Consumers’ Perceived Value and Brand Image Towards Luxury Vehicle Brand Stretching
CONSUMERS’ PERCEIVED VALUE AND BRAND IMAGE TOWARDS LUXURY VEHICLE BRAND STRETCHING By Teerapong Tammasuwan January 2013 The work contained within this document has been submitted by the student in partial fulfilment of the requirement of their course and award Table of Contents List of Figures List of Tables Acknowledgements Abstract Chapter 1: Introduction 1. 1 Overview 1. 2 Luxury Vehicle Market Overview 1. 3 The Significant of Study 1. 4 Aims and Objectives 1. 5 Research Questions 1. 6 Dissertation Outline Chapter 2: Literature Review 2. 1 Introduction 2. 2 Branding 2. 2. 1 Branding Definition 2. 2. 2 Brand Image and Equity 2. . 3 Brand Loyalty 2. 3 Brand Stretching and Extension 2. 4 Defining Luxury Brand 2. 4. 1 Financial Value 2. 4. 2 Functional Value 2. 4. 3 Individual Value 2. 4. 4 Social Value 2. 4 Chapter Summary 6 6 6 7 8 10 12 13 14 15 16 18 1 2 3 4 4 5 i ii iii iv Chapter 3: Methodology 3. 1 Research Philosophy 3. 1. 1 Positivism 3. 1. 2 Interpretivism 3. 2 Research Perspective 3. 2. 1 Deductive Research 3. 2. 2 Inductive Research 3. 3 Research Approach 3. 3. 1 Qualitative Research 3. 3. 2 Quantitative Research 3. 4 Research Design and Research Methods 3. 4. 1 Research Design 3. 4. 2 Research Methods 3. 5 Ethical Considerations 3. . 1 Ethical Principles 3. 5. 2 Plagiarism 3. 6 Limitations of Research Chapter 4: Findings and Analysis 4. 1 Introduction 4. 2 Findings and Analysis 4. 2. 1 Section 1: General information brands stretching product 4. 2. 3 Section 3: Perceived brand image of luxury vehicle brand stretching products towards original brand name 42 29 29 29 36 19 19 20 21 21 22 23 23 23 24 24 24 26 26 27 27 4. 2. 2 Section 2: Factors encouraging respondent to purchase luxury vehicle Chapter 5: Discussion 5. 1 Introduction 5. 2 Key Drivers Influencing Consumers’ Perceived Value 5. 2. 1 Financial Value 5. 2. 2 Functional Value 5. 2. Individual Value 5. 2. 4 Social Value 45 45 45 45 46 47 5. 3 Consumer Intention Towards Image of Luxury Vehicle Stretching Brand 47 Chapter 6: Conclusions and Recommendations 6. 1 Research Conclusions 6. 1. 1 Objective 1 6. 1. 2 Objective 2 6. 1. 3 Objective 3 6. 2 Recommendations 6. 3 Limitation and Recommendations for Further Study Appendices Appendix 1: Questionnaire Appendix 2: Participant Information Sheet Appendix 3: Ethics Compliance Form 63 68 71 49 49 51 51 51 53 List of Figures Figure 2. 1: Attitudinal and behavioural loyalty model Figure 2. 2: The conceptual model Figure 3. 1: The process of deduction Figure 4. : Respondent’s demographic profile Figure 4. 2: Key luxury product buyers Figure 4. 3: Favourite luxury vehicle brands Figure 4. 4: Selling notifications on luxury vehicle brand Figure 4. 5: Frequency in purchasing stretching product Figure 4. 6: Luxury stretching brand-selling notification Figure 4. 7: How likely to likely would you buy stretching products in the future 35 9 13 21 30 31 32 33 33 34 i List of Tables Table 3. 1: Research paradigms classification Table 3. 2: The differences between deductive and inductive approaches Ranking of important factors in purchasing stretching products Table 4. : Brand image Table 4. 2: Price Table 4. 3: Product function Table 4. 4: Product quality Table 4. 5: Social acceptance Table 4. 6: Emotional desire Table 4. 7: Word Of Mouth Table 4. 8 Encouragement factors in purchasing luxury vehicle stretching product Table 4. 9 Purchasing intention factors towards luxury vehicle stretching products 36 37 37 38 38 39 39 40 43 19 22 ii Acknowledgements This dissertation could not be accomplished without my supervisor, Geoff Alcock, lecturer in Advertising & Marketing at Coventry University.
I would like to express my gratitude and appreciation to my helpful supervisor for his valuable advices and time. He did not only supervise me but also provided encouragement, excellent guideline as well as essential review in every part of this dissertation. I would like to thank all professors and lecturers, who taught me in MA Advertising & Marketing course, the staff, the facilities of Lanchester library, Coventry University and all respondents who participated in my survey for their useful information and time.
Special thanks to all of my friends in Thailand and in the United Kingdom, especially the Thai Coventry Society’11 who encourage me and gave me a special time during my stay in the United Kingdom, without them I would not be able to complete this project. Finally, I would like to extend my sincerest gratitude to my family (Tammasuwan and Ruchirawat), who gave me an opportunity to study aboard, thanks for support and your faith in me. iii Abstract The luxury market is growing against recession crisis in the world market.
Despite their success, luxury brands need a fine balancing act to satisfy an increasing demand of the market and safeguards the brands’ cachet and exclusivity. Extending or stretching strategy is presented as a possible alternative for luxury brand, even though it may affect the image of original brand. This study concerns consumers’ perceived value and brand image towards luxury vehicle brand stretching. The research reveals that there are 4 factors that influence consumers’ perceived value of luxury brand which are financial, function, individual and social. They are the most influential factor for luxury vehicle brand stretching.
Furthermore, the research also presents the image of luxury vehicle brand after stretching in terms of how has the image of original brand actually been transferred to stretching product. The study used online-based questionnaire to investigate the factors that drive purchase behaviour. The questionnaire was conducted with 110 respondents aged between 20-35 years old and the result was analysed in this study. The finding shows that functional value is the most important factor encouraging consumer, and is followed personal desire fulfilment, symbolic sign of group membership come, price value came in respective order.
The finding also presents that brand equity and loyalty play an important role in driving perceived image of stretching brand. At the same time, the image of vehicle luxury brand has actually been transferred to stretching product and consumers still perceived luxury value from it. Consumers’ perceived value and luxury brand image found from this research could be used as a guideline for brand stretching strategies, especially for luxury brand. iv Chapter 1: Introduction 1. 1 Overview The market of luxury products continues to grow globally even in the recession crisis.
