Branding Luxury Cars in China and India Marie Tuxen - 301471

Prescribed Front Page

Home Assignments, Project Reports, Synopses With Oral Defence Department of Business Communication

Name:

Marie Tuxen

Student Exam No.:

301471

Program:

Marketing and Management Communication

Exam Title:

Bachelor Thesis 2013

Supervisor:

Sara Hamid Alwan

Number of Characters:

54,997 (excluding spaces)

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Branding Luxury Cars in China and India Marie Tuxen - 301471

Branding Luxury Cars in China and India With Mercedes-Benz as a Case Study

Marie Tuxen - 301471 BA Marketing and Management Communication Aarhus School of Business and Social Sciences (BSS) Aarhus University Business Communication Bachelor Thesis Supervisor: Sara Hamid Alwan 05.06.2013 Thesis length: 54,997 characters excluding spaces

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Branding Luxury Cars in China and India Marie Tuxen - 301471

Abstract Despite a financial crisis, the luxury market has discovered a way to expand and thrive while other industries have been struggling to recover (Passport, 2012, p. 38). The luxury industry has namely opened their eyes to Asia or more specifically, the Chinese middle and upper class have opened their eyes to Western luxury. Since the beginning of the 21st century, international luxury brands have mushroomed throughout China and caused that 85% of the world’s luxury brands are present here (Business Daily Update, 2011, p. 1). Due to this rapid penetration, China has become the world’s greatest luxury market, accounting for 25% of the global sale (Fortune Magazine: China, 2012, p. 1). Further, experts forecast that in a few years India will become the next major luxury market after China because the country is developing with increasingly speed in the same direction as China (Eng & Bogaert, 2010, p. 58). Guided by such facts, this thesis intends to investigate from a theoretical perspective and with focus on Mercedes-Benz’s branding strategy in China, to which extend the Indian luxury car industry can benefit from the experiences of the luxury market leader, China, to be prepared for a future increase in luxury demand. This problem statement will be viewed from the paradigm of philosophical hermeneutics because the primary research of Mercedes-Benz’s TV-commercial, “The Fashion Show”, will utilise the hermeneutic circle as the meaning is constantly growing when the thesis writer’s horizon fuses with the TV-commercial and scholar statements (Skinner, 1986, p. 24). Also, main theories like Ricca and Robins’ metaluxury, Kapferer’s brand identity prism, Hofstede’s five dimensions of national culture, and de Mooij’s marketing and cross-cultural studies are utilised since they support the notion of “no one truth” which is the core of philosophical hermeneutics (Skinner, 1986, p. 25). On basis of the qualitative research, this thesis induces findings, revealing that China and India to a large extend are similar in social and cultural development, thus substantiating that India’s luxury car industry is able to learn from Mercedes-Benz’s branding strategies in China. More specifically, collectivistic values such as brotherhood, loyalty, relationships, and “being one with nature” but also individualistic attributes as fashionable and cosmopolitan sophistication are important to emphasise. Further, national celebrity endorsers will be just as well received in India as in China because the new risen middle and upper class aspire to be associated with a higher, wealthier social class (Eng & Bogaert, 2010, p. 64). However, it is not suggested that standardised marketing materials can be used in China and India because the

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thesis only evidences that China and India are somewhat similar on the surface, and therefore adaptation to the Indian market and culture is vital for the luxury car industry.

Thesis length: 54,997 characters excluding spaces

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Branding Luxury Cars in China and India Marie Tuxen - 301471

Table of Content CHAPTER 1: FRAMEWORK OF THESIS ...................................................................................................... 6 1.1.

INTRODUCTION: ................................................................................................................................... 6

1.2.

PROBLEM STATEMENT: .......................................................................................................................... 7

1.2.1.

Research questions .................................................................................................................. 7

1.2.2.

Thesis structure ....................................................................................................................... 8

1.3.

DELIMITATIONS: ................................................................................................................................... 9

1.4.

THEORY OF SCIENCE: ............................................................................................................................. 9

1.4.1. 1.5.

Methodology ......................................................................................................................... 10

THEORETICAL FRAMEWORK: ................................................................................................................. 10

CHAPTER 2: CONTEXTUAL BACKGROUND.............................................................................................. 12 2.1.

THE LUXURY MARKET’S SURVIVAL DURING A FINANCIAL CRISIS: ................................................................... 12

2.2.

THE CHINESE LUXURY MARKET AND ITS CONSUMERS: ................................................................................ 13

CHAPTER 3: CAMPAIGN ANALYSIS ........................................................................................................ 16 3.1.

MERCEDES-BENZ: ............................................................................................................................... 16

3.2.

KAPFERER’S BRAND IDENTITY PRISM: ...................................................................................................... 17

3.3.

ANALYSIS OF MERCEDES-BENZ TV-COMMERCIAL: .................................................................................... 18

3.3.1.

Brand physique ...................................................................................................................... 19

3.3.2.

Relationship mode ................................................................................................................. 19

3.3.3.

Customer reflected image ..................................................................................................... 21

3.3.4.

Brand personality .................................................................................................................. 22

3.3.5.

Brand culture ......................................................................................................................... 22

3.3.6.

Customer self-concept ........................................................................................................... 23

CHAPTER 4: COMPARING CHINA AND INDIA ......................................................................................... 25 4.1.

INDIA’S HISTORY, ECONOMY, AND CULTURE: ........................................................................................... 25

4.2.

SIMILARITIES BETWEEN CHINA AND INDIA: .............................................................................................. 26

4.3.

LEARNING FROM MERCEDES-BENZ: ....................................................................................................... 29

CHAPTER 5: DISCUSSION AND CONCLUSION ......................................................................................... 32 5.1.

DISCUSSION OF GLOBALISATION AND LOCALISATION: ................................................................................ 32

5.2.

CONCLUSION: .................................................................................................................................... 33

REFERENCE LIST ................................................................................................................................... 35 APPENDIX ............................................................................................................................................ 40 A

Mercedes-Benz’s TV-commercial “The Fashion Show” for the GLK-class, China 2010 .................. 40

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Chapter 1: Framework of Thesis 1.1.

Introduction:

This bachelor thesis investigates the luxury industry as this area actually thrives in the economic recession (Kapferer & Tabatoni, 2011, p. 274-275). Many industries have felt the downturn since 2007, but somehow the luxury industry has found an oasis within the BRIC countries1 as the demand for luxury goods has exploded - particular in China during the financial crisis. A 2012 statement by Hongkong and Shanghai Banking Corporation reveals that “Chinese shoppers' habits are closely watched by luxury brands. That's because China accounts for a quarter of global luxury sales today, compared to 5% just five years ago” (Fortune Magazine: China, 2012, p. 1). It means that China has replaced Japan and now consumes the greatest share of the world’s luxury market (Lui, 2012, p. 1). However, China is not the only BRIC country in development as India’s luxury market is heading in China’s direction and forecasted to comprise 8-10% of the luxury market by 2015 (Campaign India Team, 2011, p. 1). In common between the two countries is not just the rather similar size of population, infrastructure, rise of the middle and upper class but also superior economic growth (Eng & Bogaert, 2010, p. 59; Gale, 2012, p. 28). 2012 numbers reveal that China’s GDP grew 8.2% and India’s 7.8% annually while much of the world was stumbling through the recession (Gale, 2012, p. 32). Experts forecast that India’s GDP will increase by 9.5% annually during the next five years and soon become the world’s third largest economy, behind China and USA in GDP (Mukherjee et al., 2012, p. 482). Also, in 2025 India is predicted to become the fifth largest consumer market in the world, indicating the country’s fierce development (Shira, 2012, p. 3, 242). When bringing the luxury industry into focus, the Chinese and Indian market of luxury cars has in particular felt the economic upturn with Mercedes-Benz, BMW, and Audi as the most popular brands in both countries (Koifman, 2012, p. 1; Business Insights: Essentials, 2012, p. 1). By looking at China’s strong growth in the luxury market and comparing these facts with the tendencies seen in the Indian consumer market, it is evident that luxury car manufacturers in India need to prepare themselves for the future prospects. However, merely few research

