University of Arkansas System
Type of paper: Thesis/Dissertation Chapter
BMW vs Mercedes
Bayerische Motoren Werke AG
Bayerische Motoren Werke AG ( English: Bavarian Motor Works), commonly known asBMW or BMW AG, is a German automobile, motorcycle and engine manufacturing company founded in 1916. BMW is headquartered in Munich, Bavaria, Germany. It also owns and produces Mini cars, and is the parent company ofRolls-Royce Motor Cars. BMW produces motorcycles under BMW Motorrad. In 2012, the BMW Group produced 1,845,186 automobiles and 117,109 motorcycles across all of its brands. BMW is part of the “German Big 3” luxury automakers, along with Audi and Mercedes-Benz, which are the three best-selling luxury automakers in the world.
BMW was established as a business entity following a restructuring of the Rapp Motorenwerke aircraft manufacturing firm in 1917. After the end of World War I in 1918, BMW was forced to cease aircraft-engine production by the terms of theVersailles Armistice Treaty. The company consequently shifted to motorcycle production in 1923, once the restrictions of the treaty started to be lifted, followed by automobiles in 1928–29. The first car which BMW successfully produced and the car which launched BMW on the road to automobile production was the Dixi, it was based on the Austin 7 and licensed from the Austin Motor Company in Birmingham, England. BMW’s first significant aircraft engine was the BMW IIIa inline-six liquid-cooled engine of 1918, much preferred for its high-altitude performance. With German rearmament in the 1930s, the company again began producing aircraft engines for theLuftwaffe. Among its successful World War II engine designs were the BMW 132 and BMW 801 air-cooled radial engines, and the pioneering BMW 003 axial-flow turbojet, which powered the tiny, 1944–1945–era jet-powered “emergency fighter”, theHeinkel He 162 Spatz. The BMW 003 jet engine was tested in the A-1b version of the world’s first jet fighter, theMesserschmitt Me 262, but BMW engines failed on takeoff, a major setback for the Emergency Fighter Program until successful testing with Junkers engines. Towards the end of the Third Reich BMW developed some military aircraft projects for the Luftwaffe, the BMW Strahlbomber, the BMW Schnellbomber and the BMW Strahljäger, but none of them were built. By the year 1959, the automotive division of BMW was in financial difficulties and a shareholders meeting was held to decide whether to go into liquidation or find a way of carrying on. It was decided to carry on and to try to cash in on the current economy car boom enjoyed so successfully by some of Germany’s ex-aircraft manufacturers such as Messerschmitt andHeinkel. The rights to manufacture the Italian Iso Isetta were bought; the tiny cars themselves were to be powered by a modified form of BMW’s own motorcycle engine. This was moderately successful and helped the company get back on its feet. The controlling majority shareholder of the BMW Aktiengesellschaft since 1959 is the Quandt family, which owns about 46% of the stock. The rest is in public float.
Mercedes-Benz (German pronunciation: [mɛʁˈt͡seːdəs ˈbɛnt͡s]) is a German automobile manufacturer, a multinational division of the German manufacturer Daimler AG. The brand is used for luxury automobiles, buses, coaches, and trucks. Mercedes-Benz is headquartered in Stuttgart, Baden-Württemberg, Germany. The name first appeared in 1926 under Daimler-Benz but traces its origins to Daimler-Motoren-Gesellschaft’s 1901Mercedes and to Karl Benz’s 1886 Benz Patent Motorwagen, which is widely regarded as the first automobile. Mercedes-Benz’s slogan is “Das Beste oder nichts” (English: “The best or nothing”). Mercedes-Benz is part of the “German Big 3” luxury automakers, along with Audi and BMW, which are the best selling luxury automakers in the world.
Karl Benz in Mannheim, Germany made the 1886 Benz Patent Motorwagen, which is widely regarded as the first automobile Mercedes-Benz traces its origins to Karl Benz’s creation of the first petrol-powered car, the Benz Patent Motorwagen, financed byBertha Benz and patented in January 1886, and Gottlieb Daimler and engineer Wilhelm Maybach’s conversion of a stagecoach by the addition of a petrol engine later that year. The Mercedes automobile was first marketed in 1901 by Daimler-Motoren-Gesellschaft. The first Mercedes-Benz brand name vehicles were produced in 1926, following the merger of Karl Benz’s and Gottlieb Daimler’s companies into the Daimler-Benz company. Throughout the 1930s, Mercedes-Benz produced the 770 model, a car that was popular during Germany’s Nazi period. Adolf Hitler was known to have driven these cars during his time in power, with bulletproofwindshields. Most of the surviving models have been sold at auctions to private buyers. One of them is currently on display at the War Museum in Ottawa, Ontario. Mercedes-Benz has introduced many technological and safety innovations that later became common in other vehicles. Mercedes-Benz is one of the best known and established automotive brands in the world, and is also one of the world’s oldest automotive brand still in existence today in 2014, having produced the first petrol-powered car. For information relating to the famous three-pointed star, see under the title Daimler-Motoren-Gesellschaft including the merger into Daimler-Benz.
