The Impact Of Branding On Sales In The Australian Automotive Industry With Volkswagen As A Case Study

Background

Introduction

A brand is a product, service, or idea that is noticeably differentiated from the rest of other commodities, services, or ideas to make it lucrative and cost-worthy without much effort. Consumers associate with a given lucrative impression or appearance of a given merchandize or service through ascertaining the name, logo, mantra or design of the firm behind the brand.  A business can offer superior products in its sector, in addition to excellent service delivery and overall best quality. Nonetheless, if the potential customers are not aware of the brand, then all these are of no value and less profitable.

Globalization, technological advancement among other factors have led to a competitive business environment where it is not just enough to create awareness but to fulfil the customer demands.  Such a situation has made customer satisfaction and branding to become a central issue. Consequently, the process of developing a reputed brand image and attracting new consumers is still a challenging work for the marketers in any company. Kumar (2010) observes that organizations should focus on customer retention with profitable long-term associations. But the degree of customer retention is dependent on the degree of customer satisfaction derived from the products and services alongside value. This is because contented consumers are most likely to become loyal. A reputable brand with increased customer loyalty will result in a higher market share (Buil, De Chernatony, & Martínez, 2013).

The automotive industry in Australia has been growing in the last decades. Moreover, the market environment has continually undergone transformations posing challenges to the players. The changes vary from consumer needs, legislation, competitiveness and technological changes. Due to competitiveness good branding has been associated with the quality thus affecting customer satisfaction and sales.  This study aims to undertake a comprehensive research proposal on the impact of branding on sales in the Australian automotive industry with Volkswagen as a case study, so as to emphasize on the need for organizations concentrate on branding to increase sales.

Problem Statement 

There have been noticeable transformations in the general market such as advancement in technology, saturated local market, stiff competition, and very demanding customers. Watchravesringkan et al. (2010) argue that these changes call for companies to revamp their current marketing strategies. The development and protection of a brand are one of the best strategies because a reputable brand creates customer confidence leading to re-purchases (Egan-Wyer et al., 2014).

Competition among primary dealers in the Australian automotive industry such as BMW, Holden, and Volkswagen among others is very stiff. As a result, the companies are implementing different strategies to acquire a high market share, improve customer satisfaction, customer loyalty through branding. Even though the issue of brand image is becoming the focus of most of the players in the automotive industry, few studies have been conducted. Chi, Yeh, and Yang (2009) found out that customer satisfaction is affected by the perceived quality and brand image.

Objectives

Additionally, several studies have associated organizational performance with brand equity and brand loyalty (Huang & Sarigöllü, 2014; Amboko & Namusonge, 2015; Malik et al., 2013). As already shown, studies have attempted to deal with the subject of branding, customer satisfaction and increase in sales, the same has not been viewed from the perspective of the Australian automotive industry. Therefore it is on this basis that this research is to analyse the impact of branding on sales using Volkswagen, Australia as the case study.  

Research Questions

The overall purpose of this study is to examine the impact of branding on customer satisfaction, customer loyalty and consequently on company sales. More specifically, this project aims to respond to the following questions:

1.    What is the effect of brand awareness on company sales?
2.    What is the effect of brand image on customer satisfaction?
3.    What is the effect of customer loyalty on company sales?

These questions will assist in responding to the purpose of the survey: to analyse the impact of branding on organizational sales in the automotive industry.

Project Justification 

Product or service branding has been the focus of most organizations owing to the current competitive market (Trygub & Synytsia, 2015). The presence of a variety of competitive vehicle models in the Australian automotive industry such as Toyota Hilux, Ford Ranger, Hyundai Tucson, and Mazda 3 among others all serving the same market with varying market needs calls for a serious consideration (Conlon & Perkins, 2018).

