The Effects of Sustainable Marketing on Brand Equity in the Automobile Industry Essay

Introduction

Background of the Study

Traditionally, experts have analyzed corporate performance by pegging it on profitability indices. However, changes in technology and consumer preferences have recalibrated the metrics of analysis by making it no longer important to rate the success of a corporate entity on profitability alone (Mahmood and Bashir, 2020). Instead, non-monetary measures of performance, such as community and environmental impacts have been included in the metrics as well (Molinillo, Ekinci and Japutra, 2019). Various facets of corporate management have witnessed this shift in assessment processes and marketing is not an exception. Indeed, today’s marketing strategies do not only promote the profitability of a firm but also strive to endear its image to consumers by highlighting non-monetary benefits, such as environmental consciousness and community impact to gain support.

The change in metrics for assessing corporate performance means that factors responsible for the success of a firm have expanded beyond financial measures of assessment. From this background, brand equity has emerged as a determinant of corporate performance because it captures changes in the perceptual assessment of corporate performance (Mahmood and Bashir, 2020). Therefore, a company’s corporate brand equity can influence its success because it represents the relationship between the perceived value of its products or services and the actual cost of availing it in the market.

Companies that operate in the automotive industry have experienced the effects of some of the above-mentioned changes in corporate performance assessment. Traditionally, environmentalists have criticized car manufacturers for promoting unsustainable marketing practices through the production and sale of fuel-powered engines (Grewal, Gupta and Hamilton, 2020). In response to these concerns, the automobile industry has developed more environmentally friendly vehicles, by lowering emission rates and improving energy efficiency standards (Nasdaq, 2021). Additionally, there has been increased interest in research and development activities in the electric vehicle (EV) market (Fu and Fu, 2021). This trend has gained pace in an environment of increased sensitization of the need to protect the environment and adopt “sustainability” as a core philosophy of business and life (Grewal, Gupta and Hamilton, 2020). This paradigm shift has led to the development of an electric vehicle car division in major automobile companies around the world. Additionally, it has contributed to the increased acceptance of sustainable marketing principles in the automotive industry.

Research Problem

Sustainable marketing involves the production, distribution, and sale of goods and services that are environmentally friendly or socially responsible. In some quarters, this corporate strategy is known as “green marketing” and it is intended to encourage companies to adopt sustainable business practices that will not only ensure their survival but also that of the communities they come from (Ha, 2021). Some of the commonly documented benefits of sustainable marketing include increased cost savings, prolonged profitability, improved corporate image, and enhanced efficiency, among others (Hollebeek and Macky, 2019; Lee, 2020). Despite the established benefits of sustainable marketing, few companies have adopted its principles in their production, or business, processes. This situation is especially true in the automotive industry, which contributes to the global production of greenhouse gases.

Sustainable marketing in the automotive industry has taken different shapes and forms, each with unique characteristics that appeal to the company involved. Brand equity is one aspect of corporate performance that has the potential of galvanizing support for the adoption of sustainable marketing practices. However, there is minimal academic focus on understanding how sustainable branding strategies affect brand equity in the long run. Brand equity is an important determinant of the success of automotive companies because the automotive industry is cutthroat with intense competition from rivals (Fu and Fu, 2021). Thus, a decrease in the brand equity of a company could significantly affect its profitability and market position. Consequently, it is important to understand factors that affect brand equity and sustainable marketing is one of them. This research proposal seeks to understand the effects of sustainable marketing on brand equity in the automotive industry.

Research Aim

The adoption of sustainable marketing principles in corporate management has the potential to change fundamental aspects of business performance at the firm and industry levels. As alluded to in this document, marketing strategies have been traditionally anchored on promoting profitability goals. This situation has since changed and companies are struggling to endear themselves to customers who are increasingly conscious of the environmental impact of the goods and services they buy. Given that these reasons have changed the industry and firm-level management practices in the automotive industry, the proposed study aims to understand the effects of sustainable marketing on brand equity in the sector.

