MBA GRADUATE DISSERTATION
A quantitative analysis of Consumer Behaviour in relation to
Electronic Cars resulting in a new Green Marketing approach for
the German car industry
Dublin Business School
MBA Programme
January Intake 2013
Supervisor: David Hurley
Attached by:
Julia Dieterich
Student Number: 1779797
Date of attachement: 23th May 2014
2
Declaration
I declare that the work described in this dissertation is, except where otherwise stated, entirely my own
work and has not been submitted as any type of exercise for a degree at this or any other
college/university.
Signed :
Julia Dieterich
23th May 2014
!
3
Table of contents
Table
of
contents
……………………………………………………………………………………………………………………………..
3
List
of
Figures
…………………………………………………………………………………………………………………………………..
6
Acknowledgements
…………………………………………………………………………………………………………………………
8
Abstract
…………………………………………………………………………………………………………………………………………….
9
1.
Justification
of
the
Dissertation
Topic
…………………………………………………………………………………….
10
1.1
Academic
Justification
…………………………………………………………………………………………………………………..
10
1.2
Industrial
Justification
…………………………………………………………………………………………………………………..
11
1.3
Personal
Justification
…………………………………………………………………………………………………………………….
12
2.
Literature
Review
………………………………………………………………………………………………………………………
13
2.1
Introduction
……………………………………………………………………………………………………………………………………….
13
2.2
Academic
Review
……………………………………………………………………………………………………………………………….
13
2.2.1
Consumer
Behaviour
in
the
German
E-‐car
industry
……………………………………………………………………………..
13
2.2.1.1
Role
of
Marketing
Communication
in
Consumer
Behaviour
Theory
……………………………………………………………
13
2.2.1.2
The
Hierarchy
of
Effects
model
…………………………………………………………………………………………………………………………….
13
2.2.1.3
Consumer
Proposition
Acquisition
Process
Model
…………………………………………………………………………………………..
14
2.2.1.4
Influence
factors
on
the
E-‐car
Purchasing
Decision
Process
………………………………………………………………………….
15
2.2.1.4.1
Consumer
Opinion
leads
to
Consumer
Attitude
……………………………………………………………………………………….
16
2.2.1.4.2
Rational
and
emotional
driven
Purchasing
Process
of
an
E-‐car
……………………………………………………………
16
2.2.2
Branding
Strategy
in
the
German
E-‐car
industry
…………………………………………………………………………………..
17
2.2.2.1
Definition
of
a
Brand
……………………………………………………………………………………………………………………………………………….
17
2.2.2.2
Consumer-‐based
perspective
on
Brand
Equity
…………………………………………………………………………………………………
17
2.2.2.2.1
Brand
Perception
…………………………………………………………………………………………………………………………………………….
18
2.2.2.2.2
Brand
Image
……………………………………………………………………………………………………………………………………………………..
19
2.2.2.3
The
ValueDrivers
model
…………………………………………………………………………………………………………………………………………
19
2.2.3
A
Green
Branding
approach
in
relation
to
the
German
E-‐car
industry
…………………………………………….
21
2.2.3.1
Definition
of
Green
Branding
…………………………………………………………………………………………………………………………………
21
2.2.3.2
Danger
of
Green
Washing
………………………………………………………………………………………………………………………………………
21
2.2.3.3
Marketing
Communications
of
a
Green
Brand
…………………………………………………………………………………………………..
22
2.2.3.4
Green
Brand
building
of
German
E-‐car
producers
……………………………………………………………………………………………
22
2.3
Contextual
Review
…………………………………………………………………………………………………………………………….
23
2.3.1
German
E-‐car
industry
…………………………………………………………………………………………………………………………………
23
2.3.1.1
Evolution
and
Future
Outlook
of
the
German
E-‐car
industry
………………………………………………………………………..
23
2.3.1.2
Reasons
for
the
actual
low
Consumer
Demand
of
E-‐cars
in
Germany
…………………………………………………………
24
2.3.2
E-‐car
Brand
Strategy
of
BMW
…………………………………………………………………………………………………………………….
25
2.3.2.1
Brand
Strategy
of
BMW
………………………………………………………………………………………………………………………………………….
25
2.3.2.2
Goal
of
the
Brand
Strategy
of
the
BMW
Group
………………………………………………………………………………………………….
25
2.3.2.3
Communicated
Brand
Image
in
the
Marketing
Campaign
of
the
brand
BMWi
………………………………………….
26
2.4
Conclusion
………………………………………………………………………………………………………………………………………….
26
3.
Research
Methodology
and
Methods
……………………………………………………………………………………..
27
3.1
Introduction
……………………………………………………………………………………………………………………………………….
27
3.2
Overall
Quantitative
Research
Objectives
……………………………………………………………………………………..
27
3.3
Positivism
…………………………………………………………………………………………………………………………………………..
27
3.4
Deductive
Method
……………………………………………………………………………………………………………………………..
28
3.5
Hypotheses
…………………………………………………………………………………………………………………………………………
28
3.6
Survey
………………………………………………………………………………………………………………………………………………….
30
3.7
Non-‐Probability
Sampling
………………………………………………………………………………………………………………..
30
4
3.8
Quota
Sampling
………………………………………………………………………………………………………………………………….
31
3.9
Sample
and
Quota
groups
…………………………………………………………………………………………………………………
31
3.9
Quantitative
data
collection
and
sampling
tool
…………………………………………………………………………….
32
3.10
Data
Analysing
…………………………………………………………………………………………………………………………………
32
3.11
Methodology
Plan
……………………………………………………………………………………………………………………………
32
3.11.1
Limitations
……………………………………………………………………………………………………………………………………………………
32
3.11.2
Ethical
Implications
……………………………………………………………………………………………………………………………………
33
3.11.3
Time
Allocation
……………………………………………………………………………………………………………………………………………
34
3.12
Conclusion
………………………………………………………………………………………………………………………………………..
34
4.
Data
Analysis
………………………………………………………………………………………………………………………………
35
4.1
Introduction
……………………………………………………………………………………………………………………………………….
35
4.2
Data
Analysis
of
the
Sample
……………………………………………………………………………………………………………..
35
4.3
Data
Analysis
for
Hypothesis
1
………………………………………………………………………………………………………..
39
4.3.1
Product
Information
……………………………………………………………………………………………………………………………………..
39
4.3.2
Brand
Personality
………………………………………………………………………………………………………………………………………….
43
4.3.3
Product
Associations
…………………………………………………………………………………………………………………………………….
45
4.3
Data
Analysis
for
Hypothesis
2
………………………………………………………………………………………………………..
50
4.4
Data
Analysis
for
Hypothesis
3
………………………………………………………………………………………………………..
54
4.5
Data
analysis
for
Hypothesis
4
…………………………………………………………………………………………………………
57
4.6
Recommendations
…………………………………………………………………………………………………………………………….
62
4.6.1
Future
Academic
Study
………………………………………………………………………………………………………………………………..
62
4.6.2
Recommendations
for
the
Industry
…………………………………………………………………………………………………………..
64
4.6.2.1
Recommendations
for
the
Consumer
Behaviour
………………………………………………………………………………………………
64
4.6.2.2
Recommendations
for
Hypothesis
1
……………………………………………………………………………………………………………………
65
4.6.2.3
Recommendations
for
Hypothesis
2
……………………………………………………………………………………………………………………
65
4.6.2.4
Recommendations
for
Hypothesis
3
……………………………………………………………………………………………………………………
66
4.6.2.5
Recommendations
for
Hypothesis
4
……………………………………………………………………………………………………………………
66
4.7
Conclusion
………………………………………………………………………………………………………………………………………….
