Defining the meaning of the word “brand” precisely is not easy. There are different views from various people. However, all authors see a brand as something different from a product. A brand exists much longer than the product itself.
According to King (1990) “a product is something that is made in a factory; a brand is something that is bought by a consumer”(King, 1990).
A product for example is a car and a brand is BMW. The brand helps the company to differentiate the offered products from its competitors (Randall, 1997) (Kapferer, 1997).
To establish a brand it needs time. The brand needs its history and stories (Kapferer, 1997). Over the time the consumers know that the brand Mercedes for example stands for high quality cars and all the features it offers.
Furthermore the relationship between the consumer and the brand is very important for the success and the existence of the brand in the market place (Randall, 2000, p.3). Every firm has to be consistently in touch with the consumers of their brands to know about their views and needs which are changing over time. The firm should have an understanding about how the customers see the brand, which problems they have and how they are using the product (Randall, 2000). This is important to get to know if the message of the brand meets the customer in the right way. Trump (2008) explains that the brand represents your ethics and position (Trump, 2008).
According to the items people own we categorise them into groups. The brand shows the membership to a certain social class (Riesenbeck & Perrey, 2009). To differentiate us from others we use brands as signals in the crowd.
Moreover we know about the quality of products and features based on the brands image. Referring to the brands image we save time in our buying decision making and also reducing mistakes in purchase decisions (Riesenbeck & Perrey, 2009). For instance you can buy high quality and soft tissues without research because you know if you buy the tissue brand “Softies” you will get exactly these features.
This study is focused on understanding the concept of “luxury” in the choice of cars in Germany. Therefore we will have a closer look at the luxury brands and the luxury customer.
Contrary to mass brands the luxury brand has a limited number of selling products so that the brand preserves its exclusivity and uniqueness. The luxury good has some kind of “impulsive, emotional and extravagant expression for the owner” (Dubios & Parternault, 1995). Further characteristics of the luxury brand are the premium quality, the individual design and a certain degree of prestige.
The buying decision of luxury brands is always related with high-involvement according to the self-concept of every person (Dubios & Parternault, 1995). If you decide to buy a handbag of “Armani” instead of a handbag of a no-name product because it fits to your overall picture you are willing to spend a big amount of money.
The luxury product is something that is not really needed but with its premium image desired by everyone (Vedpuriswar, 2005). For example luxury cars are full of things like higher quality leather, polished wood and hushed engine what makes the cars more “like a drawing room” than an object for mobility (Kapferer, 1997). Like this it brings esteem to its owner apart from its functionalities.
In economic terms luxury brands are products which always justify a higher price through higher quality. A higher price means the difference between the price of mass products and luxury goods. Therefore luxury is demanding a high level of profitability for the company (Kapferer, 1997). A car of Audi is much more expensive than a car of Opel because an Audi has a higher quality and a better brand image which justify the higher price.
Furthermore luxury, in the view of etymology, is visible through its characteristics like glitter. It defines beauty and embodies something special (Kapferer, 1997). It is said that with shoes from “Gucci” you look much more beautiful than with shoes from “Primemark”.
For the consumers it is very important that you can see the luxury they own. Therefore luxury externalises all its signs like the big brand signature on the clothes and other products. It is always viewable (Kapferer, 1997). Luxury serves the attention of the ruling class and the elite.
However Dumoulin (2007) sees the “bling” and “trash” of luxury as questioned in these days. He writes that luxury is today more about “what the street is teaching us”. In his view luxury items are “must have items” which reflect the individual vision of the owner (Dumoulin, 2007).
An important point for the existence of a luxury brand is that it needs more people who know and understand the brand than actually buy it. There are two groups in the luxury market: the dreamers and the buyers, the people who dream of luxury and the people who actually buy it. (Kapferer, 1997)
According to the history and the sociology, luxury classifies the society. Who can afford luxury belongs to the upper class (Kapferer, 1997). These people are known as aristocrats. They are considered to be in the highest class in society and traditionally have land, money, and power. Furthermore they are usually below the leaders of the country in the hierarchy of status within the aristocracy form of government. The term “aristocracy” is derived from the Greek language aristokratia, meaning “the rule of the best” (Cannon, 1997).
CEO Jennie Saunders explains luxury brands as products
“for people who are at a place in life where there shouldn’t be any compromises…we’re editing out the noise in their lives.” (Dumoulin, 2007)
People do not think about the amount of money they spend. They buy whatever they like.
Uyenco, Goulet and Charlton (2008) identified three key purchase motivations for luxury consumption during their research: indulgence (the well-being of the owner), exclusivity (to be a member of the club) and status (to show the people around us what we have). These three issues underline the determination for luxury brands (Uyenco, Goulet & Charlton, 2008).
