Critical Evaluation of Research and Theory

Brand partiy perception on the German automotive market - a comparative analysis of brand clusters

Dorothee Bialdyga Leeds Metropolitan University, UK

Abstract

Purpose- The main purpose of this paper is to validate particular brand clusters of the German automotive market, which were already identified within a qualitative research approach. Furthermore, information shall be provided whether different levels of perceived brand parity with regard to particular brand clusters exist.

Design/methodology/approach- The results are based on two quantitative online surveys. The first survey was carried out in the period of 4th of May 2012 to 12th of May 2012 with a sample of n=111. With hierarchical, agglomerative clustering procedures seven brand clusters were validated of which four are presented in this paper. The second survey was carried out in the period of 2nd October 2012 to 12th October 2012. In order to control the data collection process as best as possible, the service of a panel provider was used and a quota-sample of n=320 was achieved. Four main brand clusters were analysed.

Contribution to the body of knowledge- The paper provides two contributions: from a methodological point of view it quantitatively validates the brand clusters, which have been identified within prior qualitative research. Furthermore, the results shed light on the consumers’ parity perceptions for particular brand clusters on the German automotive market, which may support brand managers in their task of positioning their brand uniquely.

Research limitations/implications- A limitation is of course the constricted application to online samples. Therefore the sample of the first survey does not fulfill the need for representativeness. Despite dedicated efforts in the second survey not all quotas were reached.

Key Words: perceived brand parity, German automotive market, quantitative research, cluster analysis,

Introduction

In the last two decades there has been a plethora of research and publications in the field of branding which has significantly enhanced our understanding of the field. However, there is still a nebulous around understanding and applying the concept due to the rising number of brand failures. A number of findings have highlighted the concern of parity where products are perceived to be generically similar.

According to Muncy (1996) perceived brand parity is defined as “... the overall perception held by the consumer that the differences between the major brand alternatives in a product category are small.” Muncy (1996, p.411) furthermore claims that “parity can be seen as the opposite of differentiation.” Some authors follow this viewpoint and describe perceived brand parity as a lack of brand differentiation (Kocyigit and Ringle 2011; Chenet et al 2010; Lantieri et al 2009; Ogba

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and Tan 2009, Hlavinka and Gomez 2007; Jensen and Hansen 2006; Razi et al 2004). But while brand differentiation is usually related to a specific brand, parity concerns a whole product class (Muncy 1996). This object reference is the most important difference when comparing the construct of perceived brand parity to other constructs of brand research. While brand awareness, brand knowledge, and brand equity apply to individual brands (Fischer et al 2010), brand parity concerns the whole product class. Consequently perceived brand parity does not diverge across brands within one product category.

Also this seems relatively unimportant for the automotive market at first sight, as brand differentiation has been seen as strength of the German automotive market (Gottschalk 2005, p.16), this topic becomes essential when watching the trends on the German automotive market.

In the past decades, the automotive sector experienced a rapid growth leading to a fragmented market, which is divided into various segments, lines, body types and models (Becker 2007, p.28). In order to differentiate and thereby be more successful, the manufacturers of the big car brands serve nearly each market segment (Ebel et al. 2004). This strategy leads to quite homogenous markets with regard to product quality and thereby diminishing uniqueness of car brands.

Furthermore, an ongoing consolidation of the automotive industry can be observed. The number of car manufacturers declined from thirty-six in 1970 to twelve in 2010 (Becker 2007 p.77, Wallentowitz 2009 p.25, Schömann 2012 p.24). As the number of brands did not decline in the same extent, more brands are consolidated within one manufacturer. Consequently common part strategy is conducted in order to reduce costs. Applying common part strategy across brands leads to an assimilation of the cars in terms of technical features and quality aspects.

As brand parity refers by definition to one product category it is highly important to exactly define the relevant product category for which brand parity is to be measured. In most research the automotive market as a whole is seen as one product category. Due to the high diversity within the automotive market, ranging from low priced small cars up to expensive luxury vehicles this classification seems not to be suitable for parity explorations. Furthermore, it is important for the marketing managers to have information about the consumers’ parity perceptions regarding their brand in comparison with their direct core competitors.

Therefore, this research aims to find reasonable brand parity clusters on the German automotive market. Based on results of preliminary focus group discussions a quantitative survey is undertaken in order to confirm the identified brand clusters. By conducting another quantitative panel survey, the level of perceived brand parity within the particular clusters is measured.