Research Objectives

The objectives of the proposed study strive to understand the impact of the adoption of sustainable marketing practices on the overall performance of the automotive industry. Special attention has been given to the electric vehicle market, a growing automotive industry subsector witnessing significant brand value changes (Nasdaq, 2021). Thus, the objectives of the study are fixated on understanding the impact of sustainable marketing on issues affecting brand equity, which are loyalty, awareness, quality, and brand associations (Nasdaq, 2021). To this end, the objectives of the proposed investigation are as follows:

1. To determine the effects of sustainable marketing on brand loyalty in the automotive industry
2. To investigate the extent that the adoption of sustainable marketing principles would have on consumers’ perceptions of product quality in the automotive industry
3. To establish the extent that the adoption of sustainable marketing principles would have on brand associations in the automotive market
4. To estimate the extent sustainable marketing impacts brand awareness in the automotive industry

Research Questions

The research questions that will be answered in the proposed investigation will be designed to meet the above-mentioned objectives. Thus, there is a close association between the objectives underpinning the proposed study and the questions to be answered below:

1. What is the effect of the adoption of sustainable marketing principles on brand loyalty in the automotive industry?
2. How does the adoption of sustainable marketing principles impact brand awareness among consumers in the automotive industry?
3. To what extent does the adoption of sustainable marketing principles affect brand associations in the automotive market?
4. In what ways does the adoption of sustainable marketing principles affect the perceived quality of cars in the automotive industry?

Importance of Study

The findings of the proposed study will contribute to the expansion of the literature on sustainable marketing, which is a relatively underexplored area of business management. Particularly, the proposed investigation will expand the body of knowledge linking sustainable marketing practices with corporate performance. This association will be more profound by focusing on brand equity, which is a key determinant of corporate performance. Additionally, the findings of this study will be instrumental in informing policy decisions underpinning corporate performance because they will guide managers in making decisions to accept or reject processes that would optimize corporate and community objectives. The template for the adoption of sustainable marketing concepts in the proposed study will also be valuable to car automakers who intend to venture into the EV market. Indeed, firms that intend to embrace sustainable marketing principles in their business plans may use the experiences derived from this study in pursuing this type of marketing.

Literature Review

The current body of literature on sustainable marketing and brand equity has emphasized nurturing business-to-customer relationships as the main driving force for enhancing corporate performance. Key sections of this review will demonstrate that most scholarly works which have discussed sustainable marketing and its relationship with corporate performance have mainly focused on promoting customer loyalty as the tool for improving brand equity, with minimal attention given to policy and sustainable development, which the parent philosophies underlying the success of sustainable marketing.

Transition to Sustainable Marketing

The analytical boundaries that scholars have developed when investigating the transition from traditional to sustainable marketing have been defined by the benefits that companies will enjoy by making the shift. Researchers have drawn attention to the limitations of traditional marketing techniques as the key drivers for the adoption of sustainable marketing principles in corporate governance (Lee, Ham and Koh, 2019; Sheth and Parvatiyar, 2021). For example, Becker, Wiegand, and Reinartz (2019) questioned the authenticity of television advertisements and concluded that social-media-based campaigns were more attractive to audiences because of their heightened authenticity. Sustainable marketing has emerged from existing discontentment with traditional marketing methods, thereby paving the way for the development of environmentally friendly production, distribution, and sale of socially acceptable products. Stated differently, weaknesses associated with traditional marketing campaigns, relative to contemporary ones, highlight the main motive for developing sustainable marketing campaigns. Therefore, support for sustainable marketing has been forthcoming in this regard, but critics claim that its adoption is “driving the market” as opposed to “being driven by the market” (Sheth and Parvatiyar, 2021). Nonetheless, there is a similarity between traditional and sustainable marketing principles because the former promotes profit-maximization objectives and the latter includes the achievement of community and societal goals in the process.

Brand Identity and Social Capital

Processes involved in understanding the impact of sustainable marketing principles on brand equity touch on brand identity and social capital as tools for strategy development. It has been difficult to achieve the gains that exist in optimizing these concepts because of impediments to the adoption of strategic marketing concepts. Researchers such as Lee, Ham, and Koh (2019) have similarly drawn attention to this issue with varied proposals developed on how to solve them. For example, they say the cost of adopting Corporate Social Responsibility (CSR) practices in organizations, or industries, may discourage many from doing so (Lee, Ham and Koh, 2019). Therefore, cost considerations should be taken into account when making significant strategic marketing changes.

