Term Paper: Business Environment in Japan BMW

Pages: 9 (3235 words)  ·  Bibliography Sources: 1+  ·  Level: College Senior  ·  Topic: Business - Advertising  ·  Buy This Paper


[. . .] "The BMW website is an integrated part of the overall marketing strategy for BMW. The full range of products can be seen and interacted with online. We offer pricing options online. Customers can go to their local dealership via the website to further discuss costs for purchase of a car. And it is a distribution channel for information that allows people access to the information 24 hours a day at their convenience."

Currently, the Toyota Lexus is the most popular vehicle in the luxury car category in Japan. In 1995, the Japanese purchased two Lexus cars for every one Mercedes or BMW. However, BMW cars in Japan are experiencing sales growth. Looking at the first 8 months in 2002, in Japan (the most important Asian market calculated by volume) 25% more cars (28,500) were distributed to customers compared to the same period in 2001 (22,700).

As was aforementioned, public sentiment towards foreign cars was negative when BMW entered the Japan market. This sentiment was encouraged by the Japan government, particularly after WWII. The Japanese government created as many obstacles to discourage or hinder foreign companies wishing to conduct business inside Japan. Historical reports that have only been recently accessible reveal that this system was not helped by the U.S. government, which disallowed American companies from conducting business in Japan in order to safeguard a security affiliation. However, as time progressed and attitudes relaxed, many of the hindrances the Japan government put into place in the 1950s and 1960s have been removed, and companies who persevered with all the rigmarole during that time, are now reaping the benefits of their patience and persistence. Japan's car market is currently more or less open -- tariffs on imported cars have been reduced to correspond with the rates in the West. As Bernd Pischetsrieder, chairman of BMW AG, states, "Our experience in Japan is that it clearly does not help to complain about trade barriers."

BMW also takes responsibility for ensuring safety and protecting the environment, and even exploiting these two factors in their marketing campaign. As Dr. Siegfried Richter, former president of BMW Japan, states, "After the bubble years we took a hard look at operations. Unit volume was decreasing, prices still high. What could we offer customers in extra added value? We decided safety and environmental issues could both be a big plus."

BMW was the foremost car company to introduce airbags and an anti-lock braking system standard in their vehicles in Japan. BMW also began driver training courses 10-20 times a year. The courses explain how to maximise the car's capabilities, drive on snow and ice, drive defensively, etc.

In 1994 BMW initiated its 'total recycling' program. Upon a customer's request, dealers can get an old BMW car off a customer's hands, free of charge. This is a particular appealing service because it can cost a person up to $1,500 to get rid of an old car. Local governments can even request dealers to remove abandoned BMWs for free. The BMW Group benefits from this service since they can strip the old vehicle down to its parts (that is, engines, transmissions, etc.) and transport them to Germany for recycling. This service is considered a novelty in Japan. Richter explains: "Germans think if you use a car carefully you should be able to turn it in for parts and get money back. That is totally alien to Japan, still a throwaway society even for cars. Because it costs money to get rid of a car properly, many are simply abandoned on the roadside, adding to the pollution problem. BMW is helping to change attitudes and limit environmental destruction."

While it is necessary to study the business, political and legal environment in Japan when analyzing BMW's strategy in penetrating the Japanese market, it is also necessary to study what ultimately drives the success of all these arenas - the cultural environment where the target market resides. To counter the negative image foreign cars had in the Japan market, BMW had to careful orchestrate their marketing campaign to reverse this attitude amongst their target audience. Marketing Manager Walter Sawallisch stressed the elite, active, efficient car image as he flooded newspapers with advertisements for a car the majority of Japanese had never seen before. He produced unique ad copy, which attracted curiosity and sent prospective buyers to the modern BMW showrooms to see for themselves what the car was about.

Instead of hiding their European roots, BMW embraced it and forced the target market to embrace it as well. Tanegashima recalls, "We didn't worry about negative image associated with being 'foreign.' On the contrary, we ran ads featuring European scenery and faces as if they were all completely natural. We helped to introduce European style. That's one reason we stood out."