PRODUCT MIX OF BMW
BMW is one of the preeminent luxury car manufacturers in Europe, North America, and the world today. BMW produces several lines of cars, including the 3 series, the 5 series, the 7 series, the Z line (driven by Pierce Brosnan as James Bond in Goldeneye), and the new X line, BMW’s “sport activity” vehicle line. In addition, BMW is now selling Rovers, a British car line anchored by the internationally popular Land Rover sport utility vehicle, and will begin selling Rolls Royce vehicles in 2003. Sales of all the BMW, Rover, and Land Rover vehicles have been on the rise globally. High-profile image campaigns (such as the James Bond promotion) and the award-winning BMW website (where users can design their own car) continue to increase the popularity of BMW’s products. PRODUCT LIFE CYCLE BMW cars typically have a product life cycle of seven years.
BMW began production of motorcycle engines and then motorcycles after World War I. Its motorcycle brand is now known as BMW Motorrad. Their first successful motorcycle, after the failed Helios and Flink, was the “R32” in 1923. This had a “boxer” twin engine, in which a cylinder projects into the air-flow from each side of the machine. Apart from their single-cylinder models (basically to the same pattern), all their motorcycles used this distinctive layout until the early 1980s. Many BMWs are still produced in this layout, which is designated the R Series. During the Second World War, BMW produced the BMW R75 motorcycle with a sidecar attached. Having a unique design copied from the Zündapp KS750, its sidecar wheel was also motor-driven. Combined with a lockable differential, this made the vehicle very capable off-road, an equivalent in many ways to the Jeep. In 1982, came the K Series, shaft drive but water-cooled and with either three or four cylinders mounted in a straight line from front to back. Shortly after, BMW also started making the chain-driven F and G series with single and parallel twin Rotaxengines. In the early 1990s, BMW updated the airhead Boxer engine which became known as the oilhead. In 2002, the oilhead engine had two spark plugs per cylinder. In 2004 it added a built-in balance shaft, an increased capacity to 1,170 cc and enhanced performance to 100 hp (75 kW) for the R1200GS, compared to 85 hp (63 kW) of the previous R1150GS. More powerful variants of the oilhead engines are available in the R1100S and R1200S, producing 98 hp (73 kW) and 122 hp (91 kW), respectively. BMW introduced anti-lock brakes on production motorcycles starting in the late 1980s. The generation of anti-lock brakes available on the 2006 and later BMW motorcycles pave the way for the introduction of electronic stability control, or anti-skid technology later in the 2007 model year.
The New Class (German: Neue Klasse) was a line of compact sedans and coupes starting with the 1962 1500 and continuing through the last 2002s in 1977. Powered by BMW’s celebrated four-cylinder M10 engine, the New Class models had a fully independent suspension, MacPherson struts in front, and front disc brakes. Initially a family of four-door sedans and two-door coupes, the New Class line was broadened to two-door sports sedans with the addition of the 02 Series1600 and 2002 in 1966. Sharing little in common with the rest of the line beyond power train, the sporty siblings caught auto enthusiasts’ attention and established BMW as an international brand. Precursors to the famed BMW 3 Series, the two-doors’ success cemented the firm’s future as an upper tier performance car maker. New Class four-doors with numbers ending in “0” were replaced by the larger BMW 5 Series in 1972. The upscale 2000C and 2000CS coupes were replaced by the six-cylinder BMW E9, introduced in 1969 with the 2800CS. The 1600 two-door was discontinued in 1975, and the 2002 was replaced by the 320i in 1975. The 1 Series, originally launched in 2004, is BMW’s smallest car. Currently available are the second generation hatchback (F20) and first generation coupe/convertible (E82/E88). The 3 Series, a compact executive car manufactured since model year 1975, is currently in its sixth generation (F30); models include the sport sedan (F30), and fourth generation station wagon (F30), and convertible (E93), and the Gran Turismo. In 2014, the 4 Series will be released and replace the 3 Series Coupe and Convertible. The 5 Series is a mid-size executive car, available in sedan (F10) and station wagon (F11) forms. The 5 Series Gran Turismo (F07), which debuted in 2010, created a segment between station wagons and crossover SUV. BMW’s full-size flagship executive sedan is the 7 Series. Typically, BMW introduces many of their innovations first in the 7 Series, such as the iDrive system. The 7 Series Hydrogen, having one of the world’s first hydrogen fueled internal combustion engines, is fueled by liquid hydrogen and emits only clean water vapor. The latest generation (F01) debuted in 2009. Based on the 5 Series’ platform, the 6 Series is BMW’s grand touring luxury sport coupe/convertible (F12/F13). A 2-seater roadsterand coupe which succeeded the Z3, the Z4 has been sold since 2002.