66
5.
Overall
Conclusion
…………………………………………………………………………………………………………………….
67
6.
Self
Reflection
on
Own
Learning
and
Performance
………………………………………………………………
68
6.1.
Introduction
………………………………………………………………………………………………………………………………………
68
6.2.
Learning
Style
Theories
…………………………………………………………………………………………………………………..
68
6.3.
Personal
Achievements
……………………………………………………………………………………………………………………
70
6.4.
Problems
encountered
…………………………………………………………………………………………………………………….
71
6.6.
Action
plan
for
a
life
long
Learning
Process
………………………………………………………………………………….
71
6.7.
Conclusion
…………………………………………………………………………………………………………………………………………
72
7.
Appendices
…………………………………………………………………………………………………………………………………
73
Appendix
A:
The
BMW
overall
corporate
strategy
‘Number
One’
…………………………………………..
73
Appendix
B:
Questionnaire
…………………………………………………………………………………………………………..
74
Appendix
D:
EU
Data
Protection
Legislation
……………………………………………………………………………..
81
Appendix
E:
BMWi3
Marketing
campaign
in
Germany
…………………………………………………………….
81
Appendix
F:
Brand
portfolio
of
BMW
………………………………………………………………………………………….
82
Appendix
G:
Reasons
for
the
high
price
of
E-‐cars
……………………………………………………………………..
82
8.
Bibliography
……………………………………………………………………………………………………………………………….
84
5
List of Abbreviations
%
Per cent
BMW
Bayerische Motoren Werke
BMWi
E-car series of BMW
BMWi3
E-car of BMW
BMWi8
Sports E-car of BMW
bn
Billion
CO2
Carbon dioxide
E-car
Electronic car
eco
ecological
EU
European Union
EV
electronic vehicle
LOHAS
Lifestyle of Health and Sustainability
mil
Millions
R&D
Research and Development
6
List of Figures
Figure 1: Different Stages of the Dissertation Process
………………………………………………………………….. 11
Figure 2: Hierarchy of Effects Models ……………………………………………………………………………………….. 14
Figure 3: Interpretation of the Hierarchy of Effects model and the Consumer Proposition Acquisition
Process ……………………………………………………………………………………………………………………………. 15
Figure 4: Aaker’s Brand Equity Model ………………………………………………………………………………………. 18
Figure 5: Managing Brand Equity ……………………………………………………………………………………………… 19
Figure 6: The ValueDrivers model …………………………………………………………………………………………….. 20
Figure 7: Evolution of Demand of E-cars …………………………………………………………………………………… 23
Source: Prof. Dr Ing. Spath et al., 2012.
……………………………………………………………………………………… 23
Figure 8: Development of Demand of E-cars till 2020 …………………………………………………………………. 24
Figure 9: Gender of the Sample
…………………………………………………………………………………………………. 35
Figure 10: Age of the Sample
……………………………………………………………………………………………………. 36
Figure 11: Education Level of the Sample ………………………………………………………………………………….. 36
Figure 12: Net Income of the Sample
…………………………………………………………………………………………. 37
Figure 13: Present Demand of E-cars
…………………………………………………………………………………………. 38
Figure 14: Future Demand of E-cars ………………………………………………………………………………………….. 38
Figure 15: Reasons for not buying an E-car ………………………………………………………………………………… 39
Figure 16: Estimated costs of the BMWi3 ………………………………………………………………………………….. 40
Figure 17: Estimated charging time of the BMWi3 ……………………………………………………………………… 41
Figure 18: Estimated reach of the BMWi3
………………………………………………………………………………….. 42
Figure 19: Estimated acceleration of the BMWi3 in 3.7 seconds …………………………………………………… 43
Figure 20: Associated Product Attributes with the BMWi3
…………………………………………………………… 44
Figure 21: Associated positive Product Attributes with the BMWi3 ………………………………………………. 45
Figure 22: Associated negative Product Attributes with the BMWi3 ……………………………………………… 45
Figure 23: Associated Attributes considering the BMWi3 as a Status Symbol ………………………………… 46
Figure 24: Associated Lifestyle with the BMWi3
………………………………………………………………………… 47
Figure 25: Associated Gender with the BMWi3 ………………………………………………………………………….. 47
Figure 26: Associated Consumer Age with the BMWi3 ……………………………………………………………….. 48
Figure 27: Associated Characteristics considering the BMWi3 as a Person
…………………………………….. 49
Figure 28: Perceived added value of the BMWi3 in total ……………………………………………………………… 52
Figure 29: Perceived added value of the BMWi3, which is not important ………………………………………. 52
Figure 30: Perceived added value of the BMWi3, which is important ……………………………………………. 53
Figure 31: Perceived added value of the BMWi3, which is very important …………………………………….. 53
Figure 32: Perceived added value of the BMWi3, which is indispensable ………………………………………. 54
Figure 33: Trusting the car manufacturer BMW ………………………………………………………………………….. 55
Figure 34: Believe in Honesty of the BMW
………………………………………………………………………………… 55
Figure 35: Understanding the Marketing Message of the BMW ……………………………………………………. 56
Figure 36: Believe in the Success of the BMWi3 ………………………………………………………………………… 56
Figure 37: Identification with the brand BMWi …………………………………………………………………………… 57
Figure 38: Associated feelings with the brand BMWi ………………………………………………………………….. 58
Figure 39: Associated Intrinsic Emotions with the brand BMWi …………………………………………………… 59
Figure 40: Associated Emotions with the brand BMWi when watching the Marketing Movie ………….. 60
Figure 41: Associated Extrinsic Emotions with the brand BMWi ………………………………………………….. 61
Figure 42: Associated Intrinsic and Extrinsic Emotions with the brand BMWi in an overview …………. 62
Figure 43: Learning Cycle of Kolb
…………………………………………………………………………………………….. 69
Figure 44: Four different Learning Styles …………………………………………………………………………………… 70
7
List of Tables
Table 1: User and Non User quota …………………………………………………………………………………………….. 31
Table 2 : Male and femal quota …………………………………………………………………………………………………. 32
Table 3: Time Allocation Overview …………………………………………………………………………………………… 34
Table 4: Perceived added Value of the BMWi3
…………………………………………………………………………… 51
8
Acknowledgements
Having completed three months of work on my master thesis, I would first like to thank my supervisor,
David Hurley, whose guidance and support have made this dissertation possible. I appreciate the great
collaboration especially because we have never met in person and despite the communication was great.
I would like to thank my parents, Peter and Sabine Dieterich, and my sister, Sarah Dieterich, all of
whom supported me emotionally and entered into discussions with me whenever I was struggling with
the dissertation. My family provided me great and indispensable support back from my home country
Germany during the whole MBA study in Dublin, from which I felt strengthened to complete my study
with passion, ambition and vitality. Additional, I would like to thank my friend, Laura Wels, for her
precious help and friendship throughout the whole year in Dublin. Finally, my gratitude goes out to all
respondents who answered my questionnaire and helped provide valuable academic knowledge.
