New pic of my RR Ghost, aka Big 7 Series :)

Originally Posted by BaranE

I love the clock. And its really weird how all BMW 7 rivals have one. (i.e. Merc S, Lexus LS, Audi A8). I'd have really loved a mechanical clock on my 7.

Had a rental car for a couple months. Had a Chrysler 300 and it even has an analog clock in it.

Dude I know. I had a Lancia Thesis before and the cluster, dash and everything were more appealing then the 7 imho. 7 should be more special. It is the same as 5 and is 95% same with 1.

I had the red leather, Poltrona Frau, and it was much higher quality. The dash was out of magnesium alloy and the porous grill under the passenger airbag was an ac air outlet.

Originally Posted by BaranE

7 should be more special. It is the same as 5 and is 95% same with 1.

I agree with the statement. But let me ask a question - why? It's not as though the majority of purchasers (remember the main market for the 7er is China), is going to cross shop with the 5 series. So why put the extra time, effort, and money making the 7er that much different? As long as the car has the space, nice ride and brand recognition, isn't that the majority of what makes a 7 series for the majority of buyers?

Bottom line - will BMW make more money by differentiating the 7er more? Or will folks still buy the 7er in significantly profitable quantities regardless?

Originally Posted by chrischeung

I agree with the statement. But let me ask a question - why? It's not as though the majority of purchasers (remember the main market for the 7er is China), is going to cross shop with the 5 series. So why put the extra time, effort, and money making the 7er that much different? As long as the car has the space, nice ride and brand recognition, isn't that the majority of what makes a 7 series for the majority of buyers?

Bottom line - will BMW make more money by differentiating the 7er more? Or will folks still buy the 7er in significantly profitable quantities regardless?

You're mainly right. But let me follow up with this, BMW/Merc/Audi will sell regardless of the cars specs based on the price/status alone in developing countries like China. (They sell the 7 without navigation here!!!) But in more developed countries people tend to seek nicer specs and have brand loyalty. This is my second BMW but if Merc would have had nicer gas engines in 6 cylinder displacement I'd have purchased it without ever looking back just for that upscale feel of the interior. So I still have doubts whether my next car will be a BMW. (i.e. they haven't earned my loyalty) So even though BMW sells in the developing world i think if they were to customize the 7 more they'd have higher sales.

Originally Posted by BaranE

Dude I know. I had a Lancia Thesis before and the cluster, dash and everything were more appealing then the 7 imho. 7 should be more special. It is the same as 5 and is 95% same with 1.

F10,F20,F25 series based on F01 technology and appearence.It is logic to find these models similar to F01...and this is good because you find top quality and technology to lower level models.
This is the difference between BMW and other brands...

Originally Posted by BaranE

So even though BMW sells in the developing world i think if they were to customize the 7 more they'd have higher sales.

In thinking about this, I'm less sure. Look at Louis Vuitton, Apple, Burberry, Rolex etc. and other upmarket brands. They sell a lot due to consistency, rather than differentiation - I think even in the developing world. Do you have any more examples where brands sell a lot more, because of differentiation between their product lines rather than similarity? I'm not saying differentiation really hurts brands, but does it really offer that much of a sales boost?

Originally Posted by chrischeung

In thinking about this, I'm less sure. Look at Louis Vuitton, Apple, Burberry, Rolex etc. and other upmarket brands. They sell a lot due to consistency, rather than differentiation - I think even in the developing world. Do you have any more examples where brands sell a lot more, because of differentiation between their product lines rather than similarity? I'm not saying differentiation really hurts brands, but does it really offer that much of a sales boost?

Well if Rolex had better differentiation they'd get more loyalty. If a customer purchased a Rolex, they'd get an Omega as well. They'd get another rolex.

eg. Look at Vertu. People who'd never have purchased the same device in the original Nokia branding but they purchase it because of the Vertu differentiation.

Originally Posted by BaranE

Well if Rolex had better differentiation they'd get more loyalty. If a customer purchased a Rolex, they'd get an Omega as well. They'd get another rolex.

eg. I own a Vertu. I'd never have purchased the same device in the original Nokia branding but I purchased it because of the Vertu differentiation.

I'm not asking what YOU would do. But have you seen any articles, and sales figures that support your position overall? That a company can get better sales and profitability through differentiation than integration. Vertu is being sold by Nokia, so that supports a differentiation - sort of like Rolls Royce and BMW. And I haven't seen any evidence of Rolex sales having been hurt by non-differentiation.

Again, I'm sure that there are exceptions, but I think that overall, for something mainstream like a luxury car, it is probably better for BMW from a profitability and overall sales standpoint to be similar rather than different. I'm also thinking about history where the E24/E28 and E32/E34 were very similar cars, and I think very well received. However, the E65/E60 series cars, which were very different were not as well received overall (both had their critics). The Benz E-class has had its styling blasted as well.

