±±¾©Èü³µpk10

Successful brands build their images over decades, creating personalities to which consumers can relate. Alter the blueprint and you risk the brand, right?

Wrong, says BMW. The marque, for years associated with the upmarket, is creating a hatchback to compete with streetwise cars such as VW's Golf.

But will this application of its premium position to a new segment work, or could it be brand suicide?

The sporty BMW 1 Series will also take on the Audi A3 and Mercedes A-Class. The motoring press predicts that it will be priced from £15,600, positioning it at the higher end of the hatchback market.

Appearing on dealer forecourts from September, the model's challenge is to generate anticipation and desire among the car-buying public, including targeting consumers who would not usually buy a BMW.

A direct campaign through Archibald Ingall Stretton begins this month, and includes direct mail, magazine inserts and a dedicated website.

BMW will add TV advertising to the mix this summer, through WCRS, to ensure awareness reaches a peak by the time the 1 Series goes on sale.

Fierce competition

Given that BMW must depart from its upmarket positioning to move into the mainstream, why is it taking the risk?

Industry experts believe fierce rivalry between the car manufacturers means BMW has little choice.

'BMW has to be seen to be in the same markets as Mercedes and Audi,' says Mark Lund, who heads Vauxhall's ad agency, Delaney Lund Knox Warren. 'In order to survive and prosper, car companies are having to diversify.'

However, a recent FT Deutschland report suggests that both Mercedes and Audi have experienced problems entering the mass market, with the Audi A2 and Mercedes A-Class failing to meet sales targets.

Others believe that BMW's launch of the 1 Series is a deliberate strategy to attract consumers to the brand at a younger age. Its target market is single people aged 25-35, as well as couples with children. The idea is to get those buying the model to work their way up through BMW's range of cars.

While the strategy seems shrewd, it does not remove the risk of diluting the marque's prestige. Lund believes that making a traditionally premium brand more affordable makes it less exclusive by definition.

BMW itself, though, believes luxury is no longer synonymous with exclusivity, and that its move into the hatchback market can boost sales without damaging its brand or reducing margins.

Speaking to FT Deutschland, Michael Ganal, sales and marketing director at BMW Germany, asked: 'What is the limit of a premium brand? It's not a limit of 100,000, 500,000 or 1m (sales). It is really measured by the number of focused solutions for specific target groups.'

Former MG Rover marketing director John Sanders, now board director at McCann-Erickson in Birmingham, does not believe BMW is undermining itself. 'With cars, consumers are not buying on price,' he says. 'They buy on the model first, then price. BMW is maintaining its premium positioning.'

Moreover, BMW is arguably safeguarding its premium positioning by limiting production of the 1 Series to 150,000 a year.

As Professor Garyl Rhys OBE, chair of motor industry economics at Cardiff Business School, explains: 'You can take an upmarket brand downward without damaging it. As long as the product is good, there is no reason why it should undermine BMW's prestige.'

BMW's decision to position the 1 Series at the high end of the hatchback market is canny, adds Rhys. 'It makes a lot of sense to pick off brands such as Golf at the expensive end of the market, where the margins are much bigger.'

The marque's mass-market entry has already steered Volkswagen and Vauxhall in a more premium direction. The new Golf and Astra are dramatically different to previous versions; both are more innovative in terms of design and specification - a fact being emphasised in their marketing strategies.

Badge values

Sanders points out that despite its competitors' efforts, BMW's badge value will still mean its cars depreciate more slowly than other brands, making it a better long-term purchase.

'If you buy the car on finance, the residual value of the 1 Series means that monthly payments will be much the same as those on other cars in the segment,' he says.

Industry commentators are predicting that sales of the 1 Series will be impressive. Earlier this month BMW GB claimed that 10,000 people had already registered an interest and 1000 had placed firm orders.

The consensus is that BMW only faces real danger if it cuts corners in engineering and design. Nick Hough, chief executive of branding consultancy Lambie Nairn and former head of Hyundai's account at Leagas Delaney, says: 'The BMW brand is not about luxury and exclusivity; it's about quality and performance. Only if the product fails to deliver will it undermine the brand.'