According to the research findings, it can, therefore, be said that the car manufacturing industry is one that is highly sensitive to brand equity as a competitive advantage. By implication, customers have been noted to be more comfortable, dealing with companies that have long-standing brand names that can be trusted. By implication, even though the fact that the possibility that there could be new entrants in the medium to the long-term range, this may not pose much of a threat to BMW, knowing that the company has existed since 1916 and within that time frame has proven to be a very formidable market player, gaining the much-needed brand equity to robustly compete against new entrants.
This is because, in such a situation, a threat can possibly be posed to BMW in the sense that the known brand would use its brand equity to validate a proof of the new entrant’ s ability to perform. In such a situation, competition mitigation strategies aimed at using the very strategy options that the new entrant uses will be recommended. This way, BMW will be competing with both its independent brand equity and the strategic option.
BMW is known to be engaged in the manufacturing of three major lines of products, which are automobiles, motorbikes and engine parts. The question of substitute product thus comes in as a new product that serves the purpose of auto moving people from one place to the other. With this, the most immediate substitutes that come to mind are ships and airplanes. Currently, BMW can be noticed to be focussing largely on the production of luxury vehicles. Meanwhile, these vehicles are expensive for their luxurious nature, even though they serve the same purposes as other forms of cheap vehicles manufactured by competitors such as Tata, Toyota, and Honda.
Should buyers decide to make purchases based on factors such as propensity to substitute, the relative price performance of substitute and buyer switching cost, the most likely outcome is that the substitute automobiles and motorbikes will come as a threat BMW’ s luxury cars.
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