9
Abstract
This academic investigation for the Dublin Business School by Julia Dieterich, an MBA graduate in
2014, will discuss how to market effectively the innovative electronic car in the German automotive
sector in relation to a green branding marketing approach. It could be proved that the demand for
electronic cars is currently mildly growing and just will be increase in a long term. An optimized
marketing approach should help to solve this current industrial problem. A quantitative survey will
provide information about why the demand for electronic cars is low and how potential customers in
Germany perceive current marketing activities. Based on the identified issues of marketing activities,
valuable recommendations on how to market an electronic car successfully in Germany will be
provided.
10
1. Justification of the Dissertation Topic
1.1 Academic Justification
The goal of this dissertation is to analyse the reasons behind the proved, mildly growing demand for E-
cars and to provide valuable recommendations for an improved marketing strategy (Elektroauto, no
date). These will be elaborated in due consideration of consumer behaviour theory, branding strategy
theory and green branding theory, which will be discussed in the literature review. It needs to be
analysed how the potential E-car consumer behaves during the purchase process in order to be able to
influence this behaviour through targeted marketing activities. Additionally, it is necessary to
investigate how the current marketing activities of German E-car brand manufacturers can be optimized.
Hence, branding strategy theory has to be researched in order to understand how a brand should be
communicated successfully. In this case, the E-car can be categorized as a ‘green branded product’,
which needs to be marketed according to specific branding requirements. A ‘green brand’ is defined by
a specific set of brand attributes and facilities related to a perceived environmentally friendly approach.
Some studies deal with the perceived value of a green brand and ways to communicate green brands
properly but not in relation to the marketing strategy of electronic cars (Hartmann, ApoalazaIba´n˜ez,
ForcadaSainz, 2005, p. 10). Frank Dophreide, German marketing manager and CEO of a leading
German marketing agency, pointed out that German E-car brands have to fulfil successfully the gap
between a modern premium car and a new environmentally friendly concept (Steinkirchner, 2013).
Therefore, green-branding rules in relation to E-cars will be discussed in the literature review. Valuable
Green branding theory discussing how to market green branded product the best way can be adapted to
branding strategy of E-cars. Green brands should no longer be perceived as a niche market trend, but
rather as building environmental standards into mainstream brands. In the current century, consumption
develops increasingly in the direction of individuality, innovation and sustainability, which proves the
increasing consumer demand for green products. There is a trend of people returning to the older, more
basic values and natural products instead of Americanised mass consumption (Gordon, 2002, p. 3).
The results of this academic paper should provide important information for the car industry regarding
how to sell a green product minus the green brand image. The added value of this academical paper is to
provide significant new knowledge regarding how to market E-cars in Germany sucessfully, while
influencing consumers’ buying behaviour positively. Despite the proved, mildly growing demand for E-
car today, further studies show that on a long term the demand for E-cars will rise significantly, what
will be discussed in chapter ‘2.2.1. German E-car industry’. Thefore it is important to analyse current
marketing strategies on the german E-car sector, how they can be optimize to ifluence the future demand
positively.
For a successful investigation the dissertation follows a logical structure to facilitate the understanding
for the reader of this dissertation, which will be described in the following (figure 1). The advanced
research for this dissertation let the researcher identify a lack of literature, which is discussed in this
chapter. The researcher identified the industrial problem of a mildly growing consumer demand for
electronic cars. The researcher combines the academic literature in the fields of consumer behaviour,
branding strategy and green branding strategy with the industrial literature to solve the problem of low
demand and a lack of academic knowledge how to market E-cars properly. Through a quantitative
survey the researcher wants to investigate the reasons for the low E-car demand in German also in
relation to current marketing activities on German the E-car sector. Data findings and adapted academic
theory, how to market green branded product successfully will lead to a new recommended marketing
approach to optimize marketing activities on the German E-car sector in the future.
11
Figure 1: Different Stages of the Dissertation Process
1.2 Industrial Justification
In recent years, the innovative electronic car has increasingly penetrated the German car industry
(Bayme vbm, 2012, p. 14). The chairman of BMW pointed out that the electronic car will be the future
means of transportation. He guaranteed technological improvement and innovative progress of the
electronic vehicle (Prof. Dr. Jung et al., 2012, p. 4). An electronic car is defined as a general vehicle that
is driven by an electromotor using electric energy. It is also called an electric vehicle (EV) or a zero
emission vehicle, as it gets its energy from batteries. The charging process requires an average socket or
a public charging station (Backhaus et al., 2011, p. 3). In comparison, hybrid cars are also electro-driven
but have a combustion engine (VDA, 2013, p.136). From a political and ecological perspective, it is
important to increase the usage of electronic cars in order to achieve a reduction in environmentally
damaging emissions, thereby additionally providing value for social welfare. Protecting the environment
is a political goal as scientific studies show that the ozone is increasingly destroyed by ecological
damage through, for example, automobile exhaust. The electronic car is a future mobility solution that
does not pollute the environment and that, therefore, contributes towards reducing greenhouse gas
emissions (VDA, 2013, p. 117). Statistics indicate that 70% of the population will live in cities in 2050.
Urban environmentally friendly mobility thus becomes even more important. The Environmental Action
Program of the EU commission, in force from 2013 to 2020, has set the future development goals for
the car industry. The car industry has to produce and operate in a more resource-efficient and
environmentally friendly manner. The EU government has set further goals for the reduction of CO2
pollution by 2020 after the introduction, in 2006, of strong regulations to produce cars that cause 18%
less CO2 pollution. The EU commission has also introduced longer tax exemptions for electronic motor
vehicles for over 10 years, to enforce positive development of the electronic car industry. Under these
conditions, the German E-car sector is forced to invest in R&D, restructure processes and gaining
additional expertise very fast to meet governmental requirements (VDA, 2013, p. 117).
The previously listed facts underline the importance of a successful marketing strategy for E-cars today
in the German automobile sector. But the proven low private demand for E-cars in Germany is
concerning (FOM, 2010, p. 72). In January 2014, 12,156 electro vehicles were registered by the German
Federal Office for Motor Traffic (Elektroauto, no date).
