Literature review
The global move towards changing the global automotive industry through the incorporation of the Electric Vehicles (EVs) has forced China to embrace new ways of advancing its automotive technology (Neve 2014). China is seeing the chance of developing the electric vehicles as a technological advancement that will place the nation on the global economic map.
However, despite the government and the private companies instigating massive development plans that will lead to the growth of the electric vehicles, it is still unknown whether the EVs will be marketable in China or not. In a recent research, Marquis, Zhang, and Zhou (2013) discovered that although the electric vehicles are suitable for conserving petroleum, China is still seeing the idea of embracing the EVs technology as a limitation of its future growth, which lies on an intensive use coal-fired electricity.
Apart from the political influence, the behaviours of the Chinese consumers are likely going to influence the marketing of the EVs.
Consumer’s Behaviour
Role of Marketing Communication in Consumer Behaviour Theory
In the practice of marketing, Bowden (2009) postulates that designing a perfect communication channel that delivers the relevant product information to the clients, is imperative especially when dealing with the highly unpredictable consumers. One of the consumer behaviour theories that support the notion of strengthening the communication platforms is the theory of utility (Chevalier & Dina 2006).
The utility theory assumes that consumers are the ultimate decision-makers on the consumption of certain products, based on the perceptions of their available income resources and the perceived efficiency of the product. According to Croitor (2012), the economic utility theory considers consumers as rational decision makers, who balance their purchasing power with a wide range of individual spending factors that influence their purchasing.
In business management, Croitor (2012) reveals that utility consumers tend to consider utility factors such as need recognition, the available consumer information, the purchasing intention, the consumption efficiency, and finally the product end life. The above consumption factors are the psychological aspects that build the decision-making platform for the consumers and determine the purchasing chances of the consumers.
Hence, marketing communication brings the consumers into attention about the unknown benefits of the marketed product compared to the consumption factors that the consumers tend to consider before purchasing the new products (Su 2007). Communicating the needed product information during the marketing of a product enables the company to create an environment that supports the consumers to balance their personal, psychological, social, cultural, and economic factors that influence their abilities to purchase certain products (Su 2007).
From the perspective of the Chinese market, the Chinese trade battle with the Western Nations is affecting the perceptions of the Chinese E-car consumers. Since China is still transiting into a developed economy, most of the Chinese E-car consumers have developed negative attitudes towards the European E-cars (Su 2007). Therefore, communicating about the BMW i3 and i8 E-cars is essential in China.
The Hierarchy of Effects Model
The prevailing marketing and advertising literature links advertising effectiveness to the Hierarchy of Effects Model that believes in a pragmatic process that consumers psychologically have while making their purchasing decisions (Heyman & Dan 2004). The hierarchy of needs model consists of nine major elements of the pre-purchasing process that develops gradually as consumers exposed to a new product.
The nine elements of the hierarchy of effects model include; consumer’s attention, consumer’s interest, consumer’s search, consumer’s desire, consumer’s action, consumer’s like or dislike, consumer’s share, and finally consumer’s love or hate about a new product (Heyman & Dan 2004). These aspects explain the reason why the marketers of a product must socialize, sensitize, communicate, and influence the consumers from their audience behaviour into making their autonomous purchasing decisions (Heyman & Dan 2004).
According to the hierarchy model, the marketing process starts with attracting the consumer’s attention through providing the relevant product information such as the brands, attributes, evaluations, and experiences. Properly communicated product information normally raises the consumer’s interest (Fuller, Kurt & Melanie 2008).
Once the consumers develop an interest in a newly produced product, they begin searching for the product and any further information associated with it (Piron 2000). Later, consumers develop the desire to make a purchase of the product and ultimately decide whether to purchase or leave the product, based on their perceptions and attitudes towards the product (like/dislike). After deciding on whether to buy the product or not, consumers then share information and discuss the product with friends (Fuller et al. 2008).
Consumers may finally hate or love the product. As for the Chinese E-car market, the majority of the consumers still consider the marketing of the European-manufactured E-cars in China, as a political and trade battle, rather than an agenda for promoting the use of efficient green technology E-cars. Cass and Choy (2008) believe that the Chinese E-car consumers are still uninformed and inexperienced about the E-cars.
