A Strategic Approach to Marketing "A beemer is a motorcycle; a bimmer is an automobile." BMW faces competition like Harley-Davidson, Honda, Suzuki, Yamaha, Kawasaki, Norton, Ducati, Moto-Guzzi, and recently, Polaris. How does a motorcycle manufacturer remain competitive for over 75 years? The History The history of Bayerische Motoren Werke, or BMW, began with their first flat twin cylinder 500cc engine, shaft-driven motorcycle designated as the R32 in 1923. The design was based on the work of Max Friz who was originally involved in designing airplane engines, which were used during World War I. Due to World War I restrictions on the manufacturing of aircraft engines forced BMW to branch out. The twin engine was used in motorcycles produced by Flink and Helios before they decided that they could do the same thing. The BMW logo, a circle with blue and white quadrants, was derived from the image of a spinning propeller, which is the origin of the company. The motorcycles produced by BMW were among the fastest bikes in the world. They remain as a premier motorcycle even up to today. BMW built plants in Munich, Spandau, and Allach. When World War Two ended in 1945, all three of the BMW plants were severely damaged or taken over, as was the one in Spandau, by the Russians. To this day, the Ural, a Russian motorcycle manufacturer, is built from captured designs. The quality of the Ural motorcycle has never met the technological and quality standards of the BMW twin. The plant outside of Munich, Allach, was the only plant kept viable. During the hard years after World War II, the workers at the Allach plant were hired for the job of repairing the United States military forces vehicles. During this time, much of the machinery used for manufacturing motorcycles was shipped away. The workers joined forces and a minimal amount of the manufacturing equipment kept in the plant. The horizontally opposed cylinder engine was produced for 60 years before BMW introduced an inline engine. The inline engine was introduced to eventually replace the old standard, but due to the outcry of the few, but faithful followers of BMW, the opposed cylinder engine was modified and kept in the lineup of BMW motorcycles. BMW continues to refine their products
by offering options such as anti-lock brakes, electrically adjustable windshields,
and even heated seats. These options vary depending on the model and the
niche market that the particular model is applicable. "75 years of BMW
motorcycles stand for tradition, quality, safety and reliability. Since
those earliest days, BMW has influenced the motorcycle world with new ideas,
innovations and impulses, and has set new standards in every area. BMW
was the first to launch the first big touring enduro, the first closed-loop
catalytic converter for motorcycle exhaust emission control, the world's
first motorcycle with anti-lock brakes, suspension technology such as the
BMW Telelever and the BMW Paralever, engine management by digital motor
electronics and the BMW Compact Drive System, patented worldwide, to mention
just a few of BMW's accomplishments. "
The Strategy The first years of BMW consisted of sales of the 500cc R32, but the bike’s frame design suffered cracks in the frame welds due to the extra stress involved when a sidecar was used. In 1928, the 750cc R63 motorcycle was introduced, which implemented the overhead valve design. The frame was modified at this time to eliminate the weld-cracking problem seen in the R32. The 30’s introduced fast technological gains with BMW setting many land speed records and competing, but maintaining wins in road races due to the handling problems associated with the front suspension. The first motorcycle with telescopic front forks was introduced in the R12 and R17 models. These models still lacked a rear suspension and relied on a seat with springs. In the 1950’s the Rennsport was displayed in the Geneva motorcycle show, but was not a show-stopper due to its cost being twice other competitive motorcycles such as the Manx Norton or the legendary Vincent Black Shadow. Reviews stated that rider comfort had not been addressed properly, even though most agreed that the BMW was the most reliable and stately at the time. During the 60’s and 70’s, BMW’s motorcycle sales increased and BMW took the strategic approach to build a reliable motorcycle to compete with the onslaught of the Japanese motorcycles. The Japanese motorcycle marketing strategy was to enter the market at low cost and a broad competitive scope. BMW countered with the strategy of offering a reliable, high quality product for a narrow niche market. Customer complaints drove BMW to revise their motorcycle with better handling through a redesigned telescopic fork suspension, faster engines with larger motors, and a more refined gearbox offered in their /6 motorcycles. In the 80’s, the 60 years of tradition of the twin opposed engine was broken through the introduction of the 3 and 4 in-line water cooled, fuel injected 750cc and 1000cc engine motorcycles. The shaft drive was retained in the touring, sport, and stripped models produced by BMW. The K class was introduced to meet noise and emission legislation and was the first class of motorcycles to offer a catalytic converter. Competition also drove the company to offer a selection of colors other than the trademark black, which was the only color offered until the 1980’s. The 90’s brought higher technology
yet through the redesign of the opposed-twin, which included refinements
such as fuel injection and oil rather than the traditional engine air-cooling.
Another tradition was broken through the introduction of the F650, which
was the first chain-driven model offered by BMW. During these years, BMW
began to attack the various niche markets that had evolved in the motorcycling
world. Advertising and the level of awareness of what the customer wants
defined the marketing strategy that BMW would take in this decade.
