A Case Analysis - Exploring Customer Attitudes on BMW

MA-Thesis / Master von Marion Maguire, geb. Weiler

Abstract:

Giving the powerful means of branding and brand-based differentiation for creating and sustaining a competitive advantage especially in highly competitive markets such as the automobile market, this study explores brand attitudes of existing and potential customers towards the brand BMW. Moreover, this study analyzes the level and source of customer satisfaction as well as the level and source of customer loyalty of existing and potential customers. While this study considers five different factors for the degree of customer satisfaction, there is only one factor considered for the degree of brand loyalty. The factors considered for customer satisfaction are perceived customer service, perceived quality, perceived innovation, perceived technology and perceived price, while the factor considered for brand loyalty is customer satisfaction itself. The analysis of brand loyalty distinguishes between repurchase loyalty and attitudinal loyalty, former being analyzed for existing customers and latter being analyzed for potential customers.

The results indicate that (1) BMW has a high level of awareness, both in recognition and recall, (2) the image of BMW is favorable, strong and relevant, and (3) BMW is mainly associated with performance and style by existing customers and status by potential customers. Despite these overall positive results, weaknesses were identified, that contain opportunities for BMW. The regression analysis indicated that there is a strong positive correlation between customer satisfaction and perceived customer service and perceived innovation for existing customers and a strong positive correlation between customer satisfaction and perceived customer service, perceived innovation and perceived price for potential customers. Furthermore, the regression analyses indicated that there is a strong positive correlation between customer satisfaction and brand loyalty, both in form of repurchase as well as attitudinal loyalty.

Branding has been around for centuries as a means to distinguish the goods of one producer from those of another. More and more companies have come to the realization that one of their most valuable assets is the brand name associated with their products. Highly competitive markets like the automotive market make powerful brands essential to accomplishing growth. By using the underlying concept of brand equity, this paper investigates in which areas brand equity has been created for the brand BMW. Brand tools and knowledge structure of the brand BMW are uncovered using quantitative research methods. A survey was given to 151 current and potential customers and analyzed based on the brand equity framework. Furthermore, customer satisfaction and brand loyalty was tested using regression analysis.

The researcher finds that the level of awareness in form of brand recognition is with quite high for potential customers, while a higher percentage recalls BMW from their memory as a luxury brand rather than a performance brand. These results indicate an overall high level of awareness for the brand. Furthermore, results showed a desire for owning a BMW. However, distinguished by gender, female potential customers show a higher desire for competitive brands for both, as a luxury as well as a performance brand, while male potential customers show surprisingly a higher desire for competitive brands when it comes to performance cars.

The brand image of BMW is favourable and strong. BMW reflects mostly style, high quality, up-to-date engineering and high performance to a target audience of highly brand-aware individuals. Results showed that for the majority of existing as well as potential customers it is important that BMW shows the quality label „Made in Germany” since Germany is known for quality-engineering. Especially production in low-cost countries is linked negatively with lower quality and would lead to loss of the worthiness of the premium price perceived by customers. Furthermore, the brand image is not only strong and favourable, but also relevant, since respondents consider a BMW a safe car.

The regression analysis showed that customer satisfaction is positively correlated with perceived customer service and perceived innovation for existing customers and with perceived customer service, perceived innovation and perceived price for potential customers. Furthermore, the regression analysis in form of repurchase loyalty as dependent variable for analysing loyalty for existing customers and attitudinal loyalty as the dependent variable for analysing loyalty for potential customers used customer satisfaction for both as the independent variable. Results of the second regression analyses show that repurchase as well as attitudinal loyalty is positively correlated with the level of customer satisfaction. However, customer satisfaction explains repurchase loyalty only by 59.10 percent, and attitudinal loyalty with an even lower percentage of 38.91 percent, which indicates that there must be other factors important to explain brand loyalty.

The survey indicates potential in targeting customer groups that are not or not primarily targeted by BMW yet, but are interested in the brand and have high buying potential in BMW’s products currently or in the near future. These groups include students and women, with students becoming part of the target market with the start of their careers, and women providing sales opportunities due to increasingly higher level of completed education as well as higher paid jobs compared to a decade ago. In order to not fall behind, BMW should invest in innovation and use the potential in optimizing the product line. Finally, BMW should carefully consider aspects of producing outside of Germany since it has potential to diminish the brand equity by diluting secondary associations.

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