BMW's "Company of Ideas" Campaign:
Targeting the "Creative Class"

            
 
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Case Details:

Case Code : MKTG137
Case Length : 17 Pages
Period : 2004-2006
Organization : BMW of North America LLC
Pub Date : 2006
Teaching Note : Available
Countries : USA
Industry : Auto & Ancillaries

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.



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"We are eager to unveil this smart and original campaign that communicates BMW's culture of creativity so thoroughly. BMW has carved out a unique niche in the industry by placing a premium on constant innovation and inspiration, and this campaign will reveal the company behind The Ultimate Driving Machine." 1

- Jack Pitney, Vice President, Marketing at BMW of North America LLC, in 2006.

"What a load of manure. BMW long lived by the power of the idea of performance driving. Now they've decided to jettison that history in favor of New Age marketing mumbo-jumbo... They've sold their birthright for a bunch of Bangled2 pottage. A great pity." 3

- Professor Stephen Bainbridge, Professor of Law, UCLA,4 in 2006.

'Fixing What Ain't Broken'?

In May 2006, BMW of North America LLC (BMW LLC), the North American arm of German automobiles major BMW AG, released a new advertising campaign promoting itself as a "company of ideas". This move took many by surprise. The tone and tenor of the new campaign were a huge departure from the company's communications in the past. The series of new ads no longer stressed BMW's performance, but strove to project its design prowess and corporate culture that fostered innovation. In doing so, the company said that they wanted to take their brand beyond yuppies5 and attract a wider section of the affluent class.

Many analysts were surprised as 2005 had been a good year for BMW in the US, and companies didn't usually deviate from a strategy or formula that had proved successful. In 2005, BMW LLC reported record annual sales of 307,020 vehicles (BMW and MINI6 brands combined) in the US, up four percent over the 296,111 vehicles sold in 2004.

The annual sales in 2005, for the BMW brand (BMW automobiles and BMW SAV7 combined), was 266,200 units, up 2.4 percent when compared to 260,079 units in 2004. Tom Purves (Purves), Chairman and CEO of BMW (US) Holding Corp., commented, "This is a strong finish to a year marked with numerous model changeovers. We've only had full availability of our new award-winning 3 Series sedans8 in the past two to three months. Given that, and changeovers in the 7 Series9 and 5 Series,10 we are especially pleased with the annual increases."11

Despite the good sales performance, Jack Pitney (Pitney), vice president, marketing at BMW LLC felt that almost 75 percent of luxury car buyers in the US were not considering BMW as they still strongly associated it with the yuppie phenomenon of the 1980s. Thus, the company was banking on this new "company of ideas" ad campaign to redress this situation and expand its market.

Though the ads received rave reviews from various quarters, some analysts felt that BMW was losing its soul by moving away from the theme of "driving" and "performance." According to marketing expert Al Ries (Ries), BMW owned the word "driving" and this had been etched in the minds of consumers over a period of three decades with the tagline "The Ultimate Driving Machine."

Others felt that the ads fell under the heading of "preventive maintenance" as it came at a time when there was no real need for BMW to upset the cart. A few other analysts felt that BMW was losing its soul by trying to be everything to everyone.

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1] "BMW Unveils New Ad Campaign," www.strategiy.com, May 9, 2006.

2] In the 2000s, BMW made some changes in the design of its vehicles under their new design chief Christopher Bangle (Bangle). The new designs were referred to (often derogatively) as "Bangled" after the name of Bangle, by the press and BMW traditionalists.

3] "BMW Losing its Soul," www.professorbainbridge.com, May 8, 2006.

4] The University of California, Los Angeles, popularly known as UCLA, is a public, co-educational university located in the city of Los Angeles, USA.

5] Yuppie, short for "Young Urban Professional," describes a demographic of people primarily comprising of the children or grandchildren of the baby boomer generation (people born between 1945 and 1964). In general the yuppies are highly-educated and upwardly-mobile and are aged from early twenties to early-to-mid thirties as of 2006. They tend to hold jobs in the professional sectors, with incomes that place them in the upper-middle economic class. The term "Yuppie" emerged in the early 1980s. Although the original yuppies were "young," the term now applies as well to people in middle age.

6] MINI is car produced by a subsidiary of BMW.

7] SAV is the acronym for Sports Activity Vehicles. BMW calls its sport utility vehicle (SUV) as SAV. An SUV, is a type of passenger vehicle which combines the load-hauling and versatility of a pickup truck with the passenger-carrying space of a van.

8] A sedan car is one of the most common body styles of the modern automobile. At its most basic, the sedan is a passenger car with a separate hood covering the engine in the front, and a separate trunk for luggage at the rear. The BMW 3 Series is a line of compact luxury cars manufactured by BMW since May 1975. Luxury cars are vehicles that lay more emphasis on comfort, appearance, and amenities than on performance, economy, or utility. They usually offer cutting-edge technology, higher quality materials, and are often built in smaller numbers than more affordable mass-market vehicles. As of December 2006, to qualify as a luxury car, the Mean Selling Price of the car had to be in excess of around US$ 36,000.

9] The 7 Series is BMW's flagship car. It is a luxury sedan.

10] The 5 Series is a series of midsize luxury automobiles manufactured by BMW. They are available as sedans and station wagons (a car body style similar to a sedan, but with an extended rear cargo area).

11] "BMW Sets All Time Annual Sales Record in 2005," www.internetautoguide.com, January 4, 2006.

 

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