THE UNIVERSITY OF ZAMBIA

INSTITUTE OF DISTANCE EDUCATION

DEPARTMENT OF BUSINESS STUDIES

NAME : HAGGAI SIMUKONDA

COMPUTER NUMBER : 719000173

COURSE : MBAZ513

LECTURER : Marjorie Mutale Nkamba

ASSIGNMENT :1

DUE DATE : 26 FEBRUARY 2021

CONTACT :+260963802358
 Question 1
In this paper I will analyse the product life cycle of Bavarian Motor Works, an automobile

company that deals in manufacturing of automobiles with a brand name of “BMW” and how

it introduces new products on the market, how the product goes through the introduction

stages and growth stages and how they continually introduce a new product yearly. Unlike

the normal product life cycle, BMW does not follow the four stages of a product life cycle as

identified by Raymond Vernon Joachim (2016) but its products only have only two stages,

the introduction and the growth stages.

BMW Product Life Cycle.

BMW long term objectives is to keep its automobiles and services in the introduction and

growth stages by introducing new models each year in each of its product lines. Unlike other

automobile companies that launch new models and then leave them unchanged, BMW

continually improves its existing products. Explains McDowell,” Anyone can sell a lot of

cars the first year, when a car is new. It is our challenge to constantly improve the car and to

continuously find new innovative ways to market it” StudyMoose. (2016).

The following stages are the product life cycle as identified by Raymond Vernon.
 1. Introduction (birth)

2. Product Growth (Adolescent Child)

3. Product Maturity (Adult)

4. Product Decline (Old Age / Retirement)

However, this concept does not quite fit with BMW's products in relation to the product life

cycle 5 stages. Jim McDowell, vice president of marketing at BMW says " If a product is

declining, we would prefer to withdraw it from the market, as opposed to having a strategy

for dealing with the declining product, StudyMoose. (2016) . BMW products only go through

two-stages of product life cycle that is introduction and growth stages.

Stage 1: Introduction

In the introduction stage, when BMW introduces a new model of a vehicle, BMW introduces

three versions for each model that satisfy different customer preferences. BMW goes to the

market through partners, about 300 franchised dealers selling its automobiles in the united

states and Europe David Kiley(2004). The dealers and BMW share responsibility for demand

generation in the sense that BMW designs and implements national advertising while dealers

provide for product display and convenient testing by customers that includes putting its

vehicles in movies of famous characters. Dealers provide local after sales service, deliver

vehicles to customers and fulfil of all the demands of the customers. BMW uses the

worldwide web to place adverts such as Facebook, television and google adverts, twitter and

others apart from relying on their dealers who play a major role in the advertisement of a new

product. Currently, the U.S, Germany, and the United Kingdom are BMW’s largest markets.

BMW recently introduced its 1 series—a compact car designed to compete with the

Volkswagen Golf in Europe and the Rabbit in the U.S.—to attract a new younger audience.

Mike Antich(2020)
BMW cars typically have a product life cycle of 7 years. To keep products in the introductory

and growth stages, BMW regularly introduces new models for each of its series to keep the

entire series new. For instance, with the 3 series, it will introduce the new sedan model one

year, the new coupe the next year, then the convertible, David Kiley(2004) then the station

wagon, and then the sport hatchback. That’s a new product introduction for five of the seven

years of the product life cycle. So, even though they have seven-year life cycles, they

constantly try to make the cars meaningfully different and new about every three years. And

that involves adding features and other capabilities to the cars as well. How well does this

strategy work? BMW often sees its best sales numbers in either the sixth or seventh year after

the product introduction.

BMW 3 series coupe 2010 BMW 3 series convertible 2011

The life of a child at birth needs a lot of attention, care etc. when a new product is introduced

on a market, before its proven demand for the product, often Sales are low and interested

customers are few. Bringing a new product to a market is risky in the sense that there are a

number of variable or ‘Unknown costs” that may arise in the need to advertise in order to

promote awareness and convince people that the product is good and eventually convince

them to buy at the same time making profits before competitors make a similar product.

Philip and kelvin (2012) BMW made 3 versions of the 3 series and the X5 so that it becomes
difficult for the competitors to imitate what is called a new product (but in essence 3 new

products).

Because of the cost associated with coming up with a new product, many firms avoid this

stage, and will follow the innovator (BMW), who breaks the new ground and others follow

by creating similar products. At this stage,

As global sales increase, BMW has become aware of some international product life cycle

differences. For example, it has discovered that some competitive products have life cycles

that are shorter or longer than 7 years. In Sweden and Britain, automotive product life cycles

are 8 years, while in Japan they are typically only 4 years long.

BMW uses a system of product advocates to manage the marketing efforts of its product

lines. A series advocate would actually use and drive that series and would constantly be

thinking about how better the series can serve the customer? In addition to modifying each

model throughout the product life cycle, BMW modifies the markets it serves. For example,

during the past 15 years BMW has expanded its market by appealing to a much larger

percentage of women, African Americans, Asians, and Hispanics. BMW’s positioning

strategy is the same worldwide and that is to offer high-performance, luxury vehicles to

individuals. Generally, once a model is positioned and introduced, BMW avoids trying to

reposition it. Reasons for the growing popularity of BMW include high-performance

products, unique advertising, an award-winning website, innovations such as smart

technologies that learn what the driver prefers.