My thought is that while you may be successful with differentiation, the risks are huge, and the payback minimal - so from a business perspective, it's best for companies to take a safer route. Not just BMW, but probably Audi, Lexus and Benz as well.

Originally Posted by chrischeung

I'm not asking what YOU would do. But have you seen any articles, and sales figures that support your position overall? That a company can get better sales and profitability through differentiation than integration. Vertu is being sold by Nokia, so that supports a differentiation - sort of like Rolls Royce and BMW. And I haven't seen any evidence of Rolex sales having been hurt by non-differentiation.

Again, I'm sure that there are exceptions, but I think that overall, for something mainstream like a luxury car, it is probably better for BMW from a profitability and overall sales standpoint to be similar rather than different. I'm also thinking about history where the E24/E28 and E32/E34 were very similar cars, and I think very well received. However, the E65/E60 series cars, which were very different were not as well received overall (both had their critics). The Benz E-class has had its styling blasted as well.

My thought is that while you may be successful with differentiation, the risks are huge, and the payback minimal - so from a business perspective, it's best for companies to take a safer route. Not just BMW, but probably Audi, Lexus and Benz as well.

I can't directly find any research because you can't go ask everyone buying a merc whether they'd have instead purchased a BMW if it had better differentiation. E60 wasn't very well received by the critics but somehow it was the best selling 5 ever and outsold Merc E and A6. Hell during the criticized Bangle Era BMW outsold Merc globally for the first time. So I think differentiation pays off and I have yet to hear a company going bankrupt or taking heavy damage due to differentiation.

How about JC Penny as a recent example? They are trying to differentiate their upper market offering. It's failing them, and they are headed towards bankruptcy. In the automotive sector, what about Mercury? Pontiac? Saab? Differentiation didn't save those companies. Their parent companies are doing better getting back to their solid roots.

Look at the most valuable luxury brands - http://www.businessinsider.com/the-8...-world-2012-10. Not much differentiation there. Sure they may have their "halo" products that are only shown and sold to a select few, but overall, it seems pretty consistent for their major product lines.

These days, the companies that focus on costs and volume over market differentiation are the winners - financially at least. Companies such as Costco, Amazon, Coach, Ryanair... I'm not saying I like it, but I do shop those brands - so perhaps I do? A conforming non-conformist if there is such a term.

if I had done my research before buying this car and known that the 5 series was just a miniature version I'd probably have gotten something else. It's annoying to see these 3/4 versions of my car with better headlights driving around for 30k less. I don't think the 7 series comes anywhere near the amount of S Class models being sold, but I'm just going by what I've seen around town and haven't looked at any numbers. I'd have gone for the S if this car wasn't so much cheaper.

There's another consideration that hasn't been mentioned. How many MORE 5 series cars do they sell because it looks like a 7 series? Meaning, do I want a Benz E class that doesn't look as luxurious inside and out as an S-Class, or do I want a 5 series, that is very similar to the 7 series? Sure it canabalises some 7 series sales, but you more than make it up in extra 5 series sales. It's likely not the main driver (probably costs were), but it may be a side benefit. But BMW definitely wanted the 5/7, and to some extent the 3 series, to look similar other than in size.

Originally Posted by chrischeung

There's another consideration that hasn't been mentioned. How many MORE 5 series cars do they sell because it looks like a 7 series? Meaning, do I want a Benz E class that doesn't look as luxurious inside and out as an S-Class, or do I want a 5 series, that is very similar to the 7 series? Sure it canabalises some 7 series sales, but you more than make it up in extra 5 series sales. It's likely not the main driver (probably costs were), but it may be a side benefit. But BMW definitely wanted the 5/7, and to some extent the 3 series, to look similar other than in size.

Post Bangle-era, the car companies that matter (to me) have reverted to the little-midsize-large sausage business model, that they followed earlier in the '90s. This way, everyone gets the sausage size he likes, and no one feels special because they go the supersized sausage.

Overall, a brand will sell a lot more total units if all the models shares key features. The top end buyers may get a little miffed, but they do not really account for much of the volume, and hence do not mater that much. the 5 and 3 are the bread and butter of BMW. The 7 is a speciality vehicle as shown by its small sales numbers.

However, having owned all the size of sausages, I think I will revert to the mid size next time around.

Given the fiasco with Run Flats and no dipstick, it will probably be one of the remaining two brands.

On the side note, I see about 5-10 S550 everyday, but rarely encounter another F01/02 on the road. One reason I chose to buy my 7.

Funny thing is I was stopping by McDonald for an iced coffee, and there were 2 other white F01 750Li in the parking lot, same color, same color of interior just different wheels. I was like WTH?!?!

Originally Posted by azbimmer

Post Bangle-era, the car companies that matter (to me) have reverted to the little-midsize-large sausage business model, that they followed earlier in the '90s. This way, everyone gets the sausage size he likes, and no one feels special because they go the supersized sausage.