Data collection and data analyses

Five focus group discussions, with five to eight car drivers each, were executed in May 2011in order to learn about the consumers’ perception of the German automotive market. Each focus group discussion lasted 1.5 to 2 hours. Four groups were created with people who had signalled a higher perception of brand parity in advance and an additional control group was formed made up of people having a

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lower parity perception. Enabling techniques were applied and a family formation scenario was constructed exclusively for this purpose. Participants formed brand clusters, with the brands inside the clusters being homogenous while the clusters towards each other were heterogeneous regarding similarity.

In an aim to confirm the brand clusters formed in the qualitative survey a quantitative survey was conducted in the period of 4th to 12thof May 2012. An online questionnaire was administered to n=113 participants via snowball sampling. Participants were asked to rate 42 brands91 regarding six pairs of opposites referring to product (low quality vs. high quality, conventional design vs. extravagant design), price (low price vs. high price) and brand image (commodity good vs. status symbol, boring vs. adventurous, ordinary vs. something special).

The brand clusters are confirmed using a cluster analysis which groups individuals or objects into clusters. Elements in the same cluster are more similar to one another than to elements in other clusters (Hair et al 2006, p.555). The aim “is to maximize the homogeneity of elements within the clusters while also maximizing the heterogeneity between the clusters” (Hair et al 2006, p.555). A hierarchical agglomerative cluster analysis applying five different clustering algorithms was executed and compared.

Finally, in the time between 2nd and 12th October 2012 an online questionnaire including 18 questions (lasting approx. 20 minutes) was administered to a quota sample with n=320 by contacting the target persons using a professional access- panel provider. This approach guarantees a highly professional data collection method, therefore increasing the likelihood for high-quality data. Based on this data set detailed analyses of the consumers’ brand parity perceptions with regard to the automotive market in general and for four important brand clusters were performed applying three different approaches of measuring consumers’ brand parity perception. However, as the focus of this paper lies on confirming the clusters, only a very limited extract of the results of the final panel survey are presented.

Results

The quantitative results satisfactorily confirmed both, the composition of the brand clusters and also the characteristics of the clusters. The following table shows a comparison of the composition of the brand clusters regarding the results of the qualitative and the quantitative research.

Additionally, the characteristics of the brand clusters were also confirmed. A comparison of the means of each cluster for each variable provides information about the particular cluster characteristics.

267 91 The questionnaire included all brands that were mentioned in a minimum of two focus group discussions

Table 1: Overview data collection and data analyses Q u a l i t a t i v e survey

Quantitative survey I F i n a l q u a n t i t a t i v e p a n e l survey

Field time May 2011 4th to 12thof May 2012 2nd and 12th October 2012

Net Sample 5 groups with 5-8 car drivers each group

n=113 n=320

D a t a collection

F o c u s g r o u p d i s c u s s i o n s a p p l y i n g e n a b l i n g techniques.

• O n l i n e questionnaire

• Snowball sampling • R a t i n g o f 4 2

brands regarding s i x p a i r s o f opposites referring to product, price, brand image

• Online questionnaire • Quota sampling using a

p r o f e s s i o n a l a c c e s s - panel provider

• Questionnaire included 18 closed questions

A p p l i e d a n a l y s i n g methods

longitudinal and cross-sectional analysis

H i e r a r c h i c a l agglomerative cluster analyses

A range of bivariate and multivariate methods such a s c o r r e l a t i o n s , n o n - parametric tests, explorative factor analyses and a simple form of structural equation modelling (not presented in this paper)

Table 2: Cluster definitions

Cluster name Cluster definition –Qualitative research Cluster definition – Quantitative survey I

Pragmatic Dacia, Lada, Lancia, Suzuki, Tata, Kia

Dacia, Lada, Kia

Affordable C i t r o e n , F o r d , P e u g e o t , Renault, Opel, Toyota, Fiat, Honda, Mazda, Mitsubishi, Nissan, Hyundai, Seat, Suzuki

Toyota, Renault, Citroen, Fiat, Ford, Honda, Hyundai, Lancia, Mazda Mitsubishi, Nissan, Opel, Peugeot, Seat, Skoda, Suzuki

S t a t u s - orientated

Mercedes-Benz, BMW, Audi, Volvo

Mercedes-Benz, BMW, Audi

Exclusive R o l l s R o y c e , M a y b a c h , , Jaguar, Lotus, Bentley, Ferrari, Lamborghini, Maserati, Aston Martin, Bugatti, Porsche,

Aston Martin, Bentley, Bugatti, Ferrari, Jaguar, Lamborghini, Lotus, Maserati, Maybach, Porsche, Rolls Royce

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Graph 1: Overview brand cluster means

The table below presents the summary of the cluster description of the focus group discussions and the cluster descriptions referring to the quantitative cluster analysis based on the graph above.

