Components
BMW’s Subscription Business Model: Good for Business or Not So Much?
Luxury performance vehicle brand, BMW, had implemented a new subscription-based policy for customers to access certain features on their vehicles such as high beam assist, heated seats, and heated steering wheel. BMW’s brand appeared at risk as consumers expressed their displeasure about paying for accessing features that were already built-in to their vehicles. Members of the media agreed, and lawmakers even considered legal actions. BMW now faced questions of how the brand would be affected and whether the subscription-based model was the best approach.
In analyzing this critical incident, students should be able to:
1. Analyze how a business model expands from one industry to another
2. Identify gaps in service quality
3. Evaluate the ethical implications of requiring customers purchase additional subscriptions to use the features (safety features or otherwise) of a product they have already purchased
4. Describe the benefits of the subscription business model for companies and consumers
5. Appraise the impact of the subscription business model on brand relationships
6. Assess how a change in company policies can affect a brand’s risk of consumer brand avoidance
7. Recommend a business policy that simultaneously addresses customer service concerns while providing financial benefits to the firm