Lexus is a sub-brand of Toyota Motor Corporation. Its name is the combination of the words “luxury” and “excellent” which represents that Lexus specializes in manufacturing luxury and high-end automobiles.
Globally, the mission statement of Lexus is “The Pursuit of Perfection.” In America, it is modified a little bit—“The Passionate Pursuit of Perfection.” It also targets the three most famous Germen automobile manufactures as its competitors which are BMW, Mercedes-Benz and Audi. More and more excellent products are created for competing with them. With such a huge series of products, Lexus recently become the best-selling high-end automobile brand in America. According to Cheshi.Com (2011), Lexus sold 322,434 cars in the U.S. market. The amount is much higher than any other domestic or imported luxury cars manufacturers.
Lexus is Japan's top one automaker Toyota Motor Corporation's luxury brand which was first introduced in 1989 in the US market. But in only ten years, since 1999, Lexus overtook those US top sellers such as Mercedes-Benz and BMW, becoming the nation's best-selling luxury car brand until now. Figures from the China Trading Center for Automobile Import show that Lexus has already surpassed all the imported luxury vehicle brands during the first half of 2007. This has changed the landscape of Chinese luxury car market which has been long dominated by BMW, Audi and Mercedes-Benz (Gasgoo.com, 2007).”
- Competitive Product—Lexus LS 600hl
Based on the information provided by CheShi.Com (2011) and the website of Lexus, two main features of LS 600hl are being introduced.
The Lexus LS 600hl is the world’s first full-hybrid automobile. It has a 5.0L V D-4S Multi fuel injection engine which can provide with 394.4 maximum horsepower. Under the interaction between this engine and the MH batteries, the dynamic of LS 600hl soars to 445 horsepower. With such a powerful dynamic system and an 8-speed Electronic Continuously Variable Transmission system, it gives up-to-6.3 seconds acceleration from 0 km/h to 100 km/h. It is catching up with some vehicles which have V12 engines.
LS 600hl’s dynamic controlling module commands the engine to collaborate with the Permanent Magnet Motor to change gear in order to increase the energy efficiency in the driving status. When braking and decelerating, the energy will be recycled by the HV Closed-End MH batteries modules. It is very good at reducing the oil-consumption and the CO2 emission.
SWOT Analysis
- BMW has a strong brand name and a good brand image in China. Most people think owning BWM car represent as successful social status. The implications of BMW go beyond a car. (Li, 2009)
- As the slogan of BMW is "The Ultimate Driving Machine", the excellent handling and good performance of the vehicle strikes root in the hearts of the people.
- BMW as a German brand has a high reputation for quality and workmanship. Lots of people realize that German vehicles are safe and reliable.
- The BMW ActiveHybrid 7 is the fastest HEV (Hybrid Electric Vehicle) in the world.
- The fuel economy of the ActiveHybrid 7 improved significantly, it meets the trend of environmental protection and energy saving.
- The price of BMW which sold in China is much higher than the vehicles sold in other countries because of the high import tariff on automobiles in China.
- There are many problems with the BMW vehicles which are produced in Shenyang lead to a declining reputation of BMW.
- These Chinese consumers who can afford the vehicles do not really care about the fuel economy.
- The ActiveHybrid 7 is the most expensive HEV in China.
- Chinese auto sales volume maintained a high growth rate even doing the financial crisis. From January 2009 to November of 2009, Chinese auto sales volume reached 12.2 million units, representing an increase of 42.4%.(Docin.com 2010)
- The brand has built a good reputation of its good quality and artistic design. BMW has been selected in the government official vehicles procurement list. Brand awareness has increased.
- More Chinese car consumers prefer using green energy or the environment friendly vehicles since the HEVs (Hybrid Electric Vehicle) have been produced.
- BMW is focus on hybrid power enables it to go with the tide in this segment to enhance its market position.
- The high-end hybrid power automobile market in China is still immature.
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Though the auto market in China is huge, the consuming capacity is comparatively much lower than Europe and North America.
- The Chinese government has cancelled most of the policies which are good for the automobile industry. The resistance for BMW’s marketing increased.
- The Beijing government has implemented more stringent policies in order to limit the driving to control traffic jams. The auto market has been compressed to some extent.
- The fierce competition from both other imported cars and the China-made cars urges BMW to adjust its products’ prices with a flexible mind.
- The Chinese consumers lack of knowledge of the hybrid power cars. Hybrid power technology has not received much attention from the government.
