2.1 Introduction
In this chapter, the current study addresses some conventional understanding of the significance of consumer based-brand equity on the perception of consumers on a brand within critical theoretical paradigms with the aim of contextualizing the research findings. The task herein has been achieved by covering the available literature. Thus, the study has extensively reviewed many secondary data, including those from non-governmental organizations (NGOs and private organizations), government websites, books, and various journals (both national and international). Tracing out the literature that is directly linked to the theme and topic of the research was relatively challenging; furthermore, the literature was limited in this respect. One conceivable justification for this is that the present analysis itself is unique. Reviewing the literature entailed writing, analyzing, and reading a synthesis of scholarly materials concerning the topic under investigation (Garrard, 2017).
2.2 Important factors of CBBE that impact consumer’s perception of the luxury car brands
Conferring to Christodoulides and De Chernatony (2010), the CBBE should be considered from a client psychology perspective where it is viewed as a differential outcome of brand understanding on the reaction of the users to the promotion of the brand. In this regard, the mentioned authors have conceptualized that the response of customers will be more or less favorable to a product’s marketing mix that they are familiar with compared to the one of identical yet unbranded merchandise. Christodoulides and De Chernatony (2010) have also found that a credible signal of a brand is an essential factor of CBBE since it generates consumer value through the following ways: creating favorable attribute perception, reducing information search costs, and reducing perceived risks. Arguably, these credible signals of a brand contain elements from the behaviors, knowledge, attitudes, and perceptions on the part of the clients that lead to increased utility; it also enables a brand to gain higher margins or volumes than it could without the brand name (Selase Asamoah, 2014).
In their survey, Bianchi et al. (2014) recognized brand loyalty as a critical feature of CBBE in the sense that it is regarded as an essential dynamic of enactment in the present day competitive atmosphere. Loyalty goes past recap acquisitions because it surmises to a commitment to a brand. However, it is the study by Nam et al. (2011), which established that brand loyalty needs to be confirmed through positive perception by the customers; consequently, the influence of brand equity on the pledge towards a brand is evaluated when consumers have direct involvement with the brands. Pike et al. (2010) also asserted that the principal element of brand equity is product devotion, which is viewed as the connection that a purchaser has to a brand; it is both attitudinal regarding repeat purchase, behavioral through word of mouth referrals, and intent to purchase. Gundala and Khawaja (2014) found that the distinctiveness of a brand plays a crucial role in its management. Thus, a strategy that organizations use to attract the target consumer is the brand’s unique features. Brand loyalty, reputation, and awareness are all essential and significant factors in measuring brand performance.
Figure 1: Full Mediation Model
Source: Nam et al. (2011).
Based on the figure above, two service quality dimensions, including staff behavior and physical quality are integrated to the consumer-based brand equity model. The point then is that brands which are successful are designed to satisfy their symbolic needs as well as functional needs (Nam et al., 2011). Furthermore, lifestyle-congruence, brand identification, and ideal self-congruence are also incorporated to capture symbolic consumptions based on the perception of the luxury car brands.
Bianchi et al. (2014) have further argued that brand salience is another essential factor of CBBE that impact consumer’s perception because it is the strength of awareness of a brand in the minds of the consumers when they consider a particular organization. The findings by Bianchi et al. (2014) add to the validity of the works by Shajahan (2004) that brand salience is linked to how quickly the consumers would recall a brand under various circumstances. In this respect, a brand that is highly salient would have breadth as well depth of brand awareness so that it could be recalled easily in various use and purchase circumstances. Furthermore, the salience equity is emphasized on cognitive thinking in the minds of the clients when they process the information of a brand (Robinson, 2015). Conversely, in their study, Ozuem and Azemi (2017) established that brand meaning is also an essential factor of CBBE that impact consumer’s perception because it involves the standpoint of the image that the consumers have towards a brand. In another study, De Chernatony (2010) argued that the salience of a brand is reflected through brand awareness, and it facilitates the capabilities of clients to categorize the brand with particular categories of a product. The concepts of brand awareness can be measured through the following ways: brand knowledge, brand dominance, brand recall, and brand recognition De Chernatony (2010).