Overall, a brand will sell a lot more total units if all the models shares key features. The top end buyers may get a little miffed, but they do not really account for much of the volume, and hence do not mater that much. the 5 and 3 are the bread and butter of BMW. The 7 is a speciality vehicle as shown by its small sales numbers.

However, having owned all the size of sausages, I think I will revert to the mid size next time around.

Given the fiasco with Run Flats and no dipstick, it will probably be one of the remaining two brands.

I'd disagree with that. Given the Pareto principle applies BMW would get 80% of its earnings from 20% of its vehicles. Sure 1 and 3 sell like bread&butter but imho 10 or 20 1 sales would equal to the earning of one top of the line 7. You have the same electronics, cables etc. Just some leather and aluminum wouldn't explain the huge price differences between 5 and 7 imho.

Originally Posted by AdamG13

if I had done my research before buying this car and known that the 5 series was just a miniature version I'd probably have gotten something else. It's annoying to see these 3/4 versions of my car with better headlights driving around for 30k less. I don't think the 7 series comes anywhere near the amount of S Class models being sold, but I'm just going by what I've seen around town and haven't looked at any numbers. I'd have gone for the S if this car wasn't so much cheaper.

Before I got my 2010 7 Series, I test drove a 2010 S550 with AMG sports pkg (diamond white metallic, with black nappa leather..it was so gorgeous). I wanted it badly! Kind of for fun, I drove right down the street, and took the 7 Series for a spin...and wanted it even more!! It was not as luxurious, not a posh & comfortable, but it handled amazingly, and I thought the car looked so much more aggressive and "sporty". It was faster than the S550 too. And the 7 Series was SO, SO much less $$$. I cannot understand why the S-Class is so much more expensive. With more options than the S, my 2010 750 was about $88,00. The less equipped S-Class was $108,000. Crazy!

Originally Posted by Deutsch100

Before I got my 2010 7 Series, I test drove a 2010 S550 with AMG sports pkg (diamond white metallic, with black nappa leather..it was so gorgeous). I wanted it badly! Kind of for fun, I drove right down the street, and took the 7 Series for a spin...and wanted it even more!! It was not as luxurious, not a posh & comfortable, but it handled amazingly, and I thought the car looked so much more aggressive and "sporty". It was faster than the S550 too. And the 7 Series was SO, SO much less $$$. I cannot understand why the S-Class is so much more expensive. With more options than the S, my 2010 750 was about $88,00. The less equipped S-Class was $108,000. Crazy!

S class, A8 and 7 are about the same price here and in Europe. I guess its just that Merc is seen as more luxurious than BMW in US and so it can get away with higher prices.

Originally Posted by chrischeung

There's another consideration that hasn't been mentioned. How many MORE 5 series cars do they sell because it looks like a 7 series? Meaning, do I want a Benz E class that doesn't look as luxurious inside and out as an S-Class, or do I want a 5 series, that is very similar to the 7 series? Sure it canabalises some 7 series sales, but you more than make it up in extra 5 series sales. It's likely not the main driver (probably costs were), but it may be a side benefit. But BMW definitely wanted the 5/7, and to some extent the 3 series, to look similar other than in size.

That is true. Further makes me feel like I bought a 100k car from a 30-50k car company. The lower MF and $2k under invoice they offered me initially made this car seem like a better buy than the S class, but looking back I would have much rather spent the extra money on the S as I feel like it's a higher quality car and better ownership experience for the money. While I agree it has more sluggish handling than the 7, it's not like my 750 handles like an M3 or anything.

Originally Posted by BaranE

I'd disagree with that. Given the Pareto principle applies BMW would get 80% of its earnings from 20% of its vehicles. Sure 1 and 3 sell like bread&butter but imho 10 or 20 1 sales would equal to the earning of one top of the line 7. You have the same electronics, cables etc. Just some leather and aluminum wouldn't explain the huge price differences between 5 and 7 imho.

You should do some research on the sales volumes per model line. The data is readily available, and Pareto principle does NOT apply to everything.

BMW's earnings drivers are the 5er and 3er, NOT the 7er.

Originally Posted by azbimmer

You should do some research on the sales volumes per model line. The data is readily available, and Pareto principle does NOT apply to everything.

BMW's earnings drivers are the 5er and 3er, NOT the 7er.

That's correct. My info is a few years old, but at that time 3s and 5s made a lot of money. 7s about 1-2% profit (minimal). 1s lost money. Overall margin was about 6%? Considered very high. Porsche was at about 10%. So if each 7 contributes say $1,200 in profit (margins are ex factory, excluding taxes), and they sell 50,000 7s a year, then that's a profit of around $60M per year. BMW makes about $2 Billion per year overall.

BMW could likely easily live without the 7 series from a profitability stand point. It wouldn't take much of a sales decline to erode the small margins they have. However, from an image/marketing factor, not having a large luxury car would negatively impact the brand, and thus sales of the other highly profitable cars. People would ask if Benz, Audi and Lexus have limousines, why is it that BMW doesn't? What's wrong with them?