Luxury brands have thrived over the past two decades in this market and become more important as a part of people’s life (Tynan 2009). Recession may affect middle and lower income groups. This leads to widen gap between rich and poor people. However, overall market of luxury brands continues positive and can resist current crisis because it is linked with a specific model of society, which is divided into classes and has different possibilities and needs (Morelli 2012). Supported by Cohen (2012), t is stated that “premium brands have higher exposure to global growth markets, relative pricing power and strong brands, with ability to create a benefit”. Value of the luxury brand is a key success in the market because consumers perceive value of luxury brands, which, in turn, influences their purchase intention towards luxury goods (Shukla and Purani 2011). Despite their success in global market place during recession, luxury brands need a fine balancing act to satisfy an increasing demand of the market and safeguards the brands’ cachet and exclusivity (Bian and Veloutsou 2007).
In order to effectively respond to global markets expanding the original brand to other product categories utilises the power of the original brand. Extending or stretching strategy is a way to make product more affordable to attract middleincome consumers (Meyers, 2004). It presents key advantages over launching new product or new brand as it requires less investment in putting product to the market. For example, design and research cost can be reduced, consumer awareness is maintained from parent brand’s halo effect, consumer’s perceived risk is minimised which, in turn, enables consumers’ willingness to try (Cressey 2012).
Nonetheless, brand extension and stretching may damage the image of luxury brand (Vigneron and Johnson 1999). Therefore, it is important for the brand to carefully evaluate its extension or stretching strategy. 1 1. 2 Luxury Vehicle Market Overview The estimated value of the luxury market in 2007 was €200 billion, presenting a 31 percent increase from the past five years (Verdict 2007). In Britain, consumers’ spending on luxury goods has increased 50 percent between 1994 and 2004, while a mere 7 percent increase in non-luxury good spending in the same period (Keane and McMillan 2004).
Even global market is in a difficult economic situation recently, luxury sector is growing against the downturn. Bain & Company asserts 10th annual Worldwide Luxury Goods Market Study reveals that by the end of 2012, the luxury sales will increase 6. 7 percent and expect a further increase in global sales until 2015 (Morelli 2012). Similarly, in luxury vehicles market for last five years, the overall market of car sales in European Union has dropped. From the sales has dropped from €17 million a year to about €13 million in 2012 (Economist 2012).
However, sport and prestige car market still grows as car finance agreements rose by 11 percent in 2010, which is the main purchasing trend in the ? 25,000-plus category according to research. For example, Range Rover did especially well, gaining about 18 percent of financed vehicles. This figure is followed by Audi with 14 percent, BMW with 12 percent, Porsche and Aston Martin with 9 percent (Williams 2011). Even market is challenged by economic climate but it has continued to see a high demand for prestige vehicles.
Recent information reveals that Europe may be in trouble, but luxury car still has brisk record sales in May 2012 (Campbell 2012). Strong sales growth for luxury car around the world requires more production capacity. For example BMW further productions to the United Kingdom and the Netherlands, whilst still enjoying similar success as before (Madslien 2012). Value of luxury brands has been presented strongly and is working properly even in crisis situation. This can be seen from the value of well-known brand such as BMW, Mercedes-Benz and Volkswagen. They are all perceived to be high value.
From the world’s top brand year 2012 by Brandirectory (2012), the value of BMW, Mercedes-Benz and Volkswagen is presented at ? 13,150 2 millions, ? 12,222 millions and ? 10,983 millions, which are in the position of 22, 26, and 35 respectively. Many luxury vehicle brands are selling different products under their brand names in order to satisfy increasing demand of the market, safeguard the brands’ cachet and exclusivity as mentioned previously. Court et al. (1999), support that those firms who leveraging their brands by extending brand identities into new market can enerate about 5 percent or more in return to stockholders, compared with firms that do not extend their brands. The example can be found from Harley Davidson, which sells apparel and accessories under same brand name as its motorcycles and launches complimentary campaigns. Harley Davidson publishes the document called “The Harley-Davidson Roadtrip”, and inserted it in Complex magazine to present fashion editorial style, model names and Harley Davidson clothes (Newman 2007). Lynn Bonner, Harley’s director stated that “this document helps us show that we want to bring them on board and shows them they can look good while riding”.
Harley Davidson’s motorcycle generated $2. 99 billion revenue in the first nine months of 2012, while general merchandise including apparel and accessories generated $225. 4 million revenue for the brand (Harley-davidson 2012). 1. 3 The Significant of Study When brand expand and enters into different markets, this is appear to be an effective strategy. Extension or stretching may satisfy increasing demand of global market, maintain brand awareness and brands’ cachet; however, consumers perceive the value of luxury brand and react differently. The perceived quality of extended luxury brands is related to the fit with original brand.
In addition, perceived brand equity represents the main predictors, which lead to transferability (Stegemann 2006). Nevertheless, this concept is argued by Ruiz et al. (2007) who believe that perceived value is focused on quality and pricing issues. 3 As can be seen in an argument from the previous paragraph, researchers are unlikely to have a clear understanding of strong involvement and value recognition from others. Therefore, this study would like to investigate perceived value of brand stretching and to find out the factors influencing consumers’ perceived value of luxury vehicle brands stretching.
