Table of Contents
2.0 Porter’s 5 Forces Matrix. 9
2.1 Threat of new entrants. 10
2.2 Threat of substitution. 10
2.4 Bargaining Power of Suppliers. 11
2.5 Bargaining Power of Buyers. 12
3.1 Two segments of the market 12
3.1.1 Demographic segmentation. 12
3.1.2 Behavioral segmentation. 13
4.0 Strategic marketing for the pilot launch of BMW i7 2022 series. 17
4.1 Product in the marketing mix of BMW i7 2022 series. 17
4.2 Price in the marketing mix of BMW i7 2022 series. 18
4.3 Place in the marketing mix of BMW i7 2022 series. 19
4.4 Promotion in the marketing mix of BMW i7 2022 series. 19
Introduction
BMW is an international automobile company at the top of the automobile industry, producing luxurious brands of quality, style, and comfort. BMW was founded in Munich, Germany, in 1916, as a manufacturer of luxury vehicles and motorcycles (BMW Group, 2022). A defining characteristic of the BMW Group is the rapid international expansion due to increased production capacity. BMW has been successful in its global expansion strategy because of the rapid expansion of electro-mobility, enabling it to expand the current range of the electrified model. Singapore is one of the countries targeted by BMW's international expansion, with the company launching distinctive brands with an interior that can serve as a luxurious retreat and entertainment space. This case study analysis examines the entry of new car series in Singapore. The selected car series is the BMW i7 2022 luxury electric vehicle. The paper provides a situational audit of critical factors within the macro environment influencing the new product launch.
1.0 Situational Audit
As indicated in the previous section, BMW is a German multinational company that manufactures luxury vehicles. In 2021, BMW had a total sales revenue of $ 131 billion, a 16% sales increase from 2020, with an annual revenue of $113 billion (Macrotrends, 2022). BMW has become a recognizable brand because of the company's unique marketing strategy, which appeals to baby boomers, millennials, and Generation Xers. The luxury cars from BMW appeal to different target consumers because of their luxury and high performance. In 2019, BMW was the world's ninth-biggest vehicle engine manufacturer after manufacturing more than 2.3 million units. Although the company is settled in Munich, it has production facilities in countries such as Germany, Brazil, China, South Africa, the United States, Mexico, and United Kingdom.
The automotive market in Singapore is snowballing, with sales of new cars increasing by almost 10% in the last five years. As of 2021, the market value of the automobile industry in Singapore was $40 billion. The PRN News wire approximates that the automotive industry in Singapore is likely to increase by over 20,000 units from 2021 to 2026, representing a CAGR of 6.08% (Technavio, 2021). The market is expected to grow similarly in the next few years, reaching almost US$100 billion by 2030 (Motor Intelligence, 2022). The automotive market in Singapore is robust in the luxury segment, with sales of high-end cars accounting for almost two-thirds of the total. The market is also proliferating in the commercial vehicle sector, with sales of trucks and buses increasing rapidly. The continued growth in the luxury segment is expected to drive most of this growth while increasing demand from the commercial vehicle sector is also contributing.
The new BMW i7 2022 is one of the new car series from the company, dubbed as the first ever fully electric sedan, which combines electric performance and multisensory entertainment to produce unforgettable experiences for car owners. The new BMW i7 2022 is to be introduced in the Singapore market. Its preliminary values include a luxurious interior atmosphere, crystal headlights, outstanding power consumption, and an excellent electric range. However, before being launched in the Singapore automobile market, there was a need for BMW to consider macro environment analysis. The macro-environment factors entail the external factors outside of business control. In the BMW case, the PEST analysis is used to analyze the macro-environment trends.
1.1 Political factors
The political environment in Singapore is stable and supportive of the automotive industry. BMW is affected by various political influences, including introducing new regulations and policies. The automotive industry in Singapore is affected by several political factors, including its relations with other nations, its domestic economic policies, and its stance on environmental issues. The Singaporean government has several policies promoting the automotive sector, such as tax breaks and generous subsidies. This has helped to stimulate the growth of the automotive industry in Singapore.
