1Ganesh Iyer

BMW Z3

Session 7

Summer 2008

XMBA 206.1

2Ganesh Iyer

Benefits and Risks of Non Traditional Marketing

Benefits Credibility

» More credible than paid for advertising Efficiency through word of mouth

» Leveraging the buzz

Risks Loss of control

» Timing» Target audience » Over what is seen» Over what is said

Challenge of translating awareness into sales

Difficult to measure impact

German

UltimateDrivingMachine

English

Hero

Drives an Aston

Sexist

Fast cars

Adv. Technology

Sophisticated

3Ganesh 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

ConsumerAdvocacy

4Ganesh Iyer

Traditional versus Non Traditional

Credibility» NT can be more credible have more impact and more efficient when it

works.

Budgeting» NT costs can be uncertain» Traditional advertising costs can be better forecasted.

Target market» Traditional advertising can be well targeted through mass media» NT relies on audience self selection

Metrics» Traditional advertising = measurable, reach GRP, frequency = more easily

measured by market research.» NT is more difficult to evaluate.

5Ganesh Iyer

Products best suited for NT marketing

Stage in product life cycle» May work well for product launches in conjunction with mass media

advertising

May work better for social products

6Ganesh Iyer

Success of NTComparative performance

Intro year exp. sales

(units)

Launch ad support

(millions)

Spend/car

BMW Z3 9k waitlist for 3.5 months =

30,000 p.a

$20 $667

Land Rover Discovery

14,085 $9 $667

Infiniti I-30 15,194 $35 $2304

1998 units (000’s)

1997 units (000’s)

1996 units (000’s)

Z3 / Total BMW

20.6 / 131.6

19.4 / 119.3

10.3 / 102.4

Boxster / Total Porsche (selling price = $40K)

9.7 / 17.2

5.3 / 11.5

Na / 6.8

7Ganesh Iyer

Success of NT ElementsSome examples

Element Objective Reported results

Neiman Marcus WOM, Buzz 20 units over 3.5 month Christmas season

After 2 days, 100 orders placed. By Christmas 6000 orders

Central Park event Media exposure and Buzz 2000 media reps attended. # of Z3 editorials in leading publications can be counted.

Jay Leno WOM, Buzz Unpredictable, all we know is “it worked out very well” Role for campaign evaluation research to measure awareness impact.

Radio DJ Unstated Statements like “Amazing Credibility,” “Had 3 times the WOM of other events. 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.

8Ganesh Iyer

Postscript

By Jan. 1996 BMW had to scale down their marketing efforts to avoid potential consumer backlash by not being able to meet demand.

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.

Launch date March 1996. Selling price in 1997 = 30k to 36k.