Moreover, this study includes how people perceived brand image and value of stretching luxury brand in relation to original brand. Researcher uses luxury vehicle brands as a model in this study because of the distance between original brand and extent of brand stretching can be clearly seen in general. 1. 4 Aims and Objectives • To identify the key factors that influence consumers’ perceived value of luxury vehicle brand stretching in 4 aspects: perceived financial value, perceived functional value, perceived individual value and perceived social value. To discover which perceived value is the most important factor affecting purchasing decision-making process. • To critically analyse how brand’s image of luxury vehicle brand has actually been transferred to new product after stretching. 1. 5 Research Questions • • What would convince consumer to purchase stretching product? Which perceived value is the most important factor in stretching products purchasing decision-making process? • Do consumers still perceived image and value of stretching product the same as their perception of original brand name? 1. 6 Dissertation Outline This research can be divided into five sections as follows: Chapter 1: Introduction This chapter covers background research including an overview of luxury market and luxury vehicle market, significance of the study, research aims and objective and research question. Chapter 2: Literature Review The literature review chapter contains a range of previous research studies and theoretical analysis linked to research objectives, which will be conducted to support the study. Chapter 3: Methodology and Research Plan
This chapter covers major elements of research including research philosophy, research approach, research design, research method research strategies and ethical considerations of the research. Chapter 4: Findings and analysis This chapter will provide the findings result and analysis of the study, and the result will be illustrated by using statistical tools. Chapter 5: Discussion Result evaluation and discussion will be provided in this chapter. Chapter 6: Conclusion and recommendation This chapter will cover research summary and the final conclusion including recommendations for further study. 5
Chapter 2: Literature Review 2. 1 Introduction This chapter will demonstrate relevant theories and previous research from reliable resources. Initially, the literatures of branding including definition, brand equity and brand loyalty will be defined so as to examine differences in meaning and significances. Moreover, brand extension and stretching definition, luxury and luxury value will be clarified so as to have a clear understanding and create logical connection to this dissertation topic. Finally, summarise of theories and previous research will help researcher formulate this dissertation framework. 2. Branding 2. 2. 1 Branding Definition Murphy (1998) defines brand as a differentiation in the goods or service of one producer from another. It is also described as “a name, term, sign, symbol, or design, or a combination of them, intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors” (Kotler2000: 404). It has been argued by de Chernatony and McDonald (2003) that additional attributes or ‘added values’ which might be intangible can be considered by consumers more than its physical components in distinguishing a brand from product.
Many consumers purchase something because of emotional reason as well as functional reason; this is an example when added value plays an important role (Doyle 2002). Brand value is referred to functional, emotional, and self-expressive benefits delivered by the brand that provides value to customers (Aaker 1996). Jones and Slater (2003) provide more detail about range of added value that normally comes from brands’ experience such as familiarity, consistency and reduction of risks. These attributes derived from those people who use the brand and how they are associated with characteristic of brand. Consumers’ beliefs in brands can create an impact and brand appearance’s emanate. This is how added value concept is integrated in brand’s definition. The value of the brand plays an important role to influence consumers’ purchase intention (Shukla and Purani 2011). Even in the crisis, many luxury products, which perceived as high value, continue to grow in the market (Cohen 2012). 2. 2. 2 Brand Image and Equity Brand image can be described as consumers’ connection of the brand with cluster of attributes and associations.
Suggested by Keller (2009), luxury brand image is the key competitive advantage, which builds enormous value and wealth for organisations. Using brand image in marketing campaign, luxury brands would gain premium value added (Ait-Sahalia et al. 2004). This is also reflected in consumer response to brand image. For brand equity is often used in economic terms to describe the value of brand over the physical assets associated with its manufacture or provision which be developed by financial department, this is usually called brand value (Aaker and Biel 1993).
Supported by Davis (1995), he emphasises that brand value, resulting from brand equity, can present strategic potential and benefits for company. However, according to previous study, the value of the brand is not only physical assets that generate value. Feldwick (1996) supports that brand equity as brand description or brand strength, is referred to consumers brand equity to differentiate them from the meaning of asset valuation. For consumer-based study, brand strength signifies a condition in familiarity and recalls of some desirable, strong and unique quality that consumers associate with brands (Keller 1993).
The brand image does not directly influence intention of consumer but it significantly control the relationship between normative interpersonal influences and luxury purchase intentions, the personal connection with brand is higher when the brand image is consistent with the image of the social group that consumers wish to associate with (Shukla 2010). Supported by recently study of Keller (2008) focusing on customer mind-set equity, customer-based brand equity is referred to “power of a brand lies in what customers have learned, felt, seen, and heard about 7 the brand”.
There are 2 key elements used to identify and measure in equity, which are awareness/familiarity and brand associations. Marketing literature has further presented 2 additional elements of brand equity, which are consumer perceptions and consumer behaviour (Myers 2003). Consumer perceptions include consumers’ brand awareness and values of brand that consumers associate with and consumers’ perceived quality of brand, whereas consumer behaviour concerns how much consumers is loyal to the brand and consumers’ readiness to spend a price margin for a brand (Myers 2003).
Supported by Aaker (1991), brand equity is defined as “A set of brand assets and liabilities linked to a brand, its name and symbol that add to or subtract from the value provided by a product or service to a firm and/ or to that firm’s customers”. Brand equity can be grouped into five categories: brand loyalty, brand awareness, perceived quality, brand associations in addition to perceived quality and other proprietary brand assets (Aaker 1996).
Considering the 5 categories of brand equity, brand loyalty presents a key measurement for the value of brand equity, which includes attitudinal loyalty and satisfaction (relationship equity constructs), this is a key in driving brand preference and re-purchase intention among brand’s consumers in luxury market (Tolba and Hassan 2009). 2. 2. 3 Brand Loyalty The brand loyalty concept implies the degree of attachment that customers have for a brand and their connection with brand’s experience (Liu et al. 012). According to Oliver (1997), loyalty is when customers retain themselves to product/service and re-purchase firmly in the same set of brand or particular brand. Moreover, Taylor et al. (2004) describe brand loyalty as a re-purchase or re-stimulating purchasing for the outcomes in consumer repetitively repurchase in the future for the same set of brands. Some studies find positive links between ‘attitude and loyalty towards brand’, and ‘brand’s image and loyalty towards brand’ (Liu et al. 2012).
For instance, providing knowledge relating to brand image and creating consumer attitude 8 towards the brand would result in brand loyalty (Keller 1993). Hence, loyalty towards the brand is contributed by both buyers’ attitude and brand image (Faircloth et al. 2001). Argued by Baldinger and Rubinson (1996), loyalty is regarded as a combination of attitude and behaviour, and this would facilitate ability to predict the concept of loyalty in behavioural base. This is supported by Neal and Strauss (2008) who propose that attitudinal and behavioural are dimensions of brand loyalty.
Attitudinal dimension can be used to explain consumer’s satisfaction in overall whereas behavioural dimension can be used to predict consumers’ purchasing tendency towards particular brand repetitively over time. Taylor et al. (2004) demonstrate the model combining both attitudinal loyalty and behavioural loyalty, which shows different factors that might develop attitudinal and behavioural loyalty as below (see figure 2. 1). Figure 2. 1: Attitudinal and Behavioural Loyalty Model (Taylor et al. 2004) 9 From this model, only brand equity and trust play important role in contributing to loyalty.