PEST Model Analysis
- China’s government currently both limits the high fuel-consumption vehicles and encourages clean energy vehicles. The Limitation to the Fuel-Consumption of Vehicles (2004) provides a precise policy to standardize the production of automobiles, whereas the government will give subsidies and concessions to the consumption of those clean energy vehicles.
- The Development Policies of the Automobile Industry (2009) requires the local governments to abolish those policies which are against the development of the entire automobile industry.
- Because of the accession to the WTO, the automobile import tariffs have kept declining in the recent years. Due to this, the price of the imported automobile in China is becoming more and more acceptable and attractive.
- Currently the taxes about automobile consumption are overweight, including value-added taxes (17%), consumption taxes (3%-8%), and Tax on Buying Vehicles (10%). In addition, those varieties of costs for buying vehicles extraordinarily limit the growth of the automobile industry. (Du and Zheng, 2009)
- Hu Jintao (2008), who is the current Chinese President, stated that stimulating domestic demand is an essential and long-standing factor underlying China´s economic growth. Actually, after the CPC Sixteenth National Congress, the automobile sales in China boosted to some extent.
- Du and Zheng (2009) stated that along with the rapid GDP growth and the disposable income of domestic residents, automobile ownership is continuously increasing at a high speed.
- The Chinese stock market was dragged down by the Financial Tsunami. It caused the collapse of investors’ confidence. Those monetary tightening policies were adopted.
- Libya, one of the world’s largest oil exporters, now is suffering political instability. Of course, the oil price, which is an important factor to reflect the international economy, is seriously affected.
- The wealth distance between the rich and the poor is getting bigger in China.
- Inflation in China is stalling the development of the automobile industry.
- In China, the conservative culture recently became one of the most influential factors that disturb the development of R&D and designing in the Chinese automobile industry. Even though there are a lot of Chinese brands existing, their sales are much less than the foreign brands, such as those three big brands from Germany.
- China has the most population in of any other country. It is continuously increasing now. At the same time, the demand for automobiles is getting stronger and stronger too. It significantly boosts the sales of the automobiles in China.
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It could be seen in the Chinese history, consumers in China are more rational and conservative. For most people it should take a long time to make up their minds.
- Consumers in China now are able to gather the information more easily than before. Almost everything about the brand or the car they are interested in will be available on the Internet or other media. It is essential to the improvement of the consumers’ rational buying decision-making process.
- Along with the enhancement of the environmental consciousness of Chinese people, the demand for clean power cars are rising. The consumers, especially who tend to be responsible to the planet, will pay less attention to those luxury cars which have a high fuel-consumption.
- A fairly large number of domestic automobile companies in China are copy-cats. They are not striving to create or innovate their own products, but copying the advanced techniques from other countries. More to the point, those core technologies, which are the key to survival of the world-famous brands, are not that easy to be completely copied.
- BMW is famous for its innovative technologies, especially their energy saving technologies and environmental-friendly technologies, such as ActiveHybrid system and Efficient Dynamics system. Huang (2010) said that although many consumers may consider that the similar technologies from Japan are more mature, actually BMW now are playing a more important role in boosting the development of this area.
Survey Design
We are working on a class project for Media Planning. We would like you to take a few minutes to answer the following questions. Please take your time, and read the questions carefully. All your responses are anonymous and will be kept confidential.
- How many cars do you have?
- What are the main usages you consider when you buying a car?
- Driving to work
- Business
- Family
- Travelling
- Racing
- Others: ____________________
- How much are you willing to spend on a luxury car? (RMB)
- 500,000 to 1,000,000
- 1,000,000 to 1,500,000
- 1,500,000 to 2,000,000
- 2,000,000 to 2,500,000
- 2,500,000 to 3,000,000
- Above 3,000,000
- Which brand is your first consideration when buying a luxury car?
- Audi
- BMW
- Mercedes-Benz
- Infiniti
- Acura
- Lexus
- Others: ____________________Which are the important factors that affect you when choosing a car? (Multiple Choice)
- Economic
- Appearance
- Performance
- Safety
- Technique
- Green
- Brand
- Comfort
- Interior decoration
- Others: ____________________
- How do you perceive the BMW brand?
- For the following statements, please indicate your level of agreement for each of the five statements. Please use 5=strongly agree and 1=strongly disagree.
- How do you learn the information about vehicles?