According to the study by Kuiper and Smit (2014), there are four critical factors of CBBE that impact consumer’s perception of a brand. The first one is brand resonance, and it involves the association between the brand and consumer and the link between other users of the brand. In essence, this relationship governs how the customers identify with the brand and the manner in which they are loyal to a brand. The second one is a brand response, and it is based on feedback from the clients. A brand requires a response, mainly based on the evaluations and reactions from the users. The third one is a brand promise, and it has two parts, including brand imaging and market performance. The latter is concerned with the customers’ functional demands while the former is more abstract and is more concerned with the social and psychological needs of the consumer. The last one is brand identity, and it is concerned with how individuals consider merchandise in a favorable light (Kuiper and Smit, 2014).
As described by Romaniuk and Nenycz-Thiel (2013), CBBE is multifaceted, and it entails dimensions, such as brand awareness; it also comprises attitudes towards perceived quality ratings, brand personality traits, and the brand. Nonetheless, Romaniuk and Nenycz-Thiel (2013), also established that a crucial component of CBBE is the relationship that consumers hold concerning a brand in their memory. The stated relations are the features that have contacts to the name of a brand in the thoughts of the clientele. Some examples of the brand association include the following ones: consumption and purchase situations, benefits, and functional qualities. Chatzipanagiotou et al. (2016) also suggested that the favorable brand associations of the consumers and the secure connection with the brand are essential for forecasting high CBBE when combined peripherally with either brand awareness or brand reputation. Keller (2010) has demonstrated that channels can play a significant role in strengthening or formation of the brand association. Thus, the online channels would present much detailed information concerning a product, which will assist to strengthen or build performance association.
2.3 Effects on how to improve consumers purchase making process
In their study, Wang and Tsai (2014) determined the dimensions of demographic variables, buy intention, perceived value, perceived risk, perceived quality, and brand image as regards to customer buying process and resolved that there is a substantial relationship between purchase intention, perceived value, and quality, as well as brand image. The study by Wang and Tsai (2014) is relevant based on how to improve consumers purchase making process because it has shown that the image of a brand indeed increases the purchase intention of consumers and that the purchase intention is influenced primarily by the perceived quality and by the risk observed. However, an area of bias in this investigation is that it evaluates only a one-product classification (awarded fund), hypothetically limiting generalizability to other parts. However, it was the research by Arutselvi (2012), which identified psychological aspects that partly determine the general behavior of people as consumers include the following ones: the impact of attitude, perception, learning, motivation, and personality and self-concept. Nonetheless, an area of bias in this study is that it collected data only from married women both homemakers and working wives while excluding the ones that are unmarried.
In a different research, Huy Tuu and Ottar Olsen (2012) determined that contentment is the same between the contributors in high-versus-low knowledge groups and high-versus-low-risk groups. Nevertheless, the stated two groups report a higher procurement purpose, and accordingly, they are factors that need to be reflected to develop buyers’ procurement making process. However, the investigation by Godey et al. (2012) was centered on gaining knowledge on the factors that impact the decision to buy luxury merchandise. Primarily, the research evaluated the criteria governing the choice to purchase luxury products. Thus, the author established that improving consumer purchase making process will require companies to focus on the following criteria: guarantee, brand, and design.
In their study, Baek et al. (2010) concluded that the credibility of a brand positively impacts the perceived quality and information cost saved; nevertheless, it adversely affects the brand purchase purpose as well as the observed risk. Farjam and Hongyi (2015) also argued that improving customer purchase making process can be achieved by ensuring that brands have high levels of equity for the reason that such products are linked to outstanding performance, such as competitive cost structures, inelastic price sensitivity, sustained price premiums.
An investigation by Hung et al. (2011) established that improving social context is essential in consumer purchase making process because it promotes the on purchase for luxury brands. The research by Hung et al. (2011) further proof that success and physical vanity have a positive impact on the aim to acquire the luxury products while only the vanity for accomplishment had a restraining effect on insight. Conversely, it is the research by Tynan et al. (2010), which found that the experience of co-creating a luxury brand requires complex interaction and dialogue between the customers, employees, brand owner, as well as other social groups, such as the community of the customer brand.
