'Market Segmentation, Positioning and targeting for BMW & Jack Daniels'.
Assignment Two 'Market Segmentation, Positioning and targeting for BMW & Jack Daniels'
.1 Introduction
This report aims to examine the market segmentation, positioning and targeting of BMW (automobile company) and Jack Daniels (dark spirits producer). BMW will first be examined giving information about the company and where it is now and any recommendation that we feel are appropriate. We will then examine Jack Daniels in exactly the same way.
.2 BMW Company Profile
BMW was formed in 1917, from the merger of two small aero engine makers. Their famous blue and white symbol stems from the colours of the Bavarian Luftwaffe and is said to resemble the view of the one of their plane through a propeller.
BMW is renowned for its sporty, sophisticated & luxury image which has been built up since the 1970's with many motor sport victories ranging from Touring Car to Formula 1.
BMW Group's worldwide mission statement is: "To be the most successful premium manufacturer in the industry."1
.3 BMW's Marketing Mix
To examine BMW we must first look at the marketing mix. A company's marketing mix is made up of four main points these are Price, Product, Promotion and Place. Through these points we can examine the specifics of a company to gain an insight into their segmentation, targeting and positioning.
.4 Product
The products produced by BMW are prestigious, high performance, technologically advanced automobiles. These start from mid-range cars up to the most prestigious and luxurious.
The present models are:
BMW 3 Series - Saloon, Coupe, Convertible, Touring, Compact
BMW 5 Series - Saloon, Touring
BMW 7 Series - Saloon
BMW Z3 - Roadster
BMW Z4 - Roadster
BMW Z8 - Roadster
BMW X5 - 4WD
BMW M - M5, M3 Coupe, M3 Convertible, M Roadster, M Coupe
Mini Cooper - an independent brand within the BMW Group2
.5 Price
BMW price ranges are from £17,000 to £80,000. There are many options that affect their car prices such as engine size, equipment levels and motor sport versions. This means you can purchase a base model (which is the cheapest) and then add options which may cost as much as £20,000 more per car.
Examples of price:
Model
Lowest Price
Highest Price
BMW 3 Series
£16,265
£32,870
BMW 5 Series
£23,540
£42,010
BMW 7 Series
£52,750
£60,000
BMW Z3
£18,990
£27,7303
BMW X5
£34,365
£54,000
BMW Z8
£80,000
£80,000
BMW M
£36,000
£52,000
.6 Promotion
BMW use a variety of different promotion techniques, most obviously advertising. BMW advertising has always focused entirely on their cars with same advertising company, WCRS being the used since 1979.
A broad range of advertising is used by this agency such as television for branding campaigns and new car launches, the press with Tabloid weekend colour supplements, regional publications and magazines.
Outdoor campaigns such as high impact motor shows are used for product launches and branding. Sales literature, brochures, price lists and POS materials are other marketing activities that they are involved in. They have also started advertising online with pop-ups and web links to related pages. 2002 has seen BMW use the radio for national advertising for the first time which in turn has helped local Dealerships hold individual campaigns in their local press, on the radio and with bus advertisement
BMW also uses other promotion techniques. They employ methods such as associating the BMW brand to a variety of films, TV plays and documentaries. In these the heroes only drive the best-equipped cars, in this particular case, BMWs. This agreement is mutual where the producers want to use certain brands of cars and the car manufacturers want to achieve a greater degree of publicity.
This mutuality allows BMW to obtain global publicity reaching millions of viewers as well as utilizing subliminal communication. A perfect example is the BMW association is the 'James Bond' films from 1983, 1994, 1997 and 1999. E.g. In 'The World in not Enough' James Bond drove the new Z8 before the car had been launched and in 'Austin Powers 3 - Goldmember' the Mini Cooper was used.4
Other ways they place their products include upmarket dealer showrooms, association to Formula 1 (giving an impression of being dynamic and innovative), and the Americas Cup (standing for high performance ...
This is a preview of the whole essay
This mutuality allows BMW to obtain global publicity reaching millions of viewers as well as utilizing subliminal communication. A perfect example is the BMW association is the 'James Bond' films from 1983, 1994, 1997 and 1999. E.g. In 'The World in not Enough' James Bond drove the new Z8 before the car had been launched and in 'Austin Powers 3 - Goldmember' the Mini Cooper was used.4
Other ways they place their products include upmarket dealer showrooms, association to Formula 1 (giving an impression of being dynamic and innovative), and the Americas Cup (standing for high performance and technology).
.7 Place & Distribution
BMW use upper market Dealerships & Imports for non-dealer networked countries they have four car manufacturing plants in the UK these are Bracknell in Berkshire, Oxford Plant, Oxford Hams Hall Plant, and Goodwood in West Sussex. They also supply financial services based in Hook - Hampshire, Swindon Pressings Ltd - Swindon and Wiltshire. They have 156 dealers in the UK who are franchised to sell BMW cars, additionally 148 dealers are franchised to sell Minis. Worldwide BMW operate in 100 different countries with over 4,400 dealers which are authorised to sell both new and used cars, parts and after sales service products.