List of Values (LOV)
Furthermore Vinson, Scott and Lamont (1977) found out that values are related to the purchase of cars and that the purchase differentiates on the values (Vinson, Scott & Lamont, 1977). In the research part of this work the consumer values and their choices of a car will be analysed.
The three authors Sukhdial, Chakraborty and Steger (1995) developed a List of Values (LOV) which includes self-respect, sense of accomplishment, being well respected, security, warm relationship with others, sense of belonging, fun and employment in life and excitement.
It is said that the values mentioned influence the people’s daily lives and that luxury products “may be mainly purchased for value expressive reasons” (Aaker et al., 1992).
Referring to Sukhdial, Chakraborty and Steger (1995) people who desire a luxury car to use it as a symbol of their achievements are an example for people who value a sense of accomplishment. However people who value fun, enjoyment and excitement desire a luxury car which embodies fun and is exciting to drive (Sukhdial, Chakraborty & Steger, 1995). An example for the desire for security is that some consumers think that German cars are well engineered. They are safe in case of an accident (Sukhdial, Chakraborty & Steger, 1995).
In the research of the three authors about “examining owner’s personal values in addition to their evaluations of car attributes” (Sukhdial, Chakraborty & Steger, 1995) they found out that fun-enjoyment-excitement is important for owners of German luxury cars.
Also self-fulfilment and sense of accomplishment were important (Sukhdial, Chakraborty & Steger, 1995). Furthermore comfort and low maintenance cost were not that important related to a luxury car. Whereas safety, power and speed were relevant attributes of a car (see appendix: Exhibit 1 and 2).
According to Kapferer and Bastien (2009) the car is considered as “the very symbol of luxury among men”. With future research we could find that also for women a car can be a luxury symbol. The car directly makes visible the income, the standing and the status of the owner (Kapferer & Bastien, 2009). Luxury cars like Mercedes display this through their classic design and expertly built car body. Furthermore “the brand experience scale” of Brakus, Schmitt, and Zarantonello (2009) identified that “A BMW is the symbol of my success.” (Brakus, J. J., Schmitt, B. H., & Zarantonello, L., 2009:56) (Exhibit: 3). The luxury car gives the owner a feeling of exclusivity, being apart and high performance (Kapferer & Bastien, 2009).
Through its technological innovations, the optional extras and the extra price for the intangible it makes it to something special (Kapferer & Bastien, 2009). Luxury is superlative and not comparative.
The technology plays a part in contributing to the car being a luxury product with its creation of objective and qualitative rarity through a high price and the extermination of technology’s consequences (Kapferer & Bastien, 2009).
The history and stories of the brand gives birth to the dream (Kapferer & Bastien, 2009), for example the Porsche with it’s 911er. The figures stand for the glory and the success of the car, the brand and the company (Zimny, 2008). To build a myth it takes time and also it is necessary that the models are themselves mythical. The brand is built on the wealth of the owners, their glory, their symbolic power, their passion and their ability to discount everything in service of that passion (Kapferer & Bastien, 2009).
The luxury brand is linked to its traditional values and also includes something of its national virtues (Kapferer & Bastien, 2009). For instance, the Italian brands content the arts of the beautiful and the Latin sensibility like the Lamborghini. Whereas the German virtues are said to include the function, that everything is ultra-controlled, and that nothing is useless (Kapferer & Bastien, 2009). For example the BMW is known for its upper-range technology. In the following you can see the national identities and luxury cars relate to Kapferer and Bastien (2009).
Figure 1: National identities and luxury cars
illustration not visible in this excerpt
Source: own illustration based on Kapferer, N. & Bastien, V. (eds.) (2009) “The luxury strategy: break the rules of marketing to build luxury brands” London, Philadelphia: Kogan Page.
We should not forget the desire for privilege related to a luxury car. The sense of privilege goes beyond the dealership. A good example for privilege is that an owner of a Lexus in America has a car park reserved for him (Kapferer & Bastien, 2009).
Non-personal and personal perceptions In this study the values are also defined as the personal perceptions.
Vigneron and Johnson (2004) analysed the luxury-seeking consumer behaviour based on the studies of Kapferer, Dubois and Laurent. There are two types of perceptions, the non-personal perceptions and the personal perceptions. The authors basically use the five main factors conspicuousness, uniqueness, and quality, hedonic and extended self for explanation. In the following you can see them in a review (Vigneron & Johnson, 2004).
Figure 2: Proposed framework of brand luxury index
illustration not visible in this excerpt
Source: Vigneron, F. and Johnson, W. L. (2004), “Measuring perceptions of brand luxury”, HENRY STEWART PUBLICATIONS 1350-231X Journal of Brand Management, Vol. 11, No. 6, 484-506 July 2004
The non-personal perception of conspicuous can be explained through the conscious consumers. They are people who associate social status with a brand. The high price of the product is seen as an indicator for luxury and high quality of the goods (Vigneron & Johnson, 2004).