2.4 The impact of consumer acquisition, retention and profit margin due to CBBE
CBBE also promotes profit margin as concluded by Lieven (2017) that the model leads to brand equity, which contributes to increased stock-market value, profits, and sales. In this respect, Stahl et al. (2012) evaluated the relationship between profit margin, retention, and customer acquisition, which are essential dynamics customer lifetime value (CLV). Concerning profit margin, Stahl et al. (2012) consequently recognized that the clienteles who find a brand attractive would be eager to pay a premium for it; accordingly, the profit margin of a brand will increase as it becomes more strongly differentiated. Therefore, the changes in differentiation are positively linked to modifications in the profit margins, although it is negatively connected to the rates of retention and acquisition. Nonetheless, this study is biased in the sense that the data used does not reflect the multiple car ownership within a household (Stahl et al., 2012). Conversely, the study by Johansson et al. (2012) revealed that high brand equity assists an organization to reduce share price volatility and stabilize financial returns.
Central to the study by Stahl et al. (2012) there is a positive relationship between esteem and significance regarding client acquisition. Earlier research by Schivinski and Dąbrowski (2013) found that consumer acquisition has an impact on a brand due to CBBE because it enhances loyalty toward an organization and their products; it also helps to generate stronger consumer preferences, active communication power, and protection against competitors, brand-extension opportunities, and higher margins. Schivinski and Dąbrowski (2013) further established that the impact of consumer acquisition due to CBBE is that it directly affects the subjective judgment of the consumers concerning a brand by increasing the sustainability of competitive advantage and cash-flow; increase the value of a product, and making them willing to pay premium prices. In their research, Çifci et al. (2016) found that CBBE is critical for gaining competitive advantage, assessing brand awareness, differentiating brands, and driving customer equity; consequently, this impacts consumer acquisition in the sense that it leads to the attainment of strong brand equity since the customers recognize the brand, have brand loyalty, and favorable brand identification.
According to Stahl et al. (2012), knowledge and relevance are highly correlated with consumer retention. The authors established that concerning retention, the current clients have adapted to a brand, which implies that they have learned to value its attributes. Furthermore, based on consumer retention, the users will be more confident in their judgment concerning merchandise, resulting in it being more attractive when considering the variance and mean of alternatives in future choice decisions. Thus, the brands that fulfill the core needs of the clients tend to be considered for purchase; as a result, they generate higher rates of retention as well as an increased willingness for purchase. However, it is the study by Staudt et al. (2014) that established that CBBE affects customer retention because the model helps in building strong brands, which ultimately forms a lucrative set of loyal clients towards their favorite brand. The authors have further argued that a brand signal that is credible can foster perceived customer value by creating favorable attitudes as well as reducing information search cost and perceived risk.
2.5 Variance of Consumer Perception of CBBE of the Luxury Car Brands by Gender
The study by Shende (2014) found that women are an influential group due to the increase in their number as car owners, using the vehicles for their family, personnel, and office work; this calls for separate emphasis by car marketers and manufacturers to focus their strategic efforts in this direction. However, it the research by Avery (2012), which showed that through the proclamation of gender stereotype, the owners of Porsche stratify themselves along gender lines and formulate an in-group that is sharply described by masculinity as well as an out-group that is characterized by femininity. The SUV owners, in this regard, have resorted to hyper-masculine behaviors to combat exclusion due to the creation of social barriers that limit the access to the meaning of Porsche to those who gain masculine principles. According to Langlois et al. (2012), contrary to popular belief, the women in the Middle East do not play a passive role as far as significant purchases are concerned; arguably, the females in this region have a great deal of buying power. More so, these women are educated; for example, in Saudi Arabia, the Universities produce more females than the male graduate each year.
