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BMW has adopted many strategies for the multi-product. Among the strategies BMW has used in their Multi-product in price differentiation for different market segments. This is attributed to the fact that people with high disposable income tend to spend more on a prestigious good. Secondly, some markets like Africa, part of South America, Asia and Europe people have low disposable income, which the company cannot sell the product at higher prices like in areas where there is high disposable income.
There are many risks and advantages associated with the marketing strategies adopted by BMW while market their products. BMW have tried to use technological economies scale and scope to produce multiproduct that is actually meets the customer needs in various market segment. The company has chosen product approach where capital and labor are employed to reduce economies of scale. Under this method, fixed cost associated with the production are sold in a market where people have high disposable income, while people with less disposable income goods are sold to them at variable cost only.
BMW in their strategic policy has chosen differentiation as strategy for positioning in the market. In some markets have produced a sleek car that is expensive while other markets have produced different car that meets the market standards. They managed to sell the car which economic, reliability, functionality performance, elegant, sleek design sporty, aggressive fun emotional competitive appeals hard charging for the German and Europe market while a similar vehicle that fits Africa market where the disposable income is low. BMW is not using volume in their production but they use differentiated Although BMW clearly competes on a generic strategy based on differentiation focus, through these, they are able to be market leaders. Through this, they are able to build; quality of BMW cars was for different market and different cost and charges different prices. This has made them more competitive.
Using the strategy cube above BMW have followed porters argument of differentiation in which he argues that in order to achieve good benefit, you have to incur some costs which are more than average to attain higher profit. For example, the BMW Company produces a costly vehicle, which is sold to the market with higher disposable income. The same vehicle can be sold to people with low disposable income excluding the cost of non-production activities.
Another position that BMW can adopt is the position with high benefits at the same time high cost but low price. This is when the company is incurring long-term economies of scale. Variable cost is considered leaving fixed cost. As well as BMW can also adopt the strategy where high benefit, which is, associated wit low cost but high price. This is where the product is well known to be doing well and the market client has high disposable income.
Again, the other position that can be adopted is the cost of incremental where they reduce the cost/benefit ratio so that they can remain competitive. From the cube if the company launches a product that is a motor vehicle for sports at a lower price, then the market will move towards the product giving them a competitive advantage. That is from F to D meaning previously price was at a low price since people have come in the price will go up increasing the benefits and production will be higher reducing the cost of production.
References
Jenkins W (2004): towards a strategic framework for competition in multi-product consumer markets: international J management and Decision making Volt 5, Nose 2/3.
Jenkins W competing times of evolution and revolution An Essay on long-term firm survival. Web.
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