By minimizing hurdles to the adoption of sustainable marketing concepts, companies could transform their brand identities into social capital and use the same to enhance their competitiveness. Scholars who hold a similar view have advanced the claim by investigating the relationship between social capital and sustainable marketing. For example, Fan, Hsu, and Liu (2022), Lee, Ham, and Koh (2019), Pham and Pearce (2019) have conducted similar investigations by examining the relationship between CSR and corporate performance in the tourism and hospitality sectors. Researchers have also established the relationship between brand identity and social capital in the sports industry with scholars such as Sharma and Jain (2019), arguing that there is a nexus between CSR, trust, loyalty, and brand equity. Stemming from the findings of such investigations, equity crowdfunding has been proposed as a viable strategy for building social capital because of its association with brand loyalty (Sabia, Bell and Bozward, 2022). Relative to this position, researchers highlight the importance of understanding the impact of brand love and the demographic profiles of consumers when making such assessments (Nawaz et al., 2020). They are useful in moderating the impact that branding strategies would have on business-to-customer relationships.

Policy Support for Sustainable Marketing

The role of policy support in the adoption of sustainable marketing campaigns cannot be ignored in this investigation because of the existence of barriers associated with technological adoption and use. For example, the geographical distribution of customers and the effects that marketing policies have on their purchasing behaviors could be influenced by policy interventions. This is why Cano Guervos et al. (2020) investigated the impact of the geographical distribution of customers on brand loyalty and equity. They found that high levels of loyalty and commitment to brands were profound when consumers were close to their service providers (Cano Guervos et al., 2020). Therefore, situational factors that affected consumer behaviors and policy interventions played a significant role in moderating their effects.

Income disparities and education inequalities also have the potential of influencing the impact of sustainable marketing campaigns on consumers and could equally be moderated using policy interventions. However, few scholars have delved into this area of research with only a few mentions but in broad contexts. For example, Shultz et al. (2022) advocated for the use of policy interventions to promote marketing efforts in the global business space. Xiong, Yu, and Wang (2021) also alluded to the same intervention to help companies compete with their counterparts who have the inherent advantage of a recognized brand name. They argue that such a type of brand power may disenfranchise new entrants that want to have an impact in a market characterized by a wide variety of products and known brand names (Xiong, Yu and Wang, 2021). These scholars highlight the generalized nature that policy interventions have been used to initiate market corrections. However, there is minimal mention of how they could be used to promote sustainable marketing plans.

Minimal scholarly attention is also evident in establishing the link between sustainable marketing and development goals, as outlined by the United Nations (UN). It is important to create this nexus of the association because sustainable marketing is derived from these global principles of human development (Reckien et al., 2017). The failure to create this link has diminished brand resonance in various economic sectors where companies have tried to implement sustainable marketing plans for the benefit of the firm (Raut, Brito and Pawar, 2020). The disconnect emerges when customers do not understand why they need to embrace sustainability, or why it is important to them in the first place.

Summary

The insights contained in this review indicate that the existing body of literature, which has investigated the effects of sustainable marketing on corporate performance, has used the customer-centric view of corporate management to increase brand equity. Policy support is also commonly availed in the process to correct market imbalances and promote brand equity. These findings are relevant to the improvement of corporate management strategies aimed at enhancing shareholder returns, but no attention has been given to the automotive industry, as an industry with a unique responsibility of promoting sustainability in the world. The proposed research seeks to fill this research gap.

Methodology

Research Approach

There are two major research approaches in academic research – qualitative and quantitative. The quantitative method focuses on the assessment of measurable variables, while the qualitative model is applicable when research variables are subjective (Stokes, 2017). Each of these techniques has its unique advantages and advantages but the goals and nature of a study determine the best approach to select. Subject to this reasoning, both qualitative and quantitative techniques will be adopted in the proposed study because of the expansive nature of the research scope. Furthermore, the objectives of the investigation assume both quantitative and qualitative forms, thereby making it easier to embrace the two techniques. For example, brand loyalty and consumer perceptions are subjective variables that could be investigated qualitatively. Comparatively, brand associations and awareness can be evaluated using quantitative methods. At the same time, brand equity is examinable quantitatively, thereby adding to the reasons for the adoption of a mixed methods approach.