In another study, Lieven et al., (2014) argued that the relationship between brand equity and brand gender encompasses the inclusion of the following brand personality measures: ruggedness, competence, sophistication, excitement, and sincerity. In this respect, the mentioned authors have further stated that consideration of brand gender is critical for the reason that it has a considerable impact to brand equity contribution. More so, Lieven et al. (2014) support that brand gender is a crucial yet significant predictor of brand equity. In this respect, customers positively relate to the brands that provide positive as well as unique products; unique, reliable, and favorable brand association lead to strong brand equity. Thus, the strong brand equity ratings achieved through masculine and feminine brands (products with strong positioning based on brand gender) tend to be centered on favorable and robust associations. Since feminine and masculine brands are categorized by the dominance of one of the two gender aspects (for example, feminine brand are high in femininity, but low in masculinity, and vice versa) their positioning in the brand gender space is categorized with a high degree of femininity, it is easily recognizable, and clear. Central to the analysis by Kumar (2013), the satisfaction rating in the automotive industry tends to be high for the females than the males. Furthermore, the association between repurchase behavior and satisfaction with vehicles is stronger for women compared to the men. Both males and females preferred the most to acquire information concerning luxury car through colleagues and friends.
Sandhu (2016) examined the phenomenological effect of gender cues and concluded that gendered products selectively target a single gender by excluding the other. However, this study is biased in the sense that it has considered automobile to be a male-gendered product (Sandhu, 2016). In a recent analysis, Veg-Sala and Roux (2017) used a structural semiotic to describe brand narratives and their level of openness with the aim of assessing the potential for cross-gender extension for luxury brands. Consequently, Veg-Sala and Roux (2017) found that a brand will extend more easily from one market to another when they are anchored in an open determination contract whereby both men and women desire its value.
2.6 Among all dimension of CBBE which one happens to have the minimum brand equity ratings for the luxury car brands?
In their research Adetunji et al. (2017) argued that the factors that are perceived to be the most essential for consumers are referred to as the dimensions of CBBE of automotive products. The aspects that the authors have used to measure automotive brands include the following ones: brand leadership, brand awareness, brand image, brand loyalty, perceived quality, and brand awareness. More so, Adetunji et al. (2017) adopted brand preference and purchase intention as the dimension of consumer response because both are the most explanatory dynamics of customer responses to strong brand equity. In this respect, Gancarz (2003) argued that brand equity functions at the micro level; every client has their rating for the brand equity and that such evaluation will be different almost day to day. Thus, for the CBBE dimensions are to function at any level, they need to work at the Micro-level by evaluating the brand equity of every customer. Furthermore, androgynous and undifferentiated brands are expected to be associated with lower brand equity ratings since they are seen to be less appealing (Lieven et al., 2014).
2.7 Does CBBE differ between the luxury car brands concerning each attribute of brand awareness, brand association, brand image, perceived quality and brand loyalty?
Arguably, CBBE differs the luxury car brands concerning the various attributes associated with it. The study by Buil et al. (2013) concluded that increasing brand awareness is the first step to building brand equity; customers must in the first place be aware of a product to have a set of brand association eventually. Consequently, brand awareness impacts the strength and formation of brand associations, such as perceived quality. The point then is that brand awareness is essential as an antecedent of perceived quality and brand association. In this regard, Buil et al. (2013) further argued that organizations could create higher positive perceptions and brand awareness of their brands by using creative, different, and original advertising strategies. In another investigation, Huang and Sarigöllü (2014) established that brand awareness is essential because it precedes brand equity in the sense that the name of the brand offers the memory nodes in the minds of the clients. The customers, in turn, connect the brand known to the brand name, which culminates in brand equity.