12
To add new information to this research field, the current marketing campaign of BMW for its E-cars
series, BMWi, will be analysed as a base for a critical analysis of how a customer reacts to E-car
marketing campaigns and what can be improved further. The BMW Group is one of the most successful
automobile and motorcycle manufacturers worldwide, and one of the largest industrial companies in
Germany. BMW is also a pioneer of doing big, global marketing campaigns for their new E-car model
in Germany in 2013. Hence, the BMW is chosen as representative for all German E-car brands
(MarketLine, 2013, p. 4). The new premium E-car BMWi3, and the sports E-car BMWi8, were
introduced in November 2013 at the IAA, the biggest German automobile exhibition. The integrated
marketing strategy of the BMW i3 consists of print, online and TV campaigns. The main goal of the
campaign is to create a positive emotion in relation to the product by encouraging potential customers to
sign up for a driving experience. The campaign has an international and consistent online appearance
with focus on the marketing movie. The campaign also includes activities in the area of social media,
like the Facebook page with a configuration mode and the possibility to register for a BMWi3 test drive
(OnetoOne, 2013). Frank Dophreide evaluated the BMW marketing strategy. BMW has to fulfil
successfully the gap between a modern premium car and a new environmentally friendly concept. The
electronic vehicle will be the car of the future and needs to be sold to a broad population in future. Thus,
it is important that BMW sells its new E-cars like conventional cars. Public clichés—like, electronic
cars are just for people from the eco-movement—must be prevented. The BMW brand symbolizes
dynamic design and driving passion, which must extend to the new electronic car as well. The new
sports E-car model, BMWi8, breaks the cliché of electronic cars with its sports car features. Since the
model underlines the revolution of electronic cars, it was a good strategy to present both models at the
same time. The public may expect a revolutionary campaign and product presentation, which BMW
consciously wants to avoid. The concept of the electronic car itself is revolutionary enough. The
marketing team of BMW feels that the more spectacular the staging of the E-car, the higher the entry
barriers for customers. BMW wants to persuade customers to purchase the electronic car in a natural
way. The most important marketing tool and the main goal of the campaign will be the personal driving
experience. The customer can experience the E-car with all his senses, feeling the power and the driving
fun. The customer should be curious and become familiarized with the E-car (Steinkirchner, 2013). The
German car industry can remain successful when it takes part in the ecological revolution. The car
should no longer be a status symbol; it must be reinvented (Heuser, Lamparter, Pinzler, 2011). This
academic investigation analyses how successful the marketing campaign of BMW was through
analysing how the consumer perceives the BMWi brand today and if they are willed to buy an E-car or
if the marketing campaign influenced their consumer behaviour positive. From the analyses of the
BMW marketing campaign 2013 for E-cars, valuable recommendations for German E-car brand
manufacturer can be provided how to optimize marketing activities for E-cars in general.
1.3 Personal Justification
The researcher of this academic investigation has a bachelor’s degree in Business Administration and
Economics and an advanced master’s degree in Business Administration, with both degrees focusing
consistently on marketing. Furthermore, the researcher gathered important practical experience during
one-year internships in the marketing departments of L’Oréal and Estée Lauder. Due to the educational
and professional background o fthe researcher, he decided to provide significant new knowledge in the
field of marketing. In recent years, the researcher has developed a particular interest in green marketing
literature. Green marketing is a responsible management process that identifies and satisfies those
stakeholder requirements that do not affect human or natural environmental well-being (Emery, 2012, p.
17). Due to the researcher’s personal interest in this field, he was interested in the BMW marketing
campaign for the new premium electronic car series, BMWi, in Germany and the already discussed lack
13
of customer acceptance for E-cars (Steinkirchner, 2013). The researcher was interested in determining
how to market green branded products successfully in relation to the new electronic car series of BMW.
2. Literature Review
2.1 Introduction
The literature review provides information about academic studies and theoretical result in the field of
Consumer Behaviour, Branding Strategy and Green Marketing. It also provides contextual information
about the German E-car industry and the German E-car producer BMW to give an overview of the
actual status of the knowledge and progress in the marketing communication activities in the German E-
car market.
2.2 Academic Review
2.2.1 Consumer Behaviour in the German E-car industry
In the following, the consumer behaviour of E-car consumers in Germany will be analysed to gain
consumer knowledge about how to market an E-car in the most effective way.
2.2.1.1 Role of Marketing Communication in Consumer Behaviour Theory
Consumer behaviour is an important aspect of marketing and brand management. The science of
consumer behaviour tries to analyse the intrinsic and extrinsic behaviour of consumers and provides
guidance for the interface with the consumer (Kroeber-Riel, Gröppel- Klein, 2013, p. 3). Consumer
behaviour is the study of the process and intensity of involvement of a consumer in the on-going
purchasing process to satisfy his needs and desires (Salomon, 2013, p. 39). The consumer will go
through the three stages of identifying his needs, making a purchase, which results in a disposure
(Salomon, 2013, p. 39). A purchase can be defined as the exchange of money for goods and services
between purchaser and vendor (McNeal, 2007, p. 51). During this process, cognitions, perceptions and
learning will be developed, which are important to get deep insight into how the marketer can make
positive changes to influence the purchasing process (Baines, 2011, p. 80). But in this study,
understanding the concept of consumer behaviour is not just enough. It also has to be analysed how
marketing communications can influence the buying behaviour. The theory of marketing
communications tries to clarify how to influence positively the decision-making process of the
consumer.
2.2.1.2 The Hierarchy of Effects model
The Hierarchy of Effects model clarifies how marketing communication can influence the decision-
making process, which the consumer goes through, resulting in the purchase (Picktin, Broderick, 2004,
p. 84). The Hierarchy of Effects model assumes that the consumer is highly involved in the purchase
process and that he is an intelligent, rational, problem-solving human, who stores and evaluates
information to make a reasoned decision (Picktin, Broderick, 2004, p.70). There exists a verity of
Hierarchy of Effects models, which follow the concept of the cognitive model and its influence factors
on the purchase process, which is visualized in figure 7. Most cognitive models proceed from the stage
of problem definition, where the consumer is influenced by external stimuli and develops his needs. The
second stage is the information-seeking process, which results in the evaluation of the different
alternatives. In this stage of problem-solving exists a high impact of influence. It comes to a purchase
and post-purchase evaluation process, where the consumer evaluates whether his needs are satisfied or
not (Picktin, Broderick, 2004, p. 84).
14
Figure 2: Hierarchy of Effects Models
Source: John E., 2007.
The most often cited Hierarchy of Effects model was developed by Lavidge and Steiner, which
proposes seven steps of purchase process (Hoang Sinh, 2013, p. 92). The initial situation is that the
consumer is completely unaware of the existence of the product or service. At the first cognitive level,
the consumer becomes aware of the product and gains product knowledge to assess if the product can
satisfy his needs. At the second level of affective process, the consumer develops a positive attitude
towards the product leading to product preference. During the conative process, the consumer is
convinced to buy the product, followed by purchase. The series of effects is managed in a successive
order over a period of time whereby each step must be fulfilled before the consumer can proceed to the
next step (Lavidge, Steiner, 1961, p. 137). The model has been regarded as measurement tool for the
effectiveness of advertising (Hoang Sinh, 2013, p. 92). In 2000, Robert Heath criticized the Hierarchy of
Effects model saying that it was not strong enough to affect the consumer actively. The information
overflow aggravated the differentiation from competitor brands (Rainey, 2010). Moreover, Egan John
added that the Hierarchy of Effects model does not prove that the consumer fulfils each stage and that
he behaves interactively between different stages (Egan, 2007, p. 52). It can be also assessed that the
Hierarchy of Effects model does not analyse the post-purchase process. In contrast, James McNeal
separates the purchase process in pre-purchase, purchase and post-purchase actions towards a
commercial object. McNeals describes the post-purchasing action as the most important because it will
determine the future purchase for the same or similar type of product (McNeal, 2007, p. 51). Barry
defends the Hierarchy of Effects model saying that it is an important and indicatory guideline for
integrated marketing communication action. The measurement process of advertisement is highly
complex and the model is rational and logical providing scope for further research in this field (Barry,
2002,
p.
45).
For
a
valuable
theory
research
the
‘Consumer Proposition Acquisition Process Model’ will
be discussed to complement the Hierarchy of Effects model, adding theory about the after-purchase
process.
2.2.1.3 Consumer Proposition Acquisition Process Model
The importance of the post-purchase process model of the consumer proposition acquisition process
underlines the importance of the re-evaluation phases and the interactivity between the single stages
which means that in each stage of purchase, the consumer could go back to the previous stage or move
forward in the process as it is visualised in the figure 3 (Baines, 2011, pp. 81).