.8 BMW Segmentation
BMW uses segmentation to identify specific buying characteristics. To do this it must look at the geographic, demographic, behavioural, socioeconomic, and beneficial characteristics of society.
Geographically, the main markets for BMW are Europe & North America as these areas are both heavily industrialised and thus their residents are financially positioned to buy upper market cars (these areas account for 64% of BMW sales.).5
The demographics of people able to purchase a BMW are men and women aged 30 - 50 years old6. Behaviourally these people have a successful image, want a clean modern look, and the feel good factor of an established dealer network. The benefits required by these people are exclusivity, performance, reliability & quality.
Individuals with A, B, & C1 socio-economic status and salaries of £25,000 plus would be most likely to be interested in BMW automobiles.7
.9 BMW Targeting
BMW use a differentiated strategy, this means that they target specific automobile markets. These markets suit different people within the segmentation stratosphere.
The markets that BMW actually target are Sports Convertibles (Z3, 3 series, and new Z4), Executive (3 series, 5 series), Super Executive (7 series), Touring / Estate (3 series, 5 series), Grand Tourers (Z5), Super sports (M series), and 4X4 (X5).
2.1 BMW Positioning
The image that BMW has positioned its self as is exclusivity, performance, technologically advanced, quality automobile producer. The markets BMW position them selves in are very competitive. This is due to the number of other automobile manufacturers that produce cars of a similar quality, price, and image. The main manufacturers that BMW compete with are Mercedes, Jaguar, Audi, VW, Alfa Romeo, Lexus, Ford, Range Rover, Porsche, TVR and Opel (Vauxhall in the UK). Most of these manufacturers use differentiated strategies to produce large ranges of cars as well. The difference is that each of the companies relies on different brand images to sell their cars. E.g. Mercedes is seen as a luxury, reliable and quality producer but does not have the 'performance factor' that BMW does but on the other hand Alfa Romeo is renowned for being stylish and performance breed but unreliable car. The positioning of these companies and their brands has been built up over many years but BMW has stamped their mark upon the public in a positive way. This has lead to continuing sales growth through out the international car markets. This has also allowed them to move into new markets to challenge the market leaders. E.g. Range Rover and the BMW X5(4X4).8
2.2 Conclusion
BMW strategies seem to be correct due to continued and growing market share, high profitability, and increasing brand strength.
The recommendations that may be made to BMW are that they should be careful not to over stretch themselves into many other markets as their brand image may become too diluted. This would mean that they may go through a down turn in sales in future years as the brand becomes less prestigious. History shows that this has happened to major producers before with the likes of Rover group in the late seventies and early eighties when they were partly nationalised and controlled the whole UK motor industry. The truth to be told is that BMW is German and thus is more likely to be better organised than the British dinosaur in the late seventies and eighties.
Jack Daniels
2.3 Jack Daniels Company Profile
At the moment the Jack Daniels Company is owned by Brown Forman Corporation which is one of the largest American spirits and wine retailers. Due to its total sales in 2001 being more than 2.1 billion dollars. The first distillery of Jack Daniel's was opened in 1886 in Tennessee (USA). In the last century J.D has been exported in more than one hundred and twenty countries, making J.D' s logo one of the most known brands in the world. The logo can be found on t-shirts, key rings or posters in every remote corner of the world. J.D factory has always maintained its traditional image with the same original characteristics since it was purchased by Jack Daniels at 13 years old.9
2.4 J D's Marketing Mix
Again in the same way as BMW we must examine the factors of Price, Product, Promotion and Place to gain an insight into the segmentation, targeting and positioning strategy.
2.5 Product
Examining the product J.D, it is seen to be a Tennessee dry scotch whisky seven years old and it is considerate by mass consumers a whisky of middle to high quality. J D's packaging and characteristics have remained the same since the conception of the product this asserts with the idea that J.D organization is conscious that its logo is well known and is aware of its strong brand image.
.
2.6 Price
A bottle of 0.75 Litre Jack Daniels costs between sixteen to eighteen pounds and a shot in a pub costs between two and three pounds.
2.7 Promotion
J.D promotes its self through chain merchandisers instead of advertising E.g. Zippos, T-Shirts, jackets, & playing cards etc10. This was with the exception of last September when J.D wanted to celebrate its 120th birthday with big parties and promotions all over the world. As part of their 120th birthday campaign, J.D sponsored a 3-d pool game to target males aged 21 to 34 through its website (adver-gamming.). 11
2.8 Place
As Jack Daniels is an alcoholic drink retailers that distribute the drink are required to have a license. This means the places where it is possible to buy J.D are restaurants, pubs, bars, cinemas, supermarkets, off licenses and corners shops.
Segmentation
2.9 Jack Daniels strategy for segmentation
The environmental market in which Jack Daniels operates in is wines & spirit. In the conceptual map Jack Daniels is placed in the middle to high cost range of spirits, even though it is considered to be one of the most traditional and mass-known types of whisky in the world. J.D faces high competition with other global brands such as Bacardi, Courvoisier, Smirnoff, Ballentine's and Jony Walker, but also with smaller and cheaper local brands that usually are more competitive on price due to lower duty taxation.
