Introduction
This paper compares and contrasts the marketing and advertising strategies of Audi and BMW. Both companies are German-based and sell their products in the luxury car market. The two companies have a history of marketing and advertising rivalries that have manifested through public advertising wars (Kumar 9).
The same rivalry has manifested through the development and application of new technologies. This paper explores different aspects of their marketing strategies and promotional campaigns.
Comparison and Contrast of the two Marketing Strategies
According to Kotler (5), a company’s marketing strategy consists of four distinctive areas – product, place, promotion, and price. This section of the paper evaluates the marketing strategies of Audi and BMW based on this marketing framework.
BMW
For a long time, BMW has marketed itself as a luxury automobile brand (Klein 7). In line with this strategy, the company has continually targeted affluent people with a high disposable income because they can afford their cars (Johnson 9). BMW’s place strategy focuses on constructing different manufacturing plants in different markets (Johnson 9).
Through this strategy, the company does not import its cars from Germany because it manufactures them in their host’s location. Comparatively, the company’s pricing strategy centers on charging their customers a premium for improved value. This value has emerged from improved technology, luxury and the infusion of advanced car features (value-based pricing) (Klein 7).
Its promotion strategy has focused on positioning the BMW brand as a household name. To do so, the company has developed innovative advertisements (Johnson 6). In line with this strategy, the company has also sponsored high-profile events like the Olympics. Lastly, BMW’s product strategy has focused on developing cars (usually sedans) with sleek designs and high quality. Its products also have advanced technology, low gas mileage and a high performance (Klein 10).
AUDI
Similar to the BMW, Audi’s product strategy centers on providing its customers with high-tech, modern and quality vehicles (Kumar 5). In line with this strategy, the company strives to produce products with advanced technology. Its cars also have the latest features in automobile production. Audi’s slogan “truth of engineering” sums this product strategy.
The company’s price strategy aims to make the company’s cars affordable to many people. In this regard, Audi cars retail at average prices compared to its rivals, such as Mercedes Benz and BMW (Bhasin 3). However, the company has made sure that this pricing strategy strikes a careful balance with quality. Stated differently, although Audi cars are affordable, they have a high quality.
This is why Kumar (7) argues that although Audis may be relatively cheaper than its rivals, both brands observe the same level of quality in their car production processes. Audi’s promotion strategy has focused on presenting their cars as racing machines (Kumar 7).
The company believes that this strategy would show that the company’s cars are faster and better than others are (Bhasin 3). Lastly, Audi’s placement strategy highlights the company’s quest to avail its cars in major showrooms. This way, its customers could inspect the cars in their respective countries.
The table below compares the marketing strategies of both BMW and Audi
Marketing Information
In today’s fast-paced and competitive automotive market, carmakers need to gather useful marketing information that would set them apart from their competitors (Bhasin 3). In particular, Audi could use this advantage because its overall sales (globally) are lower than BMW’s (Kumar 7).
Particularly, the company should use marketing information to get a broader understanding of the global automobile market and identify untapped opportunities it could exploit. Furthermore, with a proper marketing information system in place, Audi could easily track and improve independent operation processes in its production processes (Bhasin 3).
This way, the company could easily establish a broader perspective not only of the global automobile market, but also of its independent processes, thereby facilitating improvements, which would give it a competitive advantage over its rivals.
Two uses for Consumer-Oriented promotions that could help one company in the short term and long term
Consumer-oriented promotions are useful to carmakers, both in the short term and long-term because competition in the global market is higher than ever before (Johnson 9). Such promotions may include price reductions, tax rebates, coupons and other inducements. Audi could benefit from such promotions to improve its competitive position in the market.
In the short-term, the company could retain more of its customers this way (Ray 4). For example, if it offers free after-sales service to its customers, the company could retain more customers in the cutthroat automobile market because its customers would be more appreciative of the extent that the company is going to earn their business.
In the long-term, consumer-oriented promotions could improve customer loyalty to the Audi brand (Ray 4). For example, when customers know that they could always get a good price for a high quality car (through rebates or sales); they are likely to develop a strong brand loyalty to the brand.
Analyze the Strategic Manner in which the leading company in this product group has made its pricing decisions by using one or more of the four pricing objectives
Some of the most common pricing objectives are increasing monetary sales, increasing returns on investment (ROI), maximizing long-run profit, maximizing short-term profit (Kotler 17). The key components of BMW’s pricing mix strive to meet two of the above-mentioned pricing objectives – increasing ROI and increasing monetary sales.