15
Figure 3: Interpretation of the Hierarchy of Effects model and the Consumer Proposition Acquisition
Process
Source: Interpretation of Baines, P., 2011.
The model ‘Consumer Proposition Acquisition Process’ is composed of six interactive stages of
consumer experiences. In the first stage, the consumer identifies a problem of unsatisfied needs and
builds a motivation for purchase. Therefore, he starts gathering information and determines different
product criteria, ranking the products based irrational or rational thoughts. The stage of the proposition
selection where the consumer assesses, which product fits best for his needs, results in a purchase. It can
be differentiated between a routine purchase and a specialized purchase, where the consumer is more
involved in the decision-making process. The phase of re-evaluation follows where the consumer re-
organizes his beliefs, attitudes, opinions, or values to make sure of a right decision (Baines, 2011, pp.
81). The consumer checks the benefits against the costs. This is called cognitive dissonance, where the
information conflicts with the desired outcome. Therefore, it is important for the marketer to minimize
the cognitive dissonance and meet consumer needs (Picktin, Broderick, 2004, p. 82).
2.2.1.4 Influence factors on the E-car Purchasing Decision Process
The consumer’s needs can arise either through habit or through a process of choosing a brand, which is
called ‘picking process’. The ‘picking process’ is a selection of a product or service from a broad
repertoire of alternatives. During this process the consumer is influenced by intrinsic evaluation, which
can be divided into liking or disliking. Other influence factors could result from extrinsic evaluation like
economical, technical, social, legalistic or adaptive reasons. This study will focus on the intrinsic factors
of the consumer because these can be influenced by a marketer through a successful marketing
communications strategy. According to the cognitive model of consumer buying behaviour described
earlier, opinions are built on a cognitive level, attitudes are built on the affective level and values are
linked with the conative process (Baines, 2011, pp. 81). The consumer’s opinion and attitude will be
discussed in the following. How the consumer will develop value in relation to a brand will be
considered in the theory part ‘The measurement framework of brand equity-the ValueDrivers model’.
16
2.2.1.4.1 Consumer Opinion leads to Consumer Attitude
The consumer’s opinion building about a product or service can be a salient, intrinsic process or result
in an overt expression. Opinions, which are not expressed are often more important for the consumer.
The opinion is mostly influenced externally and is built on a cognitive level where just a small number
of facts can be kept in mind as the basis for a judgement (Blythe, 2013, p. 158). The consumer’s attitude
is built on the basis of his opinion and behaviour. The long-term condition of attitude describes the
feelings of a consumer for an objective attitude. The behaviour is an unpredictable condition in the
future, which does not inevitably result in an action. The cognition is the subjective knowledge, which a
consumer has from objective attitude. This is analysed with the ABC model, which describes the
interaction between knowledge, emotion and action. After evaluating the product information, the
consumer develops an emotion about the product. A positive emotion results in the consumption of the
product (Solomon, 2013, p. 253). There are different levels of consumer attitudes, whereby the level of
involvement is described as ‘internalisation’ (Solomon, 2013, p. 253). The electronic car, for example,
is a high-involvement product because of the high price and the long durability (Bruhn, 2004, p. 1929).
Influencing consumer’s attitude at this level is very difficult because the purchase is highly important
for the consumer. The attitude is strongly connected with the values of the consumer. The marketer has
to minimise the consumer’s dissonance by positively influencing his opinions and emotions. The
consumer looks for a reinforcement of his purchasing action in his environment or focuses on his own
previous buying behaviour. Therefore, it is important to support the consumer purchase decision also
after the consumption (Solomon, 2013, p. 253). A positive purchase experience is likely to lead to
further purchases and brand commitment. The stage of post-purchase represents the stage of a future
purchase cycle in the communication process (Wijaya, 2011, p. 77). With the Rosenberg model, the
consumer’s attitude can be measured. According to the model, the consumer’s attitude towards an object
represents the degree and direction of the attitudinal effect arisen by the object. The attitude is built on
two main components: the perceived instrumentality and the value importance. The perceived
instrumentality is the subjective capacity of the object to attain the value in relation to usefulness. The
value importance is what the consumer hopes to reach through the purchase and use of a product or
service. These two components are useful to predict the consumer’s behaviour (Blythe, 2013, p. 160).
2.2.1.4.2 Rational and emotional driven Purchasing Process of an E-car
Considering the purchasing process of an E-car, the consumer makes his decisions based on rational and
emotional motives. The consumer’s rational behaviour is influenced by the physical consumer
performance and availability of a product. In contrast, his emotional behaviour describes a buying
decision dependent on social and psychological influences. Rainey argues that successful green brands
use essentially emotional appeals to engage consumers (Rainey, 2010). According to a broad argument
by marketing experts, emotional messages and relationship building can have a high impact on the
purchase decision of consumers (Heath, Feldwick, 2008, p. 4). In contrast, Fill added that emotion can
also be used to provide information but the overriding approach is informational. However, in due
consideration of the affective component, Fill pointed out that rational information is not enough to
stimulate behaviour especially when a brand has a negative image. Emotional appeal can change the
consumer’s mind. Unique and creative messages appealing to several senses achieve high awareness.
For example, the government mostly uses informational campaigns to change people’s attitude in
behaving in a more environmental-friendly way. The effectiveness of the message can be reinforced
through dramatising the consequences of a particular behaviour to raise awareness. In Kotler’s opinion,
the company can also use negative emotional appeal such as fear or shame to influence people
positively in their behaviour (Kotler et al., 2008, p. 703). In consideration of the E-car purchasing
process, the consumer has a strong requirement to identify with the E-car brand. The goal of BMW, for
example, is to create a long-term, lasting and emotional identification and commitment with the brand.
17
Therefore, the E-car producer has to put in a lot of effort in the consumer loyalty programme to create a
strong green brand commitment (Bruhn, 2004, p. 1929).
2.2.2 Branding Strategy in the German E-car industry
To analyse how to brand an E-car successfully in the German car industry, theory and actual study
results will be considered.
2.2.2.1 Definition of a Brand
Branding is a primary function of advertising through which a company tries to reach its target
audience. A brand can also be defined as the value in the mind of the consumer. It is also the output of
marketing communication activities, which has to be managed throughout the brand life cycle.
Moreover, a brand is a set of attributes that have a meaning to the consumer and create associations with
the product or service (Picktin, Broderick, 2004, p, 250). According to Aaker, a brand is a name or a
symbol to identify or differentiate goods or services from competitor brands (Aaker, 1991). For De
Chernatony and Mc Donald, a brand is an identifiable product, service, person or place from which the
consumer perceives relevant added value, meeting his needs to create a long-term competitive
advantage (De Chernatony, Mc Donald, 1989, p. 83). The different definitions combine the fact that a
brand identifies a product and is, therefore, timesaving and facilitates the decision-making process from
a consumer perspective. The consumer trusts a brand because it ensures a specific level of quality and
satisfaction. From a brand-owner’s perspective, branding can be a powerful defence strategy against
competitors. However, it can also increase profit margins through premium pricing or reduce the threat
of price war when a company gains brand loyalty (Picktin, Broderick, 2004, p, 252). According to the
structure of Aaker (1996), a brand is built on different layers like an onion, starting with the core brand,
building of the brand’s mission and the consumer’s benefits. The next layer of the brand is the brand
value, which describes the brand and its message. The final layer is building of the value facets, which
support the operationalization of the brand value. This holistic concept is the driving force for the brand
world of the BMW Group (Bruhn, 2004. p. 1942). The BMW Group positions its new E-car brand
BMWi under the corporate brand umbrella BMW. In the automobile industry, from a consumer’s
perspective, a brand is especially perceived through products, communication and personal contact with
the retailer. A corporate brand is built on personality, identity and image and is described as the soul,
spirit and culture of an organisation (Picktin, Broderick, 2004, p, 245). It describes how the consumer
should perceive and differentiate the brand under competition through its uniqueness (Bruhn, 2004. p.
