BMW Mini brand comes to India Essay

Bavarian Motor Works (BMW) group, recently introduced its iconic Mini brand in India with four models, price ranging between Rs 24.9 lakh to Rs 31.99 lakh.[1] BMW had contemplated launching the Mini brand in India back in 2009 too, but the move was shelved on account of weak market conditions, particularly due to global economic meltdown. The launch of the compact car BMW mini has been on the line of similar introductions in Indian automobile market by auto majors like Fiat and Volkswagen. Back in 2008, Fiat launched Fiat 500 Cinquecento model in India. It was priced at around Rs 14.82 lakh.[2] The car sold only 60 units and was subsequently re-launched in 2010. The sales number of Fiat 500 seems pale in comparison to the sales of Volkswagen Beetle, which was launched in India in November 2009 and had sold 300 units by July 2010[1], surpassing the original sales targets. However, the sales figures, of both these premium small cars are overshadowed massively by sales of other mass produced small cars in India, which are usually sold in Rs 3-6 lakh price range. Then why has a leading automobile maker like BMW launched a compact car like Mini in the Indian market, which cost nearly 5 to 8 times more than a regular small car in India, and then sell only by tens or hundreds and not by masses? This study aims at bringing to the light the strategies and reasons behind this move by the auto giant and what BMW aims to achieve through it. Let us first start by discussing the marketing mix techniques BMW has used to launch the Mini brand in India : Product : One of the most important component of any marketing mix is the product the company wishes to sell in the market. BMW has been strongly associated as a premium quality auto brand the world over. Its slogan â€Å"The Ultimate Driving Machine† further bolsters the fact that the company is engaged in making top quality cars, demanded by customers who prioritise the quality of the machine, driving pleasure and comfort over price. Therefore, the company targets the niche segment of buyers who demand top of the line quality product. Taking note of the increasing demand for premium cars in the Indian market the company has been adding several brands of cars, even since it set foot in the country, to the portfolio of the products it offers here. Mini was originally launched by British Motor Corporation in 1959.[3] Ever since the car was first introduced to the world, the Mini brand has carved a niche for itself, and created a sort of cult following and sentimental value towards the brand the world over. According to a Wall Street Journal Report dated January 5th 2012, Sales of Mini brand rose 20% in 2011 from the 234,000 units it sold in 2010, helped by robust demand across the U.S., U.K and China, irrespective of weak economic conditions.[4] Though the launch of BMW Mini was delayed in India (as originally planned to launch in 2009), according to Kay Segler, Senior Vice President, Mini Brand Management and Business Coordination, â€Å"Indian market is now ready for a brand like Mini as the country has become a part of the global community when it comes to lifestyle trends.† as told to PTI.[5] He further said, â€Å"More Indians are travelling and living abroad, they have network overseas and are more aware of trends ,† Segler said.[5] BMW’s market observation as worded by Segler shows that there is a market for Mini in India, for those who wish to own an iconic car, which is synonymous to fashion and style the world over. Price : BMW Mini is priced between Rs 24.9 lakh to Rs 31.99 lakh in India. The car is imported as a completely built unit, unlike other BMW variants like 3 series, 5 series, X1 and X3 which are assembled domestically, therefore carrying a high component of tax. However prices have been kept in comparison to the offerings of other competing brands like Volkswagen Beetle and Fiat 500 which fall in the same category as much as possible. Since BMW is a luxury car maker, the prices of the cars in its stable are very high. Mini is no exception. The prices are not such to justify the sale of the car to the masses but rather to high income rich influential Indian buyers who want to purchase the product majorly because of its iconic status and sentimental value attached to the brand over the decades, or simply as a status symbol. Placement : BMW sells its cars in India through 17 dealerships across 13 cities.[7] However, BMW Mini is to be sold through exclusive showrooms. Mini first started selling here at Infinity Cars, Mumbai on Linking Road. The dealership received 100 booking within a week. Later showroom in Delhi was opened in June and has sold 50 units till now[8]. BMW subsequently plans to open exclusive showrooms for Mini in Hyderabad, Chandigarh and Bangalore. The company has strategically chosen the financial capital (Mumbai) and political capital (Delhi) of India for its initial sales of Mini. Mumbai is the hub of financial activities and entertainment industry in the country and therefore has a high density of millionaires in the city. High income groups are attuned and aware of the international trends and style standards. Luxurious/status commodities are always in demand among these group, justifying the launch of an internationally perceived style icon like Mini, here first. Delhi is the home to political structure of India. The entire NCR (National Capital Region) region which includes satellite cities like Gurgaon and Noida have seen a tremendous rise in corporate and multinational establishments over the past decade and is rationally perceived as an IT hub of the country. With the advent of IT industry in the region and tremendous rise in realty prices, the entire NCR has become a home to a large number of high wealth groups. With huge disposable incomes in the region, demand for luxury cars is on the ascent. The two urban cities of Delhi and Mumbai have seen extensive westernisation in the living standards of the residents, resulting into an analogous demand. BMW therefore strategically chose the two cities as distribution centres for its Mini brand. Promotion : When the company found out that Indians accounted for more ‘Likes’ for Mini on a social networking web portal called Facebook, the company rushed to launch the product within the next six months. To promote a product that will appeal to niche class of buyers, BMW has adopted an aggressive marketing technique to sell the Mini brand in India. Supporting this, Dr. Andreas Schaaf, President, BMW Group India, â€Å"We are focused on a strong, surprising, daring and unexpected marketing strategy for the Indian market.