Since we know that alcohol is considered a drug every where, the J.D organisation has to on the whole focus its PEST analysis on political and socio-cultural environments for different countries. Through a political point of view every government has different regulations concerning alcohol consumption and spirits trade, in regards to the socio-cultural implications, the main question is 'what are the trade barriers for different societies with regards to alcohol consumption? 'For example, it is looked upon very different to drinking Jack Daniels in Scotland and to drinking Jack Daniels in an Arabic state.
Jack Daniels marketing mix is aimed as a spirit is for male drinkers since female drinkers prefer to drink clear and neutral spirits, as it gives them a sense of purity. In reason with alcoholic addiction, Jack Daniels consists of high alcoholic grade which makes it heavily used with medium to heavy drinkers. Jack Daniels is used in many different ways, the tendency to be drunken by younger drinkers who mix it with soft drinks such as Coke and older drinkers who consume it in a straight way (these are considered to more whisky drinkers). To locate its customers, the J.D organisation has to focus on demographic and lifestyle characteristics linked with alcohol consumption. In USA to understand where its potential consumers are located, tests were carried out using different characteristics such as age, sex, and marital status, showed that 22-23% of male drinkers are considered medium to heavy users of alcohol, who are either single or divorced.
The found that the majority of those who were older drank in metro-areas and those who are younger drank in rural area. However, to further understand spirit consumer profile, lifestyle characteristics were used, focusing in particular on their forms of entertainment since alcohol is supposed to be used during free time and on the contrary it is illegal to consume it during working time. At this point, it's clear that Jack Daniels consumers are divided in to two segments: one with an age between 18-35 and the other being commonly single or divorced, employed with the tendency to drink spirits through a mixed way. The second segment is composed by a class whose potential consumers are over 35 married and employed, with the tendency to drink through a straight way. 12
3.0 Jack Daniels Targeting
Regarding the targeting strategy adopted by Jack Daniels organisation, it is obvious that they have an undifferentiated strategy, which consists of them using the same Marketing Mix to different consumer segments. This decision was drawn by the fact that global spirit market is too vast. In fact Jack Daniels has never modified its product, it is "the same" whisky as that which was produced a century ago, further to this Jack Daniels has never changed its packaging, the same bottle with the same characteristics and the same label is still being used today.
3.1 Jack Daniels Positioning
Positioning, the idea with in consumer minds is that the product is linked mainly with price. Jack Daniels is placed in the middle to high price range of spirits, No matter where the product is placed the price is always to remain consistently cheaper than a Chivas Regal or Courvoisier and it is more expensive than Bell's or Famous Groose. In addiction terms Jack Daniels is considered a whisky of medium to high quality with characteristics such as light might flavour and highly strong alcoholic grade that makes it the most preferred whisky for mixed drinks.
3.2 Jack Daniels Conclusion
In Conclusion the Marketing policy adopted by J.D since early days has been working. Jack Daniels always placed themselves as a high quality producer with middle to high price compared to its competitors. This may have been possible because the final price is not influenced by costs of advertising. In the last four or five years the environment
Market of mixed spirit is changing in forms of habits and uses. By the time that competitors such as Bacardi, Smirnoff and Martini launched a new range of pre-mixed bottled spirits with a law dosage of alcohol, for example Bacardi Breezer, Smirnoff Ice Martini Metz with the final goal to target late users of alcohol that usually are beer drinkers (female drinkers or younger drinkers). A new trend since these products is invading the segment of usually mixed spirit drinkers (e.g. those who are used to drinking spirits mixed with soft drinks). This is also facilitated by the fact that a pre-mixed bottle is more assessable for the consumers rather than a fresh cocktail by a retail point of view. In fact it is possible to buy a single bottled drink in a grocery shop which it is not really a single J.D with Coke. These are the factors that are making Jack Daniel products weaker on the market and forced the organisation to plan a production of pre-mixed bottles of Jack Daniels and Coca Cola with a low percentage of alcohol, but always maintaining its traditional image with a black bottle and the same original logo (J.D DARK COLA)13.
The intention of the Jack Daniels organisation is to aim for a younger male target market of alcoholic drinkers and to remain as strong as they are in the segment of older drinkers who prefer to drink Jack Daniels straight.14
www.bmweducation.co.uk/companyhistory
2 www.bmw.co.uk/models
3 www.bmw.co.uk/prices
4 www.bmweducation.co.uk/companyfacts/fact13.shtm
5 www.bmweducation.co.uk/statistics
6 see fig1
7 see fig2
8 www.bmweduction.co.uk/companyfacts/competitors/fact1.shtm
9 www.brown-forman.com
0 www.drinkingadgets.com/jackdaniels.php
1 www.kpe.com/ourwork.howpoints/veiwpoint.advergaming4.shtml
2 www.ftc.gov/reports/alcohol/alcoholreport.htm
3 www.packagingdigest.com/news/0702news.htlm
4 www.brown-forman.com/brand_news/030702millerandJD.html
