important to constantly connect with your customer. They lost sight of this and did not change with the times.

3. Evaluate Gerlinger's performance. What has he accomplished to date? Can

BMW effectively compete against Lexus and Infiniti?

Gerlinger has been successful up to this point. He has implemented many aspects of his total package. For example, he connected with consumers by investing in the "Better Driver" advertising campaign as evidenced by the 325i model selling well and the 7 series unit sales increasing by 45% in December of 1992. BMW has received good reviews from the trade press, and they promoted environmental and social responsibility themes to relate to the values of consumers. BMW also had the first unit sales increase in 1992 since 1986 (23% increase).

BMW can effectively compete against Lexus and Infiniti as they continue to change the public's perception of their brand. They have shown a large growth in sales which is higher than Infiniti's growth meaning Infiniti is losing market share to companies like BMW. Although BMW has 7% lower growth than Lexus, they are focusing on the customer while Lexus has been slow to innovate. It is believed that as they continue to do this, they will be able to close the distance and compete more effectively against Lexus.