- Magazine
- Newspaper
- Television
- Internet
- Radio
- Word-of-mouth
- Others: ____________________
- Age: ____________________
- Occupation: ____________________
- Gender: Male or Female
- Numbers of Family Members: ____________________
- Please choose a range which can best represent your income per month.
- 0—5,000 Yuan
- 5,000—10,000 Yuan
- 10,000—20,000 Yuan
- 20,000—40,000 Yuan
- Above 40,000 Yuan
ENDS
THANKS FOR YOU PARTICIPATION!
Target Audiences
- The People’s Republic of China, with a special focus on Beijing
Beijing is on the heart of China. It is the center of economy, culture, and politics of China. In 2009, Beijing’s luxury car ownership exceeded 350,000. It was 100,000 more than Hong Kong. (XCar.Com)
- Education level: most are university graduates
- Employment status: Bankers, businessmen, executives, entrepreneurs, and so on;
- Income: More than 1,000,000 RMB per year;
- Home ownership status: Living in Beijing and in surrounding cities;
- Have a high demand to drive to work.
- Environmentalists who have a green lifestyle and care about environmental protection;
- Loyal supports of the BMW brand;
- Innovative, open-minded, accepting of the new ideas and things.
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Desire low fuel consumption or low CO2 emission which significantly affecting their decision while buy a vehicle;
- Interested in high-speed, high-performance, and excellent handling;
- Appreciate high quality and automobile safety;
Objectives
- To attract more than 1 million visits the official BMW website during theier campaign period;
- To achieve the title of Sina MicroBlog’s Most Popular Car Brand by measuring the number of fans and counting its hits in overall posts;
- To increase at least 20% growth of the sales after the campaign.
Media Vehicles
Magazines always contain a great quantity of pictures with high quality paper. Because visual effect is an important factor for vehicle promotion, it would be a good choice to use magazines rather than newspapers or radio. Compared to television commercials, magazine advertisements are cheaper, and can maintain a high repeated emergence in magazines advertisements. In addition, the audiences of magazines always have a higher education level or income than the other media. It’s more suitable for our promotion.
Auto-Fan, one of the most famous auto magazines in China, has a large number of audiences and a high reputation. It is also the first one of the semimonthly auto magazine in China. Auto Fan as the promotion channel would aim at the audiences who are enthusiastic in car or have the buying intention. In recent year, “Auto Fan” has had a great performance in E-zine, it also increase our target readers.
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Front Page:
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Double-Dull Page:
- High audience segmentation and selectively. It would reach huge number of people in given audiences.
- Long life.
- High reputation and circulation. Auto Fan is one of the most famous auto magazines in China.
- Close to the market. The headquarters of Auto Fan also is located in Beijing which is our main target market.
- Long lead time. It has to make plans weeks or months in advance.
- Auto Fan is the most expansive channel in magazine advertising.
Launching commercials in TV is one of the most common ways to deliver promotional information. Today more and more people considere TV commercial as a bothersome thing which disturbs them enjoying the news or soaps. They try to avoid commercials through applying zipping, zapping and other methods. It results in the efficiency and effectiveness of launching TV commercials decreases dramatically. However, it is still valuable for our advertisers since people will not stop watching TV.
CCTV 2 is a nationwide satellite TV channel which focuses on carrying the professional financial information to the audiences. In 2010, CCTV 2 was labeled as the Top 10 TV Channel of China. The program it launches included business news, financial forms and so forth. Meanwhile, a large proportion of our target audiences are business people who are supposed to frequently watch this type of finance TV channel. This is why CCTV 2 is chosen to be the main TV channel to carry our commercials.
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Nighttime A:
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Nighttime B:
- High geographic coverage. CCTV 2 covers the whole China through the satellite.
- High households. The second biggest satellite TV channel in China.
- High market share. CCTV 2 possesses a more than 70% share in the finance TV channel market.
- Graphics, audios, texts, and videos are all available.
- Time limitation causes content limitation.
- Many other commercials are competing.
- High producing cost and buying cost.
- Outdoor Advertisements—Bus Body
Advertising on the buses’ body is supposed to be a necessity because driving on the road is a must for drivers who are also our target audiences. Today, Beijing’s traffic congestion is considered as a defect by hundreds of thousands of people. But it is a chance for us to launch our outdoor advertisements on the buses’ body because the congestion will effectively and efficiently increase the time people spend on their trip and on the road. Thus, the advertisements will stay in their eyes longer and leave a deeper impression.