Research Design

The case study research design will be used in the proposed study because of the nuanced nature of the EV market. The low levels of EV adoption, as a core business model in the automotive industry, influence its adoption because most companies are not fully engaged in EV development; instead, they choose to have it as a division in their existing business structures (Nasdaq, 2021). The case study approach will help to identify companies that are fully involved in the EV market and not merely an appendage of their existing setup. Subject to this criterion of review, Tesla is chosen as the preferred case study because it is one of the few automobile companies with an exclusive EV focus (Nasdaq, 2021). The company’s brand value has risen in the last decade, making it the fastest-growing company in the world, in terms of brand value gains (Nasdaq, 2021). Therefore, it will be interesting to understand how such high rates of growth in brand equity have been achieved within a short time without using traditional marketing strategies.

Data Collection

The researcher intends to collect primary and secondary data to answer the research questions. Primary data will be collected using structured questionnaires administered to employees of Tesla’s marketing division (see appendix 1). The questionnaire is in two parts, where the first one captures the demographic information of the respondents, including their age, gender, education qualifications and work experience and the second part captures their views on brand loyalty, awareness, quality, and associations. These tenets of the investigation were deemed indicators of brand equity performance. The informant’s sentiments were measured using the five-point Likert scale, which had five levels of agreeability or disagreeability with the statements posed in the questionnaire. These levels were “strongly agree,” “agree,” “neither agree nor disagree,” “disagree,” and “strongly disagree.” Using this scale, the implementation of sustainable marketing practices was compared to the movements in brand equity performance.

The researcher will send the questionnaires to the informants electronically and they will email the back to the researcher in the same manner after completion. Respondents will be recruited randomly to eliminate bias and to get a general overview of the sentiments of the company’s marketing department on sustainable marketing, regardless of employee rank (Stokes, 2017). Secondary data will be obtained from books, journals, and corporate reports as the main source of information. The intention is to use Tesla’s corporate reports to track changes to its brand equity and compare the findings against its marketing performance. The justification for choosing the secondary research plan, as the supplementary source of data, is rooted in the scope of the investigation because the analysis will be industry-wide.

Data Analysis

Data from the proposed research study will be analyzed using the Statistical Packages for Social Sciences (SPSS) software and the thematic/coding method. The SPSS technique will be used to analyze primary data using descriptive and inferential analysis techniques, while the secondary data will be reviewed using the thematic and coding method. It works by identifying themes and patterns within a large body of text, based on recurring cues of word use, topic selection, and vocabulary placement, as the main techniques for identifying relevant content. Both techniques have been widely used in the social sciences to analyze data that have a mixed-method focus as the proposed study does.

Ethical Considerations

Research ethics refers to the conduct of a researcher when undertaking a study. The field is mostly preoccupied with processes relating to the collection, analysis, and treatment of data. Given that the present investigation will involve human participants, the main ethical considerations will involve confidentiality, anonymity, and consent (Patten and Newhart, 2017). To meet these ethical requirements, the information obtained from the informants will be presented anonymously. The goal is to safeguard the privacy of the respondents and protect them from any repercussions that may emerge from giving their views on the company’s performance.

Permission will be sought from the company’s departmental manager to survey employees. The researcher will not incentivize, or coerce, participants into signing an informed consent form that will prove their willingness to volunteer in the investigation. Additionally, stemming from the use of secondary data, as the main source of supplementary information, the authors of all works used will be acknowledged (Stokes, 2017). Similarly, all sources used in the research will be free for public use, and all materials that require consent from the original authors excluded from the review.

Gantt Chart

According to the Gantt chart highlighted in Table 1 below, the proposed research is expected to take nine weeks to complete with most of the work happening between weeks 3 and 8 where data analysis and peer-review processes will be undertaken.

Table 1. Gant chart

Reference List

Becker, M., Wiegand, N. and Reinartz, W. J. (2019) ‘Does it pay to be real? Understanding authenticity in TV advertising’, Journal of Marketing, 83(1), pp. 24–50.

