BMW Z3 Roadster

Case Study:Traditional Vs Non-Traditional Methods

Case Objectives

• Innovative product launch marketing • Marketing execution Vs Strategy• Role of new Marketing Paradigms

• NT ideas to break clutter• Differences in methodology – NT vs. T• Understanding risks and control

TheoryThe Story Behind Non-Traditional Media

The Rise of NT mediums

• Traditional Medium: Advertising• Tools and techniques developed

• Effectiveness: e.g. AIDA Hierarchy• Metrics: Reach/Frequency/Exposure• Evaluation: Wearout/Recall/Recognition

• Paradigm Shift to Non Traditional Mediums

The Rise of NT Mediums

• Reasons for Paradigm Shift• Rising cost of Media • Loss of control • Change in Marketing Strategy

• Three main Categories• Product Placement: Control through Co-op• Place Promotion: Control through Location• Sponsorship: Control through Patronage

Differences

Philosophy

• Traditional• Disciplined• Quantified• Planned• Budgeted• Regulated • Controlled• Strategy led

• Non Traditional• Flexible• Evolving• Adaptable• External control• Intuitive• Chaotic• Execution led

Communication Process

Awareness

Interest

Desire, Preference

Purchase

Excitement

Awareness / Visibility

Word of mouth, Buzz

Involvement / Infatuation

Purchase

ConsumerAdvocacy

Non Traditional Traditional

Others

• 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• 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.

Benefits and Risks Method usedBenefits• Credibility

• More credible than paid for advertising

• Efficiency through word of mouth

• Focus on awareness• Leverage the buzz• Create Exposure• Build into Conversation• Weave the brand into Everyday

life

Risks• Loss of control

• Timing• Target audience • Brand Image• Brand Meaning• Exposure

• Challenge of translating awareness into sales:

• Difficult to measure impact:

Evaluation

BreakEvaluation of Case :Parameters

Evaluate the case

• Strategic Significance• Benefits and Risk• Measuring Success• Translating Excitement into Sales• Post script and wrap up

So what happened?Strategic Significance

Strategic Significance of the Launch

• Motivate and Stimulate dealer network• Expand Franchise

• Underrepresented Targets• Gen X Vs Baby Boomers

• Fill Capacity at new Plant• Target : 100,000 units• Initial foray into USA.

Strategic Significance of the Launch

• Rejuvenate and Redefine BMW Image• Made in Germany to Made by BMW• Bavarian Mystique to American Icon• Precision Engineering to Fun to Drive

So what happened?Benefits and Risks

Issues FacedTypical to the Category• Loss of control

• Timing• Target audience • Brand Image: Bond/BMW Grid• Brand Meaning• Exposure

• Challenge of translating awareness into sales: The excitement/time Grid

• Difficult to measure impact: Success Criterion

Brand & Bond

German

UltimateDrivingMachine

English

Hero

Drives an Aston

Sexist

Fast cars

Adv. Technology

Sophisticated

Brand Dilution in Case of Movie FailureBrand Dilution due to ClutterBrand Dilution due to Negative Association

So what happened?Measuring Success

Measuring Success: Overall

• Phase 1 : Unqualified ingoing objectives• Sales-Cost Ratio Questionable

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 (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

Measuring Success: By NT element

Element Objective Reported results

Neiman Marcus WOM, Buzz 20 units over 3.5 month Christmas season

100 orders placed. 2days6000 orders by Xmas

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?

Dealer Ad& Promo • Generate Dealer Motivation Local publicityTraffic in dealerships increased (300%)

TV and Print •Reinforce Movie placement 15% Recall . 50% higher than Mercedes E class launchIs that good enough

Success Criterion• Great Buzz !

• What buzz?

• 3 Times the word of mouth• Quantifiable?

• 50% less than SOM/SOV rules • Impact of Traditional media with comparable spend?

• Dealer Traffic up• Influence of new product introduction?

• 9000 cars sold – Expected was 5000• Validity of Estimation?

Excitement to SalesObjectives and Mediums

Excitement to Sales

• Objectives of Phase 2• Sustain wait list customer interest• Maximize conversion rate• Maximize customer acquisition

• Mediums?

And Then?

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• Limited corporate sponsored direct marketing• Dealer funded retention programs

• Launch date March 1996. Selling price in 1997 = 30k to 36k.• Sales in 000’s

• 1997: 19.4 (Mazda Miata: 17.4 Porsche Boxter: 5.3)• 1998: 20.6 (Mazda Miata: 19.8 Porsche Boxter: 9.7)

Postscript

• Tie up for Tomorrow never Dies• BMW cruiser bike

• Awards• Promotion of the year• Marketer of the year• Brandweek : Model of effective cross promo• USA Today : Marketing Coup

Postscript

• Brickbats• Went too far• Overdone• License to Overkill • James bond – ‘ International Man of Sales’

Types of Product placement

• Corporate• Lenovo in KBC

• Generic• Rayban in MIB

• Service• ICICI in BKC

• Idea• Movie promo in a serial

Types of Product placement

• Historic• Air India in movies

• Innovation• Introducing a product• Swift in Bunty aur Babli