Affect, resistance to change and value present a smaller loyalty effect while satisfaction does not show significant relationship with behavioural loyalty. In terms of attitudinal loyalty, brand equity and trust also play important role in contributing to loyalty similar to behavioural loyalty, while affect and satisfaction present a smaller effect. Value and resistance to change do not demonstrate any relationship with attitudinal loyalty. Moreover, using both attitudinal and behavioural measures in testing, the results again reveal that brand equity and trust are the major influences in customer loyalty.
Loyalty is linked to how consumer perceived brand’s experience, where equity and trust have an impact in both behavioural and attitude of loyalty. In order to achieve research objective of how brand image has actually been transferred to new product after stretching study, testing in brand equity and trust will help provide the answer. Generally, brand equity literature and analysis show that brand equity includes attitudinal loyalty and satisfaction and they are key drivers for brand preference and re-purchase intention.
However, according to loyalty literature, brand equity and trust are key drivers for attitudinal and behavioural loyalty, the major influences in customer loyalty. These arguments present a strong link between brand equity and brand loyalty. 2. 3 Brand Stretching and Extension Brand extension means using successful or well-known brand name to introduce a new product to the market in broader context (Volckner 2007). For example, Google has extended its core brand by launching other information technology services such as Google Maps, Google Calendar and Google Answer (David 2004).
Brand extension is recognised as brand stretching when an established brand name is used for brands in unrelated markets or product categories (David 2004). This definition is supported by Lynne and Daniel (2002) who stated that “brand stretching refers to extension of an established brand name identified with a product in one market to a new product in another market, the list of brand stretching is a long one”. 10 Brand stretching and extension seem to be very similar, only the distance that makes different. Brand extension presents advantages such as consumers’ knowledge and trust.
In terms of consumers’ knowledge, using a strong existing brand to introduce a new product or service means less effort is needed to build consumer awareness (David 2004). Consumers’ trust refers to a condition which brands have already been known and trusted; thus consumers would be more likely to try new product from the brand that they know rather than a new brand (David 2004). However, when trying to stretch product or service into new category, fit to the original brand and distance need to be carefully considered.
There is a link between brand equity and luxury brand, which create a strongly significant relationship and attitude (Kim et al. 2011). Considering distance between original and stretching brand, the notion has been supported that consumers will perceive degrees of fit relating to the strength of brand (Park et al. 1991). Risks, in relation with original core product area, might occur when companies attempt to stretch their brand name, the original brand image in the current brand sector and the value in the destination brand sector should fit (Bastin 2011).
Brand stretching distance strongly correlates to the reduction in original core brand image in a prestige-oriented brand, when compared with a function-oriented brand (Kim Lavack 1996). Image of luxury and status are associated in prestige-oriented brand concept (Park et al. 1991) and this can create impact on how consumers would evaluate the brand (Liu et al. 2012). Stegemann (2006) provides the strategy for this situation, where the brand should maintain the brand fit by increasing brand equity, which will create a strong brand image; this will help to maintain brand fit and strongly link between brands.
Brand with very strong equity is more likely to be able to keep existing customers and defend themselves from competitors (Fill 2009). The value of brand equity for luxury should be understood in order to keep stretching brand fit and minimise the effect of distance. 11 2. 4 Defining Luxury Brand Definition of luxury presented by Grossman and Shapiro (1988) is goods that create prestige to the holder along with functional benefits. Luxury brands are perceived recalled for exclusiveness and well-know brand identity, great brand awareness and better (Prendergast 2003).
Argued by other research, luxury brand is expensive, high quality and unessential products that consumers perceive as prestigious, exclusive and trustworthy and offer emotional value and high symbolical value (Tynan et al. 2009). Prestige is gained from purchasing luxury goods and this concept is referred to “conspicuous consumption” (O’Cass and McEwen, 2004). The value of luxury brand is challenged by consumers’ perception towards value of luxury brand.
If consumers do not have a feeling of luxury from the product, this will not pass the standard (Smith 2003). However, people might not have the same standard in perceived value of luxury, luxury for one person may be normal to another (Reddy et al. 2009). Vigneron and Johnson (1999) suggest the theoretical of luxury-seeking in consumers’ decisionmaking process to understand consumer behaviour towards perceived degree of luxury brand. This consists of 5 unique values: conspicuous value, unique value, social value, hedonic value and quality value.
All of them are categorised into non-personal-oriented perceptions (conspicuousness, uniqueness, and quality) and personal-oriented-perceptions (hedonism and extended self) (Vigneron and Johnson 1999). Recent research developed by Vigneron and Johnson (2004), presents a stronger description of luxury, with develop conceptual outline and measurement scale for testing the perceived degree of luxury brand. Luxury’s level alters from very little to a great deal of luxury. In other words, consumers perceive degree of luxury by value of psychology they have een in a brand (Vigneron and Johnson 2004). Later stage in Vigneron and Johnson’s study, luxury is applied into larger concept which includes motives of personal and non-personal to enhance an understanding of consumers’ motive and value perception related to luxury consumption, Vigneron and Johnson (2004) 12 extend the framework by integrating the concept of luxury-seeking consumer‘s decision-making process with different perspective for monitor luxury brand in global context as presented below: Figure 2. 2: The Conceptual Model (Vigneron and Johnson 2004) The figure 2. presents additional variable of luxury value in defining perception of consumers. There are 4 dimensions: Financial value, Functional value, Individual value and Social value. 2. 4. 1 Financial Value Luxury value perception in financial dimension addresses direct monetary aspects such as price, resale price, discount, investment and so on, it refers to the value of what is given up or sacrificed to obtain a product (Wiedmann et al. 2007). 13 Price Value – for luxury products many authors determine that there is a positive relationship between price of a product and the perception of high quality (Wiedmann et al. 007). Consumers usually use price to estimate quality, and status-conscious consumers tend to use price as cue to indicate prestige (Wiedmann et al. 2007). Hence, prestige pricing is setting relatively high to imply high quality and/or high status (McCarthy and Perreault 1987) and might even be conceived for products or services to be more desired (Groth and McDaniel 1993). The brand that has the longevity of usage and superior quality is supported; the cost becomes acceptable associate with comfort, well being and security feeling (Till et al. 011). 2. 4. 2 Functional Value Functional value mainly concerns the extent in products, which include desire characteristics, useful or a desire function performance (Tynan et al. 2010). In luxury value perception towards functional dimension, the main advantage and basic efficiencies that drive luxury value consumer base can be considered as quality, uniqueness, usability, reliability, and durability of the product (Sheth et al. 1991). The excellent quality guarantees reliability and durability (Till et al. 2011).