Consumer Proposition Acquisition Process Model
Another significant model that can explain the need for a proper strategy for marketing the green technology cars in the uninformed and politically influenced Chinese E-market is the consumer acquisition model.
Motive development– the consumer acquisition model postulates that the process of marketing a business product in a new market begins with setting up consumer prospects and making acquisitions, in a process known as motive development (Grazdane 2013).
Information gathering– After a company has unveiled its product motive into a market, in a process known as information gathering, consumers seek the relevant information about the product (Grazdane 2013). Motive development and information gathering stages are cognitive processes that create knowledge and awareness among the consumers (Grazdane 2013).
Product evaluation- the available market information about a product makes consumers evaluate the product and decide whether to purchase it or not.
Product selection– After evaluating the product based on the available information, users either choose or reject the product. Product evaluation and product selection are effective processes that allow consumers to feel, choose, or prefer an item. According to Payne (2013), the process of the consumer acquisition model ends up with two major stages namely the acquisition and re-evaluation processes.
Product acquisition– this is a conative process that process in which a customer manages to make a finest purchasing decision that allows him or her to purchase a product and create an everlasting bond with the producer and the product (Payne 2013).
Product re-evaluation– Product evaluation refers to the process by which a customer, after he or she makes an ultimate decision to purchase a product, begins to reassess the product at regular times. The customer proposition and acquisition model demonstrates how the consumer behaviour is complex in nature (Payne 2013). This model indicates that marketers must demonstrate a pragmatic marketing process that matches all the consumer stages. For instance, in marketing the BMW green cars such as BMW i3 and BMW i8.
Influence factors on the E-car Purchasing Decision Making Process
Researchers have identified five major factors that determine and influence the decision-making process of the E-car consumers (Pavlou & Fygenson 2006). The E-cars are currently appearing as conspicuous tech products and not basic consumer tech products that individuals can acquire irrespective of their socioeconomic statuses (Pavlou & Fygenson 2006).
The five important factors include the efficiency or the perceived quality of the E-car, the economic capability of the consumers, the social statuses of the consumers, brand reputation, and cultural issues. In a study concerning the attitudes and purchasing behaviours of the Chinese luxury consumers, Zhang and Kim (2013) carried out an online qualitative survey on the Chinese luxury market.
Using an online data-gathering website known as the Surveymonkey.com site, Zhang and Kim (2013) investigated the attitudes of the Chinese luxury consumers through an assessment of five key variables. The variables that the two researchers analysed included brand consciousness, materialism, fashion innovativeness, social comparison, and fashion involvement.
Consumer Opinion leads to Consumer Attitude
It is common that most of the modern consumers tend to rely on the experiences of other consumers to purchase or hire newly introduced goods or services (Phau & Prendergast 2001). Consumers use information from customer reviews that indicate certain experiences on the products, to decide whether they will or will not purchase certain products available in the market (Phau & Prendergast 2001).
In a study concerning the behaviours of the consumers towards new products, Wijaya (2012) analysed how the hierarchy of effects model develops in the process of advertising new products. According to Wijaya (2012, p. 81), “consumers evaluate product or service performance through their experience by comparing, what they expected, imagined, and convicted, with what they perceive they received from a particular supplier.”
According to Rahman (2011), consumers use their experiences with the products or listen to the experiences of others in relation to the efficiency of the products, to make judgments on whether to purchase the products or not. In their study, Zhang and Kim (2013) discovered that brand consciousness or brand reputation is a key aspect that influences the Chinese conspicuous consumers.
The aspect of brand consciousness according to the two researchers originates from the Chinese cultural perception enshrined in the concept of face, or the mianzi. In China, something or someone must have the trait of social self-worthiness to remain valuable to other people (Lu & Pras 2011). For a product to permeate the Chinese market, a good reputation is mandatory to convince the aspiring buyers in the new markets (Lu & Pras 2011).
Another aspect that influences the Chinese conspicuous buyers is materialism, where the idea of the consumer’s economic capability becomes a factor. In China, wealth defines the social status of individuals. According to Zhang and Kim (2013), materialism highly associates with the enrichment of social status and purchasing of an E-car or possessing visible wealth, may deem materialistic.
From the study of Zhang and Kim (2013), another significant factor that influences the purchasing decisions of the luxury products such as the E-cars is the cultural beliefs of the individuals. In China, culture is a driving factor that contributes to the decision-making behaviours of the Chinese E-car buyers.