Stage 2: Market Growth

Demand begins to accelerate and the size of the total market expands rapidly, this can also be

referred as the “Take-off Stage”. With a successful product there is a gradual rise in the sales

curve. Potential competitors such as Audi, Mercedes benz, who have been watching
developments, launch similar competing products and start brand differentiation. It is advised

that this time, the innovator must now switch from policies of trying to get customers to “feel

the product” in this Stage, to “Feel the product”, BMW focuses its advertising on persuasion

to convince the customers to drive the ‘the ultimate driving machine”, BMW of North

America’s growth strategy leverages global BMW Group initiatives. Studylib, (2016) For

example, BMW Group introduced “The Power of Choice” concept allowing customers to

customize their vehicles and order self-customized vehicles through their website, something

that best fits their needs Mike Antich (2020) Whether it is fully electric, hybrid technology,

or internal combustion engine, their global production line network is able to manufacture.

The ultimate extravagance in buying a car is having everything customized to the owner’s

preferences. Today, 80% of European buyers and 30% of U.S. buyers use the BMW website

to choose from 350 model variations, 500 options, 90 exterior colors, and 170 interior trims

to create their perfect vehicle This provides additional flexibility to the fleet customers and

make it easier for them to achieve their diverse sourcing requirements. They also make

valuable adjustments in their own organisation to fully meet the fleet customers’ expectations

as they less focus on customer satisfaction be it toward fleet managers or drivers or leasing

companies, whether someone purchase one unit or 500, they place the same importance to

them.

At this stage, they also make investment to improve the ordering capabilities, for example,

they implemented a new ordering system to enhance how partners place orders for BMWs

and Minis. They also introduced new processes to make it easier for their dealers to serve

fleet customers by developing dealer programs for small business fleets and equipping them

with the right tools to best serve the customers.

Market Growth Extension

BMW tries to extend the growth stage by introducing extension strategies such as Introducing

slight Changes and a fresh appeal to the target market, but allowing it to appeal to a new

segment of the market by either just increasing the horse power of the engine. Studylib(2016.

BMW has been proactive by taking the opportunity to enter new markets such as china where

it has produced cars since 2003. It operates in premium market and its strongest competitors

are Audi, Mercedes Benz and Lexus ( Marcel keller) .

Limitations of Product Life Cycle

While the product life cycle model is a very helpful tool for helping to understand current and

potential market conditions, in order to develop appropriate marketing and competitive

strategies, there are some limitations and concerns with the usage of the PLC.

1. The four stage product life cycle is not a guarantee of success

Like BMW, its products have a life cycle of only two stages that is the introduction

and growth stages and yet the company has been in existence for the past 125 years

with a success in luxury automobiles.

2. Not all new products will be successful.

That means that for many new product categories, they will never leave

the introduction phase and will never experience growth or maturity Therefore, there

is a concern on overlying upon the “belief” of a new product becoming a high-growth

product – which may lead to over investment in a potentially under-performing and

expensive new product.

3. Fluctuations in sales data – One major problem in the Product life cycle is that the

graph is completely dependent on sales data. Thus if there are fluctuations in the sales

data, then the graph is useless and cannot be used to predict precisely the movement
 of products or the overall product rise and decline. Such fluctuations can arise due to

production issues, seasonal sales of the product or due to any other reason.

4. Varying market conditions – There may be a variance in the sales data due to

varying market conditions. Therefore, products which are hit in one place, might not

be hit in other regions or territories due to the differences in consumption patterns of

those territories

5. The product life cycle is not unique across different companies

Because the product life cycle is not unique across different companies, it is difficult

to measure or compare two similar products in a given market considering that they

all have different stages in their life cycle.

Conclusion

In conclusion, we have seen that BMW only have two stages of product life cycle which is

the introduction and growth stage and that the product life cycle of the products has been set

to 7 years of which sales climax are seen at year 5 and 6 which in essence going with the

traditional product life cycle of four stage would be in the growth stage. BMW produces

different models of the same series in order to outsmart the competitors and every year they

produce a different model for the next five years to keep the product alive. BMW uses series

advocates to build experience and build vehicles that satisfy the needs of the customers. They

also advertise through movies by adding their vehicle in the movies with special famous

characters in order to build brand image. Below is a summary BCG matrix for BMW.

High BMW 5 Series and 7 series BMW x3 Series

-525i,5301,545i Sedans BMWx5 models
-Coupe BMW Z4
Market BMW 7 Series Models
Growth -sedan

BMW 1 series Mini Cooper Cabrio

BMW 3 Series Mini Cooper S Cabrio
BMW 6 series M5
Low
BMW Convertible, 6 series M5 Individual
M6

High Market Share Low

References
David Kiley, 2004, Driven: Inside BMW, the Most Admired Car Company in the World,
John Wiley & Sons.
StudyMoose. (2016). BMW's Product life cycle. Viewed 22 February 2021
<http://studymoose.com/bmws-product-life-cycle-essay>
Philip Kotler, kelvin L.Keller,2012, Marketing Management, prentice Hall
Mike Antich,2020, BMW Growth Strategy to Increase Fleet Market Share,viewed 22
February 2021.https://www.automotive-fleet.com/10128453/bmw-growth-strategy-to-
increase-fleet-market-share

Studylib, 2016, product life cycle, viewd 22 february 2021 <

https://studylib.net/doc/5391852/product-life-cycle>

Joachim Jan Thraen, 2016, Mastering Innovation in China: Insights from History on China’s
Journey towards Innovation, springer