Smart Pricing Strategy of BMW

Smart pricing strategy
BMW (Bayerische Motoren Werke)

Prepared by: Yap Kai Ying (A18HA0270)

Background of BMW
Group

• BMW is a multinational company that produces luxury vehicles
and motorcycles in German. The company was founded in 1916
as a manufacturer of aircraft engines. It was produced from 1917
to 1918 and again from 1933 to 1945. However, BMW Group also
is the leading of the automotive manufacture and seller in the
world. The company has a worldwide subsidiaries and
manufacturing such as in China, South Africa, United States,
Brazil, Malaysia, India and etc.

• Vision for BMW Group is “We are Number ONE. We inspire
people on the move. We shape tomorrow's INDIVIDUAL
PREMIUM MOBILITY.”

• Strategy of company- leading BMW Group into new era which is
use the leverage technology and able to sustain to deliver unique
customer experiences and features.

Price strategy

Most important pricing strategy is: BMW does not really focus on pricing strategy based on
the market economy, they was targeted sales promote in
Premium pricing strategy younger market by deliver best performance and driving
• Premium pricing strategy is that the company sets high prices for its products to dynamic.

show that its products are high-value, luxurious or high quality. Premium pricing
is focus on the perceived value or benefit that received by the customer through
the product.

• For example, the customer get most value from the BMW is the performance
and the safety of the car. On the other hand, BMW also combine of space,
family-friendly features. It also provide comfortable and sporty driving dynamic
to their customer which expect from the BMW brand.

• BMW use price partitioning, different series, quality and look will be set at
different price.

The premium pricing strategy has used by BMW Group to create their brand awareness. The customers will
think they are pay much higher prices for the perceive quality of the product. For example, launching a new
small BMW model - MINI COOPER is to targets premium price cars in the markets and it was set at the high
price due to the different and unique features. Here is the MINI Malaysia price list 2020:

Even though MINI COOPER is relatively small size, but this
powerful brand has make the car become one of the
world’s most profitable car.

Model Price
Mini 3 Door RM249,888 - RM 313,888

Mini 5 Door RM 259,888
Mini Clubman 2019 RM 215,888 – RM 342,888

Mini Countryman RM 248,888 – RM 362,888

Competitors of Strong competition from other luxury manufacturers
BMW Group like Audi, Mercedes has fight market share with
BMW.
According to U.S. News and World Report
(Best Cars), BMW has some good performance An example price range show the price range of two
compare with Audi. similar spec of the car.

BMW has a best performance in safety. For Car model Price range
example, BMW’s 2 Series, 5 Series, X3 is the
highest score in safety score which is 10 out of BMW 5Series From RM 328,800
10.

Moreover, average safety score of BMW is
9.76 compared with Audi (9.68).

The best luxury car in US is BMW 5 Series
which was ranked No. 1 in “2018 luxury
midsize cars class” with the score 8.9 out of 10
compare with Audi A6 (8.0).

Audi A6 From RM 309,375

Compare luxury sedan BMW 3Series

with Audi A4 and Mercedes-Benz C-Class

Form price range data, we can see that Mercedes-Benz C-Class has a Car model Price range
BMW 3Series RM 248,800-RM 293,800
highest price compare with the other. Although three of this luxury sedan
has a similar price range, but sales of BMW 3Series was increase by Audi A4 RM 206,524-RM 297,116
7.28% as compare with Audi A4 drop the sales by 23% and Mercedes-
Benz C class also drop by 18.63% in the US market from 2018 to 2019. Mercedes-Benz RM 259,888-RM 421,888
C-Class
Even though 3 of them has similar price range, the customer will choose

to buy BMW 3Series due to BMW provide the best performance for the
luxury sedan with energetic engine choices to a feature-packed interior,
sporty exterior design, spacious interior design, child safety seats can be
built in, it also offers a good fuel economy, features are user-friendly and
efficient.

Insight of BMW Group

BMW is pay more attention at superior performance, but for new BMW buyers For those who are not willing to pay for the technology
or shoppers it is still difficult to understand the advanced technology built into because it was costly, they can choose the BMW 3Series
each car in market. However, there have 48% of customers switch their vehicle which have lower taxes and expenses of fuel consumption
brand because of the technology features they want even though the brand have and not costly but also have good experience as well.
historically preferred.

In order to attract and maintain the loyalty of customer, BMW has making
virtual reality (VR) that allow customer to see the technology and deliver the
best experience that has been built inside of BMW. Their also focus on building
customer loyalty which create multi-channel either in physical store or digital
store by help their customer find the research more easier. Moreover, BMW has
conduct a video campaign “#BMWSTORIES” which show customers personal
stories and how the BMW brand helps them through their emotional and real
journey. It was a success video marketing which increase 5 times of
engagement in BMW Brand.

Price partitioning

• With a different series feature, version and year of
manufacture will have different prices.
• An example show as below:

Some reference value of BMW show as
below:

Best SUV Model Price
Best Car Kia Telluride RM 135,870
Best luxury SUV Toyota Camry RM 104,722
Lincoln Navigator RM 313,844

Suggest Fisker Inc. (2016) which is relaunch

brand of Fisker Automotive (2007).

World's first production luxury plug-in

hybrid electric vehicles.

Car model Price range
BMW 330i $41,745 (RM 181,966)

Suggestion Fisker Emotion Start $37,500 (RM 163,462)

From this example, we can see that Fisker Inc. is offer

low price of the electric sport sedan as compare with BMW

set a high price to their sport sedan. I will suggest that Fisker

Inc can use the price strategy of BMW-premium

strategy to create brand awareness in the market in

order to gain more profit and do not repeat a disastrous

policy in 2007.
As a World's first production luxury plug-in hybrid electric
vehicles the quality, performance and feature of Fisker
Vehicle is not to lose BMW

Summary

Due to covid-19, the sales of BMW was decreased 15.3%. However, BMW
saying that there are well prepare to handle this challenge. For instance, BMW
has release 90-day deferred payment plan to those who buy the car for the first
payment by financing through BMW Financial Services and they also offer a
special lease payment waiver to loyal customers.
BMW Group have a good smart pricing to run their business. In common high
price will make lose the sales but BMW Group have good at their price strategy
which high price with high quality of their product and make their customer
perceive the value of their product.
BMW will launch the all-new BMW 4 - Series Coupé M440i in 2021
by start at price RM254,000 (A video show in appendix)

Appendix

• A video show the all-new BMW 4 - Series
Coupé M440i

Scan it watch the video

References

• Essays, UK. (November 2018). Marketing strategy
and pricing strategy of BMW. Retrieved from
https://www.ukessays.com/essays/marketing/marke
ting-strategy-and-pricing-strategy-of-bmw-
marketing-essay.php?vref=1

• Loveday, steven. “BMW vs. Audi: Battle of the
Brands.” U.S. News &World Report, 18 Sept. 2018,
https://cars.usnews.com/cars-trucks/bmw-vs-audi

• Anon,“Full Price of the Fisker Ocean Revealed.” New
Mobility, 6 Jan. 2020, www.newmobility.global/e-
mobility/full-price-fisker-ocean-revealed/.

• BMW Malaysia: Price List 2020
www.bmw.com.my/en/footer/metanavigation/price-
list.html.

• BMW.com https://www.bmw.com.my/en/

Scan Me !!