1 Ganesh Iyer BMW Z3 Summary and Answers

2 Ganesh Iyer Benefits and Risks of Non Traditional Marketing Benefits l Credibility »More credible than paid for advertising l Efficiency through word of mouth »Leveraging the buzz Risks l Loss of control »Timing »Target audience »Over what is seen »Over what is said l Challenge of translating awareness into sales l Difficult to measure impact German Ultimate Driving Machine English Hero Drives an Aston Sexist Fast cars Adv. Technology Sophisticated

3 Ganesh Iyer How does NT work? Focus on awareness Leverage the buzz Cannot fully control what is said and to whom RELIES ON AUDIENCE SELF SELECTION Awareness Interest Desire, Preference Purchase Excitement Awareness / Visibility Word of mouth, Buzz Involvement / Infatuation Purchase Consumer Advocacy

4 Ganesh Iyer Traditional versus Non Traditional l Credibility »NT can be more credible have more impact and more efficient when it works. l Budgeting »NT costs can be uncertain »Traditional advertising costs can be better forecasted. l Target market »Traditional advertising can be well targeted through mass media »NT relies on audience self selection l Metrics »Traditional advertising = measurable, reach GRP, frequency = more easily measured by market research. »NT is more difficult to evaluate.

5 Ganesh Iyer Products best suited for NT marketing l Stage in product life cycle »May work well for product launches in conjunction with mass media advertising l May work better for social products

6 Ganesh Iyer Success of NT Comparative performance Intro year exp. sales (units) Launch ad support (millions) Spend/car BMW Z39k waitlist for 3.5 months = 30,000 p.a $20$667 Land Rover Discovery 14,085$9$667 Infiniti I-3015,194$35$ units (000’s) 1997 units (000’s) 1996 units (000’s) Z3 / Total BMW 20.6 / / / Boxster / Total Porsche (selling price = $40K) 9.7 / / 11.5 Na / 6.8

7 Ganesh Iyer Success of NT Elements Some examples ElementObjectiveReported results Neiman Marcus l WOM, Buzz l 20 units over 3.5 month Christmas season l After 2 days, 100 orders placed. l By Christmas 6000 orders Central Park event l Media exposure and Buzz l 2000 media reps attended. l # of Z3 editorials in leading publications can be counted. Jay Leno l WOM, Buzz l Unpredictable, all we know is “it worked out very well” l Role for campaign evaluation research to measure awareness impact. Radio DJUnstated l Statements like “Amazing Credibility,” “Had 3 times the WOM of other events. l What does this mean in terms of measurable effects on sales? Always try to specify quantitative objectives for each element to the extent possible Important role for campaign evaluation research to understand the sales impact of these programs.

8 Ganesh Iyer Postscript l By Jan BMW had to scale down their marketing efforts to avoid potential consumer backlash by not being able to meet demand. l Tactics shifted to maintaining consumer interest »Cinema advertising (60 sec. Teaser placements) »In flight videos targeted at business travelers. »Dealer sponsored direct marketing programs to maintain interest of people on waiting lists. l Launch date March Selling price in 1997 = 30k to 36k.