To the Editor:
With its new 1 series, BMW enters a sector where most purchases are cost-driven. But the quality of the product and the strength of the BMW brand allows substantial premium pricing, essentially taking it out of the volume market.
The real risk to the BMW brand is not the 1 series, but the huge number of 3 series models now on the road and the inevitable impact on resale values.
This isn't helped by BMW's desire to boost sales during the model run-out by making affordable models indistinguishable from more powerful and exclusive models.
So far a strong, well-managed brand has protected BMW from the perils of ubiquity, but they should not forget the classical marketing analysis of Abraham Maslow: For most purchasers of premium products, self-actualization and the esteem of peers are critical. As volumes increase, so must the focus on premium positioning.
Which brings us back to the 1 series. This morning I drove past the latest BMW dealer advertising: a large roadside position in an affluent suburb proclaiming "A BMW from £299 a week."
If Maslow is right (and he usually is), buyers at the profitable middle and upper end of the BMW range do not want the affordability of BMW ownership to be displayed quite so brazenly.
BMW marketers should reflect that price-led advertising helped Saab quickly kill a distinctive premium positioning that had taken three decades to establish.
BMW should control its dealer promotions, stop price-lead advertising and maintain the perceived price differential that is so important to the success of premium brands.