These advantages focus on rational purpose, and consumers expect good enough performance in functional value in order to satisfy their needs (Wiedmann et al. 2009). Usability Value – generally, design of product or service is for performing a particular function. The core benefit of product usability is to achieve a goal, which is to satisfy consumer needs (Wiedmann et al. 2007). The idea of usability can be understood in terms of ease of use and can be defined by the physical-chemical-technical, concrete or abstract product/service dimensions (Park et al. 1986).
Quality Value – one of the reasons why consumers purchase luxury brands is the superior quality mirrored by the brand name (Gentry et al. 2001). Luxury consumption regularly highlights an importance of quality to reassure consumers’ perception and value of luxury (Roux 1995). 14 Uniqueness Value – refers to the degree of how consumers can identify the differences between one brand from its competitors (Wiedman et al. 2007) and how exclusivity and scarcity are perceived in terms of the product, this enhances the consumer’s desire or satisfaction for a brand (Pantzalis 1995).
The value of product is less if more consumers own it (Amaldoss and Jain 2005). Luxury brand is used to distinguish or classify consumers themselves from others (Vigneron and Johnson 2004). 2. 4. 3 Individual Value Individual’s luxury value perception presents customer‘s personal orientation towards luxury consumption and addresses personal matters such as materialism (Richins and Dawson 1992), hedonistic and self-identity value (Vigneron and Johnson 2004). Self Identity Value – self-identity refers to facet of self-individual in the way one perceived his own self (Jamal and Goode 2003).
In consumer’s selfconcept study, it is found that self-image or product-image congruity model has an impact on consumer purchasing behaviour (Sirgy 1982). Supported by Puntoni (2001) who study and present significant impact of self-congruity on luxury-brand purchase, luxury items are consumed in order to integrate their symbolic meaning into consumers own identity or use for develop consumers’ identity. Hedonic Value – emotional value is carried in products and service. It provides additional inherent enjoyment to functional utility (Westbrook and Oliver 1991).
Luxury consumption study shows that luxury products seem to offer subjective intangible benefits (Dubois and Laurent 1994). Moreover, the luxury concept is recognised as an association between emotional response and luxury consumption, for instance, sensory pleasure and gratification, aesthetic beauty, or excitement (Vigneron and Johnson 2004). Thus, hedonism presents subjective effectiveness and attractive properties obtained from consuming or purchasing luxury brands to stimulate feeling and affective states which received from personal rewards and fulfilment (Westbrook and Oliver 1991).
Luxury consumers may be motivated by desire for selfrewarding experiences (Tsai 2005). However, many consumers may not 15 necessarily be affluent; they just like to spend their increasing disposable income on hedonic goods (Silverstein and Fiske 2003, 2005). Materialistic Value – can be explained as an individual’s principal degree to which owning possessions play an important role in one’s life, if consumers are materialistic, they are more likely to acquire possessions (Belk 1985).
In addition to materialistic oriented, it is found that consumers strongly trust in external cues and seasoning those possessions that are consumed in public places (O’Cass and Muller 1999). This can be related to individualmaterialistic understanding that present signal or communication source of possessions can portray individual status and social position and impress others (Belk 1985). These characteristics can be used to classify materialistic people who enjoy their lifestyle with full of possessions (Schiffman and Kanuk 2006). . 4. 4 Social Value Luxury value perception in social dimension refers to people’s desire in possession luxury brand that may be regarded as group membership symbolic (Vigneron and Johnson 2004). Moreover, luxury brands may be used to demonstrate social status or to maintain professional appearance (Arghavan and Zaichkowsky 2000). This presents strong social function in luxury consumption, which is relevant to perceived advantage of individuals acquired by consuming products or services recognised within their own social groups.
For example, conspicuousness and prestige value might be developed when purchasing and consuming luxury brands (Vigneron and Johnson 1999, 2004). Conspicuousness Value – can be described as how reference groups influence luxury brands consumption (Mason 1981). These studies explore that reference group has a positive effect to susceptibility in conspicuousness of a product. For example, in public where people consume luxury goods, they are more likely to consume conspicuous goods publicly rather than consume luxury goods privately.
Conspicuous consumption still plays an important part in shaping preference in many product consumptions in public contexts (Vigneron and Johnson 2004). Luxury products are a good example 16 of branded products that are most likely to be purchased publicly to intentionally provoke reactions from relevant others (Schiffman and Kanuk 2006). Prestige Value – prestige is used to explain the term referring to the extreme end of the luxury brand category, which relates to interpersonal motives since consumers make purchase in order to adorn theirs’ ego (Liu et al. 012). A research demonstrates that in forming attitudes, people tend to conform to the majority opinion from their member groups (Festinger 1954). Hence, prestige brands may be used during weekday to present professional position while modest brand is used during weekend to fit with social standards of neighbourhood (Wiedmann et al. 2009). Frequently, as luxury products and brands contain prestigious value and social referencing, the symbolic sign of group membership comes from desire of people in possession luxury brands (Wiedmann et al. 009). Affluent lifestyle images influence an individual by the bandwagon effect, which conforms from non-affluent lifestyles (Dittmar 1994). Defining the meaning of luxury helps us to understand how luxury value is created and what the conditions to create luxury value are. The aforementioned academic studies present a combination of motives between non-personal-oriented perceptions and personal-oriented-perceptions. These factors will help analyse and give a clear framework to test perceived degree of luxury brand.
In order to reach our objectives of study in luxury vehicle brand stretching, factors will be tested to determine the most important factor that leads consumers to purchase luxury vehicle stretching products. Study findings can allow relevant brands to adjust to their stretching product strategy for maximum market efficiency. 17 2. 4 Chapter Summary This research uses luxury vehicle brand as a pilot study in brand stretching because the examples can be clearly seen in product stretching. For example, Ferrari is selling many stretching products such as clothes, watch, headphone, earphone and speaker docks (Ferrari 2012).
Many luxury vehicles brand such as Harley-Davidson and Porsche also launch their brand stretching products. The literature review in this chapter can be divided into 2 parts in relation to research objectives. The first part is branding study and the second part involves brand extension, brand stretching and luxury brand study. Branding study includes several factors such as ‘brand image and equity’ and ‘brand loyalty’. The literature in this part demonstrates brand value, which relates to equity in order to influence consumer purchase intention.
