BMW Case

Analysis :

We can begin by the facts, during this period, the number of cars sales in united states decreased by 24%, but BMW evolution was worse with a decrease of aproximatively 30% during the same period. So what are the reasons of the decline of BMW on the american market beetween 1986 and 1991?

We can notice several key events which had a strong influence on BMWs business. The brand is on the luxury / performance car segment of the market touched by differents news reforms and taxes appearing during the period. So the 10% tax reform act for luxury cars (1987) and the doubling of the gas guzzler tax are some key elements to justify the fall of sales.

Moreover the economical conjuncture has to be taken in account, indeed the stock market crash in 1987 reduce the number of potentiel BMW buyers, added to the changement of the DM / Dollar relationship which makes BMW prices increased by 24%. Those elements created changes of consumers buying behaviour. At the same moment we could see new competitors from Japan which were more in adequation with the customers in term of pricing and communication strategy.

The lack of dealers services is also one of the important points, as BMW isn’t sold by exlusive dealers but by many dealers selling various brands, this distribution sytem did not correspond to the image that the brand want to spread.

So all those facts and figures show that BMW had to review his marketing strategy to face the “crisis” they were going through.

Diagnosis :

In a marketing point of view, the image of BMW in 1991 didn’t feet with the market demand. So the communication should be review to be in adequation with the state of mind of the market.

If I were Mr Gerlinger, i would oriented the image of the brand to an environement friendly brand which didn’t sacrifice the performance and the quality of its products. So the R&D had to develop new fuel/petrol savings technologies in order not to be taxed for