The Chinese consumers are fond of comparing themselves to others in terms of their social statuses, as social recognition matters to many people (Arnold & Thompson 2005). Therefore, the trends in the purchasing of the luxury products sometimes follow the route of social recognition and social status.
In their study, Zhang and Kim (2013) also reviewed the cultural behaviours of the Chinese consumers and noticed that China remains dominated by the collectivist culture. Hung, Chan, and Tse (2011), reveal that due to the Chinese collectivist culture, consumers tend to imitate the lifestyle of their wealthy elites and consider this behaviour as a gateway for gaining social recognition.
Rational and emotional driven Purchasing Process of an E-car
Consumer purchasing behaviour is a diverse concept as it extends beyond the social and economic factors that inspire buyers to purchase certain products (Lu & Pras 2011). Some consumers may want to purchase a newly launched product due to their inherent emotional bond that with the products.
Recent studies on the Asian culture have revealed that Chinese women make up the highest number of emotional buyers in the Asian automotive industry. In a study of the Chinese premium car industry, Sha, Huang, and Gabardi (2013) qualitatively examined the upward mobility in the purchasing of vehicles.
Under the umbrella organization, McKinsey and Company, Sha et al. (2013) used statistical data from the Chinese transport sector to compare the upward mobility trends in the Chinese Premium Car Market. More than 26 percent of the surveyed Chinese buyers liked the electric cars, such as the BMW i3. However, most important in the research was the idea of emotional purchasing.
In their research, Sha et al. (2013) discovered that majority of the consumers are purchasing premium cars based on their emotional attitudes. Therefore, premium car manufacturers are nowadays shifting their focus towards ensuring that green cars are reflecting the emotional needs of the E-car consumers.
Their research also analysed more than 30 predefined emotional traits, but concentrated on only ten best traits. In the research, one of the automakers used the Chinese traits based on the brand DNA that comprise of the finest personalities of dynamism, aspiration, and trendy styles. The other automakers used the traditional Chinese Confucian values such as the aspects of sophistication, reliability, quality, and heritage (Sha et al. 2013).
In this survey, the researchers discovered that the premium car buyers, especially those enthused by the green technology cars, not only care about the purpose of their vehicles or their functional abilities, but also about their emotional attachment to their cars.
Branding Strategy
Definition of a Brand
Branding is a strategic manufacturing process that acts as a primary function of advertising, through which a company tries to reach its target audience. A brand can also refer to the value in the mind of the consumer (Moisescu 2005).
A brand may refer to a specific corporate product, designed through specific strategies, given a specific market name, and designed with specific features that distinguish it from other products within the company and outside the company (Midttun & Witoszek 2015). It is also the output of marketing communications, which producers must manage 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.
In marketing, products tend to communicate to the consumer audience through their specific logos, their specific features, and their specific designs or their unique messages (Moisescu 2005). BMW has two important E-cars that come with the brand name, the BMW I Series.
Consumer-based perspective on Brand Equity
In trying to understand how a brand survives in a market, David A. Aaker designed the Brand Equity Model. The theorist defines brand equity as a marketing concept that describes a number of assets and liabilities that are associated with a certain brand.
According to Aaker (1996), these assets and liabilities are inclusive of the names and the symbols that are potentially capable of adding some value to, or deducting value from a marketed product or service. In the Brand Equity Model, Aaker (1996), identifies five important components of the products or services that are capable of adding value or removing value from the products or services.
According to Aaker (1996), the five components that he calls assets and liabilities add or deduct a product or service value. The components include brand loyalty, brand awareness, perceived quality, brand associations, and other modest assets. In his theoretical perspective, Aaker believes that the five brand elements work independently but have mutual links.
Aaker’s believes that companies can evaluate the customer’s brand loyalty of through decreased marketing costs, through a company’s timing towards reasonable threat, through a company’s efforts to attract new clients, and through a company’s leveraged trade (Moisescu 2005). In brand awareness, companies will understand customer’s awareness on a brand through assessing the customer’s anchored relationship with the brand, their familiarity with the brand, and their commitment to the brand (Aaker 1996).
