week 5. Developing a Global Vision

Economic and Technological Development


First, let’s take a look at BMW in context of the global automobile industry. In recent decades, the industry has undergone significant consolidation among manufacturing enterprises. From multiple acquisitions by Ford to the Daimler-Chrysler merger, many automakers now enjoy economies of scale and global distribution networks that afford significant advantages in procurement, R&D, manufacturing, and distribution.
The chart plots relative automobile unit share and growth rates of the major manufacturers.
BMW succeeded in differentiating its product line to address the growing needs of its target audience, introducing the Z3 roadster and the X5 sport utility in the late 1990s. By the end of 2003, fully ten percent of all BMW sales were in the “light truck” category. The new MINI, launched in 2001 as a separate master brand yet arguably benefiting from the halo effect of its parent brand, was a phenomenal success, reaching estimated sales of over 120,000 units in 2003, or ten percent of the BMW Group’s unit sales. Nonetheless, isolating pure BMW unit sales reveals respectable five-year unit growth of 30 percent, a virtual tie with the growth of Mercedes-Benz.

But just over the last few years, some major tweaks have been churning out of BMW’s design and marketing departments. Perhaps threatened by the marketing savvy and performance-minded products from Audi, Mercedes, Infiniti and others, BMW has decided to shake things up a bit in its quest to keep the core brand distinct from the pack. And while significant shifts in design philosophy, driving qualities, or brand identity could alienate loyal consumers and damage brand equity, BMW has ironically put these very attributes into play in what appear to be some risky moves to achieve greater brand relevance.

It’s always interesting to see a tried and true brand change course. At the end of the day, while the designers and marketers tweak the Machine, hopefully they’ll continue to steer the Ultimate Driving brand down a road that’s true to its heritage.