Cano Guervos, R. A. et al. (2020) ‘Influence of tourist geographical context on customer-based destination brand equity: an empirical analysis’, Journal of Travel Research, 59(1), pp. 107–119.

Fan, D. X. F., Hsu, C. H. C. and Liu, A. X. (2022) ‘Transforming brand identity to hotel performance: the moderating effect of social capital’, Journal of Hospitality and Tourism Research, 6(2), pp. 512-529.

Fu, S. and Fu, H. (2021) ‘A method to predict electric vehicles’ market penetration as well as its impact on energy saving and CO2 mitigation’, Science Progress, 104(3), pp. 1-11.

Grewal, R., Gupta, S. and Hamilton, R. (2020) ‘The journal of marketing research today: spanning the domains of marketing scholarship’, Journal of Marketing Research, 57(6), pp. 985–998.

Ha, M. T. (2021) ‘Optimizing green brand equity: the integrated branding and behavioral perspectives’, SAGE Open, 11(2), pp. 178-185.

Hollebeek, L. D. and Macky, K. (2019) ‘Digital content marketing’s role in fostering consumer engagement, trust, and value: framework, fundamental propositions, and implications’, Journal of Interactive Marketing, 45(1), pp. 27–41.

Lee, S., Ham, S. and Koh, Y. (2019) ‘Special issue on economic implications of corporate social responsibility and sustainability in tourism and hospitality’, Tourism Economics, 25(4), pp. 495–499.

Lee, N. R. (2020) ‘The future of social marketing: let’s get it in orbit by 2025!’, Social Marketing Quarterly, 26(1), pp. 3–13.

Mahmood, A. and Bashir, J. (2020) ‘How does corporate social responsibility transform brand reputation into brand equity? Economic and non-economic perspectives of CSR’, International Journal of Engineering Business Management, 5(3), pp. 221-243.

Molinillo, S., Ekinci, Y. and Japutra, A. (2019) ‘A consumer-based brand performance model for assessing brand success’, International Journal of Market Research, 61(1), pp. 93–110.

Nasdaq. (2021) Tesla brand equity credible catalyst to be acknowledged. Web.

Nawaz, S. et al. (2020) ‘Role of brand love and consumers’ demographics in building consumer–brand relationship’, SAGE Open, 11(2), pp. 1-15.

Patten, M. L., and Newhart, M. (2017) Understanding research methods: an overview of the essentials. London: Taylor & Francis.

Pham, V. T. T. and Pearce, D. G. (2019) ‘Destination and tourism business brand consistency in Binh Thuan, Vietnam’, Journal of Vacation Marketing, 25(1), pp. 37–50.

Raut, U. R., Brito, P. Q. and Pawar, P. A. (2020) ‘Analysis of brand resonance measures to access, dimensionality, reliability, and validity, Global Business Review, 21(1), pp. 162–175.

Reckien, D. et al. (2017) ‘Climate change, equity and the sustainable development goals: an urban perspective’, Environment and Urbanization, 29(1), pp. 159–182.

Sabia, L., Bell, R. and Bozward, D. (2022) ‘Using equity crowdfunding to build a loyal brand community: the case of Brewdog’, The International Journal of Entrepreneurship and Innovation, 7(2), pp. 332-354.

Sharma, R. and Jain, V. (2019) ‘CSR, trust, brand loyalty and brand equity: empirical evidences from sportswear industry in the NCR region of India’, Metamorphosis, 18(1), pp. 57–67.

Sheth, J. N. and Parvatiyar, A. (2021) ‘Sustainable marketing: market-driving, not market-driven’, Journal of Macromarketing, 41(1), pp. 150–165.

Shultz, C. et al. (2022) ‘JPP&M’s global perspective and impact: an agenda for research on marketing and public policy’, Journal of Public Policy and Marketing, 41(1), pp. 34–50.

Stokes, P. (2017) Research methods. London: Palgrave Macmillan.

Xiong, L., Yu, H. and Wang, Z. (2021) ‘Competition in a variety-seeking market with brand name awareness’, SAGE Open, 11(2), pp. 1-13.