1

The term “BRIC countries” or “BRICs” was invented by Goldman Sachs in 2003 about the four developing countries in avid economic growth - namely Brazil, Russia, India, and China (Kotler et al., 2009, p. 476)

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articles have looked into consumer behaviour on the Indian luxury market, hence India needs to borrow literature about luxury consumption from other countries (Gupta, 2009, p. 39; Eng & Bogaert, 2010, p. 56). For such reasons, this thesis will investigate the luxury car industry by using Mercedes-Benz as pivotal point and hereby draw conclusions from the experiences, gained in the Chinese luxury car market. These findings will then be evaluated on to determine to which degree, Indian luxury car manufacturers should be able to learn from the luxury market leader, China.

1.2.

Problem statement:

Since India has been predicted to become the next major luxury market after China, the purpose of this thesis is to research (Eng & Bogaert, 2010, p. 58): From a theoretical perspective and with focus on Mercedes-Benz’s branding strategy in China, to which extend can the Indian luxury car industry benefit from the experiences of the luxury market leader, China, to be prepared for a future increase in luxury demand?2

1.2.1.

Research questions

In order to thoroughly answer the problem statement, the following three research questions have been outlined and are to be answered in each their chapter throughout the thesis.

Research question 1 (R1) How come Chinese consumers have increased their expenditures on luxury during the financial crisis and hereby made China the world’s greatest luxury market? By understanding Ricca and Robins’ concept of ‘meta-luxury’, the financial crisis’ impact on the luxury industry will be clarified before this chapter examines the Chinese luxury market and its consumers.

2

Mercedes-Benz is also on the Indian market but sales volume is extremely low here compared to China’s. Since India is also lacking knowledge about its luxury consumers, the country is encouraged to learn from China’s car market

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Research question 2 (R2) How does Mercedes-Benz brand its cars in China through “The Fashion Show” TVcommercial as representative? By using Kapferer’s ‘brand identity prism’ as framework, this part investigates which branding strategies the Chinese luxury car industry, through the scope of Mercedes-Benz, takes advantage of.

Research question 3 (R3) Which branding strategies can India’s luxury car industry learn from Mercedes-Benz’s way of advertising in China? By combining the findings from R1 and R2 with facts about India’s growing economy and country similarities with China (based on Hofstede’s and De Mooij’s notions), this section looks into which branding strategies India should be able to learn from China.

1.2.2.

Thesis structure

The following figure creates an overview of the thesis and how it has been organised to answer the three research questions and hence the problem statement in a natural manner.

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1.3.

Delimitations:

Due to the restricted length, delimitation is needed in order to clarify what this thesis will comprise and what it will not touch upon. For example, the primary research can only embrace one campaign analysis from the luxury car industry, meaning that findings, generalisations, and suggestions, created from the research, are drawn on a limited scope - a larger scope of investigation may have strengthen or changed the final conclusion. Also, only visuals will be analysed upon in the TV-commercial, omitting the Chinese text and speak because a translation into English will never mirror the exact same meaning as intended in Chinese, hence in both ways somewhat challenge the validity of the analysis. Moreover, this thesis only focuses on the luxury car industry in the two developing countries, China and India. It causes that luxury brands in developed countries or other luxury categories would only be able to take little inspiration from these findings. Even though China and India are two of the largest countries and in reality cannot be homogeneous across all regions within each nation, it is necessary to conduct culture generalisations to make the thesis plausible. It means e.g. that generations and social classes are seen as homogeneous throughout each country.

1.4.

Theory of science:

Hans-Georg Gadamer’s ‘philosophical hermeneutics’ has been chosen as the scientific tradition that sets the framework for the theoretical approach of this thesis. Scientific paradigms help individuals describe and understand the universe around them and the phenomena (events, books, visuals etc.) in it (Skinner, 1986, p. 34). While natural sciences, like critical rationalism, intend to explain the universe, human sciences as hermeneutics seek to understand it (Chalmers, 1999, p. 43). Since our understanding of the universe and phenomenon is created on the basis of subjective interpretations (influenced by background and preconceptions), philosophical hermeneutics states that no “one true” meaning exists as each interpretation is as good as another person’s (Skinner, 1986, p. 26). Therefore, primary research and understanding of secondary research will be marked by the thesis writer’s way of viewing the subject and perceiving the world, meaning that understanding is always produced between receiver and phenomenon (Skinner, 1986, p. 25). Nevertheless, this thesis intends to verify itself by including theories and statements from scholars and specialists in order to support interpretations of the thesis writer which is one aspect of the methodology.

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1.4.1.

Methodology

To conduct primary research in the thesis, a ‘qualitative method’ is used as the TV-commercial is analysed through an interpretative approach, resulting that the analysis has a certain level of subjectivity which corresponds with the notion of philosophical hermeneutics (Skinner, 1986, p. 24). Thus, the campaign analysis and discussion of findings reflect the ‘hermeneutic circle’ because meaning is created in an ongoing process in which the horizon of MercedesBenz’s TV-commercial, the thesis writer’s universe, and notions of scholars are constantly fusing to create a better understanding (Skinner, 1986, p. 25). Moreover, the primary research takes an ‘inductive’ stand because it analyses the specific case of Mercedes Benz’s TVcommercial (Chalmers, 1999, p. 41). On the basis of these findings, the thesis generalises to a certain degree in order to clarify what Indian luxury car manufacturers can learn from the Chinese luxury car industry.

1.5.

Theoretical framework:

Due to the paradigm of philosophical hermeneutics, this thesis seeks to substantiate itself by utilising theories from a handful of respected scholars within the category of either luxury branding or cross-cultural branding, thus avoiding too subjective interpretations. Even though marketing scholars such as Philip Kotler and David A. Aaker are considered two of the most admired marketing gurus, they have been omitted in favour of the following three experts who have specialised within luxury branding, written “Meta-luxury” and “The luxury strategy”, respectively (Marketing Minds, 2012, p. 1). Manfredi Ricca and Rebecca Robins are both Directors at Interbrand, the world’s leading brand consultancy, and have over a decade’s experience with consulting the world’s most respected luxury brands (MacMillan, 2013, p. 1). Their concept of meta-luxury embodies craftsmanship, focus, history, and rarity which are perceived differently depending on a person’s education, social class, purchase behaviour etc., hence this theory supports philosophical hermeneutics (Ricca & Robins, 2012, p. 25-26). Jean-Noël Kapferer is a worldwide-thought leader on brand management and particularly within the luxury brand industry (Kapferer & Bastien, 2012, jacket) His brand identity prism focuses not just on how luxury brands market themselves, but also how they communicate the

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brand personality and how it is perceived by consumers (Kapferer & Bastien, 2012, p. 148). According to philosophical hermeneutics, there cannot be “one truth”, thus the way luxury brands want to be perceived may vary greatly from the perception each and every consumer holds about the given brand. Geert Hofstede is an extremely acknowledge pioneer within cross-cultural studies and is most known for his five dimensions of national culture. These dimensions are, however, very broad and generalised but useful to get an overview of cross-cultural comparison (cf. part 4.2.). A valued scholar like Fons Trompenaars, who has modernised the five dimensions, could have been chosen but Hofstede’s original framework has been found most suitable (UK Essays, 2011, p. 1). Only, because Marieke de Mooij, who is a respected Doctor in Communication like Hofstede, has viewed his five dimensions from a marketing and consumption-related perspective in the book “Global marketing and advertising” (De Mooij, 2005, p. 60). As Hofstede and De Mooij recognise, cultures are perceived differently depending on who evaluates them and in what perspective they are viewed, meaning that the two scholars’ notions belong to the category of philosophical hermeneutics.