Singapore has long been a central trade hub, and its automotive industry has benefitted from this status. The government has implemented various policies to support the automotive sector, including generous tax breaks and targeted subsidies. For instance, in 2014, Singapore Government, through the Land Transport Authority, introduced car-sharing programs that introduced 1,000 electric vehicles and their charging infrastructure (CMS Law, 2020).
The automotive industry in Singapore is also a significant employer, and the government has been supportive of initiatives to improve worker productivity. However, environmental concerns have often been cited as a significant sector challenge. The government has prioritized reducing automobile emissions and has enacted several initiatives to promote alternative fuel sources. A critical regulation is the automotive emissions standards prescribed by the National Environment Agency of Singapore, requiring all vehicles imported and registered in Singapore to comply with national emission standards (Roberts, 2015).
1.2 Economic factors
The Singaporean economy is strong and growing, providing opportunities for BMW to expand its operations. The country has a competitive automotive market and strong consumer demand. The International Monetary Fund (IMF) reports that the GDP of Singapore in 2021 was $397 billion, with a GDP per capita of $72,000 and a forecasted GDP growth rate of 7.6% in 2022 (Srinivasan & Leigh, 2022). These statistics suggest that Singapore is first becoming a high-income country with a positive GDP growth rate that impacts the automotive industry.
Singapore also has a strategic geographic location, playing a crucial role with its neighboring countries. Singapore can also be regarded as a developed nation, with higher income among residents to fulfill their materialistic desire. Therefore, the business sector, such as the automotive industry, can expect a higher purchasing power from vibrant customers. Singapore also has moderate inflation, which will make the BMW i7 have positive consumer confidence and increased consumer spending trends. Singapore also has higher consumer spending, reflecting a higher purchasing power. These higher consumer trends can positively influence the marketing strategies of the BMW i7 2022.
1.3 Social factors
The social environment in Singapore is supportive of the automotive industry. Various countries have cultural differences unique to the country. This means that the BMW Group must adjust the new BMW i7 2022 to fit the needs of the people. The population of Singapore is substantial, so there is a high demand for new cars. As of 2021, the high-income city-state had a population of 5.9 million (Department of Statistics Singapore, 2021). This has helped to drive the automotive industry in Singapore forward. Singapore also has a moderate to the high middle class. These consumers act as brand ambassadors for BMW i7 2022, encouraging the vibrant younger population to maintain their loyalty to BMW. Singapore's higher education rate translates to more talented, skilled, and knowledgeable employees. Higher education also means that consumers will be more aware of the consumption patterns of the new luxury BMW i7 2022 car series. Singaporean consumers also have an increased health consciousness regarding environmentally friendly cars. This is likely to drive the sales of the new BMW car series.
1.4 Technological factors
The advancement of technology has played a significant role in the development of the automobile industry in Singapore. The following are some of the critical technological factors that have affected the industry:
- The popularity of electric vehicles has led to a shift in the demand for automotive products and services. This has impacted the automobile industry in Singapore as manufacturers have had to develop new product lines to meet the demand for electric vehicles.
- The development of autonomous driving has revolutionized the way people commute and interact with their surroundings. This has led to a surge in demand for automotive products and services capable of autonomous driving.
1.5 SWOT Analysis
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Strengths
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Weaknesses
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Opportunities
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Threats
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2.0 Porter’s 5 Forces Matrix
2.1 Threat of new entrants
The Singapore automobile market is a highly competitive one, with many established brands and a large number of new entrants. The threat of new entrants is high in this market. There are many new entrants in the market, including small and medium-sized companies (SMEs), which are looking to gain a foothold. A 2020 report by Value Champion revealed that the major players in the luxury automotive market in Singapore as of 2019 were Mercedes (14.25%), BMW (14.19%), and Audi (13.49%) (Value Champion, 2020). These companies may offer lower prices or innovative products that appeal to consumers. The threat of new entrants is also high because there are many existing players in the market. These companies may be able to resist competition from new entrants as they have a strong foothold in the market. The Singapore automobile market is also highly fragmented, which makes it difficult for new entrants to gain a significant market share. The Singapore government has imposed stringent regulations on the automotive sector, which makes it difficult for new players to enter the market.
