Transcript BMW Z3 - Faculty Directory | Berkeley-Haas

BMW Z3
Week 7
Fall 2009
EWMBA 206.1
Ganesh Iyer
1
Benefits and Risks of Non Traditional Marketing
Benefits

Credibility
»

More credible than paid for advertising
Efficiency through word of mouth
»
Leveraging the buzz
Risks

Loss of control
»
»
»
»
German
Ultimate
Driving
Machine
English
Fast cars
Adv.
Technology
Hero
Sophisticated
Drives an
Aston
Sexist
Timing
Target audience
Over what is seen
Over what is said

Challenge of translating awareness into sales

Difficult to measure impact
Ganesh Iyer
2
How does NT work?
Awareness
Awareness / Visibility
Word of mouth, Buzz
Excitement
Interest
Involvement / Infatuation
Consumer
Advocacy
Purchase
Desire, Preference
Purchase
• Focus on awareness
• Leverage the buzz
• Cannot fully control what is said and to whom
• RELIES ON AUDIENCE SELF SELECTION
Ganesh Iyer
3
Traditional versus Non Traditional

Credibility
» NT can be more credible have more impact and more efficient when it
works.

Budgeting
» NT costs can be uncertain
» Traditional advertising costs can be better forecasted.

Target market
» Traditional advertising can be well targeted through mass media
» NT relies on audience self selection

Metrics
» Traditional advertising = measurable, reach GRP, frequency = more easily
measured by market research.
» NT is more difficult to evaluate.
Ganesh Iyer
4
Products best suited for NT marketing

Stage in product life cycle
» May work well for product launches in conjunction with mass media
advertising

May work better for social products
Ganesh Iyer
5
Success of NT
Comparative performance
Intro year
exp. sales
(units)
BMW Z3
Launch
ad
support
(millions)
Spend/car
9k waitlist
for 3.5
months =
30,000 p.a
$20
$667
Land Rover
Discovery
14,085
$9
$667
Infiniti I-30
15,194
$35
$2304
1998
units
(000’s)
1997
units
(000’s)
1996 units
(000’s)
Z3 / Total
BMW
20.6 /
131.6
19.4 /
119.3
10.3 /
102.4
Boxster / Total
Porsche
(selling price =
$40K)
9.7 /
17.2
5.3 /
11.5
Na / 6.8
Ganesh Iyer
6
Success of NT Elements
Some examples
Element
Objective
Reported results
Neiman Marcus

WOM, Buzz
 20 units over 3.5 month
Christmas season

Central Park event

Media exposure and Buzz

Jay Leno

WOM, Buzz

Radio DJ
Unstated
After 2 days, 100 orders placed.
 By Christmas 6000 orders
2000 media reps attended.
 # of Z3 editorials in leading
publications can be counted.
Unpredictable, all we know is “it
worked out very well”
 Role for campaign evaluation
research to measure awareness
impact.
Statements like “Amazing
Credibility,” “Had 3 times the WOM
of other events.
 What does this mean in terms of
measurable effects on sales?

•Always try to specify quantitative objectives for each element to the extent possible
• Important role for campaign evaluation research to understand the sales impact of these programs.
Ganesh Iyer
7
Postscript

By Jan. 1996 BMW had to scale down their marketing efforts to
avoid potential consumer backlash by not being able to meet
demand.

Tactics shifted to maintaining consumer interest
» Cinema advertising (60 sec. Teaser placements)
» In flight videos targeted at business travelers.
» Dealer sponsored direct marketing programs to maintain interest of
people on waiting lists.

Launch date March 1996. Selling price in 1997 = 30k to 36k.
Ganesh Iyer
8
Analysis Framework
Perceptual mapping
Company Analysis
Marketing Myopia
First mover advantages
1. Customer Analysis
2. Competitor
Analysis
Positioning
Segmentation
3.Marketing Strategy
Pricing process (ODI)
Pricing and innovation
Non Traditional advertising and promotions
BMW Z3
Direct marketing
Product
Price
Promotion
Place
Marketing Orientation
Branding
Product Line Strategy
(Cambridge)
Traditional Advertising
Going to market
Goodyear
Market
Ganesh Iyer
9