Situation Analysis

James McDowell, vice president of marketing at BMW

North America, Inc. must design Phase II
communication strategies for the launch of the new
BMW Z3 roadster. The program follows an out-of-thebox pre-launch campaign centered on the placement
of the product in the November 1996 James Bond
movie, Golden Eye, and including other nontraditional elements such as a product appearance on
Jay Lenos Tonight show, an offering of a James Bond
Edition Roadster in the Neiman Marcus Christmas
Catalog, and large scale public relations activities.
McDowell must assess the effectiveness of the prelaunch activities and design marketing tactics that can
sustain product excitement until product availability in
March.
BMW Z3 is the first BMW car which is being
manufactured in North America which has not been a
very big market [roughly around 16%] for BMW
because of the inability of the American customer to
associate with a foreign brand. Therefore the sales and
marketing approach of BMW Z3 will lay the foundations
of the future of BMW brand in America. Their phase I
was a success, and they had two months between the
launch and the product availability to further ingrain
their brand image in the hearts of the Americans. So
how to strengthen their brand campaign for the coming
two months was their main concern.
SWOT Analysis
STRENGTHS

1. BMW is not the biggest but the best car company in the world as it is
more into youth targeting.
2. Increase in sales: Their franchise expansion seems to be more
promising way to incremental sales to the brand.
3. It influences consumers strongly through Media and film industry.
4. It is Innovative and Impactful.

WEAKNESSES
1. Their corporate image is too serious and tradition-bound
2. Plan Execution was complicated.
3. Z3 was perceived to be German-made car not an American made-car.

OPPORTUNITIES
1. The cars are not as expensive as German manufactured cars.
2. It is the first Auto plant outside Europe.

THREATS
1. Competition from Mercedes.
2. People not accepting a German car in US.
3. New players in the market. The partners or sub- partners may turn into
rivals.
4. Government regulations

Exhibit Analysis
Exhibit 1: BMW Units Sales history (U.S and worldwide)
Perfect for the Z3 launch because people were getting familiar with
BMW products.
Unit sales showed up to an upward trend and actually increased during
the given period (1984-1985), which showed that BMW had its global
strategy.

 Comparatively in the US, Sales figures showed an increase as well as

decrease for the same period. Between 84 to 86 it actually increased by
approximately 37%, and from then on till 91, it was down by
approximately 40%, but again the sales picked up from 92 to 95
recording almost a 45% jump, perfect for the Z3 launch because people
were getting familiar with BMW products.

Exhibit 2: Notable movie product placement Examples.

Gauging from the movie product placement examples, there have been
many movies in the past, which have acted as a springboard for launching
a new product with responses being mostly favorable at times for the
company.
For Example when Tom Cruise sported Ray ban sunglasses in Risky
Business, Ray bans sales tripled. When Apple laptops were shown as an
integral part to solving an intrigue plot in Mission Impossible, Apples long
terms sales increased.

Exhibit 3: Time line of Key events.

The key events followed pre-launch from 1992 onwards followed BMW s
strategy to position and market the z3 appropriately. During the year
1994, they tied up with MGM for the product placement through the movie
Golden Eye.

Exhibit 4: Z3 Roadster Neiman Marcus Christmas catalog

A part of BMWs strategy to pursue the audience to check out the new
Z3 roadster while shopping for Christmas. It highlighted the fact that its
now James Bonds BMW

Exhibit 5: 1996 Apple Corporate Print Advertising referring BMW Website

It was a positioning that BMW was looking out for. They wanted the
American public to know about its superior technology. What better way to
showcase it than associating itself with a true blue American tech brand
like Apple

Exhibit 9: Comparative Launch advertising Campaign Expenditures and

Introductory year sales

 It actually analyses figures for all the cars in all segments launched in
that period (90-95), and they finally come out with figures for the
average launch reach goal, which is 75-90% with the average frequency
being 2.5, which is exactly what BMW is looking for to promote the Z3.

Exhibit 10: 007 licensed to sell dealer promotional kits

Associates BMW with the legend of 007, and these are kits for dealers
who are the connect point of the customers, which means the customer
will also have the movie in mind while driving.