2.2 Threat of substitution
The threat of substitutes is a high force for the new BMW i7 2022 car series. The main substitutes for the new car series in Singapore are other luxury brands such as Mercedes-Benz, Audi, and Tesla. These brands offer similar vehicles at similar price points, so customers can switch to a different brand without feeling too much of a financial burden. The Singapore market is also relatively small, so there is limited competition for BMW dealerships.
2.3 Competitive intensity
The competitive intensity in the Singapore Automobile market is high. The major players in the market are Mercedes-Benz, Audi, and Tesla. These companies are fighting for market share and are willing to invest in new product launches and marketing campaigns to gain an advantage over their competitors. The market is highly competitive, and the companies can attract high customer loyalty. However, the market is also volatile, and new competitors can emerge quickly and challenge the leading companies.
The main challenges of the new BMW i7 2022 car series in the Singapore automobile market are competition from other major players and high customer loyalty. The company can attract high customer loyalty because its products are of high quality. However, the market is highly competitive, and new competitors can emerge quickly and challenge the leading companies.
2.4 Bargaining Power of Suppliers
There are many suppliers in the market, but some have more power than others. The most powerful suppliers are those who have a large number of suppliers and can offer better prices. They can do this because they have the bargaining power to demand higher prices from their suppliers. Other suppliers have moderate bargaining power because they can negotiate prices with a few big suppliers. However, if there is a shortage of a specific type of car in the market, then the bargaining power of suppliers can increase significantly.
2.5 Bargaining Power of Buyers
The bargaining power of buyers in the automotive market in Singapore is relatively high. There are several reasons for this, including the fact that there are a large number of automotive manufacturers operating in the country, as well as a relatively high level of competition among these companies. Consequently, buyers have many options when selecting a new car or truck. Moreover, the price of new vehicles in Singapore is generally high, making it relatively easy for buyers to get a good deal on a new car or truck. Many Singaporeans are well-informed about the various types of vehicles available in the market, making them relatively confident in their ability to make informed decisions about buying the new BMW i7 2022 car series.
3. Segmentation Strategy
The German automobile manufacturer exemplifies a good segmentation strategy to stand apart from the crowd and achieve a good segmentation strategy. Since 2020, BMW has become famous for the ‘i-series,’ with different customers with varying age ranges and professions (BMW, 2022). Ideally, the segmentation of BMW is based on different classes of customers, different needs, incomes, and behavior. The two most crucial segmentation strategies that apply to the BMW i7 2022 series are demographic and behavioral.
3.1 Two segments of the market
3.1.1 Demographic segmentation
The company's main customer base is affluent middle-class people. BMW has a strong presence in luxury markets around Singapore. The company sells a variety of models that cater to different segments of the market. However, in the Singaporean market, the demographic characteristics of the new BMW i7 2022 series include people aged 25-55 years, both males and females. The car series suits the needs of married couples with at least two children.
3.1.2 Behavioral segmentation
Under behavioral segmentation, BMW divides buyers into different groups based on loyalty and information. The company combines luxury, performance, and reliability to position the new BMW i7 as a masterpiece that appeals to middle-class and upper-class consumers. Therefore, the new i7 series establishes itself as a high-value product that appeals to customers as reflected in both pricing and quality. The new i7 series targets people with a successful career and who want to upgrade to a sleek and modern car. The new model also suits the enthusiastic working class who prefer to display their class. The primary consumers also have higher income levels and maintain their status by buying luxury cars.
Table 1: BMW i7 2022 Segmentation
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Type of segmentation |
Criteria |
Target group |
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Demographic |
Age |
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Gender |
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Lifecycle |
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Income/Class |
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Behavioral |
Degree of loyalty |
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Personality |
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Benefits sought |
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User status |
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