BMW Z3

1
BMW Z3

• Week 7
• Fall 2009
• EWMBA 206.1

2
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
• Timing
• Target audience
• Over what is seen
• Over what is said
• Challenge of translating awareness into sales
• Difficult to measure impact

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How does NT work?
Awareness
Interest
Desire, Preference
Excitement
Purchase

• Focus on awareness
• Leverage the buzz
• Cannot fully control what is said and to whom
• RELIES ON AUDIENCE SELF SELECTION

4
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.

5
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

6
Success of NTComparative performance
Intro year exp. sales (units) Launch ad support (millions) Spend/car
BMW Z3 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 (000s) 1997 units (000s) 1996 units (000s)
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
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Success of NT ElementsSome examples
Element Objective Reported results
Neiman Marcus WOM, Buzz 20 units over 3.5 month Christmas season After 2 days, 100 orders placed. By Christmas 6000 orders
Central Park event Media exposure and Buzz 2000 media reps attended. of Z3 editorials in leading publications can be counted.
Jay Leno WOM, Buzz Unpredictable, all we know is it worked out very well Role for campaign evaluation research to measure awareness impact.
Radio DJ Unstated 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.

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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.

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Analysis Framework
Perceptual mapping
Company Analysis Marketing Myopia
First mover advantages
1. Customer Analysis
2. Competitor
Analysis
Segmentation
Positioning
Marketing Orientation
3.Marketing Strategy
Branding
Product
Pricing process (ODI) Pricing and innovation
Product Line Strategy (Cambridge)
Price
Traditional Advertising
Promotion
Non Traditional advertising and promotions BMW Z3
Place
Going to market Goodyear
Direct marketing
Market