Changing Perceptionsthe Reality behind Car Brands
By Randheer Mallawaarachchi
Superior branding makes the most significant difference in the automotive industry. The price that the customer expects to pay for the product over identical luxury vehicle brands depends on the brand name that is established. As a result a halo looms over every model of vehicle under the brand. It’s a given that the majority of auto manufacturers prefer to give brand positioning and development outmost priority on their marketing agenda.
Yet, despite their thirst for power, automotive brands remain dismally understood. Why does the brand command such authority which is clearly product driven? What is the source of each brand’s value creation? What are the determinants that wax or wane the car brand’s value over the years.
CONSUMER PERCEPTION ON COMPETING BRANDS DEPENDS ON THEIR CORRELATIVE PERFORMANCE AGAINST TWO HOLISTIC FACTORS: PRODUCT EXCELLENCE AND COST
Image attributes are traditionally used to measure the brand with the intention of expanding insight regarding brand differentiation. However, consumer perception is based on different measures of value. For instance, they consider that car lines which is famed for luxury and prestige tends to manufacture cars that shine in other aspects such as the ride, handling, safety and reliability. A brand’s score on one attribute tends to be correlated with the score on a different attribute. These scores have the potential to be integrated into a single measure that represents a car line’s inclination to produce supreme products.
Consumers nowadays are generally informed in all aspects of product costs. The comprehension regarding the difference between initial purchase price and operational and maintenance costs along with the ultimate resale value acts as a major challenge for producers. A combination of these perceived expenditures determines the perceptual price throughout the ownership cycle. Similar to product excellence, all attributes can be integrated into a single measure of product cost.
THE MAGNITUDE OF PRODUCT EXCELLENCE AND LOW COST OF OWNERSHIP DETERMINES THE BRANDS VALUE PROPOSITION
Consumers are well aware of the fact that superior products come with a greater price. Self-selection of an automotive segment occurs on the basis of which attribute (cost of ownership or product excellence)has more priority, in the consumer’s individual point of view. Within that chosen segment, brands that are adept to deliver a mix of both attributes, with more of which was given priority provides superior value.
Consequentially, producers are left with two options; provide varied proportions of product excellence to cost of ownership (that is segment selection) or provide equal performance across both attributes( within the limits of the selected segment). The end result is a production function which is a trade-off between product excellence and cost of ownership, with boundaries defined by brands which occupy superiority in each segment.
Brands can create differentiation on the basis of secondary attributes. BMW has occupied a niche within the luxury section based on its image as the ‘ultimate driving machine’ that offer excellent acceleration, turning and handling. Similarly, Subaru has a differentiated reputation within the market segment on the basis of the security of all-wheel drive.
Additionally, channel performance (experiences and product availability) has a tendency to differentiate a brand. Saturn is accepted as a standout entity due to its famed customer service and pleasant buying experiences provided. However, a considerable amount of brands fail to achieve meaningful differentiation through means other than product excellence and cost of ownership.