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Chapter 2: Contextual Background To get a basic understanding of the luxury industry and consumer market, this chapter will delve into how it has been possible for China to become the world’s largest luxury market during a recession. First, by looking into how the financial crisis has affected the luxury market both in China and in a global perspective which are substantiated by Ricca and Robins’ definition of meta-luxury. Second, an understanding of the Chinese luxury market is sought in a historic and cultural perspective in order to characterise Chinese consumers of luxury and grasp the motivation behind this extravagant spending. On the basis of such research, this chapter endorses to answer R1.

2.1.

The luxury market’s survival during a financial crisis:

The financial crisis in 2007 triggered a global economic downturn that affected unnumbered industries, evident in the global real GDP which fell 0.7% in 2009 - the first decline since the Wall Street Crash in 1929 (Passport, 2012, p. 15). To put it into a luxury perspective, the US luxury market plummeted 16% and the European market shrank 8% in 2009 whereas China’s cravings for luxury were still going strong despite the fact that many advanced economies suffered from severe job losses and significant decrease in consumer spending and private investments (Ngai & Cho, 2012, p. 255; Passport, 2012, p. 15). Such statements reveal that many developed countries were harshly affected by the economic downturn while China was one of the first countries to recover after the recession (Passport, 2012, p. 38). In fact, the BRIC countries (Brazil, Russia, India, and China) have been appointed as being the source of growth that will bring the world economy out of the financial crisis as these four countries are among the few which have experienced an impressive annual growth in GDP since 2007 (Van Agtmael, 2012, p. 79; Buscaglia & Weismann, 2012, p. 3). The financial crisis has had a negative impact on the previously popular luxury markets, namely Japan, USA, and Europe, by means of changing consumption behaviour. These luxury markets have not just shrunk due to decline in the level of extravagant spending but also due to changing buying behaviours, caused by the economic downturn. As luxury shoppers have been forced to re-examine their priorities in luxury consumption, it has become a trend to rent luxury commodities to “show off” for a short period of time or to buy second-hand luxury

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goods to get the real deal for a bargain price (Yeoman, 2011, p. 48-49). However, the luxury industry has found an oasis in China as the luxury market here is the fastest growing economy, thus it is not surprising that China today accounts for 25% of the global luxury market (Business Daily Update, 2011, p. 1; Fortune Magazine: China, 2012, p. 1). The changing consumer behaviour in the luxury market can also be seen from a theoretical perspective as Ricca and Robins (2012) believe that the “concept of luxury” has also changed during the recession (p. 5). In the beginning of the 21st century, the economic stability made consumers think less about the reasons for purchasing luxury and from whom (Ricca & Robins, 2012, p. 76). However, the financial crisis has changed consumers view on luxury now “it is about luxury beyond luxury” and what Ricca and Robins (2012) have named metaluxury3 (p. 5). It means that luxury consumers desire to invest money and resources in valuable objects, and hence luxury today must embody craftsmanship (expertise and quality), focus (commitment to excellence), history (longevity and heritage), and rarity (exclusivity and limited accessibility) (Ricca & Robins, 2012, p. 25-26). Additionally, these four factors reflect the paradigm of philosophical hermeneutics since they may be perceived differently. Individuals are not ‘tabula rasa’, meaning that their social background and experiences influence how they e.g. perceive “quality” and “exclusivity” (Skinner, 1986, p. 25). In sum, the financial crisis has in several ways changed the behaviour of luxury consumers all over the world, and hereby forced luxury brands to seek new or fortify markets which China, among other developing countries, has had the economic growth to be target for. To put it differently, Asians have not moved towards Westernisation but the West has moved increasingly more towards Asia and especially China (Zhang & Prosser, 2012, p. 18).

2.2.

The Chinese luxury market and its consumers:

Even though the global luxury industry has first gained a firm foothold in China from the 21st century, extravagant spending has for thousands of years been a part of the Chinese culture but to start with, only for royals, aristocrats, and scholar-bureaucrats as they were considered the “leisure class” (Ngai & Cho, 2012, p. 257). Between 1960-1976, called the Cultural Revolution, this leisure class was crushed by a leader who wanted to create a classless society. 3

Definition: “Meta-luxury is an enterprise paradigm based on knowledge, purpose and pursuit of timelessness, ultimately embodied in a unique achievement” (Ricca & Robins, 2012, p. 10)

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In the years to come, this leader was inaugurated, causing that another radical social change marked China as the Economic Reform started in 1978 and shifted the country’s view towards wealth and luxury (Ngai & Cho, 2012, p. 257). In 1990, The Open Door Policy unlocked the Chinese market for foreign traders from e.g. Europe and USA, resulting in strong economic growth that increased China’s purchasing power. This was reinforced in 2001 when China joined the World Trade Organisation, meaning that the country’s foreign trade policies were liberalised and made it easier for foreign businesses to enter the Chinese market (Euromonitor International, 2012, p. 4). Important about this historical outline is that these revolutionary social and political changes have imprinted the people of their time, and therefore made consumer behaviour of the Chinese population very heterogeneous (Degen, 2010, p. 1). Nevertheless, generations after the Economic Revolution in 1978 will be delved into as these are important consumers in a luxury perspective. The Upwardly Mobile Generation is today in the age range of 35 to 50, and these individuals are therefore the first to truly embrace the Economic Revolution, thus able to get good educations at universities in order to climb the ladder of wealth (Degen, 2010, p. 1). Additionally, this generation can be compared with the Western Generation X4 whereas the next “Chinese generation” is a parallel to Generation Y that is significantly interesting for the Chinese luxury industry (Gelston, 2008, p. 1). The Young Emperor Generation is today aged 13 to 34 as they are all born after the Economic Revolution in 1978 and marked by the One Child Policy that was imposed to control growth of the population (Degen, 2010, p. 1). The policy meant that each couple were allowed to give birth to only one child, coursing this generation to be highly spoiled, best educated, thus most confident, ambitious, and therefore dubbed “the young emperors”. This generation has been characterised as “self-centred, frequently self-indulgent, and the most avid and savvy consumers” (Degen, 2010, p. 1) in the Chinese society, meaning that these individuals are most attractive to the luxury industry as they consequently have a tendency for self-indulgence and lavish consumption (Ngai & Cho, 2012, p. 247). Guided by this, the young emperors perceive fashion to be a pathway to individuality by means of acquiring global appeals such as modernity, cosmopolitan sophistication, status, and respect that set them apart from others (Zhou & Belk, 2004, p. 67; Guoxin et al., 2012, p. 1518).