Some companies have suffered losses and others have closed down due to the inability to keep up with the dynamic needs and the stiff competition in the Australian automotive industry (Conlon & Perkins, 2018). This research proposal is to be carried out with the aid of critical evaluation of existing relevant literature and the views to be obtained from the management of Volkswagen through the use of interviews and questionnaires. Their responses will provide the exact details on the impacts of branding on customer satisfaction, customer loyalty, and company sales. More specifically, the following are the benefits of conducting this study:

• The study will benefit parties who are interested in gaining an insight into how branding influences the performance of the automotive industry.
• This research proposal will also contribute to the body of knowledge on how branding has shaped the automotive industry in terms of competitiveness
• The managers of the automotive companies can implement the strategies obtained from this study to increase market share and sales. However, each marketing strategy is being considered in the light of the nature of the current market
• Business owners, policymakers, and researchers can find the outcomes of this study useful

Expected Research Outcome 

The following outcomes are expected from this research proposal:

It is expected that the proposal will provide an in-depth understanding on the impact of branding on customer satisfaction, customer loyalty and consequently on company sales.

The study outcomes will also identify the extent to which Volkswagen uses branding to achieve customer satisfaction and loyalty and hence improve its sales. Other competitors and policymakers can also use the outcomes to improve their marketing strategies in order to improve market share.

The study findings will also provide an analytical framework for ascertaining and analyzing the possible impacts of branding on customer satisfaction, loyalty and consequently on sales. This information will ultimately help organizations in the automotive industry to develop strategies that will positively impact company performance.

Conceptual Framework And Research Hypothesis 

Effect of brand awareness on company sales

Branding essentially helps to differentiate the goods and services from one another (Kitchen, 2010). Most enterprises utilize branding technique to improve their products or service similarity so as to make them more appealing to the customers. Thus branding helps to make goods or services become more favorable to influence the purchase decision of customers. Conversely, a brand can negatively affect the business if customers associate with it negatively.

Benefits of the Study

Keller, Parameswaran, & Jacob (2011) defines Strategic brand awareness as the level to which a customer relates the brand with his need satisfied. It is a significant element of brand growth which differentiates the brand from others (Aaker & Joachimsthaler, 2012). A merchandise with better strategies for brand exposure implies that it is easily noticeable and welcomed by the customers in a manner that it is distinguished from competitive products in the same industry (Huang & Sarigöllü, 2014). The definitive objective of business is to generate profits and increase sales by increasing their market share and fostering repeated purchases. Brand awareness is very central in the consumer purchase decision process.

Keller, Parameswaran, & Jacob (2011) observes that marketing experts focus on branding to develop brand awareness in addition to establishing a good reputation. Aaker (2009) and Chen & Chen (2010) found out that perceived quality also influences the purchase decision. Accordion to Sweeney & Swait (2008) improved brand satisfaction and its availability in the customer’s variety of impulsive reminiscence interprets into the loyalty of that customer and as a result, the consumer is more than ready to purchase more of the same brand.

Brand Perception

Chi, Yeh, & Yang (2009) posits that brand perception impacts the purchase intentions by influencing the brand rewards perceived through the unique information attributed to the brand features in the consumers. Aided perception is primarily accomplished through branding (Hackley & Hackley, 2017). Woodside & Brasel (2011) recount that the higher the brands position in the mind of the consumer the higher the association to the purchase of the brand.

Effect of brand image on customer satisfaction

It is common in the branding literature, that favorable brand image positively influences customer satisfaction. Malik, Ghafoor & Hafiz (2012) assert that brand image has a direct association with customer satisfaction. Therefore, a positive brand image of a car model is likely to generate high customer satisfaction. Chang & Fong (2010) found out that corporate image was directly related to customer loyalty. Customers who are happy with products or services offered by a brand are more likely to recommend them to others; are less likely to shift to other brands, and have a high probability of re-purchasing the same brand.