Moreover, brand loyalty also plays an important role to measure the value of brand equity and trust as a key driver for brand preference and re-purchase intention. This can be connected to brand equity and trust as a key contribution to both attitudinal and behavioural loyalty. In addition, the objective of discovering how brand image of original luxury vehicle brand has been transferred to new product after stretching can be achieved based on those aforementioned concepts. Another part of the literature review aims to reach the research objectives of ‘brand extension and stretching’ and ‘luxury brand’.
Theory of brand extension and stretching show critical concern in keep the brand fit and minimise the affect of distance between original brand and extended brand in intended market because the distance of stretching strongly correlates to reduction in original core brand image in prestige-oriented brands. Additionally, theoretical of luxury which provides the perceived value framework to understand how consumer perceived value of luxury will be used to link luxury vehicle brand stretching to find out the most important factor that influence consumer to purchase those stretching products as presented in the objectives. 8 Chapter 3: Methodology 3. 1 Research Philosophy Epistemology refers to the expression of opinions about knowledge and its interpretation. It is classified as being areal and tangible communication form rather than direct personal experience, known as softer form (Eldabi et al. 2002). Epistemology centres on the topic either knowledge is something learnable or something from individual experienced being appeared (Burrell and Morgan 1979). Research paradigm can be categorised into positivism and interpretivism and both of them are associated with qualitative and quantitative method (Saunders et al. 009 and Robson 2011). Both positivism and interpretivism are based on an assumption of a difference in natural knowledge and research methods (Eldabi et al. 2002). Positivist epistemology categorises a phenomenon of individual components in order to understand social setting whereas interpretivist epistemology attempts to understand individual’s opinion towards phenomenon (Cavaye 1996). Nevertheless, positivist research is chosen for this study. Table 3. 1: Research Paradigms Classification (Silverman 1998) 3. 1. Positivism Positivism approach enables a researcher to observe and measure the objectives, and it also concerns abstract concept, for instance, values or satisfaction (Cameron and Price 2009). Bryman and Bell (2011) provide that 19 positivism, as an epistemological position, supports the approaches to natural science application in the authenticity study. Cameron and Price (2009) agree that positivism helps researcher measure objectives, structure conceptual idea of people and predetermine the research outline.
Positivism is implicated in quantitative methods which data have been rectified and presented as statistics, figures and numbers by researcher. Also, positivism standpoint includes questionnaire and structured interviews. However, most positivism researchers are likely to simplify to allow implementation of methodological structures (Gill and Johnson 2002). Consistent with Blumberg et al. (2011), two assumptions are followed by a researcher: (1) The gathered objective facts and the social world can be quantified (2) The social world contains basic components that can be minimised.
The reason for following those two assumptions is that they are external and value free to conduct research. Different researchers may be involved in observing the same social phenomenon (Blumberg et al. 2011: 17). As a result, quantitative measurement can occur. 3. 1. 2 Interpretivism Accordingly to Saunders (2007), interpretivism is essential in helping researchers to apprehend differences in people, acting as social actors. Social actor means staging of human life, which they play a certain role, sometimes with or without direction. Social roles are explained in consent with giving meaning to the role that hey play and also explaining other roles using a set of meanings that relate to their own. The interpretive paradigm is linked to research in qualitative method, which attempts to decode, express and interpret to give explanation in terms of meaning (Maanen 1989). 20 3. 2 Research Perspective 3. 2. 1 Deductive Research Deductive theory has significant association with positivism (Lee 1991). The deductive theoretical indicates the greatest basic nature view with connection between research and theory (Bryman and Bell 2011). When deductive research has been conducted, the quantitative method is likely to be amassed (Saunders et al. 007). Deductive research is essential because researcher is able to operate the research design for testing the hypotheses with cautious measurement and complex statistics (Cameron and Price 2009: 75). This approach will assure researcher that the variables are executed precisely without interruption from any causes (Saunders et al. 2007). Figure 3. 1: The Process of Deduction (Bryman and Bell 2011: 11) 21 3. 2. 2 Inductive Research On the other hand, Bryman and Bell (2011) explain that deductive approach involves selecting exact observations to wider generalisations and theories.
Inductive research might be adopted when particular factor in the research is unlikely to be predicted with general theory or related theory does not exist, (Cameron and Price 2009). Inductive research involves using data collected from respondents to compare with a relevean literature review (Saunders et al. 2007). It should be mentioned that the specific concern is the context or a place that events happened when conducting inductive approach. Therefore, this research may be suitable for testing objective with small sample rather than large number of sample (Saunders et al. 2007). Table 3. : The differences between deductive and inductive approaches (Saunders et al. 2007) 22 3. 3 Research Approach Qualitative and quantitative are research techniques that help researcher collect data (Bradley 2010). Quantitative research involves statistical analysis, which presents numeric and statistic evident to test hypotheses or draw final analysis (Ticehurst and Veal 2000, Saunders et al. 2009). Questionnaire survey is a tool to collect data in qualitative research (Ticehurst and Veal 2000). The collected data is analysed and illustrated in graphs and statistics (Bradley 2010, Cameron and Price 2009).
On the other hand, data in qualitative research is collected by using focus group or in-depth interview and is analysed in non-numerical method (Bradley 2010, Cameron and Price 2009) 3. 3. 1 Qualitative Research Qualitative research is presented in non-numerical data structure (Cameron and Price 2009). This type of research requires small sample sizes; however, number of interviews, focus group and workshops depend on study objective together with budget, time, topic complexity and sample requirement (McGivern 2009). Due to time limitation, quantitative research will be conducted in this research. 3. 3. Quantitative Research Quantitative research will be used to collect data in this study. This research uses a huge population or sample in a well-managed way (McGivern 2009). Researcher chooses this research method because it provides many advantages in data collecting and analysis. For example, data is a representative of a large sample size, which allows researcher to cover a wider population when drawing conclusions (Cameron and Price 2009). Also, it should be mention that result from quantitative research is more convincible and more scientific from audience perspectives (Cameron and Price 2009).
