BMW CASE WRITE UPBMW a German company, which was founded in 1916 as an aircraft engine manufacturer, today known its core competency in automobile industry, produces more than 553,000 automobiles resulting in revenues worth $18.6 billion. It owns 1.7% of the worlds automobile market share by selling 60% of its automobiles outside Germany and 33% outside Europe. However, despite its worldwide performance, the sales of the company have been steadily declining in the United States since 1987. BMW is highly focused on being independent of other firms and is targeting the youngest and the highest income bracket customers in the luxury segment of automobile business. Buyer Attitude. The United States market of BMW declined by 20% in two years due to the 1987 Tax Reforms Act impact and the crash of the stock market in October 1987. In addition to this the Luxury Tax of 10% on any sales in excess of $30,000 and the doubling of the gas guzzler tax, designed to penalize the owners of cars falling below certain fuel efficiency standards added to the agony of declining sales. The change in the DM exchange rate from $0.46 to $0.57 (24%) resulted in the increase of the sales prices by 27% in comparison to others. All these prevailing situations in the US shifted the consumer buying behavior towards value oriented purchasing. To further deteriorate the condition the entry of new players like Honda, Nissan and toyata outdated the BMW market strategy. BMW Actions. Karl Gerlinger, president of BMW North America developed a three part program to reposition the brand image in the minds of the consumer. (i) Brand and product, which included expanding performance image to quality, safety and social responsibility of the company (ii) Franchise, involved better coordination with the dealers, customer orientation, prestige and ensuring long term trust and confidence with dealers and in the US market (iii) Organization and people, focused. The to create the first class organization with highly motivated sales force through delegation of responsibility and authority. It also focused towards use of meritocracy in form of rewarding performance, establishing a structure, information and training systems to live up to the expectations of the customers. In addition to this the company also spent a huge amount towards advertising the new image of the company. The implementation of Karls program resulted in 23% unit sales increase in the market, the first in the last five years. The construction of the Spartanburg, South California plant began to contribute 15% of BMWs worldwide output. The company

also outsold Mercedes even before the program of dealer orientation and customer care could be fully implemented.