BMW has been engaged in motorsport activities since the dawn of the first BMW motorcycle in 1923. BMW has a history of success in Formula One. BMW powered cars have won 20 races. In 2006 BMW took over the Sauberteam and became Formula One constructors. In 2007 and 2008 the team enjoyed some success. The most recent win is a lone constructor team’s victory by BMW Sauber F1 Team, on 8 June 2008, at the Canadian Grand Prix with Robert Kubicadriving. BMW was an engine supplier to Williams, Benetton, Brabham, and Arrows. Notable drivers who have started their Formula One careers with BMW include Jenson Button, Juan Pablo Montoya, Robert Kubica and Sebastian Vettel. In July 2009, BMW announced that it would withdraw from Formula One at the end of the 2009 season. The team was sold back to the previous owner, Peter Sauber, who kept the BMW part of the name for the 2010 season due to issues with theConcorde Agreement. The team has since dropped BMW from their name starting in 2011.
Effective public relations need to play an integral part in BMW marketing strategy. It is important for BMW to maintain regular contact with all organisational stakeholders with the use of various marketing communication channels. Specifically, communication channels used in public relations include, but not limited to online press releases, annual reports, speeches, and seminars. As part of their corporate social responsibility initiatives BMW management is also recommended to increase the level of its association with local charities in the UK such as Oxfam, NSPCC, or Cancer Research UK. Moreover, BMW management can initiate the development of identity magazine of the BMW Group which can cover the latest trends and news in local and global automobile industry and at the same time serve as an effective channel to communicate the marketing message to the target customer segment.
Advertising can be defined as “the activity or profession of producing information for promoting the sale of commercial products or services” (Business Dictionary, 2013, online). BMW is recommended to be communicating its marketing message to target customer segment on the basis of using a set of advertising channels. Specifically, engagement in print and broadcast advertisement through channels popular amongst BMW target customer segment needs to be adopted as one of the cores of the marketing strategy. Advertising banners need to be displayed in locations in London frequently attended by BMW target customer segment such as Canary Wharf and City. Moreover, BMW marketing team is recommended to be improving the quality of point-of-sales advertising through supplying audio, video and image materials that motivate salon visitors to commit to the purchase.
Sales promotion involves offering short-term incentives for potential customers to commit to the purchase of products and services. BMW Group is recommended to use sales promotion in the UK market in an occasional manner in order to increase the levels of revenues for short-term perspectives. For example, 100th anniversary of BMW on March 7, 2013 can be specified as an appropriate occasion to announce 10% sales promotion for all BMW models. However, it is important to note that BMW needs to engage in sales promotions in the UK market only in an occasional manner, no more than once a year, because using sales promotion more frequently may cause depreciation of BMW premium brand value.
The prices of BMW Group are based on a differentiated strategy. This means that they charge extra for premium quality. This difference in prices is due to each cars different engine size, gear levels, fuel consumption, sports version.
The pricing strategy that the BMW Group adopts is based on several key trends. One most important trend of BMW is labeled as “premium-tization”. Premium-tization trend of BMW causes polarization of markets. This trend triggers the consumers to demand and pay much higher prices for the perceived quality.
SWOT ANALYSIS OF BMW GROUP
A SWOT analysis will be used to see the various Strengths, Weaknesses, Opportunities and Threats of the BMW Group. Strengths:
Strong marketing strategy.
Customers recognize the strong brand name of BMW Group Company. Strong brand image i.e. BMW, MINI Cooper and Rolls Royce.
Every 2 to 3 years BMW introduces its new version of cars i.e. constant innovation and technology. Weaknesses:
There is an increasing number of duplicate spare parts of BMW and MINI Cooper. The manufacturing costs of BMW cars are very high as compared to its competitors. This is also a reason for high pricing of BMW cars. Not a mass market company like Toyota and their volumes are small.
There is an opportunity for BMW Group to increase further innovation and technology in their cars due to increasing competition in car industry. BMW Group should also look to make new collaboration with other car manufacturers i.e. introducing new brands. BMW Group should also look to produce cheaper cars by new innovation and technology. Expansion of the BMW Group in Asia Pacific, Asia, Africa and Australia.