Huang and Sarigöllü (2014) further argued that the brand awareness is likely to increase the market performance of a brand because the consumers may use it as a purchase decision heuristic, which implies that a brand that is known as a much better chance of being selected over the unknown one. According to Sasmita and Mohd Suki (2015) due to brand awareness, the consumers can categorize a particular product or brand in comparison to its rivals and know its characteristics as well as how it looks. Conversely, concerning brand awareness, the research by Steurenthaler (2009) found that brand awareness alone is enough to generate a response from the consumers when the clients are willing to base their choice on familiarity. Brand awareness consists of two aspects; first, it entails brand recall implies that a client can recognize a brand when considering a unique product category, such as when looking for a safety vehicle. Second, is brand recognition whereby consumers can correctly categorize a brand as having heard or seen it (Steurenthaler, 2009). According to Farjam and Hongyi (2015), brand awareness has different level; it can offer the brand with a signal of commitment and substance as well as a sense of familiarity at the recognition level; it further impacts choice by influencing what brands get selected and considered at the recall level. Awareness plays a crucial role in the brand equity model because it leads to a high level of purchase, primarily because the users tend to purchase those brands that they are familiar with; thus, enhancing the sales and profitability of a firm (Farjam and Hongyi, 2015).
Considering the figure two below CBBE brand attribute, brand association differs from brand awareness in various ways. For example, in their analysis, Sasmita and Mohd Suki (2015) found that the brand association is linked to information on what is in the mind of the clients concerning the brand, either negative or positive, connected to the brain memory node. Furthermore, the concept acts as a data collecting tool to execute brand extension as well as brand differentiation. Accordingly, any information based on brand association is linked to the name of the brand in customer recall, and reflect the image of the brand. The point then is that for a product, the higher the brand association, the more the consumers will remember it and be loyal towards it. Furthermore, it can be argued that brand association has an influence that is positive towards brand equity. In this respect, Steurenthaler (2009) also established that brand association is a crucial aspect that needs to be actively managed; consequently, the first way that brand awareness impacts the decision-making of the consumers is by influencing the brand association that makes up the brand image. A positive brand image is generated by marketing programs that connect a unique, favorable, and strong association to the brand in memory. The mentioned three dynamics provide the key to creating brand equity whereby it does not matter how appropriate a brand association is except if it is adequately strong that consumers link it to the brand and recall it (Steurenthaler, 2009).
Figure 2: Luming Wang and Adam Finn CBBE Model
Source: Farjam and Hongyi (2015)
Brand image is also an attribute of CBBE that differs between the luxury brands as compared to brand association and awareness. For instance, Han et al. (2010) examined the relationship between brand prominence and price for the luxury car brands. The authors further replicated their findings by assessing the size of the Mercedes emblem on available cars as well as sport-utility vehicles. Han et al. (2010) found that the symbolic meaning that clients develop from a particular brand is often centered on the association between a brand and its users whereby such consumers are influenced by their group, those whom they avoid being associated with and those they aspire to resemble. The point then is that using a brand is integral to the brand image and it assists in describing why customers shy aware from specific brands and are attracted to others.
In another study, Homer (2008) appraised the relationship between observed superiority and vision, with a specific emphasis on products plagued with undesirable impressions, including where the insight of the users on product qualities conflict with its seeming image. Homer (2008) has established that just like the brand image, perceived quality has a powerful impact on the preference of a brand. Concerning brand loyalty, Yoo and Park (2016) found that brand loyalty offers few reasons for clients to engage in an extended search for information among alternatives. According to Sahin et al. (2011), the increases in satisfaction cause an increase in brand equity, which implies that happiness is a brand loyalty antecedent. The aspect in question is regarded as a source of brand loyalty due to various reasons. For example, the consumer-brand association is essential in establishing brand loyalty, and brand experiences lead to commitment to a product, which, in turn, results in increased profitability and active referrals of the brand. Sahin et al. (2011) have also shown that brand trust has a considerable impact on brand loyalty. The reason therein is that trust generates exchange association between the consumers and an organization. For this reason, allegiance underlies the ongoing process of maintaining and continuing an essential and valued association that has been created by trust.
2.8 Describe the factors influencing consumer perceptions of luxury car brands?
The study by Tynan et al. (2010) found that consumers identified numerous categories of value that they sought in luxury goods and outlined the manner in which the brand delivered profit. In this respect, the consumers consider money no object based on their status as ultra-high or high net worth persons. The point then is that concerning the purchase of luxury goods, money is perceived to be a necessary condition but not a sufficient one. The experience of the overall luxury brand provides a crucial of enhancing the consumer perception of luxury brands in categories such as exclusivity, authenticity, uniqueness, and personal identity. In another study, Byun and DeVaney (2006) resolved that some of the aspects that impact the insight of users on luxury car brands consist of the following features: durability, comfort, reliability, safety, and performance. In addition to the stated technical components, the price, previous experience, consumer loyalty, brand name, and country of origin of the vehicle affect the value perception of the consumers. However, this study seems to be biased in the sense that the definition on retail price was based on a somewhat controversial manner and there is a need for an accepted definition of a prestigious vehicle (Byun and DeVaney, 2006).