In perceived quality, companies will evaluate the goodness of a product by understanding the quality offered to the product, the levels of differentiation, the number of brand extensions, the price trends of the product, and its availability in the market outlets (Aaker 19996).
In brand associations, companies will evaluate the associations created by brands through the consumer’s insights, the number of brand lines, and the levels of brand differentiation. In other priority assets, companies can evaluate the strength of their brands through assessing its patents, its propriety rights, and its intellectual property rights.
Brand Perception
The concept of brand perception dates back to the 18th century when marketers wanted to find the association between the product name and its subsequent market performance. According to Ghodeswar (2008), brand perception literally means the notion that each individual consumer has built concerning a certain product brand, or simply, the differential value that a product brand has in a niche market.
Chinese consumers live in a collectivist culture, where numerous cultural and historical life aspects determine their consumption and purchasing behaviours on certain tech and non-tech products. In a study of the Chinese consumer behaviours, Shi, Wen and Fan (2012) conducted a research that dealt with the perceptions about the facial influence on the Chinese purchasing behaviours.
Using a quantitative research survey approach, Shi et al. (2012) noticed that face (mianzi), which in a company can be a product brand image, is crucial in determining the purchasing decisions of the consumers.
Brand Image
Brand image is a concept that is almost similar to brand perception although the meanings of the two concepts and their applicability in the marketing research differ distinctively. According to Ghodeswar (2008 p. 5), “brand image is the perception in the mind of the customers about the brand and its associations.” In simplest terms, a brand image represents the whole idea of how the consumers in the public, perceive a product brand despite their varied intentions of the purchases on the products.
A brand image, according to Ghodeswar (2008), should exist as a mutual bridge that establishes and strengthens the emotional relationship between the manufacturers and the consumers. In a recent study about brand image, Sarwar, Azam, Haque, and Sleman (2013) analysed how a brand image affects the consumer’s perceptions about a product brand. Just like the fact that BMW i3 and BMW i8 are products of Germany, the researchers discovered that a German’s image might influence the Chinese buyers.
The Value Drivers Model
The Value Drivers Model is a pragmatic product development and marketing strategy that demonstrates how corporate sustainability leads to growth and success of a newly launched product (Moisescu 2005). The Value Drivers Model postulates that products must come with defined purposes, resonance, a proof of performance, and proof of a difference.
Such features bring about a meaningfully different experience, where the aspects of credibility, performance strength, fundability, and extendibility, become valuable aspects that bring a considerable return on investment benefits (Moisescu 2005). For instance, the BMW i3 and the BMW i8 have a high operational efficiency that comes through reduced maintenance costs, a sizeable power consumption, and easy maintenance.
In terms of cost-effectiveness, the two cars are low in energy, and use electric power that is easily available around the owner’s homes (Moisescu 2005). These features make the consumers feel comfortable to purchase these vehicles, and the car manufactures will eventually estimate their investments with their financial objectives.
Goal of the Brand Strategy of the BMW Group
In reviewing the consumer’s behaviours, most researchers have discovered that consumers have complicated traits when it comes to making purchasing decisions (Leo, Bennett & Hartel 2005). In brand positioning, where designing a brand identity acts as the foremost idea in the whole process of corporate branding, consumers tend to seek information on why a company has created a brand strategy in their market.
In their goal, the leader of Brand Strategies, Helmut Meysenburg postulates that, “pleasure is a key component of the BMW brand, in which sheer driving pleasure and sheer joy about the car and sheer delight about mobility are major facets” (Groppel-Klein 2014, p. 47).
Helmut Meysenburg also states that emotions not only come from the customer’s personal dynamics, but they sometimes come from the inner excitement created by the elegancy of cars in their qualities, their innovations, and their exteriors and interiors. These techniques have furnished the BMW i3 and the BMWi8.
Communicated Brand Image in the Marketing Campaign of the brand BMW I
In its initiative of campaigning for the green cars, the BMW Company has its well-communicated green car brand known as the BMW I Series (Pisano & Duchemin 2013). Through its strategic plan of delivering state-of-the-art green cars, the BMW I Series is the current brand image that is leading the marketing campaign that several similar companies have designed to enlighten people about the green technology (Pisano & Duchemin 2013).