On the other hand, Beijing, the heart of China’s economy and politics, has the most developed and effective public transportation network in China. Beijing’s public transportation system operates throughout the day for about 18 hours. It means that the commercials will be continuously carried to the target audiences from 5:00 to 23:00.According to new information provided by the Beijing Transportation Department, in the first season, the average daily passengers of public transportation increased to 19.43 million which is close to the permanent resident population of Beijing at the end of 2009.
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Whole bus, color spraying:
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Two sides of a bus, banners:
- Cannot be avoided.
- Wide coverage.
- Continuousness.
- High exposure.
- Visual Only.
- Long replacement cycle reduces the timeliness which will result in reduce the attractiveness of the commercial.
- Simple and short messages lead to lack of information.
- Internet—Video Sharing Websites
Today visiting those online video sharing websites become a major form of internet activities. For the world’s biggest video sharing website Youtube, the total click-through rate of its videos reached to 13.9 billion in June of 2010, while the rate of China’s current biggest video sharing website, Tudou, reached 150 million for each day by 25 million independent users. Consequently, placing ads on those video sharing websites is practical with high efficiency and it is an important field for advertisers.
Advertising on the video sharing websites is new form of advertising which is derived from the Chinese. Those foreign leading video sharing websites have never thought about that. An advertising period is created before every video is started. These ads are delivered compulsively and they last 5 seconds to 30 seconds. Of course, they are annoying and bothersome and people are trying to avoid them through switching their attention to other websites temporarily. However, people currently are relying on these websites which are providing them with free television program reviews and many interesting videos. They will avoid them, but a huge number of them will still engage in those campaigns launched on this type of websites.
- Advertising placement before videos
- CPM (The same as the price mentioned above)
- Before video begin: 120 RMB
- When pausing: 150 RMB
- Direct selling opportunities
- High user involvement
- Multiple pricing options including performance pricing
- Ad practice can be irritating
- Extreme clutter
- It is easy to be avoided through pressing the bottom “Alt+Tab”.
Frequency—Ostrow Model
- Total of all factor scores = 89
- The Number of factors scored = 17
- Ideal minimum number of times ads should be seen = 89/17 =5.235
Based on these numbers, the bottom of unadjusted Effective Frequency range is rounded to the nearest whole number, 5. So the Ostrow Base is 5.
In this analysis, the ideal minimum of ad exposures is 16 and the ideal maximum is 21.
Scheduling
*Different color is stand for different medias’ scheduling period.
Campaign period: six months
All the three methods of scheduling advertising will be applied.
For the TV and magazine, the flighting and pulsing patterns are put into use. Since the purchase of automobiles will not be influenced by the seasons and other special time, the gaps of these two patterns are averagely distributed.
Secondly, the continuity pattern (straight-through advertising) is available for the bus-body advertising. The reason is that it costs a large amount of money to pay for the producing and removing process to the bus company. It is not effective and efficient to apply the fligting and pulsing methods.
Thirdly, the advertising on Tudou.com will enjoy the pulsing patterns because of the increasing clutter of advertising in this type of website. We have to avoid annoying the target audience and effectively deliver the promotional materials by decreasing the exposure in Tudou.com. Pulsing will be a great solution.
Budget
- Front Page: 600,000 * 3 (times) = 1,800,000 (RMB)
- Double-Pull Page: 800,000 * 3 (times) = 2,400,000 (RMB)
- Nighttime A with 10s: 45,900 * 92 (times) = 4,222,800 (RMB)
- Nighttime B with 10s: 55,500 * 92 (times) = 5,106,000 (RMB)
- A++ Lines (1): 128,000 * 3 (months) + 18000 (Producing) = 402,000 (RMB)
- A++ Lines (2): 108,000 *3 (months ) + 3000 (Producing) = 327,000 (RMB)
- Before video begin: 120 (CPM) / 1,000 * 1,000,000 (hits) = 120,000 (RMB)
- When pausing: 150 (CPM) / 1,000 * 1,000,000 (hits) = 150,000 (RMB)
Effectiveness
Two major steps will be taken to implement the evaluation process after the 6 month campaign period.
- A post-campaign survey will be delivered to those people who buy the BMW ActiveHybrid 7 in every 4S shop in Beijing. The questionnaire will focus on studying the way they get the information about the car and why they choose the car.
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The sales are the most significant factor to show whether the campaign succeeds or not. 6 months after the campaign, we will compare the sales of mid-campaign and post-campaign period to the pre-campaign period.
Appendix
Comparing Chart
Frequency—Ostrow Model
Reference
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