An earlier study by Choo and Mokhtarian (2004) found that pro-high density and travel dislike are two significant travel attitude factors. The individuals who have a stronger dislike for travel tend to purchase luxury cars may be to improve the unpleasant of the trip. Conversely, the pro-high density attitude factor has a positive sign both for expensive vehicles (SUVs and luxury cars) and for smaller cars (mid-sized, compact, and small cars), with the high degree transpiring for the second category. The frustrated lifestyle factor, not surprisingly, has a negative sign for SUVs and luxury cars, although not driving a car that is expensive is more likely a pointer of being frustrated for other reasons than a direct result of being frustrated. However, this study is seen to be biased because the obtained data did not have comprehensive information on all cars in a household, including their history of acquisition. The investigation by Hudders et al. (2013) has shown that the factors influencing consumer perception of luxury car brands include the following ones: aesthetics, excellent quality, premium price, scarcity, uniqueness, and exclusivity. More so, this study seems to be biased in the sense that it did not make a distinction between various product classifications when measuring the characteristics of luxuries (Hudders et al., 2013).
Figure 3: Integrated Brand Equity Model
Source: Farjam and Hongyi (2015)
Furthermore, Baltas and Saridakis (2009) found that despite the performance-related characteristics (for example, maximum speed, horsepower, and engine capacity), the features linked luxury and comfort (for instance, alloy wheels, automatic air conditioning, and leather interior) also have significant and positive effects. Additionally, the two safety features, including electronic safety systems and airbags, have highly substantial positive coefficients. Consequently, it can be suggested that the luxury car buyers are more concerned with the design and superb quality than price (Baltas and Saridakis, 2009).
2.9 CBBE in UAE and Middle East
Joghee and Dube (2016) found that to promote the purchase of vehicles in UAE; an organization can position a strong brand name in the minds of the consumers by improving luxury, service facility, and features. The mentioned authors further established that the UAE has turned out to be one of the favorite markets for automobile organizations globally, mainly because when compared to Europe and North America, the Middle East has been one of the most robust regional markets for car manufacturers. Joghee and Dube (2016) also showed that with more than 25 distributors of different brands obtainable in the bazaar, the automotive industry in UAE is highly competitive. Thus, the market share maintenance and growth in the automobile industry in UAE relies primarily on the manner in which an organization positions itself on those concepts that are most crucial to the users.
Central to the study by Owais et al. (2015), in the UAE, the automotive sector will remain to be the fastest growing market for luxury brands globally, and the industry has received a boost after winning the bid for Expo2020. Furthermore, in the UAE, the automotive area has already experienced considerable progress in sales; consequently, the automotive market in the kingdom has remained to be the most robust market for most of the automobile organizations compared to other markets in the Middle East. According to Langlois et al. (2012), when compared to other Islamic nations, the UAE is perceived to have a well-educated knowledge of customer goods, including luxury cars. In this respect, the growing numbers of consumers who are young as well as educated have a high disposable income, and they are always ready to form brand loyalties. Langlois et al. (2012) have further established that the UAE is the most attractive market for luxury car brands due to the country’s combination of deregulation, demographics, and prosperity.
Figure 4: Components Influencing Luxury Car Brands in UAE
Source: Owais et al. (2015)
According to Anon (2013), the value of the luxury car market in UAE is strong as evident from its marked growth; for instance, the BMW Group Middle East announced sales rise of 13% in the first half of 2011. Conversely, based on figure four above, Kalebe et al. (2015) have argued that the UAE has a substantial population that has a high disposable income to purchase luxury vehicles; the majority of luxury ca