Appendix

Appendix 1 – Questionnaire

Dear Participant,

Thank you for choosing to participate in this study. In this research paper, we aim to understand the effects of sustainable marketing on brand equity performance in the automotive industry. We seek to understand your views on this research topic based on your expertise and experience in marketing.

Please, (✓) tick on the appropriate boxes

Part A – Demographic Data

Please, state your gender

• ☐ Male
• ☐ Female

How old are you?

• ☐ 18-25 Years
• ☐ 26-35 Years
• ☐ 36-45 Years
• ☐ 46-55 Years
• ☐ Older than 55 years

Please, state your highest education qualification

• ☐ High School
• ☐ Diploma
• ☐ Undergraduate Degree
• ☐ Master’s Degree
• ☐ PhD

How long have you been working for the organization?

• ☐ Less than 1 year
• ☐ 1-2 Years
• ☐ 3-4 Years
• ☐ 5-6 Years
• ☐ More than 6 years

Part B – Impact of Sustainable Marketing on Brand Equity

Brand Loyalty

Tesla’s adoption of sustainable marketing plans has increased brand loyalty

• ☐ Strongly Agree
• ☐ Agree
• ☐ Neither Agree nor Disagree
• ☐ Disagree
• ☐ Strongly Disagree

Tesla’s adoption of sustainable marketing has enhanced customer commitment to the brand

• ☐ Strongly Agree
• ☐ Agree
• ☐ Neither Agree nor Disagree
• ☐ Disagree
• ☐ Strongly Disagree

Tesla’s adoption of sustainable marketing principles has led to repeat purchase behavior among customers

• ☐ Strongly Agree
• ☐ Agree
• ☐ Neither Agree nor Disagree
• ☐ Disagree
• ☐ Strongly Disagree

Brand Awareness

Our adoption of sustainable marketing has led to increased consumer engagement of the Tesla brand

• ☐ Strongly Agree
• ☐ Agree
• ☐ Neither Agree nor Disagree
• ☐ Disagree
• ☐ Strongly Disagree

Our adoption of sustainable marketing principles has promoted the visibility of the Tesla brand

• ☐ Strongly Agree
• ☐ Agree
• ☐ Neither Agree nor Disagree
• ☐ Disagree
• ☐ Strongly Disagree

Our adoption of sustainable marketing has enhanced brand outreach in the global automotive industry

• ☐ Strongly Agree
• ☐ Agree
• ☐ Neither Agree nor Disagree
• ☐ Disagree
• ☐ Strongly Disagree

Perceived Quality

Tesla’s adoption of sustainable marketing has enhanced the perceived durability of its cars

• ☐ Strongly Agree
• ☐ Agree
• ☐ Neither Agree nor Disagree
• ☐ Disagree
• ☐ Strongly Disagree

Tesla’s adoption of sustainable marketing principles has enhanced the aesthetic appeal of its cars

• ☐ Strongly Agree
• ☐ Agree
• ☐ Neither Agree nor Disagree
• ☐ Disagree
• ☐ Strongly Disagree

Tesla’s adoption of sustainable marketing has enhanced the reliability of its cars

• ☐ Strongly Agree
• ☐ Agree
• ☐ Neither Agree nor Disagree
• ☐ Disagree
• ☐ Strongly Disagree

Brand Association

Our adoption of sustainable marketing plans has created brand associations between Tesla and sustainability in the automotive industry

• ☐ Strongly Agree
• ☐ Agree
• ☐ Neither Agree nor Disagree
• ☐ Disagree
• ☐ Strongly Disagree

Our adoption of sustainable marketing plans has created brand associations between Tesla and affordable electric cars

• ☐ Strongly Agree
• ☐ Agree
• ☐ Neither Agree nor Disagree
• ☐ Disagree
• ☐ Strongly Disagree

Our adoption of sustainable marketing plans has created brand associations between Tesla and innovation in the automotive industry

• ☐ Strongly Agree
• ☐ Agree
• ☐ Neither Agree nor Disagree
• ☐ Disagree
• ☐ Strongly Disagree

*** End ***

Thank you for participating in the study!