1942).
2.2.2.2 Consumer-based perspective on Brand Equity
Aaker defines brand equity as a set of five categories of brand assets and liabilities linked to a brand,
which provides value for the target group. The five sets of a brand asset are: brand loyalty, brand
awareness, perceived quality, brand associations and other proprietary assets like patents, trademarks
and distribution relationships (Aaker, 2006, pp. 194).
18
Figure 4: Aaker’s Brand Equity Model
Source: David A. Aaker, 2006.
From a consumer’s perspective, a brand achieves equity when people are familiar with the brand, having
positive and strong associations. Brand equity consists of two forms of brand-related knowledge: brand
perception and brand image (Shimp, 2007, p. 36). To manage and control brand equity, the E-car
producer BMW has to understand how the consumer perceives the brand and what are its strengths or
weaknesses. Therefore, the marketer BMW has to analyse the brand perception and how the brand is
perceived in comparison to the competitors (Bruhn, 2004, p. 1945).
2.2.2.2.1 Brand Perception
An important component of branding is the consumer’s perception. The marketer’s goal is to achieve
the most favourable perception possible through a strong brand personality. The target group should
connect specific characteristics with a brand, which trigger positive stimuli to create an overall strong
brand image (Blythe, 2013, p. 109). The consumer’s perception is a process of individual selection,
organisation and interpretation of several stimuli into a meaningful impression. The process is based on
persons’ needs, values and expectations and is, therefore, highly individual
(Schiffman et al., 2008,
p.168). Perception occurs when a brand name comes to the consumer’s mind, thinking about particular
associations with a brand. Brand perception is the basic element of brand equity. If the consumer is not
aware of a brand, a brand cannot have equity. The ‘Managing brand equity’ model (figure 5) of Aaker
shows the different levels of perception which the consumer experiences, beginning with the stage of
unawareness and ending with the ‘Top of mind’, which is the target stage of each established brand. The
pyramid visualises two stages of awareness: brand recognition and recall. Brand recognition reflects a
19
relatively superficial level of awareness whereas at the stage of brand recall a deeper level of awareness
is achieved. The stage of unawareness can be equated with the failure of a brand (Shimp, 2007, p. 38).
Figure 5: Managing Brand Equity
Source: David A. Aaker, 1991.
The attitudes and behaviour of the staff of a company are, for example, main brand builders and a strong
marketing communication tool, which transmit the corporate culture to the public. Therefore,
inconsistency between staff behaviour and the companies’ culture has to be avoided. A difference
between consumers’ expectations and perception can lead to dissatisfaction and negative effects on the
brand image (Picktin, Broderick, 2004, p. 258).
2.2.2.2.2 Brand Image
The sum of all characteristics of a brand tries to profile the corporate personality. In turn, the corporate
personality transmits the corporate identity, which is everything how a company is known and
understood as. The perception of the companies’ target audience, which is created from the corporate
identity is named corporate image. All marketing communication activities of the company help to build
the corporate image through the consumers’ feelings, which become associated with thoughts. To ensure
a desired and representative brand image, the brand has to be managed (Picktin, Broderick, 2004, p,
245). The brand image builds the second dimension of the brand knowledge, which is described earlier.
Shimp describes the brand image as associations, which activate the memory, building positive links
with the brand. All consumer thoughts and feelings are types of these associations. A high level of brand
equity is reached if the consumer associates the brand with different benefits, resulting in a positive
brand evaluation (Shimp, 2007, p. 39).
2.2.2.3 The ValueDrivers model
To measure the brand equity, the ValueDrivers model (figure 6), which maximises the financial value of
brands is considered. Value drivers are different components to help increase the value of a brand. One
key goal of this measurement framework is to deliver a meaningful brand experience to the consumer
and maximize this moment. The framework regards two key issues influencing the brand management
nowadays. On the one side, the market of consumer needs has become more complex and is fast
changing. Therefore, the marketer has to focus on his communication, distribution and pricing activities
to ensure a clear and unique brand profile. On the other side, go-to-market options have increased
20
heavily over the last few years through the transparency of Internet which is not time or space bound.
The pressure of being innovative and reacting in real time to market changes has increased immensely.
Figure 6: The ValueDrivers model
Source: Hollis, N., 2013.
In the first stage, the ValueDrivers model considers the definition of meaningful, differentiated brand
experience, which can lead to price premium positioning or achieve a higher turnover. To create such an
experience, the marketer has to be clear about the purpose of the brand, which should be significant and
different from competitors. The most effective way to generate differentiation is to achieve resonance on
an intrinsic level of consumer behaviour, encouraging all senses to create linked thoughts with the
brand. In the best case, the marketer generates consumer awareness at an emotional and rational level.
The consumer’s emotionality is most valuable. If the consumer creates a strong identification with the
brand, this brings a significant added value to the consumer. Differentiation can also occur at an
extrinsic level based on the feelings, which are developed during the brand and product experience. For
example, social and environmental corporate responsibility can form extrinsic differentiation or a unique
product design which the brand BMWi fulfils. The marketer has to address real consumer needs for a
price that the customer is willing to pay through a clear marketing message delivery. In the second
stage, the model focuses on the reinforcement of this experience in the context of a more widespread
audience. According to the ValueDrivers model, findability, credibility, vitality, affordability and
extendibility can amplify the meaningful difference of a brand. Findability means physical availability,
which requires a well-managed distribution network. The product or service needs to be visible and
should be easily identifiable for the target group. Optimized credibility can be achieved through
consistent brand communication. A new product line like the BMW E-car series should be properly
adjusted to the parent brand BMW concept, building unity. A brand can be perceived as vital if the
brand is perceived in relation to activity and innovation. Social media is a good tool to manage creative
and innovative marketing campaigns. Price management is also an important factor for adding value to a
brand. The product or service has to be affordable and match the price the consumer is willing to pay.
Moreover, extending the brand is a successful ValueDriver for growing brand value to cover new
market segments. In the final and third stage of the model, a brand can generate value through four
different ways. The marketer can extend the brand to gain a new consumer segment in the same product
category or reach new geographical markets. The marketer could also create a premium-pricing concept
21
or focus on high turnover. All these ValueDrivers lead to a long-lasting brand value growth (Hollis,
Pincott, 2013).
2.2.3 A Green Branding approach in relation to the German E-car industry
The result of this paper should provide important information for the E-car industry about how to
market a green product. Therefore, the Green Branding theory will be examined in relation to the
German E-car industry.