Exhibit 11: Box office draws for Noteworthy Product Placement Movies
It shows the opening week ticket sales for notable product placement
movies and Golden Eye is in the top 5 which is good news for BMW

Exhibit 12: Sample Product Reviews from Major Automotive Magazines

Automotive magazines tend to be the consumers guide before buying a
car. So, everybody takes them seriously. For the Z3 to receive good
reviews from the automotive.

Exhibit 13: 1995 Unit Sales and Advertising Spending within the U.S
Luxury/ performance Segment
This was the time when the car was being prepared to be launched, and
BMW was doing good to be at No.3 in that list which considered total
sales. But BMW shrewdly went about its Media expenditure, far below its
capacity

Issue Analysis
The main issue in this case is that, in the context of a new product launch,
how bmw will structure its marketing mix and manage its launch? Dr.
Helmut Panke, Chairman and CEO of BMW (U.S.) Holding Corp. were
saddled with the responsibility of exporting BMWs mystique from the
Bavarian hills to the fields of South Carolina. Franchise expansion into
more youthful targets seemed the most promising way to add incremental
sales to the brand. Updating the corporate image and to have a new
product development program which was capable of sustaining that

image. Positioning Z3 in the American culture and settling into the hearts
and minds of American public. Focus on nontraditional marketing methods
to leverage the excitement and enthusiasm of the core customer base in a
way that would draw broader attention and interest to the brand. Search
of unconventional ways to introduce the unique vehicle like selecting
Fallon McElligott whose proven experience in integrated and electronic
marketing-the key skills for a nontraditional launch. Deal negotiations with
MGM/United Artists on the James Bond Golden Eye film. The Z3
appeared in the movie for a miniscule amount of time which was
considered ironic. Other complimentary elements of the program that
would pre-sell the Z3 and generate dealer traffic would be stimulating
interest in other models in the BMW product line.

Recommendations
BMW, being a global company decided to open Spartanburg plant in North
America. We think it should have had an approach to open few other
plants in other top strategic parts of the globe at the same time. If it had
done so, it might not have given an opportunity to its competitors in those
strategic parts of the globe to open their plants or to develop a similar
strategy. Doing so, BMW would have gained the edge over its competitors.
The central goal of the launch was to expand the BMW franchise. But we
feel that it was not necessary for BMW to stress so much on the American
culture and settling into their minds and hearts because that may have
hampered its recognition and success in other parts of the world. Rather,
it could have addressed the general public all over the world.
BMW knew it had 345 dealers and their goal was to expand the franchise.
It produced only 150 pre-production cars for use in pre-selling promotions
which were circulated among the dealers. This gives the public an internal
picture of the BMWs confidence level in the Z3s success. It may have
wanted to pre-produce more cars than the number of dealers for preselling promotions.
The BMW/MGM agreement was orally sealed in January 1995 and formally
signed in July 1995. This elongated time period of gap may have created

opportunities for their counterparts to break or disturb the agreement.

Another thing is BMW did not pay anything to MGM to place its product in
the movie. This may be because of its reputation in the global automotive
market. So, the exchange between BMW and MGM was very simple. We
feel that the agreement should have been more complex and strong
enough to last long their relations as it was a one time opportunity.
The final pre-launch marketing plan included some complimentary
elements of the program. One of them was Neiman Marcus Catalog
Offer. BMW and Neiman had set a 20-unit sales goal over the three and a
half month Christmas selling period. Later they increased it to 100.
Neimans had received 6000 customer orders or waiting list applications
by Christmas. So, we thought BMW should have analyzed the situation
and predicted at least a figure that was close to the number of orders it
had received by Christmas. Doing so, it would not have disappointed the
5900 customers who might have changed their minds to buy a different
car and spread the word-of-mouth. The last element was the Radio DJ
program which was decided by the management one and a half weeks
before the D-Day. We thought that there should have been more
complimentary elements scheduled till last day before the D-Day. The one
and a half weeks gap before the launch may have created some
opportunities for its competitors to counter their plan.