The company achieves these goals by adopting a premium-pricing model. Indeed, as Klein (13) observes, targeting high-end customers allows the company to charge a higher price for its units, thereby allowing the company to enjoy higher margins than its competitors. This way, it increases its monetary sales and ROI.
Suggest Two Actions that other Companies within the Same Product Group may take to differentiate themselves and gain a competitive Advantage
In a competitive market, companies have to differentiate themselves by adopting unique marketing strategies that would earn them a competitive advantage (Kotler 3). Many automakers, such as BMW, Audi, and Mercedes Benz, saturate the global luxury automobile market. Mercedes Benz competes directly and indirectly with the two companies discussed in this paper.
The company could differentiate itself by adopting a unique service model. According to Kobran (2), this strategy could help to show how Mercedes Benz is different from other luxury brand companies. The difference could emerge through a depiction of unique car manufacturing processes and its differences with other companies that operate in the same market segment.
To demonstrate how this advantage will differentiate Mercedes Benz from its competitors, Kobran says, “Companies that can demonstrate a more effective way to service their customers often gain a competitive advantage and a compelling way to differentiate” (3). Alternatively, Mercedes Benz could differentiate itself through technical expertise. This differentiating factor does not mean that the company should differentiate itself through technology only.
Instead, it could project itself as having a solution to a perennial problem among car buyers (Kobran 5). For example, it could present itself as the company that builds stable cars. Collectively, adopting unique car manufacturing processes and advancing its technical position in the automobile industry could help the company to gain a competitive advantage over its rivals such as BMW and Audi.
Define the most Effective Advertising Medium for a Company in the Selected Product Category
There are different types of advertising media used by different companies to promote their brands. The most common types of advertising media include television, radio, print publications, internet, direct mail, and sponsorships. Although these advertising strategies have different advantages and disadvantages, some of them are more effective in the automotive industry than others are (Ray 6).
The most effective advertising medium for promoting luxury car brands, such as BMW and Audi, is sponsorship. The justification for the advancement of this strategy is its focused nature (Kotler 15). For example, sponsoring motor events is likely to market a car brand among people who like cars. This way, car companies would be targeting specific and not general audiences.
Ray calls this type of marketing strategy “marketing with the end in mind” (5). Furthermore, sponsoring a car event taps into the emotional appeal of such events among potential customers who are passionate about cars (Kotler 16). Similarly, it is more relevant than other types of advertising, which marketers could use in the luxury automobile market, because it is relevant by reaching potential customers where they choose to be in.
Sponsorship is also more effective than other types of advertising in the automobile market because it is interactive (Kotler 16). Stated differently, while other types of advertising, such as television and radio, are monologue, sponsorship is a dialogue between sellers and potential buyers. Therefore, luxury carmakers, such as BMW and Audi are bound to benefit from the continuation of sponsorship as their main promotional strategy.
Conclusion
This paper has shown that BMW and Audi are rivals in the luxury automobile sector. They have different marketing strategies that have propelled them to leadership positions in the global automobile market. Their marketing strategies converge based on their promotional and product strategies. However, they differ in terms of their place and pricing strategies.
Since BMW has more sales numbers than Audi does, this paper proposes that the latter should exploit marketing data to gain a competitive advantage by gaining a broader perspective of its internal processes and identifying possible opportunities for improvement. This paper has also shown that other companies in the luxury brand segment could differentiate themselves in the market by adopting a unique service model and through improved technical expertise.
To wade through the cutthroat automobile industry, this paper also proposes that leading automobile brands should pursue sponsorship as the main advertising strategy because it is more interactive and focused, compared to other available strategies. This advertising strategy is likely to increase their sales numbers and earn them a competitive advantage over their rivals.
Works Cited
Bhasin, H. 8 Advantages of Marketing Information Systems. 2012. Web.
Johnson, R. BMW AG: Marketing Plan. 2015. Web.
Klein, A. Marketing Plan: BMW 1-series in Germany, London, UK: GRIN Verlag, 2007. Print.
Kobran, S. How To Differentiate Yourself When You’re Not that Different. 2013. Web.
Kotler, P. Kotler On Marketing, New York, NY: Simon and Schuster, 2012. Print.
Kumar, A. Marketing Plan: Audi Company Overview. 2014. Web.
Ray, L. The Long-Term Effects of Customer-Oriented Sales Promotions. 2014. Web.