BMW is in the mass customization business since 1992 enabling on schedule vehicle deliveries and afforded a high degree of flexibility in making changes late in the production process. In 1994, BMW acquired MINI and by 2002, the customization program played a crucial part in the successful re launch of the iconic MINI. Internet has changed the way the people buy cars and by 2011, more than 70% of consumer purchases originated from online research. BMW currently offers a customization program for their X3 model which was successful in increasing the X3’s sales in North America in 2011. The ‘Dream It, Build It, Drive It’ customization program improves BMW’s distribution strategy by allowing dealers to carry less inventory and custom order their vehicles.
BMW’s X3 Product Manager to decide whether or not to expand the mass customization program to the X5 model to revitalize sales or use the program to launch the new X4 model. BMW’s challenge will be effects of rising gas prices, customer lead times, impact changes on regional and global distribution strategy, production costs, and logistics. BMW needs to be aware of their competitive strategy and positioning in the North American market.
Concern that the X5 sales will be negatively affected by rising gas prices is not supported by studies shown here. Steady rise in gas prices has not impeded the car and truck sales increase since 2009. Customers continue to utilize the internet for shopping, as shown in the study of increasing ecommerce. Customers prefer to shop online for many reasons including time savings, variety, availability, and spend less on gas. Much of the X3 success had been due to the customization program, which was initiated after the model had the worst sales amongst all models. The ‘Dream It, Build It, Drive It’ program revitalized the X3’s sales and made it one of the best-selling models for the BMW group in 2011.
Study has shown that despite rising fuel costs, truck and car sales are increasing. What also is important is that the aspect of customization and technology is appealing to BMW customers. This is also proven to be successful at revitalizing the sales of the X3 during an economic struggle. Campaign the New X4 Launch Planned For 2014. This should be considered, to offer selection and variety to customers without increasing dealership on hand inventories. If the system that is designed to keep costs low and variations controlled is successfully created and tested, the ‘Dream It, Build It, Drive It’ program should be used for all the vehicles produced on the Spartanburg ‘One-Line’. This will provide shorter lead time to customers in North America. By 2014, the expected rate of the consumers making purchases online will increase and will be much a desired feature.
Conclusions
Expand the mass customization but only for car produce in US for now. It is building on the success of X3 strategy. Limit the mass customization to certain products to see if it is a really relevant strategy. It does not need to change all the structure of our worldwide supply chain management. It build our differentiation by offering a deeper brand management relationship with the customers.
References:
1. Pearce, J. A., & Robinson, R. B. (2015). Strategic management: Planning for domestic & global competition.
