Reality Is Perception The Truth About Car Brands

Topics: Marketing, Brand management, Product management Pages: 6 (3232 words) Published: February 22, 2015
Expensive advertising cannot compensate for weak
brands and undifferentiated products.

strong car brand can
create significant value
in the automotive
industry. The price
consumers expect to
pay for otherwise
identical luxury vehicles can vary as much
as $4,000, depending on the car’s
brand. For mass-market cars, brand
helps determine which products a
consumer considers buying. Furthermore, superior brands extend their halo across every model of
vehicle within the brand. It’s no surprise that most auto manufacturers make brand positioning and development a key item on their marketing agenda. Yet despite intense interest in
their power, automotive brands
remain relatively poorly understood.
Why do car brands have such value
in a business that is clearly product
driven? How do brands acquire
their value? What causes their value
to wax or wane over time?
Because of the prominent role
that brand positioning and development play in many auto manufacturers’ business strategies, we conducted extensive research and
analysis to better understand how


consumers think about car brands.
Our analysis uses standard statistical
techniques to distill multiple brand
image attributes (drawn from Allison-Fisher International LLC surveys of car buyers) into a small set of underlying factors, which provide
valuable insights into consumer
brand perceptions. (See “Research
Methodology,” page 3.)
Our research shows that consumers have a simple yet sophisticated understanding of what differentiates car brands. Notwithstanding automakers’ attempts to distinguish
their brands on the basis of lifestyle
or emotional imagery, consumers
evaluate brands in terms of their
earned reputation for product excellence relative to their total ownership cost. Consumers’ perceptions are based on their accumulated
direct and indirect experience with
the products that constitute those
These perceptions are obviously
not perfect. Some brands’ reputations exceed or fall short of their demonstrable product attributes.
But, as a rule, consumers’ beliefs are
accurate, stable, and relatively
immune to manipulation. In contrast to the situation with other con-

Illustration by Lars Leetaru

by Evan Hirsh, Steve Hedlund, and Mark Schweizer

strategy + business issue 32

All Consuming Behavior

comment all consuming behavior

Reality Is Perception:
The Truth about
Car Brands

1. Virtually all of the difference in how consumers perceive competing brands can be explained
by their relative performance
against two holistic measures:
product excellence and cost.

Traditionally, car manufacturers
have tried to measure their brands
across a large number of image
attributes, hoping to develop additional insights about brand differentiation. However, consumer perceptions of a brand’s reputation are generally consistent across different
measures of value. For example,
consumers believe that manufacturers whose car lines have a reputation for luxury and prestige tend to produce cars that excel in many other areas, such as ride, handling, safety,
and reliability. In fact, a brand’s
score on any one attribute tends to
be so highly correlated with its score
on another attribute that these scores
can be integrated into one measure
that represents a car line’s propensity
to create excellent products.
Consumers also have a sophisticated understanding of product cost. They recognize that vehicles
differ not only in their initial purchase price, but also in their expected maintenance and operating costs, as well as their ultimate resale value.
Together, these different types of

expenditures determine the total
cost to the consumer over the ownership cycle. As with the product excellence dimension, the various
attributes that determine a brand’s
expected ownership costs can be
integrated into a single measure of
product cost.
These two holistic measures,
product excellence and cost of...
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