Table 3: Cluster descriptions

Cluster name Cluster description –Qualitative research Cluster description – Quantitative survey

Pragmatic Dacia, Lada, Kia

“The brands in this cluster are all associated with poor quality and cheap price. They elicit rather negative emotions such as a lack of prestige”

This cluster has the lowest ratings of all clusters for each variable. The brands within this cluster are of very low quality for a very low price. They are nothing special and rather boring and ordinary also in terms of design.

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Affordable T o y o t a , R e n a u l t , Citroen, Fiat, Ford, Honda, H y u n d a i , L a n c i a , M a z d a M i t s u b i s h i , Nissan, Opel, P e u g e o t , Seat, Skoda, Suzuki

“ I n c o m p a r i s o n t o t h e pragmatic cluster, this cluster does not show a lack of seriousness and does not elicit such negative emotions. In terms of perceived emotional i m a g e t h e b r a n d s a r e perceived as down to earth brands, a little bit boring as they do not offer anything special. When it comes to d i s c u s s i o n s a b o u t p r i c e , participants stress more the costs of service and spare parts and they talk rather about the price performance ratio, than about the pure price. In terms of quality opinions differ, some think that the quality is sufficient; some think the quality is poor.”

This cluster clearly exceeds the cluster described above in terms of quality and price. This cluster also achieves higher ratings for the image attributes and the design. Nevertheless it is still located at the lower end of the scale regarding all variables.

S t a t u s - orientated M e r c e d e s - Benz, BMW, Audi

“With brands of this cluster, participants associate high q u a l i t y a n d h i g h p r i c e . R e g a r d i n g t h e e m o t i o n a l image brands within this cluster are seen as a little bit snobbish but they also seem to envy the luxury brands.”

Very high quality is attributed to this cluster. The brands within this cluster even come very close to the exclusive car bands in terms of quality. They also achieve the second highest mean for price of all clusters and are seen as more as a Status Symbol than a commodity good. However in contrast to the exclusive car brands, these brands are allocated only slightly above the middle of the scale according to the boring and ordinary image attributes and the conventional design attribute.

Exclusive Aston Martin, B e n t l e y , B u g a t t i , F e r r a r i , J a g u a r , Lamborghini, L o t u s , M a s e r a t i , M a y b a c h , P o r s c h e , Rolls Royce

“The brands within this cluster seem to be very emotional charged. The brands show a positive emotional image of luxury and prestige…”

This cluster outperforms all other clusters on all variables. Beside the high quality and the high price that are attributed to this cluster, the brands within this cluster are clearly seen as Status Symbols and something really special according to both image and design

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In order to measure the level of perceived brand parity, three different approaches were applied:

1. A simple global question was asked: “Overall, how similar do you think the brands within this group are?” (Scale from 1 to 7, whereby 1 means “not similar at all” and 7 means “very similar”)

2. Respondents were asked to rate four statements of a previously validated parity scale.

3. A multi-item question consisting of 24 items was asked: “How similar do you think the brands of this group are in terms of the following items” (Scale from 1 to 7, whereby 1 means “not similar at all” and 7 means “very similar”). Items refer to all four areas of the marketing mix.

The key result is that all three approaches revealed the same pattern: The cluster with the highest perceived brand parity was the status-orientated cluster, followed by the exclusive cluster. For the pragmatic cluster the third highest parity perception was measured and the affordable cluster is the cluster with the lowest level of perceived brand parity:

Conclusion

The brand clusters are confirmed with regard to composition and characteristics. Different levels of perceived brand parity with regard to particular brand clusters on the German automotive market were identified and validated.

Directions for further research are to explore the differences in parity perceptions among particular consumer subgroups as this will give marketing managers valuable insights for positioning their brand according to the needs of their target group.

A limitation is of course the constricted application to online samples. Therefore the sample of the first survey does not fulfill the need for representativeness. Despite dedicated efforts in the second survey not all quotas were reached.

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