Recession which has affected businesses in every part of the world. To maintain the same level of innovation and performance. The growing competition in the automobile industry i.e. competitors of BMW Group include Mercedes, Audi, Jaguar, Ford, Lexus. The earnings of the BMW Group are Dollar dominated, so the increasing strength of Euro is another threat for the company.
BMW Welt focuses on strengthening the dialogue with customers and visitors by showing a wide range of BMW cars and motorcycles, and providing vehicle distribution, particularly the creation of a special experience with regards to customer collection of an ordered vehicle. BMW Welt also offers shops with BMW auxiliary products, as well as a fully serviced gastronomic restaurant. In the meeting forum, BMW Welt offers conference rooms and the opportunity to stage media events. The building often houses exhibitions related to new BMW models and, since 2012, other BMW Group brands such as Mini and Rolls-Royce BMW plans a new distribution system for the 5-series sedan that will keep some of the vehicles allocated to dealerships in one of three locations around the country. The distribution system would give dealers pools of cars in three locations, said Miles. Rather than ship each dealership’s total monthly allocation to the store, some of the cars will be kept at BMW processing facilities on both coasts and in the South. “The basic principle is to make more of the inventory that exists available to sell and to reduce the dealers’ floorplan cost,”
MERCEDES PRODUCT RANGE VANS
Mercedes-Benz Vans sets standards through perfection and meticulous attention to detail. Ground-breaking innovations and excellent value retention are decisive for the brand’s success. With its broad spectrum of offers the brand can really score points with the customer.The Mercedes-Benz Vans product spectrum includes vans, MPVs and camper vans for private and commercial use. Mercedes-Benz Vans stands for sustainable technologies. In particular the new Mercedes-Benz Sprinter, introduced in the spring of 2013, was equipped with technologies that make it even more frugal and environmentally compatible. Whether for a private or commercial customer – Mercedes-Benz Vans is focused on customisation according to the customer’s needs. Although each customer is different, one thing applies to all in the same measure: Mercedes-Benz Vans delivers the best possible solution.
As part of the Daimler Trucks division, Mercedes-Benz Trucks has been a hallmark of premium quality for over 100 years now. It stands not only for reliability and economic efficiency, but also for first-class product and service quality and comprehensive expertise in the area of customer-oriented transport solutions. The high standard of quality applies equally to our Actros, Arocs, Axor, Antos and Atego truck series and to special-purpose vehicles from Mercedes-Benz Trucks. The latter include the Mercedes-Benz Econic and the legendary Unimog, for example. Our comprehensive range is rounded off by the Mercedes-Benz Zetros, which has been designed as an off-road truck for deployment in extremely rough terrain.
The world’s first motorised bus was built in Germany by Karl Benz in 1895, some years before Gottlieb Daimler also started to build and sell buses in Germany as well. By 1898 both Karl Benz and Gottlieb Daimler, then rivals, were exporting their buses to Wales and England. Soon Daimler products were sold in the British Empire in a partnership with the British company Milnes. Milnes-Daimler developed a double-decker in 1902 and provided a bus for the first motorised bus service in the United Kingdom the following year. Though the company met success in selling buses throughout the British Empire, the partnership between Daimler and Milnes had to be undone due to the First World War.
Mercedes-Benz carries a full range of passenger, light commercial and heavy commercial equipment. Vehicles are manufactured in multiple countries worldwide. The Smart marque of city cars and Maybach luxury cars are also produced by Daimler AG. Between 2003 and 2009, Mercedes-Benz produced a limited-production sports car with McLaren Cars. The resulting Mercedes-Benz SLR McLaren was an extension of the collaboration by which Mercedes engines are used by the Team McLaren-Mercedes Formula One racing team, which was then part owned by Mercedes.
SWOT ANALYSIS OF MERCEDES
1. Mercedes Benz has a strong brand value and global leader in premium cars 2.
Lack of capital constraints
3. Leader in innovation i.e. 1st to introduce diesel engines, fuel injection and anti locking brakes
4. More than $12bn allocated for R&D
5. Strong presence in motor sport under McLaren Mercedes
6. Manufactured and assembled in over 20 countries across the world
7. Mercedes holds patents on the majority of safety features Weakness
8. High maintenance cost of Mercedes Benz cars
1. Developing hybrid cars and fuel efficient cars for the future
2. Tapping emerging markets across the world and building a global brand
3. Fast growing luxury automobile market & increased income
1. Government policies for the automobile sector across the world
2. Ever increasing fuel prices
3. Intense competition from global automobile brands