Brand image has a substantial influence on customer satisfaction across all sectors. Dawes et al. (2015) found out that various elements of store outlets that constituted brand image had a direct effect on customer satisfaction. An experiential study in the hospitality industry by Alves & Raposo (2010) revealed that brand image was significant forecasting customer satisfaction. In a competitive marketplace in which enterprises compete for customers like the automotive industry; customer satisfaction is regarded as a vital differentiator and has become the focus in marketing strategy.

Branding and Customer Behavior

Hsieh & Li (2008) shows that brand image affects customer loyalty indirectly but through customer satisfaction. However, a brand image can directly or indirectly affect customer loyalty. Nonetheless, brand image is perceived to be a predictor of customer loyalty. As a result, in the automotive industry, a positive brand image is likely to inspire customer loyalty, and yet customer loyalty contributes to building a strong brand image of the enterprise. An organization’s reputation is associated with its values, mission, and visions which is also linked to the company’s name and acts as an umbrella brand for the variety of products or services, yet the brand image is categorical to given group of products.

Effect of customer loyalty on company sales

Customer loyalty is defined as in-depth devotion to re-buy or re-patronize a favored merchandise or service contentiously in the future, and thus triggering repetitive purchases of a similar brand.  Wilkins, Merrilees, & Herington (2009) opine that loyalty is an evaluative decision-making process that must meet six conditions: it must be biased; a behavioural feedback; articulated over time; via decision making; in relation to one or more other products; based on a combination of such brands; and a psychological element.

Multiple behavioral intention loyalty models have been proposed such as the quality models. Jang and Namkung (2009) show that some models assert that service quality only affects loyalty through satisfaction and value. Whereas others opine that quality directly affects loyalty (Chang & Fong, 2010). Boohene, & Agyapong, (2010) elucidates that the value model directly influences preferred outcomes of strategic customer loyalty and that both service quality and contentment are antecedents to value.  The satisfaction model maintains that customer satisfaction is directly associated with behavioral intentions such as loyalty, and service quality and value being results of satisfaction (Zhao et al., 2012).

According to Brakus, Schmitt & Zarantonello (2009), the use of both attitude and behavior in the ascertainment of loyalty substantially improves the development of loyalty. Boksberger & Melsen, (2011) disputes that loyalty in the service industry can primarily be measured using just one pointer and that is the readiness to commend. Roy (2011) asserts that loyalty can be understood by two measurements: behavioral loyalty, which is expressed by repetitive purchases, and attitudinal behavior, which is implied to the intrinsic emotional and perceptive aspects of loyalty.

Hypothesis

According to the problem statement and research objectives, the following research objectives have been proposed and are to be tested in the study.

Impact of Brand Image and Customer Satisfaction on Customer Loyalty

Hypothesis 1:

H0: Null Hypothesis: Brand awareness does not affect company performance

H1: Alternative Hypothesis: Brand awareness affects company performance

Hypothesis 2:

Ho: Null Hypothesis: Brand image has no effect on customer satisfaction

H1: Alternative Hypothesis: Brand image affects customer satisfaction

Hypothesis 3:

Ho: Null Hypothesis: Customer loyalty doesn’t affect company sales

H1: Alternative Hypothesis: Customer loyalty affects company sales

Methodology

The study will undertake the following proposed methodology in order to effectively analyze the aim and study questions

Literature Review

In order to obtain secondary data, the researcher will critically review the relevant literature. The information will be sourced from various sources namely Google scholar, published journal articles, peer-reviewed articles, CQU online library research, and books which will be critically examined. The secondary data will be analyzed using thematic content analysis to analyze the degree to which the branding has or has not affected sales (Vaismoradi, Turunen, & Bondas, 2013).

Target Population

The target population in this study comprises of all the customers visiting the large outlet of Volkswagen showroom in Australia. The entire target population is those that visit the showroom for various inquiries regarding the products offered by the company or to make purchases. According to the records obtained from the marketing department, approximately 500 customers visit the showroom on a daily basis.

Sample size

Convenience sampling will be used to develop the sample size of 50 out of the target population of 500 customers. Random sampling will be used to select the subjects of the sample size because this technique minimizes biases (Creswell & Clark, 2017).