4

Generation X is individuals born between 1961 and 1981 while Generation Y is individuals born after 1982 (Gelston, 2008, p. 1)

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Chinese luxury consumers are not just described as being young emperors but also the middle class and of course the upper class which are both rising rapidly due to China’s economic growth (Centaur Communications Ltd., 2007, p. 1-2). The middle class is defined by having an average annual income between US$ 7,800 and US$ 65,000 and is increasing so dramatically that in 2020, 55% of the Chinese population will be in this category (Centaur Communications Ltd., 2007, p. 1; Euromonitor International, 2009, p. 3). The 250 million individuals in the middle class desire luxury because it is important to show the class they aspire to become a member of and naturally to show instant proof of status, success, and new gained wealth (Degen, 2010, p. 1). These ordinary people would identify lavish consumption of luxury goods as extraordinary whereas extraordinary people, the 18 thousand billionaires and 440 thousand multimillionaires in China, would classify luxury items as ordinary (Kapferer & Bastien, 2009, p. 314). Regardless of social class, Chinese luxury cravings can also be described by deep cultural norms, founded by the core of traditional Chinese culture, called confucianism. Confucianism values in-group harmony, meaning that there is great emphasis on a subject’s obligation to e.g. leader, family or friends (Ngai & Cho, 2012, p. 263). Thereby, it is an individual’s duty to show his family’s wealth or the status of his education through luxury attributes that reveal one’s social class. Conclusively, the remarkable history of China has clarified that its population is very heterogeneous, however, the ‘target audience’5 of the luxury industry seems somewhat generic. Also, luxury cravings of the young emperors, and the rising middle and upper class explain how China in such short time has become the world’s largest luxury market. Moreover, the attitude towards buying luxury is diverse since Chinese consumers to a larger extend are attracted by individualistic values of Western cultures, but at the same time they are still drawn by deep rooted cultural values e.g. formed by confucianism.

5

Definition: ”They are the many groups of people towards whom marketing communications may be focused” (Pickton & Broderick, 2005, p. 162)

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Chapter 3: Campaign Analysis This chapter investigates how marketing of luxury cars is conducted in China in order to grasp how luxury marketing within the car industry can be executed to allure Chinese consumers of the middle and upper class. To conduct R2, the global luxury car manufacturer Mercedes-Benz has been chosen because the automaker in 2012 was in top three of the most popular luxury car brands in China (Koifman, 2012, p. 1). Further, the primary research of Mercedes’ TVcommercial “The Fashion Show” will be analysed by means of Kapferer’s brand identity prism and concepts from other marketing scholars, thus taking advantage of the hermeneutic circle when generating knowledge.

3.1.

Mercedes-Benz:

Mercedes-Benz (from now on abbreviated Mercedes) has been chosen for the primary research because the manufacturer has a fascinating history and not least interesting statistics. Also, Mercedes has been present on the Chinese marked since 1994 but in spite of its already global success back then, the manufacturer had a slow start in China which is seen in annual sales of only 4,800 units in 1999 (Daimler, 1994, p. 1; Jones, 2010, p. 1). However, in 2012 Mercedes annual sales in China had increased dramatically by growing to 206,150 cars sold in one year, indicating that Mercedes is still getting significantly more popular in China (Daimler, 2013, p. 1). To substantiate the luxury car market’s fierce development in India, it is worth noticing that Mercedes has been present on the Indian market since 1996, but its annual sales here are still rather small with only 7,630 cars sold in 2012 (Daimler, 1996, p. 1; Mercedes-Benz India, 2013, p. 1). Nevertheless, the Indian luxury car industry has a great market potential in the coming years since Mercedes states that the sales in India are predicted to be in the 25,000 to the 70,000 corridor by 2020 and is hereby following China (Jones, 2010, p. 1). In a historical perspective, the background for Mercedes’ world-success is rooted in its heritage from the automaker’s founding fathers. In 1886, the German Gottlieb Daimler and his son, Paul Daimler, developed the world’s first motor driven, four-wheeled, road vehicle which was the foundation stone for establishing Daimler Motor Company in 1890 (Orgarin, 2011, p. 1). Shortly after, a wealthy banker and sportsman, Emil Jellinek, discovered the great

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prospects for Daimler and gave almost unlimited funds to develop stronger, faster and more modern cars. In 1900, Daimler completed a new car which was named “Mercedes” after Jellinek’s beautiful daughter to honour him as Jellinek had already begun to promote and sell Daimler automobiles to the higher echelons in society (David, 2012, p. 1). Due to this success, the automaker was legally registered as Daimler-Mercedes. During and after World War One, the financial situation was opposing the dreams of Daimler-Mercedes which lead to the merge with Benz & Company in 1926. Also a German automaker that had started production of motor-driven vehicles around the same time as Daimler and therefore equally respected (David, 2012, p. 1). The trademark was then named Daimler-Benz, but promptly the company became known as Mercedes-Benz as we know the manufacturer today. Above all, Mercedes has been chosen for the primary research because the brand is in quintessence of true luxury due to its longevity and unique cars that have always symbolised “flawless quality and cutting edge engineering” (Auto Evolution, 2012, p. 1).

3.2.

Kapferer’s brand identity prism:

Kapferer’s brand identity prism consists of six aspects; ‘brand physique’, ‘relationship mode’, and ‘customer reflected image’ that are the three external facets and ‘brand personality’, ‘brand culture’, and ‘customer self-concept’ which all are internal facets (Kapferer & Bastien, 2012, p. 148). Even though these facets draw on either intangible or tangible aspects, common to them are that these facets are symbolic dimensions that not just contribute to build the brand identity but certainly also to build an identity of the consumers. Therefore, this prism reflects philosophical hermeneutics because understanding is created between the sender/phenomenon and the receiver, resulting in multiple meanings. In other words, Mercedes cannot fully know how the receiver perceives the message as meaning is first created when the horizon of the TV-commercial clashes with the horizon of the receiver (Skinner, 1986, p. 34). Regarding external facets of the brand identity prism, brand physique is worth examining to start with. It comprises codes, signs, colours, traits, iconic products, and features that make up a unique familiarity. Such non-verbal attributes are important in the creation and communication of the symbolic, social, and cultural function of the brand and hence the luxury products (Kapferer & Bastien, 2012, p. 148). Second, relationship mode defines the Page 17 of 40

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nature of the relationship which is created between the luxury brand and the recipients - e.g. by a certain communication style, media or communicator. Third, customer reflected image makes references to the stereotypical consumer because the luxury brand represents a reflection that not necessarily mirrors the recipients but nevertheless establishes a desired personality that the target audience wants to buy into (Kapferer & Bastien, 2012, p. 149). Regarding internal facets, brand personality is not just focusing on the created brand personality but the physical creator and originator of the brand whose character traits have been the foundation for brand establishment. Next, brand culture is important as it illustrates a brand’s DNA such as its deepest values, religion, country of origin, and inspiration source which all together depict an exceptional brand and not just generic and superficial traits (Kapferer & Bastien, 2012, p. 150). Last, consumer self-concept is focusing on consumers’ selfperception once purchasing the desired luxury product. In the third external facet, customer reflected image, the “external mirror” was delved into, reflecting how consumers believe they present themselves to the external environment. This facet outlines instead an “internal mirror”, meaning that feelings of personal satisfaction and achievement, gained by possessing these desired luxury items, are important (Kapferer & Bastien, 2012, p. 149). Finally, combining Kapferer’s brand identity prism with a campaign analysis is merely ideal as he has stated about the prism’s facets; “these aspects can only come to life when the brand communicates with the consumer” (EURIB, 2009, p. 2) and that is highly the case when analysing marketing materials.

3.3.

Analysis of Mercedes-Benz TV-commercial:

Mercedes’ TV-commercial, “The Fashion Show”6, for the Mercedes GLK-class from 2010 has been chosen as pivotal point for the analysis and will be analysed by means of Kapferer’s six steps in the brand identity prism. Since the prism investigates both internal and external facets of a brand, the analysis of the TV-commercial will be supported by facts, found in Mercedes’ history in order to complete the prism. This is also necessary for the analysis as it will only embrace visual elements and therefore not look into verbal messages.