2.2.3.1 Definition of Green Branding
The Green Marketing approach is focused more on ecological issues than social and economic issues
compared to the classic marketing approach (Emery, 2012, p.17). Fill argues that a green brand has to
fulfil three strategic goals: differentiation, integration and added value to create strong, positive and
lasting impressions (Fill, 2013, p. 11). A green brand is built according to the principles of sustainability
and environmental friendliness, targeting a consumer group, which is willing to pay for these ethical
brand values. The consequences of the financial crash and the Euro crises led people to think more
about having enough money to drive a car than acting in an environmental-friendly way. When
consumers are highly price-sensitive, companies have to provide low prices or real value. Ethical or
green brands can create this value and can thus justify higher prices (Arnold, 2009, p. 70). According to
Grant, 8 to 10% of people are classified as having a dark green lifestyle, 20 to 40% of people are up for
light green changes and still 60 to 80% of people are not concerned about the environment (Arnold,
2009, p. 70). John Grant, the author of ‘The Green Marketing Manifesto’, questions: ‘Why can’t you
just ‘green’ a conventional brand?’ The issue is that ‘green’ is not a simple image; it is more a factual
and sceptical evaluation of a brand or a product (Arnold, 2009, p. 70). According to Holbrook, Lehman
and O’Shaughnessy, a consumer has an intrinsic and extrinsic evaluation. The internal perspective is not
only determined by thoughts or personality structures, it is also influenced by the opinion of people we
trust (Baines, Fill, Page, 2011, p. 230).
2.2.3.2 Danger of Green Washing
Communication experts from the marketing consultancy OgilvyEarth published important Green
Branding rules in 2009. Companies try to use green claims to improve the brand image, which is named
‘Green Washing’ (Williams, 2010). Green Washing is a misleading marketing claim by a company to
conceal its abuse of the environment and present a positive image (Emery, 2012, p. 223). But Arnold
argues that branding is not just about the image; it’s about how the brand is perceived from the
consumer perspective (Arnold, 2009, p. 44). Further reports of the OgilvyEarth showed that 64% of
Americans no longer trust sustainability-related marketing claims. The OgilvyEarth adviser, Ma Jun,
announced that more and more local and multinational companies have to handle Green Wash violations
from the public. Therefore, companies have to build high credibility for sustainability-related marketing.
A survey identified a strong consumer movement to support green products (Williams, 2010). In 2009,
Time magazine published that 38% of consumers over 18 years try to buy products from socially
responsible companies. The change in public awareness shows a revolution of responsibility (Stengel,
2009). The United Nations Framework Convention on Climate Change in 2009 confirmed that a global
citizen-consumer revolution developed to support sustainable future. The OgilvyEarth adviser, Jeunesse
Park, identifies the authenticity of the company’s brand image as crucial. A further challenge for
consumers is to understand the green health claims, according to adviser Andrew Winston. Green Wash
claims can damage the company’s reputation, if consumers doubt the company’s developments
(Williams, 2010). John Grant agrees that consumers do not trust companies, which make profit by green
22
taglines (Grant, 2008, p. 25). Negative clichés about eco products in consumers’ minds have to be
removed (Williams, 2010).
2.2.3.3 Marketing Communications of a Green Brand
Arnold describes the problem saying that people have got immune to environmental claims. They realise
the rising problem of the environmental conditions, but they do not feel personally responsible. The
sense of security is not touched. Thus, there is a missing link between the stage of ‘think’ and ‘feel’ of
the Hierarchy of Effects model. But the consumer behaviour can be changed if the company can make
people feel and act (Arnold, 2009, p. 70). In relation to Green Marketing approach, consumers who do
not feel responsible for the environment have to be convinced to buy an electronic car. The ecological
aspect is one of several reasons to buy an E-car. People have to be convinced of the idea of making a
significant change through the purchase, influencing the total impact (Grant, 2008, p. 25-27).
A successful way to create green brand perception is the communication of a negative issue followed
by the solution providing the brand. In respect of electronic cars, the negative effect of pollution can be
explained followed by the solution of the electronic car. This approach is highly credible because it
reduces reporting bias and sceptical opinions (Soloman, 2013, p. 293). In Arnold’s opinion, consumers
are not even able to understand a marketing message because they are too confusing and complicated
creating uncertainty. In consequence, the personal involvement is low and the consumer cannot develop
feelings, which results in not purchasing the product. Companies which communicate a clear and easily
understandable marketing message can change people’s mind and, therefore, also the action of purchase
process (Arnold, 2009, p.70). Ian Higgins agrees that environmental claims should be factual, specific
and clear. According to the experts at OgilvyEarth, the environmental marketing message should be
honest and tell the truth for creating authenticity and credibility. For providing true content, details
should be explained in the integrated marketing strategy. Especially, content generalization and broad
taglines should be avoided (Williams, 2010). Interbrand, the global leading brand consultancy and
founder of the annual Best Global Brand Reports, analyses green brands of 2013. According to this
study, green brands, which communicated transparent and clear message, could achieve more value in
public. Also, the selection of appropriate media channels is important to reach the right target group at
the right time and place, which is interested in the marketing message. The green marketing message
should be aligned with the company’s performance to convince the consumer of its trustworthiness and
brand honesty (Baines, Fill, Page, 2011, pp. 230).
2.2.3.4 Green Brand building of German E-car producers
The BMW is ranked as one of the top twenty sustainable brands in Germany. It was observed that
automobile brands, which invested in the R&D sector and implemented sustainability in the corporate
strategy, could achieve more value in customer perception. New product design and the use of light and
sustainable materials can underline the environmental-friendly image. Technological E-car
manufacturer brands have to especially optimise environmental-friendly performance and efficiency
throughout the value chain (Pietig, 2013). A brand should look ethical as well as give the feeling of
ethos (Arnold, 2009, p. 9). Leaving behind the mass and fast consuming generation, society’s buying
behaviour seems to be turning back to old basic values. Brands, which do not adapt to the environmental
changes and ethical performance, will fail (Arnold, 2009, p. 33). There is a significant gap between
being profitable or profiteering. Trying to be a brand with a big ego and being the loudest and most
profitable brand do not always establish good consumer perception. The brand is a reflection of personal
contact with the stuff. Consumers want to be treated more as special and valued like a friend. Being
number one does not mean consumer satisfaction or better service. Consumers could also perceive a top
brand as greedy and arrogant. In this case, the target audience will not pay for overpriced products if
they do not sympathise with the brand, losing respect and reputation. To avoid this negative green brand
23
image, the big players need to build up an ethical brand, treating the consumers and the environment
with respect (Arnold, 2009, p. 9).
2.3 Contextual Review
2.3.1 German E-car industry
The German E-car industry will be considered to research about the evolution of the E-car sector and the
consumer behaviour in this sector.
2.3.1.1 Evolution and Future Outlook of the German E-car industry
The German automobile industry is especially a very attractive market with a high growth potential in
the future. In 2012, 128.2 bn Euro of total sales were generated in the German automobile sector
(Statista, no date). Behind Japan, China and the USA, Germany is the fourth largest automobile
producing nation (BWT, 2013). Over the last few years, the innovative E-car has penetrated more and
more into the German car industry. On the one hand, some economical studies show clearly that the E-
car is the future transport vehicle. Roland Berger predicts that 37% of cars will be E-cars in the
European automobile market by 2025. McKinsey said that in 2030, two out of three cars will have an
electric motor. According to the electro mobility index of McKinsey, which measures the successful
implementation of E-cars, Germany is better placed than China for the first time (Bayme vbm, 2012, p.