But marketing was not only limited to print media. BMW aggressively sought to know their target market completely and adapted themselves accordingly. Knowing Japan's penchant for golf, BMW hosted golf tournaments or invited customers to big golf competitions. They also gathered the best golfers from these events for BMW Masters. Golf is usually patronized by corporate executives so when they would all get together at these golf tournaments, they did more than just discuss cars. Being of similar age, social status and socio-economic background, these corporate executives cultivated a group identity that dictates lifestyle. BMW took advantage of popular sentiment in Japan where a person's group identity is considered more important than his or her personal identity.

Currently, BMW cars are seen as status symbols, more than just a mode of transport to get from A to B. For example, 46-year-old interior designer Shunsuke Kurita prefers his black 1999 BMW 318i. "It's a status symbol more than anything else, but I figure a BMW has better resale value than domestic cars." Lueder Paysen, previously BMW Japan finance director and eventually president, recalls their marketing strategy. "We concentrated on people who wanted to be different, on people who bought Italian suits and wore French ties... We focused on positioning BMW not just as a means of transport but as an attitude, a feeling."

In keeping with current customer needs and wants, the BMW Group was not adverse to incorporating unorthodox extras in their vehicles. "Mr. Paysen often came up with proposals that we found crazy," remembers chairman Pischetsrieder. "But we went ahead because he said it was what Japanese wanted." One such crazy proposal involved a flap in the front seat, which one could pull down as a response to the penchant of many people in Japan who liked to put their feet up. The BMW Group also concentrated on increasing the comfortability and luxury of the backseat as a response to Japanese and other Asians who prefer to be chauffeured as opposed to Westerners who relish driving themselves. The BMW Group primarily targets men with incomes of $75,000 and more. However, BMW is not just targeting the affluent. They are also targeting the upscale youth with the introduction of the BMW Mini (the first BMW to be powered by all four wheels) and making BMWs more affordable and accessible through financing and opening their 'used car' channel.

The BMW Group in Japan has surmounted many of the challenges posed by the Japan market. Despite the obstacles in the political, business and cultural arenas, BMW have managed to not only garner success in a notoriously difficult market, but also pave the way for other foreign companies, whether it be in the automobile industry or elsewhere, to crack the Japan market. They are living testimony to the merits of persistence, optimism, ambition and innovative thinking.


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BMW Annual Report 2001. http://www.bmwgroup.com/e/0_0_www_bmwgroup_com/2_investor_relations/2_2_publikationen/2_2_1_geschaeftsbericht_01/2_2_1_1_alle_downloads_im_ueberblick/pdfs/10_BMW_AnRep2001.pdf

BMW Press Club (September 10, 2002) "BMW Group Sales August 2002: BMW Group shows a 21% increase in sales in August," in bmwboard. http://www.bmwboard.com/news/view.asp?linkid=304

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Kerin, Roger A., Berkowitz, Eric N., Hartley, Steven W., & Rudelius, William. (2002) Managing Products and Brands. http://highered.mcgraw-hill.com/sites/0072410752/student_view0/chapter11/video_cases.html

Kishi & Russell (December 15, 2000). The Road Not Taken: BMW. http://www.uncc.edu/~medomoto/3209/business/bmw.html

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Analysis of Business Environment in Japan - BMW Perspective

Panke, Dr. Helmut. (2002) "Premium Brand Strategy in the Automotive Market," in Nikkei Global Management Forum. http://www.nni.nikkei.co.jp/FR/NIKKEI/ngmf/ngmf2002/2002ngmf_su01_panke.html

BMW Annual Report 2001, p. 37. http://www.bmwgroup.com/e/0_0_www_bmwgroup_com/2_investor_relations/2_2_publikationen/2_2_1_geschaeftsbericht_01/2_2_1_1_alle_downloads_im_ueberblick/pdfs/10_BMW_AnRep2001.pdf

Kishi & Russell (December 15, 2000) The Road Not Taken: BMW. http://www.uncc.edu/~medomoto/3209/business/bmw.html

Kerin, Roger A., Berkowitz, Eric N., Hartley, Steven W., & Rudelius, William. (2002) Managing Products and Brands. http://highered.mcgraw-hill.com/sites/0072410752/student_view0/chapter11/video_cases.html

Bacani, Cesar. (2001) "Asia's Cars of Choice," in Asiaweek.com. http://pathfinder.com/asiaweek/96/1101/cs1.html

BMW Press Club (September 10,… [END OF PREVIEW]

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