The Models One of their most popular selling model, the Gellande/Strande (G/S), or enduro model, was introduced in 1980 with an opposed-cylinder engine size of 800cc. It won the 1981 Paris-Dakar race and immediately won popularity. In 1987, the G/S engine size was also offered in 1000cc, which became the largest engine size offered in an off-road motorcycle. The year 1996 brought a redesigned engine with the increased engine size of 1100cc. The R1100 G/S model is designed to offer plenty of power with rider comfort and ruggedness, which offers the flexibility to ride on the roughest trails or smoothest interstate highways. The sport model was originally defined in the legendary R90S, which was introduced in 1975. Perhaps the smoothest running BMW ever produced was the sporty three-cylinder K75S, whose production was halted due to low profitability of the motorcycle in its niche market. Currently, it is defined in the R1100S model. It offers a lightweight bike with a high horsepower rating. Its marketing strategy is to compete with the Japanese sport bikes, but offer the high horsepower, easy maneuverability typical of the Japanese motorcycles but with a higher quality standard. This is achieved through the addition of the front Telelever suspension, which eliminates the front fork diving typical during braking and also superior braking via anti-lock brakes. A strategy move not predicted by the motorcycle world was the introduction of the R1200C cruiser model. BMW recognized that profits could be reaped on introducing a substitute model in the Harley-Davidson arena. It offers the high quality typical of the brand, anti-lock brakes, the patented Telelever front suspension and fuel injection. It was the highest selling BMW model in 1998, which proves that BMW did their homework in introducing this model. This bike will never replace the Harley. It is marketed to attract the customer that wants a cruiser model, but with higher quality and more refined features than the motorcycle offered by Harley. The 4-cylinder in-line engine K1200RS and the boxer-style engine R1100RS models define the sport touring models. Both motorcycles are produced to compete in the high performance touring bike market, whose target market consists of owners of sport motorcycles such as Honda, Kawasaki, Yamaha, Ducati and Buell, a division of Harley. The R1100RS can not perform sufficiently to compare with its competitors and will probably undergo a facelift in the near future to resolve the customer complaints of a clunky gearbox, handling deficiencies, and engine vibrations. The K1200RS develops more horsepower than the R1100RS in a smoother manner. It currently holds the honor of having more horsepower than any other motorcycle that BMW has produced. It is not the top runner of the crotch-rocket segment, but stays in the group with its smooth-running engine and ability to maneuver sharp curves or interstate highways with the style that BMW sport touring bikes are known for. The R1100R and R850R are defined as "Roadsters" and are targeted for the "naked bike" enthusiasts. They has many of the basic elements of the other boxer-style motorcycles produced by BMW, but does not have all of the fairing that cover the motor. They compete with the stripped models offered by Japanese manufacturers, but include options, such as anti-lock brakes and Telelever front suspension, which are not found typically on stripped models. Their prime market consists of entry-level riders but also appeals to veteran riders. The F650 was developed in conjunction with Aprilia, Rotax and BMW. It is assembled in the Italian Aprilla plant under the direction of BMW. It is targeted for the entry-level rider who desires the BMW quality, but at an affordable price. It is the first chain-driven motorcycle with the BMW logo attached. Its sales indicate that it being well received and it received the Australian "Bike of the Year" award in its first year of production. The final market to be addressed is
the touring market whose pack leader has been the Honda Goldwing. BMW has
feebly attempted to get its foot in the door of this market for years,
but has finally done just that with the introduction of the K1200LT.
Touring models produced by BMW in the past have always fallen short of
this market due to the utilitarian concept that was applied as is noticeable
in the R1100RT. The
K1200LT is just what its name implies, a luxury touring motorcycle. It
still resembles a BMW with its sporty handling, but has many amenities
common to the Goldwing. Although it lacks the luggage space found on the
Goldwing, it has options such as a heated seat and electrically controlled
windshield to allow the rider to be in more comfort. In a comparison
between the K1200LT, the Goldwing, and the Harley–Davidson Ultra Classic
Electra Glide, the beemer held its ground, but was not the decisive winner.
The results seemed to hinge on what the rider was looking for in rider
comfort and handling. Regardless, it seems like BMW has finally made an
honest attempt of targeting this market segment. Not to short cut the R1100RT,
it suffers the utilitarian approach, but does a good job of attracting
the touring group of riders who require a lighter, sportier version of
motorcycle.
Results During 1998, BMW’s motorcycle sales were more successful than its entire history with an 11% increase over the 1997 sales. The export market represented 63% of total sales. Record sales were made in the United States and Italy, who represent the two most important export markets. Due to record-high sales, 100 new jobs were created in the Berlin-Spandau plant. Predictions are that 50 additional jobs will be created at this plant during the next year, further indicating a positive growth trend. In the first half of 1999, the company is still prospering with the K1200LT and the R1200C leading the different motorcycle models in sales. Canada has shown a 58% increase of sales in 1997 over 1996, which adds to the positive outlook for BMW. BMW motorcycles continues to refine
their products and show growth
in a small segment of BMW AG that has been overshadowed by the automobile
segment of the company. With the innovations and diversification that this
company has shown over the recent years, there seems little doubt that
it will continue to prosper in the United States as well as globally.
Review Questions
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