15). A scientific study of the Böckler institution also supports the future development of E-cars,
predicting an increasing sale of about 15% by 2030, which is low compared to hybrid cars which will
increase by about 35% by 2030. In contrast, combustion engine cars will decrease by about 40% (Prof.
Dr. Ing. Spath et al., 2012, p. 18). The main increase of E-cars is predicted between 2020 and 2030 and
visualized in Figure 7.
Figure 7: Evolution of Demand of E-cars
Source: Prof. Dr Ing. Spath et al., 2012.
Ele$
Engine$car$
Suppor/ve$Hybrid$
Electonic$Car$
Engine$cars$
Suppor/ve$Hybrid$
Full$Hybrid$
Electronic$car$
24
2.3.1.2 Reasons for the actual low Consumer Demand of E-cars in Germany
After proving the increasing demand of E-cars on a long term, it is even more surprisingly that demand
today is mildly growing, which is visualized (FOM, 2010, p. 72). Te study of NPW is visualized that the
demand of E-cars in Germany increases slowly, which is explained through low market capacity and
low supply (figure 8). In January 2014, just 12,156 electro vehicles were registered by the German
Federal Office for Motor Traffic. McKinsey presents every three months an Electric Vehicle Index. In
international comparison, the demand for E-cars is even slightly decreasing in Germany. McKinsey
predicts 0,7% share of E-cars on the German car market in 2017, which is a slightly decreasing value in
comparison with the last results of the Electric Vehicle Index (Elektroauto, no date).
Figure 8: Development of Demand of E-cars till 2020
Source: Adapted to a study of NPW, 2012.
In a study of the statistical institute FOM in Germany conducted in 2010, 763 participants were
surveyed (FOM, 2010, p. 72). It was proved that there are some product features of the E-car which
negatively influenced the consumers’ demand for E-cars. There was further proof that the consumers
perceived the E-car to be expensive compared to a motorcar (Study CarIT, 2012). A study of Aral in
2011 showed that 59% of the respondents are not willing to pay more for an E-car. The younger
consumer group especially under 40 is not just ready to pay 1.466 Euro more. This is an important fact
in contrast to the opinion of the car producers who think that the younger people are more willing to buy
an EV (Meyer, 2013, pp. 127). The marketing activities for E-cars should also focus more on the topic
of tax reductions and inform about cost advantages compared to motorcars. Moreover, the government
has to introduce subsidies, which make the EV more attractive. According to Bayme vbm, the subsidies
must be low to reach the planned governmental goal (Study CarIT, 2012). The most discussed
marketing topic in relation to E-cars is environment. However, the consumer needs to be informed first
about the important technological aspects to reduce uncertainty and a lack of information in relation to
E-cars (Study CarIT, 2012). Of the sample, 60% have difficulties with the less reach of an E-car
compared to a motorcar. Forty per cent of the respondents accept 5-30 min charging time of the E-car
and just 11% accept three to six-hour-long charging time. Fifty-five per cent of the respondents could
accept a 1-5 km distance to the next E-car charging station. It could be determined that the acceptance of
EVs rises when the EV is a second car in the household (FOM, 2010, pp. 72). A study proved that there is
a positive correlation between a well-informed consumer and the willingness to pay more for an E-car
(Backhaus et al. 2011, p. 85). Marketing expert Björn Sprung, the director of the international
0″
200000″
400000″
600000″
800000″
1000000″
1200000″
2010″
2014″
2017″
2020″
Evolution of demand in E cars in Germany
Phase&1:&
2011+2014&
”
) Market”
prepara1on”
) Low”Market”
capacity”
) Low”supply”
”
“”
Phase&2:&
2015+2017&
”
) Market”
increase”
) Higher”Market”
capacity”
) Higher”supply”
”
“”
Phase&3:&
2018+2020&
”
) Start”of”mass”
market”
) High”Market”
capacity”
) High”supply”
”
“”
Early”
Adopter”
Substainable”
Market”Growth”
Mass”
Market”
25
Marketing agency ‘Nielsen’, underlines that the marketing strategy of German automobile companies
needs to focus more on sales arguments, which are important for the consumers. If marketing is targeted
in relation to consumer needs, the demand for E cars can be accelerated (Study CarIT, 2012). These
problems can be solved with the progress and innovation over time.
2.3.2 E-car Brand Strategy of BMW
2.3.2.1 Brand Strategy of BMW
The German automobile sector comprises multi-brand companies whereby the supply will be extended
through buying-in of different brands (Bruhn, 2004. p. 1929). A multi-branding strategy is defined as
the supply of multiple brands in the same product segment. Also, the BMW Group drives a cost-
orientated multi-branding strategy based on the future-driven overall corporate strategy ‘Number One’,
which is discussed in detail in the appendix A (Picktin, Broderick, 2004, p, 254). But it has to be
assessed that the most successful German car manufacturers like BMW, Hyundai, Peugeot, Porsche and
Toyota, focus on just few brands (GENIOS WirtschaftsWissen, 2004). On one side, the German car
producer uses a strong corporate brand whereby the company’s name is synonymous with the total
BMW product class and a strong brand portfolio, which is discussed in detail in the appendix F.
Corporate branding is used when a company operates in a tightly defined market like the automobile
sector, which brings advantage for the advertising of related products like the new BMWi series. The
strategy helps to avoid confusion and diversification during the purchasing process (Laforet, Saunder,
1994). On the other side, BMW uses house brands like MINI and Rollys Royce to cover different
market segments (Laforet, Saunder, 1994). The BMW Group wants to target especially a younger
consumer group with the MINI and the luxury segment with the Rollys Royce (BMW Group, no date).
The company tries consciously to differentiate the products of the three premium brands from each
other. The subsidiaries should operate independently from the parent brand, which allows focusing on
their own business. This can also bring promotional advantage by creating something new and providing
a more targeted advertisement (Laforet, Saunder, 1994). Looking at the brand BMW, it is observed that
the Group drives an umbrella branding strategy which is a management approach whereby the parent
brand name is used across a range of products, benefiting from the consistent and clear parent brand
identity (Millward Brown Knowledge Point, 2008). Umbrella branding and extending the brand lead to
a complex product portfolio, which is direction giving for all marketing activities and is quite
advantageous (Aaker and Keller, 1990). The consumer can perceive familiarity, credibility and
associations with the corporate brand when he buys one product from the product range. This effect is
called ‘halo effect’, which is not always guaranteed. A study by the Millward Brown Institution in 2008
found that around one quarter of advertising activities in relation to umbrella branding shows a
significant halo effect for products of the parent brand portfolio (Millward Brown Knowledge Point,
2008).
2.3.2.2 Goal of the Brand Strategy of the BMW Group
For the BMW Group it is important not to extend the brand portfolio too much to keep the brand
authenticity. The customer has to be given the possibility of individual identification but at the same
time the degree of standardisation has to be kept because of synergy effects. Each brand has a clearly
defined profile and a system of values so that a broad brand portfolio without any overlaps can be
provided (Bruhn, 2004. p. 1935). The brand BMW tries to differentiate from other brands to gain
competitive edge, which is challenging because in the premium car segment, the consumer has detailed
product knowledge through multi-channel media. The long-term marketing messages and values have
also to be adapted to the changes in society. The rational consumer behaviour is about price and the
emotional consumer behaviour is about the willingness to pay more for a premium product (Bruhn,
