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"SIGMA predicted - correctly, it turned out - the luxury-car market was headed for a significant expansion"

In a cover story on page 1, the "Wall Street Journal", at the opening of the Detroit Motor Show, favourably mentioned the work of SIGMA.
Neal E. Boudette, an expert when it comes to the automotive industry, concluded that the trend-setting studies conducted by SIGMA led BMW to take initiative, and have helped the car manufacturer from Munich get back on the road to success.

The Wall Street Journal New York (Frontpage), Monday, January 10, 2005

Designs on Wider Base Of Customers Drive Off Some of BMW’s Purists

by Neal E. Boudette
Ten years ago, BMW AG looked into the future and concluded its business was in danger of running out of gas.
Through the 1980s and early 1990s, BMW had been one of the world’s most ingenious marketers of luxury goods. With pinpoint precision, it identified a swelling class of prestige-minded yuppies and built them the cars they craved: sporty sedans that weren’t flashy but could outrun just about anything else on the road.
The car maker kept it simple: Its trademark 3, 5 and 7 Series coupes and sedans all had the same basic design. BMW’s planners called the concept Eine Wurst, drei Grössen – one sausage, three sizes. BMW’s white and blue hood emblem eclipsed the Mercedes Star as a symbol of achievement.
But in the late 1990’s, BMW sensed the attitudes and values of luxury-car buyers were shifting. Many were placing more emphasis on family and leisure time. These new upscale consumers included aging baby boomers, yuppies who went on to start families, and liberal-minded professionals who piled up wealth in the 90’s boom. For them, sporty sedans alone wouldn’t cut it, research indicated. They would want more vehicle choices and more eye-catching designs to suit their changing lifestyles.
With its future at stake, BMW made an ambitious gamble: It spent billions of dollars to broaden its single, narrow product line into a whole spectrum of upscale cars. It acquired Rolls Royce and relaunched the Mini, the British cult car of the ‘60s. It put the BMW brand on sport-utility vehicles, convertibles, roadsters and, most recently, a compact car.
At the same time, BMW has completely remade the 3, 5 and 7 Series. Sensing the one-sausage look had become boring, it has given each car its own distinctive design of sculptured curves and creases, and infused them with advanced electronics to make them luxurious as well as sporty to drive. The new 5 and 7 Series are out now: the redesigned 3 Series is on the way.
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Unlike most of its competitors, BMW doesn’t strive to compete in every segment of the auto industry. Instead, the Munich-based company shuns the high-volume market of middle-of-the-road vehicles and focuses strictly on premium-priced cars. The Mini, for example, is smaller than a Honda Civic, but is priced at about $3,000 (€2,300) more.
This strategy has made BMW, despite its relatively small size, one of the world’s most profitable car makers. In 2003, its automotive operations generated $2.7 billion in operating profit, more than those of General Motors Corp., Ford Motor Co., Volkswagen AG and Renault SA – combined.
The remaking of BMW sprung from an exhaustive study jointly funded in the 1990s by European car makers including Mercedes, Volvo, Audi and BMW. It was carried out by SIGMA, a German research firm that has pioneered a method of predicting shifts in consumer tastes.
SIGMA looks beyond demographics such as age and income. It often interviews consumers for hours and even photographs their homes and offices to build a picture of the mindset of different consumers. Its work for the car makers found the yuppies of the ‘80s and ‘90s – a group it called “social climbers” – were motivated almost exclusively by professional success. They put work first and gladly flaunted their wealth. For them, driving a Bimmer was the perfect way of saying “I’ve made it.”
But SIGMA found this greed-is-good, look-at-me attitude was becoming passé by the late ‘90s. For BMW, there would be little growth in its future if it stuck with just serving its hard-core customers.
SIGMA predicted – correctly, it turned out – the luxury-car market was headed for a significant expansion. As the yuppies decline, other groups with different upscale mindsets would increase in number.
One group, dubbed “upper liberals,” includes socially conscious, open-minded professionals who hit it big in the ‘90s. Some are former yuppies who have gone on to have kids. They are still professionally ambitious, but now take time out for family and demanding hobbies like skiing, triathlons and mountain biking. Sedans don’t have the room or flexibility for their active lifestyles. In the past they often leaned toward Volvos, Saabs and SUVs.
“Post-moderns” are high-earning innovators like architects, entrepreneurs and artists. They are highly individualistic and gravitate toward head-turners like convertibles and roadsters.
Another group called “upper conservative” is made up of wealthy, traditional thinkers. They’ve never been that interested in driving sporty cars like BMWs, and prize luxury and comfort over driving performance. In their minds, the Mercedes S-class and Jaguars set the standard for elegance and sophistication.
A final group in the SIGMA study consists of upper-middle-class consumers at the top of a milieu known as the “modern mainstream.” Like upper liberals, they are family-oriented and active. Typically they leaned toward near-premium brands Honda or Volkswagen: BMWs were too expensive for them. But increasing numbers of them are looking to move up above the middle class and are open to luxury-brand cars.
With this thinking as its roadmap, BMW began spending billions of dollars to remake its product line.

For upper liberals, it added the X5 in 1999, an SUV that the company prefers to call a “sports activity vehicle,” in a bid to appeal to this group’s active lifestyle.
In 2001, it launched the new Mini, aimed at upper-middle-class buyers who aren’t quite affluent enough to buy a real BMW. This group is also the target market for the new BMW compact, the 1 Series, which has just arrived in Europe. It is due in the U.S. in 2006 or 2007.
A BMW-developed Rolls Royce, the Phantom, sells for about $325,000, and is intended for the very wealthiest upper conservatives.
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