Data Collection

The researcher will adopt interviews and questionnaires to gather data. The questionnaire will consist of close-ended questions to improve the validity of responses and for easy analysis. Interviews will also be used support and validated the collected data (Bryman, 2016). The interviews will be conducted under the guidance of the questionnaires. The researcher will personally deliver the questionnaires to the customers as they visit the showroom, but assisted by two research assistants in the distribution and collection of the questionnaires. The assistant researchers will first be trained by the researcher so that to be effective in data collection and offer guidance to the respondents in case of any inquiries regarding the study.

Data Analysis

Qualitative and quantitative approaches (mixed approach) will be used to analyze the secondary and primary data collected respectively.

Quantitative Data:

Quantitative data gathered from questionnaires will be used to quantify the views of the respondents (Treiman, 2014). Descriptive statistics will be used to summarize and associate variables collected from the questionnaires. The data will be cleaned, checked for inclusivity and comprehensiveness, grouped, tabulated, and summed up using descriptive dimensions such as average, percentages and frequency distribution tables. Regression analysis will be adopted to examine the effects of branding on ales in addition to its effects on customer loyalty and satisfaction. SPSS version 20 will be used for analysis.

Concept of Customer Loyalty

Qualitative Data:

Secondary data will be analyzed to obtain an in-depth understanding of the research topic (Grbich, 2012). The obtained data will be categorized into themes and relationships between the study variables ascertained through thematic content analysis.

Organization Of The Study

Chapter one will consist of the research proposal as indicated in the assignment

Chapter two will describe the case study of the impact of branding on organizational sales

Chapter three will comprise of the conceptual framework and hypothesis

Chapter four describes the research methodology adopted in the research literature review, methods of data collection and analysis, target population, sampling technique and sample size.

Chapter five will comprise of the research findings as well as analysis

Chapter six will consist of the summary of the key outcomes and the discussions on their implications in the automotive industry.

Gantt Chart

The table below outlines the time-frame for the entire research project

Activity	Start Date	End Date	Duration (Days)
Choosing study topic	12/04/2018	20/04/2018	8
Developing of research objectives	22/04/2018	26/04/2018	4
Data Collection Approach	28/04/2018	02/05/2018	4
Development of Questionnaire	04/05/2018	10/05/2018	6
Project Proposal organization	12/05/2018	20/05/2018	8
Sample size of survey	22/05/2018	26/05/2018	4
Data collection	27/05/2018	09/06/2018	13
Data analysis	11/06/2018	18/06/2018	7
Write-up and submission	23/06/2018	28/06/2018	5

Project Budget And Budget Justification

To complete the research within the set timeframe (12 weeks), the research budget is approximately $ 8,600. The budget justification is as follows:

Secondary data is to be obtained through critical review of the literature including published journal articles, peer-reviewed articles, and books. The access to these online materials requires subscription fees which varies depending on the site. This is expected to cost $2,100.

The collection of primary data will involve the physical distribution of printed questionnaires by the researcher assisted by two cohorts. The total estimated cost for data collection is $ 4,500. $ 800 is to be used in the printing of 50 questionnaires with each costing $ 1 and the balance is to be used to mail them. Since it will not be prudent to make frequent visits to the showroom, some basis inquiries will be made through phones with the relevant staff on the other side. This will approximately cost $ 700. Most important visits to the showroom will be made twice, that is before the actual research and during the research. Transportation expenses for the researcher will cost $ 2,000. A stipend for the assistant researcher including their transportation and meals are estimated at $ 1000. Data analysis will involve the use of SPSS, and this will require an expert to do at an estimated cost of $ 3,000.

Activity	Estimated Amount
Literature review	2100
Data collection: Printing 50 questionnaires:$ 800	4500
Phone calls :$700
Transportation: $2000
Stipend for 2 Assistants researchers: $ 1000
Data Analysis	3000
Total	9600

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