†[9] Dummy models of the cars in its portfolio were placed on a lake close to New Delhi and on the rooftops of skyscrapers in order to enhance the presence of Mini brand in India.[9] This strategy was also part of its international ‘daring’ marketing strategy, though domestically it was a new technique. To further promote the Mini brand, the company plans to further collaborate with several marketing agencies. The emphasis is put on the unique ideas the car can be promoted with. According to Bejamin Nagel, Head of Mini India, the focus is on Guerilla and experimental marketing, as the Mini is not a mass product, but rather a premium car. Therefore, the company has opted not to promote it through mass media. It is therefore safe to say that for promoting the Mini brand in India, BMW is focusing on BTL (below the line) advertisement methods to target specific group of niche buyers, instead of ATL (above the line) methods of mass advertisement. Indian Automobile and the Mini The Indian automobile market which we know of today, has developed from its miniscule form since the early 1950s to the giant and growing industry it is today. Before the reforms to liberalise the economy in the early 1990s, the automobile sector was highly insulated from foreign investments. Due to very high tariffs on imports and other measures, the participation of foreign companies was extremely restricted. If we go back a bit further, 1950s saw the arrival of TATA Motors, Bajaj Auto and Mahindra & Mahindra. This lead to a steady increase in vehicle production in India. Subsequently, 1960s witnessed the establishment of two and three wheeler industry in India. However, post entry of Maruti Udyog in the 1980s, the industry witnessed tremendous growth. In 1983, Suzuki was permitted to enter a joint venture with Maruti by government, for some time and it became the only FDI player in the segment.[10] However, a decade later post liberalisation of the Indian economy, the government de-licensed passenger car manufacturing. Eventually, the industry saw a huge influx of foreign car makers into the country by way of FDI. Presently, automobile industry is one of the key growing sectors in the country. Almost every major car maker in the world is present in India. Even after the economic meltdown post 2007, India is still one of the fastest growing economies in the world. This has transformed into huge rise in disposable income, resulting in enhanced demand for products at par with international standards. This and others factors like favourable demographics, supportive business environment have attributed to the decisions of almost all the leading automobile companies in the world to set up and grow their business in India by providing cars at par with the worldwide quality standards. However, according to a recent report carried out by Society of Indian Automobiles Manufacturers, the growth in domestic sales of cars over the April-August 2012 period was 6.61% which is a decline of 3.9% over August 2011, due to the on ongoing economic downturn and turbulences.[11] But most industry analysts and car manufactures are optimistic about the future outlook of the industry which is still seeing considerable growth compared to automobile sector growth in other countries, and expect to witness better business on the hopes of government reforms to boost overall economic development and GDP growth in the coming times. The recent decisions to allow single brand and multi brand retail FDI in the country by the government has further strengthened the confidence of foreign investors towards the business policies in the country being favourable. Therefore, BMW’s decision to bring the Mini brand to the select Indian auto buyers is further vindicated by the deep analysis of the Indian automobile market done above. Like most of its other premium brands of cars, the company does not plan to sell the Mini brand to the masses, but rather to the niche and super rich segment of the Indian auto buyers which demands an international product for the premium price. The demand from this segment has been constantly rising over the past decade. As a result, other premium manufacturers like Audi, Mercedes-Benz, Volkswagen have been gradually introducing international brands of their car models in India. Like them, BMW’s management perceived this as just the start of the Indian growth story. As a developing country, there is huge potential of growth in the automobile sector, compared to the developed nations where the markets have seemed to reach to a saturation point. However, in the developing economies like India and China, the growth potential is huge and the development graph has still a long way to go upwards, backed by political will, before it can reach some sort of saturation. Some might argue that BMW’s decision to introduce Mini brand in India might be precocious. However, considering the growth potential in the economy, it is only right that BMW would want to stem its roots as deeply as possible in the premium automobile segment of the country right from the start. By adding Mini brand to its portfolio of the internationally recognised products the company sells in India, BMW wants to further bolster its image and position in the market, emphasising its willingness and seriousness to do a long lasting business in India, and providing wide range of premium cars acknowledging and fulfilling different styles, preferences and desires of the premium car buyers of India. References __________________________________________________________________ [1] http://www.hindustantimes.com/News-Feed/Auto/BMW-launches-Mini-brand-in-India-with-four-models/Article1- 791750.aspx [2] http://articles.economictimes.indiatimes.com/2010-07-19/news/27601128_1_cinquecento-fiat-beetle [3] Reed, Chris (1994). Complete Mini: 35 Years Of Production History, Model Changes, Performance Data. Croydon [4] http://online.wsj.com/article/SB10001424052970203513604577142310291706308.html [5] http://www.hindustantimes.com/News-Feed/Auto/BMW-launches-Mini-brand-in-India-with-four-models/Article1- 791750.aspx [6] http://www.bmw.in/in/en/newvehicles/3series/sedan/2011/showroom/index.html [7] http://www.cardekho.com/BMW/cardealers [8] http://articles.economictimes.indiatimes.com/2012-06-08/news/32124207_1_bmw-india-india-president-andreas- schaaf- mini-cooper [9] http://www.cartrade.com/car-bike-news/bmw-to-adopt-aggressive-marketing-strat