6

Appendix A: Mercedes-Benz TV-commercial “The Fashion Show” (CD/link: 47 seconds-long in total)

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3.3.1.

Brand physique

Mercedes has a few key materials that make up the brand physique. Mercedes’ three-pointed star from its logo [02, 46]7 (and as radiator mascot on some models) has always been a part of the manufacturer’s history, and therefore an important icon of the longevity of the Mercedes brand. The three-pointed star and the well-known radiator grille of Mercedes are conspicuous elements that make people instantly realise that this car is a Mercedes whether they know anything about cars or not. This is a result of Mercedes history - the state leaders and royals who have been known for driving Mercedes, and the fact that the automaker has always branded itself and the cars with these prominent elements (David, 2012, p. 1). In short, the prestige and respect Mercedes has assimilated through its longevity are represented in the three-pointed star, radiator mascot, and radiator grille which people are willing to pay an extended price for.

3.3.2.

Relationship mode

The story line establishes a specific relationship with recipients as the story between the model and the driver automatically is associated as values of Mercedes and the branded car. Returning to the story line, the model arrives at a menswear fashion show in a GLK-class Mercedes, indicating the social class she belongs to - also because the intensive attention from paparazzo reveals a glamorous life of a star [07, 15]. In the meantime, the model’s driver embarks upon a long, tough but beautiful journal into the country to visit a remote village and deliver books and gifts for school children [19-36]. Despite the model’s high status, she has not forgotten about the less fortuned in society [4, 17, 43]. This aspect is important from a culture perspective as brotherhood, collective responsibility, helpfulness, and “being one with nature” [28-34, 31] are key values in the Chinese society (Zhang & Prosser, 2012, p. 20; Li et al., 2011, p. 167). Also, loyalty towards one’s relationships is important which is seen in the TV-commercial [05, 41] when the driver promises the model to deliver books and gifts for the remote school (Zhou & Belk, 7

Numbers within such brackets indicate how many seconds into the TV-commercial, one can find the discussed elements - the underlined numbers mark the second into the commercial in which the screen shot has been taken

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2004, p. 71). Additionally, it is also custom in China to give and receive gifts with two hands [5, 37] which is also present (Mack, 2010, p. 1). Such values are supported by Hofstede’s distinction between ‘individualistic and collectivistic cultures’. In the former, individuals are “I-conscious”, task oriented, and prioritise self-actualisation while individuals in the latter are “we-conscious”, basing identity on social systems, and priorities relationships (De Mooij, 2005, p. 62). China is a collectivistic country, and therefore the above mentioned values are important for the majority of the public which make the target audience more receptive to the TV-commercial as it embraces the Chinese culture (Zhang, 2010, p. 3). Further, these values are communicated efficiently through a TV-commercial because the medium supports both verbal and non-verbal communication. According to Hall, China is also a ‘high context culture’, resulting that most information is part of a context, thus communicated implicitly through e.g. non-verbal language [4, 16, 40] (De Mooij, 2005, p. 56). This notion opposes ‘low context cultures’ which are mostly seen in individualistic countries as these people communicate in a more direct and explicit manner (De Mooij, 2005, p. 56). One may argue that Mercedes has chosen the TV-medium because the automaker is well aware that implicit and non-verbal messages are important persuasion appeals in China. Moreover, research reveal that the oldest half of Generation Y and the youngest half of Generation X (individuals aged 20-40) are to an increasing degree being influenced by Western cultures (Zhang, 2010, p. 3). This consumer group is therefore equally persuaded by collectivistic/high context and individualistic/low context marketing appeals (Zhang, 2010, p. 3). In brief, the chosen medium and communication style create a unique relation to the recipients as Mercedes takes into account the cultural and social values of China to establish an uncomplicated relation with the target audience. Additionally, the TV-commercial also manages to draw on Western appeals such as the clothing and accessories which appeal to young consumers in China (cf. part 2.2.).

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3.3.3.

Customer reflected image

In continuation of relationship mode that touched upon the story line, the customer reflected image is also mirrored in the story line. The model and driver function as ‘celebrity endorsers’8 for Mercedes, and hereby their personal history and status provide a realistic, perhaps more tangible, perspective to the roles they play in the TV-commercial. The role of the model reflects a glamorous life of a star which one can assume that many luxury consumers desire to experience [6-16]. This perception of the model’s role is supported by the story of the actress’ actual life. The woman is the supermodel Lin Chiling who is known as being “The First Face of Taiwan” due to her popularity - not just here but also in Japan and China (Hub Pages, 2011, p. 1). When looking at the driver in the TV-commercial, he shows loyalty, goal orientation, control, courage, strong driver skills, good taste of cars, clothing, and accessories (aviator sun glasses), and a good heart (caring and helpful) [6, 18-39, 32]. Again, this role is supported by the actor’s own story of life as Hanyu Zhang is a qualified film actor from Beijing and has won several Best Actor Awards for his role in various Chinese films (Love HK Film, 2010, p. 1). Hence, the model and actor have been chosen for the roles because they are already famous and respected celebrities in China. As Kotler et al. (2009) state about celebrity endorsement, it is important that they are recognised by the majority of the public as attractive and liked persons; credible in what they do and have achieved; and in a way have expertise or experience within the category, the endorsed product belongs to (p. 478). Here, one may argue that the social class and status that the model and actor are perceived to belong to, connect them to the luxury category and hereby implicitly makes them experts in choosing the right luxury car brand - here Mercedes. Finally, the model and driver in the commercial, combined with the popularity and status of the actress and actor, create a reflection of a stereotypical consumer of Mercedes cars. Whether the actual consumer of Mercedes cars mirrors this stereotype is not important as long as the real consumer desires this image and believes he/she can become “some sort of a star” by purchasing a Mercedes GLK-class.

8

Definition: ”The overt and explicit support for a product or service from a well-known or famous individual” (Doyle, 2011, p. 157)

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3.3.4.

Brand personality

The brand values of Mercedes come from its history and hereby its founding fathers; Gottlieb and Paul Daimler, Emil Jellinek, and later also Karl Benz. Even though it is Daimler and Benz’s engineering and innovation skills which are the foundation for the Mercedes brand, one may argue that Jellinek is the one in a branding perspective who has had the greatest influence. Due to Jellinek’s financial involvement, for ten years he had the power to determine when to produce cars, how they should be designed and engineered, the volume of the production, and not least who were permitted to become a customer (David, 2012, p. 1). Jellinek had excellent connections due to his banker status and international reputation as a racing driver which meant that he only allowed individuals of known influence to purchase one of the exclusive Mercedes cars. Jellinek has ever since been honoured through the use of the Mercedes name as he established the brand’s reputation “as a quality and high performance product” (Ordarin, 2011, p. 1). When linking these facts to the chosen TV-commercial, it becomes evident that the attributes of the driver (loyal, goal oriented, in control, courageous, strong driver skills, and good taste) also become attributes of the Mercedes car, meaning that the GLK-class is reliable, in power and control, has high performance, safety and driving qualifications in a classic, yet modern design. Therefore, Mercedes’ history supports such attributes but if it is not known by consumers, the associations are reflected in the TV-commercial as well.

3.3.5.