Quantitative research data collection methods include survey and participant observation using questionnaire and diaries. The objectives of study, the topic and ability of researcher in approach the participants together with cost and 23 time calculating will determine data collection method (McGivern 2009). As questionnaire and data collected from quantitative methods can be analysed by using computer programs, it presents advantage in enhancing quality and saving time (McGivern 2009). 3. 4 Research Design and Research Methods 3. 4. Research Design Research design is a plan or structure for piloting a study. This is the crucial process for data collection in terms of research problem solving and structure term (Malhotra and Birks 2006). An appropriate research design and data collection tool will conduct this study, and it will be assessed in the most operative method. 3. 4. 2 Research Methods Primary Data Primary data is data collected from the primary experience or original information root (Collis and Hussy 2009). According to Saunders et al. (2007), primary data is new data collected precisely for particular purpose.
There are many methods in collecting primary data such as face-to-face communication, post, telephone, observation and the Internet (McGivern 2009). Nevertheless, online questionnaire survey will be applied in primary data collecting for this research. Questionnaires There are two types of the questionnaire administration: Self-administered and Interviewer-administered (Saunders et al. 2009). Interviewer-administered questionnaire involves recording answers from respondents and can be categorised into two types: telephone interview and face-to-face interview (Saunders et al. 2009).
Self-administered questionnaire can generally be completed by respondents and can be categorised into three types: firstly, postal questionnaire which is 24 sent and returned by post, secondly, hand-delivered questionnaire to each respondent directly, and lastly, internet and intranet-mediated questionnaire, which is electronic conducted via internet or intranet (Saunders et al. 2009). For this study, the researcher uses internet-mediated questionnaire. Also this study is considered to be a small-scale research, sample size from 30 to 250 is normally accepted (Denscombs 2007).
Thus, the questionnaire will be distributed to 110 respondents aged 20-35 mainly from the Coventry University students. The selected age group is classified into Generation Y who would normally have a free in spending mind (Horovitz 2002). In addition, Trendwatching (2009) notes that generation Y is a key driver in a luxury fashion business, presenting an increase in purchasing power. This is in line with Gardyn (2002) who states that Generation Y consumers have strong purchasing power and can make a decision in purchasing by themselves. These are main reasons that why such age group is chosen to participate in the survey.
It is also worth mentioned that researcher simplifies this questionnaire by avoiding technical terms and jargon. Secondary Data Secondary data or desk research is data that can be collected without leaving the desk (McGivern 2009). Consistent with Malhotra and Birks (2006), the secondary data assists the researcher to define research problem and an appropriate approach. This means the secondary data can be collected and analysed before collecting the primary data. Several secondary data sources have been collected and applied by researcher so as to reach the objectives.
The followings are secondary sources have been used in this research: Journals: Online databases provided by the Coventry University have been accessed for searching relevant journal and current study, for instance, Science Direct, SAGE Journals online, Business Source Complete (EBSCO) and Emerald Journals. 25 Textbooks: Textbooks are used to research for particular definitions, theories and so on so as to apply into current study. Websites: Credible and reliable websites have been used to obtain recent information about the trend and situation of luxury vehicle brands in the market.
Data Analysis This study applies quantitative research via online-based questionnaire through www. surveymonkey. com. A web link is sent to our possible respondents via social media such as Facebook and e-mail. The target respondents are 110 participants from the Coventry University student aged 20-35 who are familiar with luxury car brands. The data analysis and result will be presented in bar charts, tables and other appropriate formats. 3. 5 Ethical Considerations 3. 5. 1 Ethical Principles MgGivern (2006) defines ethics as moral principles, which are used for behaviour guideline.
This is in line with McDaniel and Gates (2007), whom explain that researcher should place an emphasis on ethical considerations in order to understand and respect the participants’ right. There are 4 main areas that researcher ought to consider presented as below (Diener and Crandall 1978): • Harm to participants: this includes harm to participants’ self esteem, stress, career harm, physical harm and so on. • Lack of information consent: for a good research, participants should be given information about study and then they can decide whether to participant or reject to do so. Invasion of privacy: participants should be treated delicately and they should be given an opportunity to reject to answer the questions if they do not feel comfortable to participate. 26 • Deception: researchers should not mislead their participants. Deception should be minimised, and its effects must be mitigate. In order to guarantee the ethical awareness of the researcher, this research is submitted to the Coventry University’s regulations for research ethical’s approval. Participants will be provided the participant information sheet and consent form for asking permission before conducting research. . 5. 2 Plagiarism Collis and Hussy (2009) define plagiarism as an action that one person copies other people’s work and identifies it as own original work. To avoid plagiarism, all sentences should be paraphrased and reference credits using Harvard Reference Style should be cited as required by the Coventry University. Moreover, according to the rules governing plagiarism, the researcher will upload a research proposal draft via the University’s plagiarism check programme before submitting the final research paper. 3. 6 Limitations of Research
To evaluate research’s accuracy and consistency, three most common criterion including reliability, validity and generalise ability should be considered in the study (Hair et al. 2007: 240). 3. 6. 1 Reliability Reliability is defined as a consistency level among multiple measurements of a variable evaluation (Hair et al. 2010). The research method is considered to be reliable if results of a study can be repeated with similar method (Golafshani 2003). Before start collecting data, researcher’s supervisor needs to approve and recheck the project to assure that all questions in the questionnaire are reliable. 27 3. . 2 Validity Validity is the range of measures or scale, which is presented by respondents in a concept (Hair et al. 2010). It links to the situation of whether a concept really measures that concept (Bryman and Bell 2011). Before distributing the actual study to particular group, data should be conducted as pilot test through interview and online questionnaire in order to increase the result validity (Hair et al. 2007). 3. 6. 3 Generalisability Researchers must assure that their findings can be generalised beyond the confines of the specific context in which the research was conducted (Bryman and Bell 2011).
Research quality leads the degree of generalisability. This means the higher research quality, the higher degree of generalisability. 28 Chapter 4: Findings and Analysis 4. 1 Introduction The result from the questionnaire survey will be discussed in this chapter. The most important perceived value factors and study of consumers’ perception towards brand image of luxury vehicle brand stretching product will be presented. The study uses quantitative research to examine 110 participants. Research is conducted in a specific group of the Coventry University student aged 20 to 35 year olds.
The data was collected and analysed through internet-mediated questionnaire (www. surveymonkey. com), and then illustrated by pie charts, tables and other appropriate charts. The questionnaire is allocated into three parts as follows: Section 1: General information Section 2: Factors encouraging respondent to purchase luxury vehicle brands stretching product Section 3: Perceived brand image of luxury vehicle brands stretching product towards original brand name 4. 2 Findings and Analysis 4. 2. 1 Section 1: General information This general information is collected from 110 respondents aged 20 to 35 years old.