Furthermore the perceived uniqueness is about the limited supply of products. The products are difficult to obtain and expensive (Vigneron & Johnson, 2004). A good example therefore is a car of Jaguar. It enhances one’s self-image.
The indicator of perceived quality is the high price. A superior quality is expected from luxury products (Vigneron & Johnson, 2004). For instance the speed and acceleration for a luxury car are elements that reflect the perception of quality. The personal perception of hedonism is about the pleasure-orientated consumers (Vigneron & Johnson, 2004). They are looking for emotional benefits and not that much at the functional things of a product.
Finally the extended self includes people who want to classify and distinguish themselves from others (Vigneron & Johnson, 2004). Through the consumption of the luxury products they want to present their personal success to others. The consumers are highly materialistic. Moreover they see luxury brands as items to reach happiness (Vigneron & Johnson, 2004).
2.2. Brand management (branding)
The brand management (branding) of luxury and mass products is almost the same today. The differences which existed earlier are disappearing (Kapferer, 1997).
The brand management is about creating brands and managing them in the way that they won’t lose its image and identity. Therefore the managers need the feedback of the consumers. They should know why the customers consume their brand and referring to luxury why they consume luxury. This is what will be analysed later on in this study.
Kapferer (2004) says that branding was seen as a task of the marketing and communication staff and that nowadays branding is seen as a very important tool. That is why the whole company with all its resources should be involved today (Kapferer, 2004). Everything is focused on creating a difference, so that you can see to which company the product belongs. “The brand is more than just a name.” (Kapferer, 1997:37)
Moreover Rust, Zeithaml & Lemon (2004) found out that brand management should not only focus on increasing long-time brand equity. It is important to include customer equity as well (Rust, Zeithaml & Lemon, 2004).
Brand equity is the value of the brand (Pahud de Mortanges & Van Riel, 2003) or further explained the sum of the customer’s measurements of the brands intangible values (Rust, Zeithalm, & Lemon, 2004). If you want to measure brand equity according to Rust, Zeithalm & Lemon (2004) you have to put brand equity in context with customer’s lifetime value and know that it varies by individuals.
Customer equity is the lifetime values of all the firm’s customers across all the firm’s brands (Rust, Zeithalm, & Lemon, 2004).
The authors recommended growing the lifetime values of the customer relationship to the managers by trying to satisfy the customers’ needs. There are different ways to achieve it. For example you can build loyalty and retention and also cross selling related goods and services.
The reason why you should include customer equity next to brand equity is
because a brand gains from its customers (Rust, Zeithalm, & Lemon, 2004). It obtains its meaning and value from them to be strong and successful. Also it is cheaper to keep the current customers than to gain new customers for your brands (Rust, Zeithalm, & Lemon, 2004). If the brand managers only focus on their brands like in earlier days, they will lose their current customers (Rust, Zeithalm, & Lemon, 2004).
To distribute the brand successfully in the market, the brand managers can not only consider the customer’s knowledge of the brand’s intangible qualities (Rust, Zeithalm, & Lemon, 2004). They also have to integrate customer lifetime value with the help of the customer segment managers. Thereby they will generate long-term customer satisfaction (Rust, Zeithalm, & Lemon, 2004).
However Macmillan (2007) understands branding as a process of managing a company’s brands to increase long-term brand equity and financial values. The brand managers make sure that the brands reap profits for the company (Macmillan, 2007).
The up-to-date definition of branding by Trump (2008) sees brand management central to marketing. He explains that branding is only successful if the product or service meets the customer needs (Trump, 2008). In conclusion we can say that branding is all about the customer’s perception.
Furthermore an important point is that the brand managers achieve a strong brand in the market (Riesenbeck & Perrey, 2009). A brand is strong when the target group recognises the brand as “well known”. Moreover the brand managers can be more successful and creative if they know about the insights of the customer and when they have done a market analysis of the target group. According to the explanation of Kapferer (2008) luxury brand management should not only focus on customer expectations because the luxury brand is something special. It offers more than just a product (Kapferer, 2008).
The principles of luxury brand management are to construct entrance barriers for those who should not enter the luxury market (Kapferer, 2008). The management will achieve this through high prices and an exclusive distribution. It is also important to renovate the “basic” standards of quality regularly because the quality standards are always increasing (Kapferer, 2008). The degree of rarity of the products and the differentiation of luxury brands to basic brands should be sustained (Kapferer, 2008).
With reference to Chevalier and Mazzalovo (2008) the management of a brand should consider the changes in society and the up-coming consumer trends in their decision making that their brand does not lose its position and fit the customer needs and the current trends (Chevalier & Mazzalovo, 2008).