Brand culture

Brand personality and brand culture are closely connected as a brand’s personality naturally has its roots in the brand culture. Thus, the values established by Mercedes’ founding fathers are part of the brand’s culture as well, but to touch upon another vital trait of Mercedes, ‘country of origin’9 will now be examined. Returning to the history of Mercedes, both the original Daimler Motor Company and Benz & Company were established in South Germany, hence Germany has always been known for its unique engineering and craftsman skills (Ordarin, 2011, p. 1). Here, it is worth noticing that China perceives Europe as being the home of luxury and fashion, resulting that country of

9

Definition: ”The sum of beliefs, ideas and impressions that a person holds of products of a specific country” (Pickton & Broderick, 2005, p. 720)

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origin is very important to Chinese luxury consumers (Centaur Communications Ltd., 2007, p. 1). This statement is also supported by the fact that the three most popular luxury car brands in China (Mercedes, BMW, and Audi), are also the three best selling luxury car makers in the world, and they are naturally from Germany (Koifman, 2012, p. 1; DW, 2013, p. 1). In this perspective, the country of origin means a great deal to branding as it can be an important persuasive appeal and quality factor (Li et al., 2011, p. 166). Nevertheless, one may argue that Mercedes’ link to Germany is implicit in this TV-commercial as the brand is already well established in the minds of Chinese luxury consumers. Further, Mercedes’ logo and name are enough to make people remember that the brand is associated with a high level of credibility and quality as its origin is German. Even though BMW and Audi also draw on country of origin, Mercedes differentiates itself by being known as the oldest automotive brand in the world which is still in existence today (Auto Evolution, 2012, p. 1).

3.3.6.

Customer self-concept

In the light of China’s economic growth, the middle and upper class have increased greatly in only a few decades (Gale, 2012, p. 32). It means that many luxury consumers are from the lower middle class, and therefore the purpose of buying luxury goods is to gain recognition through signalling their success (Kapferer & Bastien, 2012, p. 130). It is also a fact that the Chinese luxury market is marked by Generation X and Generation Y as 73% of luxury consumers in China is less than 45 years old of which 45% is less than 35 years old (Kapferer & Bastien, 2012, p. 131). As previously stated, Chinese consumers aged 20-40 are attracted to individualistic appeals (cosmopolitan sophistication, status, modernity etc.) which they believe to get through Western luxury items (Zhou & Belk, 2004, p. 67). Also, masculinity in China’s upper society is defined by commodities, consumption, and attributes which naturally are symbolised best through luxury (Song & Lee, 2012, p. 9). Guided by these statements, it becomes obvious that the characteristics of the driver in the TV-commercial not just function as attributes of a stereotypical customer or the GLK-class, but these qualities are also values that the actual consumer believes to get transferred when possessing this particular Mercedes car.

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Conclusively, the main findings from Kapferer’s brand identity prism will be highlighted and elaborated on in the following chapter (cf. part 4.3.) as it investigates what branding strategies the Indian luxury car industry can learn from Mercedes’ TV-commercial “The Fashion Show”.

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Chapter 4: Comparing China and India This chapter will first look into India’s history, economy, and culture in order to justify why India has been chosen as the country to compare with China. Second, Hofstedes’s five dimensions of national culture in collaboration with De Mooij’s cross-cultural marketing perspective will explain to which extend, India’s culture can be compared with China’s. Third, by combining research about China (R1) with facts about India’s growing economy and country similarities with China, this part will answer R3 by concluding which branding strategies, India can learn from the Chinese luxury car market by drawing on findings from the primary research (R2). Moreover, the merge of these findings takes advantage of the hermeneutic circle since the thesis writer’s interpretation of the TV-commercial rises to a new perspective when knowledge of India’s culture is added to the interpretation process.

4.1.

India’s history, economy, and culture:

Since India and China have the strongest economies within the BRICs and are rated the fastest growing markets in the world, it is naturally to choose India as the country that, to a certain extent, should be able learn from China’s experiences within the luxury car industry (Byoungho et al., 2012, p. 1042). Also, some specialists believe that India has been overshadowed by China the past twenty years and hence “China’s rise may have provided an example of what to follow in some respects and, in other respects, and example of what to avoid” (Shira, 2012, p. 241) since India’s growth has begun to reflect China’s over the past decade. India’s economic similarity to China is also reflected in the country’s political history. Not because India was a British colony from 1619 until 1947 where the country became independent, but because several political disputes resulted in years with economic instability which was first settled in 1991 when the economic liberalisation reform was introduced (Shira, 2012, p. 11). This free-market policy meant that India opened to global investments and most importantly global trade (Shira, 2012, p. 2, 11). It became the starting signal for an era of economic growth that has transformed India and made it the second most attractive Foreign Direct Investment destination in 2012 (Shira, 2012, p. 2, 11). Today, India has a population of 1.2 billion people (China has 1.3 billion people) among whom 25% lives in poverty, however, the middle and upper class have increased by 12.9% and 21.4%,

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respectively, during a ten years period (Shira, 2012, p. 3; National Bureau of Statistics of China, 2013, p. 1; Venkatesh et al., 2013, p. 112). The rising middle and upper class demand new and global consumer goods and technologies to express their new way of living which have made India such an attractive luxury market since the country began whetting its appetite for extravagant consumption (Shira, 2012, p. 1, 22). When turning our focus to the Indian luxury car industry, it is constantly growing which is expressed by an annual increase of 18% in 2012, caused by the country’s large invests in its infrastructure (Shinde & Ganjre, 2012, p. 2). During the next five years, India expects to invest US$ 1 trillion in highways, transportation systems, airports etc. that consequently will boost the national economy as such projects create more jobs and hereby greater consumer needs (Gale, 2012, p. 36). Additionally, it is predicted that India by 2050 will have 611 million cars running on its roads, thus become the biggest automobile market which accordingly will increase the competition on the automaker market (Shinde & Ganjre, 2012, p. 2). A century ago, it was only the “Indian Elite”, called Maharajas, who had the status and wealth to purchase luxury items, but today India’s economic development has taken the rising middle and upper class into a new world where they are about to consume luxury at the same level as seen in several Western countries (Shukla, 2011, p. 244; Eng & Bogaert, 2010, p. 56). This is also substantiated by the fact that the Indian luxury market in 2010 was worth US$ 377 million and has since increased by 28% each year, indicating how fierce the Indian luxury market is expanding (Eng & Bogaert, 2010, p. 56).

4.2.

Similarities between China and India:

During the past two decades, China and India have constantly been subject for comparison because the two nations share several similarities that originate from history, economy, politics, geographic, demographic, and technological development (Byoungho et al., 2012, p. 1044). China and India have both in recent times liberalised their politics/economies, and they have experienced significant growth in GDP in the 21st century (Shira, 2012, p. 1). Besides being neighbours, India and China are also part of the BRICs, comprising countries that are defined by major developments, and they have the world’s first and second greatest populations among whom a rising middle and upper class are taking advantage of their nation’s increased wealth e.g. by consuming more (Shira, 2012, p. 1). Page 26 of 40

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Thus, it is not surprising when scholars refer to these two giant nations as “Chindia” because some believe that “in a near future, the two countries will have reached their rightful place as regional partners and usher in what then may be henceforth referred to as “the Asian Century” (Wang, 2011, p. 455; Shira, 2012, p. 243). Moreover, this enlarged interest in comparing India and China is also seen in the increased number of research articles that compare the two countries such as Dougherty & Valli, 2009; Quer, Claver & Rienda, 2010; Wang, 2011, and Byoungho, Mark & Ji, 2012.

