The Ultimate Driving Machine is positioning itself for a new title: the Ultimate Winning Machine.
BMW has opened the throttle on its motorsports efforts. The centerpiece of its strategy is a new Formula One power unit. The motive? Bragging rights. Or, as Scott Doniger, motorsports manager for BMW of North America Inc., puts it: 'Our goal is to market ourselves as participating in the highest form of racing there is.'
Doniger discussed Formula One testing, its M3 program and other racing efforts with Special Correspondent Michelle Krebs late last month. Edited excerpts follow.
BMW has a long tradition of competition, dating to the earliest days of airplanes and automobiles. In 1972, BMW Motorsport GmbH was created as a separate entity to build high-performance cars for racing and sporting road use. What's the latest news regarding BMW's racing activities?
BMW's racing activities are entering a new era around the world. We will be back in Formula One in the year 2000, not just with an engine but in a true partnership with Williams Grand Prix Engineering. The engine, being developed at a brand-new facility next to Williams in England, has just had its first performance test, which was done in relative secrecy. We understand it is proceeding well.
Can you provide any more details?
They are working on developing the engine, and that's about all we know. It is going through the different phases and steps of development that normally take place on high-performance cars. We know it has gone well but haven't heard much else.
Why does BMW want to reenter Formula One?
We have a history and a successful track record in F1. We were
the F1 champion in 1983. Then F1 decided to ban turbocharged engines. We withdrew and focused more on production- and touring-car racing. In the late 1980s, the V-12 became the platform for a great race engine. We went back into testing with the McLaren F1 production-based car. We raced and won Le Mans in 1995 in our first race. That got us back into the highest level of sports car racing. So we decided to take on the biggest challenge that exists: F1.
How does BMW market that when the United States, one of its biggest markets, has no Formula One race?
There is a Canadian F1 race, and we anticipate F1 will be in the U.S. by 2000. If there is a race in Indianapolis, as it appears there will be, certainly our goal is to market ourselves as participating in the highest form of racing there is. We have every hope our car will be competitive with McLaren and Ferrari from the start. That's our goal. If things go well and we win that race or are winning races in the first year, we certainly want to speak about that in our advertising - that BMW is at the top of the charts in the highest level of competition.
BMW has enjoyed success in motorsports here in the United States of late. Can you recap?
In the United States, we have built a track record based on our production models. We began racing the M3 almost five years ago in North American GT racing. We've won three consecutive championships. We won last year's road racing, so we had dual championships.
Why did BMW select the touring-car venue it entered in 1995?
We felt it was the best venue for the M3 to compete in. It had been dominated by Porsche, and within 16 to 18 months, we started beating Porsche.
How does BMW use winning on Sunday to sell on Monday?
We've been able to market not just to racing enthusiasts but to a broader group of all auto enthusiasts.
We've been able to blend the production-based nature of the M3, which is a wonderful street car, with racing. We've married the two worlds, which most manufacturers can't do. Every time we win a race, we run advertising in enthusiast and lifestyle magazines that touts the win and points out that we've beaten the competition. We also point out that buyers will see virtually the same characteristics in handling, braking and acceleration of the race cars on the cars they buy in the showroom.
How do you advertise?
We introduced three new M products recently using the 'M Power' advertising campaign. We used it on the Internet, in direct marketing and in print ads. The advertising speaks to the person with the BMW chromosome, with the genetic predisposition to appreciate BMW's performance heritage. It resonates even with people who can't afford the M cars, according to our research and survey work.
Can BMW quantify that it actually sells more cars?
We've sold over 12,000 M cars, which represents nearly 10 percent of the business in the U.S. So it is a very successful formula that resonates with consumers. In addition, our major competitors are coming at us with their own M-type versions of cars: Mercedes with AMG, Saab with Viggen, Audi, Volvo.
But don't the M cars sell on their own without racing, which is expensive?
Demand for the M cars is continually high. They are among the only cars in the industry that after launch need little promotion to sustain them. Still, racing is at the very heart of the M cars. The racing world provides us with an outlet to talk with consumers that other manufacturers don't have.
Does racing have a halo effect on BMW's other non-M cars?
I believe it definitely does. Racing makes a wonderful statement of a company's potential. It beautifully supports what BMW is all about: engineering expertise. Racing is the perfect forum to prove that expertise. It is a statement of brand and the BMW marque.
Does BMW tie owners into local motorsports events?
We have over 46,000 members of BMW car clubs nationwide. At every race, there is a contingency of car club members. They have vehicle corrals and host hospitality and driving events the weekend of the race. These are people who are not just enthusiasts of motorsports but are advocates for BMW. They are people who understand what their cars are made of and why so much engineering and thought goes into them. To have them at the races and see BMW win has a beautiful spillover effect.
What other marketing tie-ins do you have with motorsports?
We try to take care of the people who have supported us. At auto shows, we have a preview day with members of the local BMW car club to introduce new products and recap our motorsports activities before the show opens. We have a section of the display called the M Cafe at large auto shows.
What else do you do beyond auto shows?
We do a number of other things. Last year, we held the first annual M Day USA in Spartanburg, S.C. (home of BMW's U.S. assembly plant). About 1,000 owners of M cars were there to celebrate the 20th anniversary of the production of the first M car. We had exhibits, displays, presentations, a driving program and a banquet.
We also have a driving program - the Ultimate Driving Experience - that travels the country to major markets. This year, it featured the new 3 series, but there was also an opportunity to drive any BMW there, including M cars. We did it in conjunction with a breast cancer research foundation. We donated a dollar on behalf of the driver for every test-driven mile.
In BMW's press kit on racing, a catalog of BMW and M accessories is included. How does that play into motorsports?
We have a brand new line of M Power accessories for the car and the person. It's an extension of the M brand. We've found it is a great extension of the brand for BMW dealers to have in their showrooms as well, because BMW owners, especially M owner, are so interested in their cars.
How do you measure the effectiveness of racing and subsequent marketing with BMW customers and potential buyers?
We do consumer focus-group research. We also maintain a close relationship with customers through the Internet. Like everyone else, we've discovered the Internet can provide a very direct, one-to-one relationship with the customer.
How do dealers play a role?
We also build and maintain relationships through our dealers. We have a very good group of BMW retail centers, and they have very close relationships with customers. BMW customers are not the type who just put down a check and leave with their cars. They establish relationships with their dealers. They are constantly inquiring about the next BMW car or new options. Our customers are intimate with their cars.
There's a big difference between the typical BMW owner and the Mercedes or Lexus owner. BMW owners traditionally are more interested in and inquisitive about their cars. They are more active in their lifestyle - more doers than watchers. BMW's core values of performance, safety, practicality and luxury blended together resonate with them.
How do the demographics of BMW buyers, especially M buyers, and motorsports aficionados mesh?
They are similar. The demographics of M owners are skewed toward males. They are highly educated; many have gone through graduate school and are professional. Many are entrepreneurs who have demonstrated success in some area or another. They have great ambitions for themselves. They are very interested in technology, especially the Internet. The M buyer is very interested in driving and racing. The fun-to-drive quotient always scores high at the top of their charts.
Is it vital to win on the race track to achieve the marketing potential of motorsports?
A company like BMW would not make an effort at any level of motorsports without having winning championships as its goal. There's no point in being there if you can't prove you can win.
How much does BMW spend on motorsports?
I'm not prepared to tell you what we spend.
Do you get your money's worth?
Absolutely. We've had three GT championships. We couldn't get the attention, support and positive response we do get as we travel from track to track, set up displays at auto shows, driving events and races if we didn't race.