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Topic: Student Questions

What Would Be The Pricing Strategy For A Bmw?

Posted by Anonymous on 6/1/2005 at 6:39 PM ET 250 Points
I am writing a paper about a new product (in my case a BMW 3-series) and need to know what the pricing stategy would be if the BMW is in the early stages of its life cycle
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  • Posted by mgoodman on 6/1/2005 at 7:10 PM Accepted
    While I have a lot of experience in the general area of pricing strategy, I am not familiar with the current pricing on the BMW 3-series. (Is it really in the early stages of its life cycle? I owned a BMW 320 twenty years ago.)

    Why don't you go to the local BMW dealer where you live and ask them about pricing for the car, who its main competitors are, and what THEY think the pricing strategy is? Then go to the dealers for competitors -- Audi, Mercedes, Saab, Lexus, etc. -- and ask them the same questions.

    If you do that, you'll have the answer you need. Unless someone on this forum has recently been in the market for a BMW 3-series car, or is consulting for BMW, it's unlikely we can tell you what their pricing strategy would be -- or if it's really in the early stages of its life cycle.

    By the way, it wouldn't surprise me to learn that they have different pricing strategies in different parts of the world. You need to be sensitive to WHERE you are located -- Europe, US, Asia, SA, Australia, Middle East, etc. -- as you pursue the question.

    Also, if this is a student question, shouldn't it be in the "Student Questions" section of this forum? "Research/Metrics" seems like an odd place for this particular question.
  • Posted by koen.h.pauwels on 6/2/2005 at 3:51 AM Member
    I share Michael's doubt on the 3-series life cycle stage: knowing which country you are talking about could help here. As for pricing strategy, the 3-series is an interesting case, because:
    1) it is clearly meant to be an entry-level model, priced 'reasonably' so that e.g. young managers can afford it. Within its price class, it has great performance, combining luxury with a sporty look. Moreover, creative marketing such as the 'BMW online films' campaign increased the cool and approachable image (while reducing the 'yuppie' negative association) for even younger audiences. Ultimately though, BMW wants you to upgrade to the higher-margin 5 and 7 series throughout your life.
    2) on the other hand, BMW likes to give an air of exclusivity to its 3 series too: I had to wait 3 months for mine (living in the US North-East) and there was absolutely no price negotiation. Moreover, BMW maintains a price premium over comparable cars (eg Audi)

    In sum, pricing (including in the early life cycles) for such product considers the tradeoff between achieving a young, approachable image for volume growth (implying a lower price) versus a desire for exclusivity/prestige image and margin (leading to a higher price)
  • Posted by Mushfique Manzoor on 6/13/2005 at 1:41 AM Accepted
    hi jwheel

    great response from experts above. like all experts mentioned, the pricing strategy depends on the market where BMW-3 series is entering/has entered recently.

    initially the 3 series was launched targeted at the young managers, and the design had a stylish sporty as well luxurious look. the objective was to lure the young affluent managers to hook into BMW as a whole: start with 3 series and then rest of life will love nothing but BMW and upgrade to 5 series and 7 series. A premium pricing strategy was followed compared to others in the same segment for the reasons just mentioed above. But that was based on the developed markets of Europe and US.

    so like i said, the pricing strategy depends on the market its entering or entered recently. to find out the pricing strategy for your market, do the following....

    1. first analyse the segment in which the 3 series is placed

    2. then analyse the target consumers, their taste, lifestyle, how the 3 series match that lifestyle etc

    3. find out the competitors in that same segment and analyse the pricing of the competitors.

    4. analyse the Value Proposition of all the competing cars including 3 series.

    btw, you can check the following links on 3 series pricing.

    https://car-reviews.automobile.com/news/all-new-bmw-3-series-features-aggre...

    https://carsguide.news.com.au/news/story_page/0,8269,15338015%255E21822,00....

    https://www.detnews.com/2005/autosinsider/0503/01/A01-104171.htm

    hope this helps.

    cheers!!
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