Further, when delving into China’s and India’s culture, it also becomes obvious that the two countries share fairly many similarities which have been discovered through the lenses of Hofstede’s five dimensions of national culture. The model distinguishes 75 cultures according to five dimensions; ‘power distance’, ‘individualism/collectivism’, ‘masculinity/femininity’, ‘uncertainty avoidance’, and ‘long-term orientation’ which are measured on a scale from 0 to 100, thus making this model most efficient when putting one culture against another one (De Mooij, 2005, p. 60). By means of this model, Hofstede’s results of China and India reveal that in the tree dimensions of power distance, masculinity/femininity, and uncertainty avoidance, the two countries are 10% or less different from each other, indicating an extremely high level of resemblance (Hofstede Centre, 2012a, p. 1; Hofstede Centre, 2012b, p. 1). Nevertheless, it is important to notice that these five dimensions are created on the basis of the universe that Hofstede holds. With a philosophical hermeneutics’ stand, other individuals may perceive “a high level of masculinity” or “a low level of individualism” different, hence findings from Hofstede’s model can be understood in various ways. It makes findings from the five dimensions very broad and generalising but acceptable to get an overview of two cultures. Regarding power distance, both China and India have a strong acceptance of unequal distribution of power in the society, demonstrating a need for hierarchical order (De Mooij, 2005, p. 60). This can be seen in the Chinese values of confucianism where individuals will always have obligations to other subjects whereas in India, a social hierarchical order is demonstrated by the Cast System10. These norms state that an individual is born into a certain social class which one cannot leave regardless of how well he may perform later in life because separation must be kept, meaning that the lower casts cannot pollute the higher, 10

Even though the Indian Cast System was abandoned in 1950, it is still utilised to some degree in some parts of the country as it is an important part of Hinduism (Daniel, 2005, p. 1)

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purer classes of casts (Daniel, 2005, p. 1). Moreover, in a marketing perspective, De Mooij states that consumption of luxury brands functions to reveal one’s status to get the proper respect (2005, p. 60). It also corresponds with De Mooij’s marketing view on masculinity/femininity as masculine societies, which both China and India predominantly are, desire to demonstrate their performance and achievements through e.g. luxury attributes (2005, p. 65). In the light of the rising middle and upper class in China and India, it makes sense that individuals in developing markets crave to “show off” their new gained wealth and social class. When looking into uncertainty avoidance, both China and India lie in the lower end, indicating that they have a high acceptance of uncertainty and therefore extremely open to change and innovation (De Mooij & Hofstede, 2010, p. 89). In a marketing view, it is seen by China’s and India’s constant growth and modernisation - consequently, such populations are not afraid to accept new, foreign brands and commodities. In the last two dimensions of Hofstede’s notion of national culture, China and India exhibit somewhat differences as India is a collectivistic culture but in the end of the scale where it is also slightly influenced by the individualistic culture while China is highly collectivistic (Hofstede Centre, 2012a, p. 1; Hofstede Centre, 2012b, p. 1). India’s faint individualistic orientation may China counterbalance with its growing interest in Western values (cf. part 2.2.), thus making the two countries more similar within this dimension. Further, these results are also reflected in long-term orientation because India is medium long-term oriented whereas China lies extremely high in this scale (Hofstede Centre, 2012a, p. 1; Hofstede Centre, 2012b, p. 1). It indicates that both countries, to each their degree, emphasise persistency and therefore creation of long-term relationships (De Mooij, 2005, p. 59). In a marketing perspective, De Mooij argues that collectivistic countries and long-term oriented cultures are attracted more by advertising building on creating trust, respect, and relationships while advertising targeting individualistic countries and more short-term oriented cultures focuses on persuasive appeals (De Mooij & Hofstede, 2010, p. 89-90). All together, China and India seem to be rather similar which substantiates the fact that India to a greater extend should be able to learn from Mercedes’ experiences with advertising in China. Nevertheless, it is kept in mind that this is very broad generalisations as even small nations cannot be hundred percent homogeneous internally (Jacob, 2005, p. 515). Therefore, this thesis only provides enough evidence to suggest what India’s luxury car industry to some

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degree should be able to learn from China’s because India lacks research about the changing luxury market and consumer behaviour (Mukherjee et al., 2012, p. 484).

4.3.

Learning from Mercedes-Benz:

Since India has been identified as the next major luxury market after China but is lacking knowledge about its new risen luxury consumers, the sparse data available about Indian consumers have been collected in order to unveil what the Indian luxury car industry can learn from Mercedes’ manner of advertising in China (Eng & Bogaert, 2010, p. 56, 58). To formalise these findings, they have been applied to Kapferer’s brand identity prism which was explained and utilised in chapter three (cf. part 3.2. & 3.3.). Regarding brand physique, Mercedes’ TV-commercial emphasises the three-pointed star and the radiator grille as they are associated with the quality, status, and longevity that make the Mercedes brand unique and recognisable. Due to India’s rapid rise of the middle and upper class, many Indian luxury consumers are “new” in this world and do therefore have sparse knowledge of luxury brands and their penetration (Mukherjee et al., 2012, p. 493). Hence, one may argue that it would be reasonable to put emphasis on such prominent objects in order to increase the ‘brand awareness’11 when introducing marketing materials for the Indian luxury car industry. Likewise, research show that the longer time a brand has been present on the Indian market, the more it is utilised because Indians are actually very brand conscious (Mukherjee et al., 2012, p. 483, 491). When looking into brand relationship mode, it is stated by Hofstede that China is a highly collectivistic society which India also is, however, in the end of the scale closer to individualistic cultures (Hofstede Centre, 2012a, p. 1; Hofstede Centre, 2012b, p. 1). Mercedes’ TV-commercial respects China’s collectivistic orientation by including traditional Chinese values such as brotherhood, loyalty, “being one with nature”, and the gift-giving tradition which would also be ideal for an Indian luxury car campaign as such values are more or less common among all collectivistic cultures. Since 80.5% of the Indian population is Hindus, it is also important to respect the values of Hinduism that e.g. emphasises harmony among people, and between individuals and nature (Shira, 2012, p. 88). Furthermore, in chapter two and 11

Definition: ”[Prompted] brand awareness is once a brand name is suggested to a consumer, the consumer recalls being aware of it already” (Pickton & Broderick, 2005, p. 259)

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three, there have been stated that the young population of China is to an increasing degree getting more attracted to Western advertising appeals which are expressed in the TVcommercial through the luxury concept in general, the chosen clothing and accessories. This would also be ideal in marketing of Indian luxury cars because the country in its nature is more receptive to individualistic appeals. Also, research unveil that Indian consumers like to combine Western styles with traditional Indian styles, thus not abandoning its cultural heritage in the national modernisation but rather adapting new impressions to Indian values (Eng & Bogaert, 2010, p. 65). In the light of customer reflected image, Mercedes’ TV-commercial utilises a Chinese and Taiwanese celebrity endorser to create a closer relation to the target audience and to make the created scene easier identifiable. This strategy would also be highly efficient in India because research reveal that consumers in India are positively influenced by national celebrity endorsers (Eng & Bogaert, 2010, p. 64). Also, ‘Bollywood celebrities’12 are highly admired by the general population because they represent a desired level of prestige, image, success, and status (Eng & Bogaert, 2010, p. 70). It becomes therefore a valuable solution for including Indian norms without lowering the level of superiority and exclusivity which are vital in luxury branding (Kapferer & Bastien, 2012, p. 141). Looking into brand personality, the storyline of “The Fashion Show” functions to establish desirable attributes of the GLK-class and personal characteristics that consumers believe to gain when buying this particular Mercedes car. It is an effective strategy in emerging markets because it is important for such luxury consumers to identify and maintain their new image through extrinsic attributes (Shukla, 2011, p. 245). Hence, it would also be logical to take advantage of this in Indian luxury car campaigns because it is a fact that Indians would rather buy fewer items in order to buy commodities with the right level of quality and popularity (Passport, 2012, p. 68, 74). Regarding brand culture, country of origin is also important to Indian luxury consumers because they, like their Chinese counterpart, identify true luxury brands as having roots in Europe (Mukherjee et al., 2012, p. 485; Eng & Bogaert, 2010, p. 69). By establishing this country of origin connection in the minds of Indian luxury consumers, one can only assume that automakers will significantly increase their possibilities of branding success. 12

