BMW market segmentation

Bayerische Motoren Werke AG

Current approach to Market segmentation:

One of the key aspects of designing strategy within the BMW’s marketing department is the consideration of ‘market segmentation’. The main goal of market segmentation is to ramify large heterogeneous markets into several branches such that they can be targeted effectively to complement customer needs

 

BMW offers a wide range of car models with unique designs and specifications that offer different advanced features to comply with customer demands. These models are designated numbers from 1 to 8, which are known as series number. Each series number represents the division of a vehicle line, which primarily differs on the basis of size and provides distinct features. 

 Marketing researchers claim that, it is constructive to analyze the situations, which may affect consumers’ buying behaviors for successful marketing. This proposes the idea of dividing customers into different groups based on four key segmentation categories; geographic, demographic, psychographic and behavioristic variables 

➢ Geographic segmentation

Geologically, BMW characterizes its tasks into seven fragments, specifically China, the US, Germany, Rest of Europe, Rest of Asia, Rest of the Americas, and Other regions. In the Financial Year 2017, China represented 18.6% of the organization's all out incomes, trailed by the US 17.3%; Germany being the home country of the company contributed 13.7% to the total sales while majority of business was noted to be from Rest of Europe which generated 31.9% of revenue (Store.marketline.com, 2019). From these statistics, it can be noted that BMW tends to expand its business to developed regions like Europe and neglects developing or under developed regions such as Asia or Africa. 

➢ Demographic segmentation

In an effort to affectively target specific audiences, BMW strives to evaluate the demographic aspects and hence segments its models accordingly. The key demographic factors BMW takes into consideration are ‘age’, ‘income’, ‘life-stage’ and ‘gender’. As BMW is a premium brand, it targets only specific customers who have high incomes and are able to afford premium cars. For young customers, the design is made compact, with sporty look and comparatively less luxury features in order to reduce costs. On the other hand, for customers in executive careers, BMWs 7 series is designed offering features of spectacular opulence to maximize comfort. BMW successfully targets age range of 20-50 years by providing features that suit each age group. Series 1 was designed for younger customers where as series 3, 5 and 7 were designed to target elder people. The X series of BMW has a variety of SUVs, which target customers with bigger size of families. The intensive demand of SUV’S X7 also served as an opportunity for BMW to elevate its total revenue. Lastly, BMW has identified a lot of potential in targeting female customers market. Female drivers fancy open driving and hence BMW 3 Series convertible and BMW Z4 are categorically designed for this purpose 

➢ Behavioural segmentation:

“Every person is unique. And so are the brands of the BMW Group and the products and services they offer” (Bmw.co.uk, 2019). For brands of high prestige like BMW, it is essential to maintain close relationship with customers in order to understand their degree of loyalty, attitudes and their response to products. For this purpose BMW group has successfully established ‘Customer Relationship Management’ (CRM) department. In a primary research conducted by BMW marketing team it was found that 40% of participants agreed to be in a relation with the BMW brand. It is essential for BMW to maintain this customer’s trust. And hence, significant emphasis is laid upon valuing the feedback from its loyal users in order to innovate new ideas to provide better quality products 

➢ Psychographic segmentation

Customers are often motivated to buy expensive products because they want to exhibit high social class and luxurious lifestyles. Other than this, people might have different preferences either because of their own perceptions or because of the influence of culture and surroundings. In an attempt to persuade customers, BMW is engaging with customers through online sources by writing articles and blogs that lauds its premium quality products and innovations (Miles, 2019). For example The official website of BMW informs users about BMW’s efforts in chasing sustainable goals with the production of I series electrified cars which consume less energy and are lighter and faster than traditional cars 

It can be argued that although BMW has successfully identified its market segments and effectively targeted customers to increase sales, a large market of Asia is neglected. Moreover BMW needs to prioritize market segments and instead of focusing in all directions should analyse which segments needs more attention. 

Conclusion:

Putting in a nutshell, it is safe to say that BMW is regarded as one of the top line brands in auto industry. Behind its success is BMW’s vigorous and effective way of managing its internal and external affairs. While analyzing the micro environment has lead BMW to form close relations to its suppliers and customers, going over the macro environment has informed the company about external factors that play a vital role in affecting the performances. One of the most important discussions carried out in this report was the competitor analysis. It was observed that BMW faces strong competition with Mercedes and Audi. Considering total number of car-sales, Mercedes has taken a lead over BMW by a hefty margin to take first position as the market leader while BMW edges Audi by a narrow margin to take 2nd spot. Lastly, the report talks about the key marketing strategy of BMW as it has categorized its market into different segments in order to effectively target customers who are believed to have different attitudes and buying behaviours. For this purpose, BMW is keen towards designing quality products with variety of features to acquire competitive advantage in the market.