Data illustrated in this part include demographic profile, key luxury product buyers, favourite luxury vehicle brands, selling notifications on luxury vehicle brand, frequencies in purchasing stretching product, luxury stretching brand-selling notification and how likely to purchase stretching products in the future. 29 Figure 4. 1: Respondent’s Demographic Profile This figure 4. 1 presents crossing data between gender and education level of the total of 44 male respondents and 66 female respondents. 6 male respondents and 24 female respondents completed bachelor’s degree. At the same time, 63 respondents, representing the largest group, completed master’s degree, with 24 male respondents and 39 female respondents. Lastly, 1 male participant and 3 female participants complete doctoral degree education level, presenting the smallest number. 30 Figure 4. 2: Key Luxury Product Buyers Family Spouse Yourself 3% 2% Colleague/ Friends Other 40% 53% 2% Figure 4. 2 demonstrated luxury product buyer for 110 respondents.
The most important purchasing factor (53 percent) is the respondents purchase the luxury product themselves, and followed by 40 percent of respondents who receive luxury product from their families. However, other groups who purchase luxury product for respondents include colleague, spouse and others share a small portion of 3, 2 and 2 percent respectively. 31 Figure 4. 3: Favourite Luxury Vehicle Brands The favourite luxury vehicle brand is reported on the Figure 4. 3. The most favourite brand is Porsche, which scores highest and is chosen by the total 53 respondents, and 34 of them are males.
Second most favourite brand is Ferrari, which follows Porsche by 10 respondents in total preference. Lamborghini scores in third place with 18 respondents behind Ferrari and is chosen by the same amount of male and female. About 23 respondents prefer other vehicle brands, including Mercedes and BMW. For the last three; Range Rover, Harley Davidson and Lotus are not significantly chosen by respondents, with 15, 9 and 4 respondents respectively. 32 Figure 4. 4: Selling Notifications on Luxury Vehicle Brand Yes No 19% 81% Figure 4. 5: Frequency in Purchasing Stretching Product
Always Usually Sometimes 0% 9% 23% Rarely Never 34% 34% 33 Figure 4. 6: Luxury Stretching Brand-selling Notification As presented in figure 4. 4, approximately 4 out of 5 respondents notice that luxury vehicle brands sell its stretching products. From figure 4. 5, it can be seen that 34 percent of respondents are ‘sometimes’ and ‘rarely’ purchase stretching product. 23 percent of respondents never purchase stretching products and just only 9 percent of respondents usually purchase stretching product. However, none of the respondents always purchases stretching products.
The figure 4. 6 presents crossing factors between figure 4. 4 and 4. 5. The pie chart shows different frequency in purchasing stretching products among groups of respondents who do and do not notice that luxury vehicle brands sell stretching products. From total 105 respondents who completed this question, 66 respondents notice about luxury vehicle brand stretching products and purchase stretching products in different frequencies. To explain, 8, 31 and 27 respondents who usually, sometimes and rarely purchase stretching products in respective order. 4 Regarding those 20 respondents who are not aware of luxury vehicle products stretching, they purchase the stretching product in different frequencies. To illustrate, 1, 5 and 9 respondents usually, sometimes and always purchase the stretching product respectively. As for 24 remaining respondents who have nerver bought stretching product will be further investigated in Figure 4. 7. Figure 4. 7: How likely to likely would you purchase stretching products in the future Very likely Quite likely Quite unlikely 3% 5% Not at all likely 36% 56%
For 24 respondents who never purchase luxury vehicle brand stretching products were asked how likely they would purchase brand stretching products. The result is shown in figure 4. 7 that only 3 percent of nonstretching product consumers are very likely to purchase stretching products in the future. On the contrary, the majority of respondents, about 56 percent, are quite likely to purchase and another 36 percent are not likely to become luxury vehicle stretching product’s consumer. 3 percent of respondents are unlikely to become a customer in the future. 35 4. 2. Section 2: Factors encouraging respondent to purchase luxury vehicle brands stretching product As table below present ranking of factors, encouraging consumer to purchase stretching products. Such factors include brand image, price, product function, product quality, social acceptance, emotional desire and word of mouth. Respondents were ranking number from 1-7, which starting from the most important factor to the least important factors. Table 4. 1: Ranking of important factors in purchasing stretching products: Brand image Ranking of Brand image First order Second order Third rder Fourth order Fifth order Sixth order Seventh order Rating average 3. 20 Number 31 17 13 14 14 6 10 % 29. 5 16. 2 12. 4 13. 3 13. 3 5. 7 9. 5 Based on observation of table 4. 1, brand image is presented the highest percentage, at 29. 5. As a result, it can be stated that brand image plays an important role encouraging respondents in stretching products purchasing decision. 36 Table 4. 2: Ranking of important factors in purchasing stretching products: Price Ranking of Price First order Second order Third order Fourth order Fifth order Sixth order Seventh order Rating average 3. 4 Number 10 14 27 12 18 11 13 % 9. 5 13. 3 25. 7 11. 4 17. 1 10. 5 12. 4 Based on observation of Table 4. 2, 25. 7 percent of respondents rank price as the third factor. It can be assumed that this factor is less important than brand image and product quality factors in encouraging individuals to purchase stretching products. Table 4. 3: Ranking of important factors in purchasing stretching products: Product function Ranking of Product fuction First order Second order Third order Fourth order Fifth order Sixth order Seventh order Rating average 3. 2 Number 14 21 16 13 22 8 11 % 13. 3 20. 0 15. 2 12. 4 21. 0 7. 6 10. 5 Based on observation of Table 4. 3, 21 percent of respondents consider stretching product’s functional before purchase. This is ranked fifth of all factors. 37 Table 4. 4: Ranking of important factors in purchasing stretching products: Product quality Ranking of Product quality First order Second order Third order Fourth order Fifth order Sixth order Seventh order Rating average 3. 06 Number 25 25 19 11 9 12 4 % 23. 8 23. 8 18. 1 10. 5 8. 6 11. 4 3. 8 Based on observation of Table 4. , the majority of respondents, with 23. 8 percent equally rank product quality factor both in first and second order. Thus, this shows that product quality is one of the most important factors, comparable to brand image in encouraging respondent’ purchasing decision. Table 4. 5: Ranking of important factor