Definition: ”Bollywood is the name given to the Mumbai-based Hindi-language film industry in India” (Bollywood World, 2010, p. 1)

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The last facet is customer self-concept which was exhibited in the TV-commercial through a focus on improved image and social status that Chinese luxury consumers would achieve by possessing a Mercedes GLK-class. As seen in China, Indian consumers perceive luxury to symbolise modernity, progression, and social development because emerging markets naturally desire what developed markets see as ordinary and common to possess (Eng & Bogaert, 2010, p. 59). These are all important characteristics that especially young, urban luxury consumers desire when taking advantage of luxury products’ way of increasing one’s recognition. This notion is also substantiated by the fact that Indian luxury consumers utilise such commodities to “show-off” which is reasonable to accept when discovering that 54% of the Indian population is below 25 years old (Eng & Bogaert, 2010, p. 59; Mukherjee et al., 2012, p. 486). Moreover, the growing Indian middle class is defined by having an income between US$ 5,000 and US$ 35,000 and being degree holders which correspond to a certain degree with China’s middle class (Mukherjee et al., 2012, p. 487). In a target audience perspective, the average luxury consumer in India would be rather similar with the recipients of Mercedes’ TV-commercial, assumed to target young, Chinese luxury consumers, hence it is reasonable to state that India’s luxury car industry can learn from “The Fashion Show”.

In summary, this part of the thesis has unveiled elements and strategies that the Indian luxury car industry can draw on when producing stronger and more targeted national campaigns. It is naturally a rather general analysis to draw future branding strategies from, but due to the luxury market’s exponential growth in India; rapidly increasing penetration of global luxury brands; and not least the lack of profound research articles about Indian luxury consumers, this thesis establishes basic proves that India to a significant extend can learn from China and how luxury car branding is conducted here.

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Chapter 5: Discussion and Conclusion This final chapter will first look closer into the research findings and what they mean for the Indian luxury car industry. What the findings contribute with in a knowledge perspective will also be delimited to clarify what this thesis in reality can substantiate. Conclusively, how the chapters of the thesis have answered the three research questions will also be clarified in order to raise one final answer to the problem statement.

5.1.

Discussion of globalisation and localisation:

In continuation of research findings, it becomes natural to reflect upon them in the light of globalisation vs. localisation13. It has within the marketing world been recognised by many scholars that global brands need to adapt their marketing communication to consumer needs of the local markets (De Mooij, 2005, p. 21). De Mooij (2005) supports this view point by stating that “there may be global products, but there are no global people. There may be global brands, but there are no global motivations for buying those brands” (p. 4-5). In other words, consumer needs may be universal but cultures’ attitudes, motivations, and expression of needs vary greatly (De Mooij, 2005, p. 21). In this reflection, the concept of ‘global tribes’ becomes interesting as marketers with this viewpoint believe that homogeneous markets or a niche of “global people” are to find across borders (De Mooij, 2005, p. 21). Some scholars argue that demographic groups of luxury consumers belong to this category as e.g. “Asian teens, in the way they behave and dress and express themselves, increasingly resemble American and European teens” (De Mooij, 2005, p. 21), indicating that young Chinese and Indian luxury consumers have the same attitudes. However, other scholars state that populations sharing the same economic and demographic aspects are still affected by their national values and therefore “people with similar lifestyles do not behave as a consistent group of purchasers” (De Mooij, 2005, p. 22). Even though this thesis has provided evidence for comparing China and India, it is recognised that these assumptions are very broad and generic. Thus, it is emphasised that only inspiration from the branding strategies, utilised in Mercedes’ TV-commercial, can to a larger extend be captured by Indian

13

Globalisation of markets means standardisation of identical products worldwide with identical distribution channels and promotion strategies while in localisation, all these factors are adapted to the local market (De Mooij, 2005, p. 20)

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luxury car manufacturers in order to learn how to allure the Indian middle and upper class. Additionally, a certain degree of localisation of the marketing communication is necessary when introducing campaigns to the Indian luxury car market since this thesis cannot validate suggestions for standardising marketing materials between China and India. Further, Kapferer and Bastien (2012) state that a global luxury brand like Mercedes will be desired to the same extend by many cultures due to its international character, but somewhat localisation of marketing materials is essential to establish trust and relation (p. 265). In order to maintain exclusivity, luxury marketing communication aspire to “tell stories that are perceived as authentic, somewhat secret, and capable of transmitting an implicit message, loaded with collectivistic values” (Kapferer & Bastien, 2012, p. 273) which will be challenging to mediate without “talking the language” of the target audience.

5.2.

Conclusion:

Since India has been identified as the next major luxury market after China, the purpose of this thesis was to investigate to which extend the Indian luxury car industry could benefit from the experiences of the luxury market leader, China, to be prepared for a future increase in luxury demand (Eng & Bogaert, 2010, p. 58). Investigating the luxury market in China and India is a very complex matter, and therefore the focus of the luxury car industry was chosen due to its popularity in both countries (Business Insights: Essentials, 2012, p. 1, Koifman, 2012, p. 1). Also, Mercedes-Benz was chosen as pivotal point for the primary research which was conducted by an analysis of the automaker’s TV-commercial “The Fashion Show” for the launch of Mercedes’ GLK-class in China. In order to thoroughly answer the problem statement, three research questions were outlined and answered in each their chapter. First, chapter two (R1) established an understanding of how the luxury industry had been affected by the financial crisis in order to grasp the reason for other luxury markets’ decrease which also explained why global luxury brands had fled to Asia. The second part of chapter two delved into China’s historic, economic, and cultural development in the past half century to understand who the Chinese luxury consumers are, and why they are consuming so heavily now. These insights laid the foundation stone for chapter three (R2) that analysed Mercedes’ TV-commercial and revealed many localised aspects that had been included to allure the Chinese middle and upper class. In chapter four, Page 33 of 40

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the first part sought to investigate India’s history, economy, and culture to become equipped for the second part which provided enough evidence for comparing China and India. The third part in chapter four (R3) unveiled which branding strategies India’s luxury car industry could learn from “The Fashion Show” which were substantiated by the sparse research, found about Indian middle and upper class consumers. The discussion part emphasised the final answer to the problem statement by concluding that this thesis has provided evidence for suggesting the Indian luxury car industry to take advantage of the branding strategies, Mercedes has utilised in China. However, Indian luxury car marketers must not forget to adapt Indian norms and values to the marketing communication because China and India are still two heterogeneous countries that only possess significant similarities on the surface.

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Appendix A

Mercedes-Benz’s TV-commercial “The Fashion Show” for the GLK-class, China 2010 CD: The CD contains the 47 second-long TV-commercial The CD holds three versions of the TV-commercial - they are all the same, however, downloaded in three different ‘file types’ making sure that at least one of them are able to be watched regardless of which computer/program showing it. Link: http://v.youku.com/v_show/id_XMTU4NTU5Nzg4.html (YouKu, 2013) Naturally, the CD cannot be included in this “online” version of the thesis, however, the above link takes one to the website where it can be watched.

Thesis length: 54,997 characters excluding spaces

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