The BMW I Series is the already communicated brand image that will carry the intentions and goals of the BMW green technology and the other purposes of modernizing the premium cars. The brand image began in 2013, when the BMW Group, first came up with the idea of designing the BMW i3 green car that enlightened E-car buyers about the modern green tech that brings about sustainability and style (Pisano & Duchemin, 2013). Later in the beginning of 2015, BMW Group reinforced its BMW I Series through the release of the BMW i8 vehicle.
A Green Branding Approach
Definition of Green Branding
China is now the leading consumer of the premium cars meant for self-drive because the middle class seems to be growing just as the nation seems to grow economically (Kaigler-Walker & Gilbert 2009). Green branding is nowadays a new marketing strategy in which companies are seeking sustainable solutions to the growing environmental problems by producing eco-friendly products.
In the automotive industry, green branding may refer to the approaches that the automakers are using to develop new green car models, and emboss features and designs that ensure the cars are less harmful to the environment (Dodson 2012).
In green branding, the automakers are nowadays using electric cars that have rechargeable batteries to enable the functioning of the engines without any considerable harm to the atmosphere (Schiffman & Kanuk 2004). In another approach to green branding, some companies have designed green cars that are using bio-fuel to reduce environmental harm.
Dangers of Greenwashing
Although green branding is a global sustainability campaign, people across the world have questions about the behaviours of the firms associated with the green branding strategies (Harris & Corner 2011). Even as legit green companies may be sure about their intentions of marketing their green products and services, some companies have also misused the concept of green branding (Futerra.org 2010).
Companies use the concept of green branding and green tech solutions to persuade buyers to purchase counterfeit green products or simply market their products while using the green branding strategy wrongly (Futerra.org 2010). Amid the growing confusion in the green technology, people are also worried about the inventions of the green technology in which several malice organizations are using the green technology concept to brainwash consumers (Futerra.org 2010).
In China, the country is insensitive to the dangers of greenwashing and several marketers are greenwashing the uninformed and vulnerable consumers. In China, many companies are forging alliances with giant automakers and tech companies to dupe consumers and greenwash them about their green-branded products (Harris & Corner 2011).
In a study about the dangers of greenwashing, Futerra.org, a leading UK research company dealing with corporate responsibility and sustainability, designed a research that surveyed the levels of greenwashing in the United States, United Kingdom, China, Australia, and France. The research discovered that counterfeit and real companies spent about £17 million to set up malice advertisements that duped vulnerable consumers about their products (Futerra.org 2010).
Among the victimised countries, China appeared to be the most vulnerable country as marketers are not answerable for their misconducts, simply because China is desperate of becoming a giant economy without considering the essence of corporate responsibility and sustainability (Yoo & Lee 2009). For the BMW i3 and i8 green cars, several green car imitations might arise in China.
Marketing Communications of a Green Brand
Most of the green brand strategies use words such as inorganic, recycle, eco-friendly, emissions, environmental harm, reuse, and reduce, in communicating and attracting the consumers who love the green technology products. The E-car market is different on how people perceive the green technology.
A study conducted on the Chinese green technology industry by Janiszewska and Insch (2012) showed that Chinese still live in their traditional culture of collectivism and communicating a green brand may be easy when marketers consider the promotional techniques and advertising methods that reflect the cultural desires of the Chinese consumers.
Additionally, social media and digital TV platforms have become relatively familiar with the Chinese consumers and using these platforms would inspire people who love the green technologies in the automotive industry (Janiszewska & Insch 2012). Public road tests and free rides are also charitable promotion services that most Chinese admire.
Green Brand building of German E-car producers
The fact that China is adamant towards the idea of embracing green technology as a solution of eradicating the vice of environmental pollution, several green technology companies have set their targets towards sensitizing the Chinese consumers about the need to embrace green technology in the automobile industry (Anurit, Newman & Chansarker 2008).
Nonetheless, penetrating into the Chinese electronic car market is never easy for any company as the consumption trends and consumer behaviours of the Chinese E-car users tend to vary from the behaviours and consumption trends of other consumers from the developed and other developing nations (Piron 2000 & Bowden 2009).
A recent report about the consumption trends of the electronic cars in China from the world’s leading business journal, the Wall Street Journal, shows that despite the government and international automobile companies spending millions of dollars to revamp the Chinese electric-car industry, several buyers are avoiding these clean-tech vehicles.
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