In this study the author will research and analyse the concept of “luxury” in the choice of car brands with a closer look at BMW and Mercedes in Germany. The author has chosen these two brands, because they are the most luxurious German brands and represent best the model of luxury brands. They are also well known in the German market and therefore the best convenient luxury brands for market research.
2.3. Mercedes-Benz & BMW
Mercedes-Benz is a German multi-brand. It offers various types of vehicles in different segments. Therefore it can better meet the demands of different markets (Kapferer, 2008).
2.3.1. The Mercedes-Benz brand model
Segar and Brehm (2000) used the brand model of Dr. Helene Karmasin to describe the Mercedes-Benz brand.
Figure 3: The Mercedes-Benz brand model
illustration not visible in this excerpt
Source: own illustration based on Segar, A. and Brehm, H.G. (2000), “How to Create a Common Way of Thinking About the Brand in the Process of Globalisation”, ESOMAR Automotive Marketing, Lausanne, February 2000
The main attitude of the brand is depicted in the centre of the model. According to Segar and Brehm (2000) this displays fairness and engagement. Fairness is seen in the manufacturing of the products and commitment in the overall task to supply mobility for the individual.
Furthermore in the view of the two authors the marques ethos is encased in particular psychological codes which are set in relationship in the model. There are three main codes which describe how the brand behaves and what it delivers. These three codes are: discipline, hedonism and solidarity (Segar & Brehm, 2000).
Discipline embodies the heritage of the Mercedes brand according to Segar and Brehm (2000). It stands for the safety, reliability and quality of the MercedesBenz products. Mercedes-Benz is known for its performance and high quality as we know from the history of the brand. It has launched its own successful range of fragrances and leather goods like other auto marques.
The culture of hedonism stands for enjoyment and the lust for life. Hedonism people are pleasure-oriented and confident in style. Segar and Brehm (2000) thought that this played a role in Mercedes-Benz’ past and is also present in its future. The brand is known for its classic design and style and dream cars. The company put a huge emphasis on individual and customised needs. In the view of Segar and Brehm (2000) an example is the SLK with its clear bias towards Hedonism embodied within youthful driving pleasure 365 days a year.
With reference to solidarity the brand stands for its environmental responsibility. It is searching for solutions for preservation of the environment and the protection of life. Therefore it is sharing technological innovations and contributing to the advancement of the industry. In this case the two authors mentioned the A-Class of Mercedes-Benz as a good example.
Finally, it is important to remember that the three codes vary from country to country. For instance the term of hedonism in the US market, over there individuality, as a broader expression, was deemed more applicable and of more immediate relevance to utility vehicles (Segar & Brehm, 2000).
In summary, the two authors see as an example for the three codes in the Mercedes-Benz brand the E-Class as the typical Mercedes. According to them it supports Mercedes-Benz basic values (discipline) through safety, high quality finishing, reliability and longevity and comfort (particularly stress relieving comfort). Comfort in a trend value context (enjoyment of space and driving feeling) is an area where the E-Class has category leadership. Orientation values are supported by environmental balance and fuel consumption data. With reference to the brand model you can say that Mercedes-Benz is one of the most desirable brands in the automotive world, unsurpassed in quality, individuality and responsibility and with an exemplary attitude.
BMW is also a German multi-brand because of its huge range of vehicles in different segments. Furthermore it is the world’s top luxury automaker by volume in 2007 (Ramsey, 2007).
2.3.2. THE BMW BRAND MODEL
In addition, the BMW brand can be described by the brand model of Dr. Helene Karmasin as well. In the term of BMW the core attitude is “sheer driving pleasure” (BMW, 2009a) which means to have fun by driving a BMW car. BMW achieves this attitude through the code of discipline.
Discipline embodies safety which BMW is trying to realize through its famous anti-lock braking systems (ABS) which enables enhanced performance on the street. Furthermore the vehicles include high quality of interior and exterior materials and also high quality engine (BMW, 2009b). The BMW Group always improves the road safety of its vehicles. According to the press the company displayed a sample of its cars fitted with innovative technology on the International Technical Conference on the Enhanced Safety of Vehicles (ESV) which is the world’s largest and most important conference focusing on the issue of vehicle safety (BMW, 2009b).
The culture of hedonism in a BMW is different to the one of a Mercedes. The BMW vehicles have a more sportive design than a classic and traditional design. But all over a BMW embodies enjoyment and the lust for life according to the history of BMW. For example the BMW 3 series with its perfect road holding and its stylish and sportive design (BMW, 2009).
The code of solidarity BMW is trying to embody through its very low fuel consumption and its well engineered engines.
The brand values of both manufacturers are evident not only in the products themselves but also in the way they are distributed. This is particularly clear with “Mercedes-Benz world” and “BMW world”.
There the customers collect their cars in a special atmosphere that is supposed to make this day a unique experience.