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Effects of line extensions in the luxury and non-

luxury car industry



CCG 8th semester, Spring 2013, Aalborg
University
Andra -Mihaela Cristea
Camilla Lengaard Nrrevang
Helle Mlgaard Christensen
Kristian Skaanning Rasmussen
30/5 2013
Abstract
In the postmodern society, consumers are left with an endless multitude of choices and possibilities,
making it almost impossible to find the best choice. The automotive industry is no exception with many
brands offering a large variety of car models. To make it even more complicated, many car companies are
starting to make line extensions, which mean producing car models that in some way deviates from the
main brand. Either making smaller and more affordable cars, premium models or other models that
somehow differs from their main brand, in order to move into other parts of the market.
The purpose of this project is to investigate if these line extensions have an effect on how some of the car
brands that have made line extensions, are perceived by the consumer in comparison to the brand identity
that the companies want to convey. Herein there will also be a comparison of whether there is a difference
in mainstream brands and luxury brands, to see if it is easier for one of the categories to make successful
line extensions. The subject of analysis is four car brands; two deemed mainstream and two luxury. These
are respectively Skoda, Kia, Mercedes-Benz and Audi.
The analysis of these car brands will be based on two separate analyses; a content analysis of 15
commercials of each of the four brands, and a questionnaire analysis, where 102 people have been
enquired about their perception and knowledge of the four car brands.
The result of these analyses revealed that for three of the four brands; Skoda, Mercedes-Benz and Audi, the
perception of the brands and the brands' identities were similar, while Kia was considered a relatively
uninteresting and cheap brand, even though they seem to want to be perceived as a young and fun brand.
However, this is not the way they are being viewed. This also has an effect on the consumers' positivity
towards Kia making a luxurious car, where many of them did not believe it was a good idea, even though it
would not have an effect on the brands perception. The consumers seemed more positive towards Skoda
and Audi making line extensions, while they were not too positive about Mercedes-Benz making a small
and affordable car. Their perception of the brand would change for the worse if they made such a car.
This suggests that it is the perceived image and identity of the brand have an effect on how a line extension
is received by the consumer. The reception of line extensions seems to be more significant in the luxury
category.
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Table of contents
Introduction ................................................................................................................................................................... 3
Methodology ................................................................................................................................................................. 6
Paradigm .................................................................................................................................................................... 6
Research design ......................................................................................................................................................... 7
Content analysis ........................................................................................................................................................ 8
Questionnaire ............................................................................................................................................................ 9
Data generation ....................................................................................................................................................... 10
Sampling .................................................................................................................................................................. 11
Validity ..................................................................................................................................................................... 12
Reliability ................................................................................................................................................................. 13
Literature review ......................................................................................................................................................... 15
Theoretical background ............................................................................................................................................... 25
Brand identity .......................................................................................................................................................... 25
Branding .................................................................................................................................................................. 25
Critique of Branding ................................................................................................................................................ 25
Brand Identity .......................................................................................................................................................... 27
Brand equity, Brand image ...................................................................................................................................... 31
Brand extensions and line extensions ..................................................................................................................... 36
Richard Pollays Advertising Appeals ....................................................................................................................... 42
Analysis of the companies ........................................................................................................................................... 43
Data Generation ...................................................................................................................................................... 43
Coding ...................................................................................................................................................................... 44
KODA-Background ................................................................................................................................................. 47
koda commercial analysis ...................................................................................................................................... 51
Kia Motors-Background ........................................................................................................................................... 55
Kia commercial analysis ........................................................................................................................................... 59
Mercedes Benz-Background .................................................................................................................................... 63
Mercedes Benz Commercial Analysis ...................................................................................................................... 66
Audi Brand Background ......................................................................................................................................... 69
Audi Commercial Analysis ....................................................................................................................................... 73
Questionnaire analysis ................................................................................................................................................ 76
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Data generation ....................................................................................................................................................... 76
Coding ...................................................................................................................................................................... 77
Analysis .................................................................................................................................................................... 78
General result of the questionnaire ........................................................................................................................ 79
Hypotheses .............................................................................................................................................................. 82
Comparison between the analyses ............................................................................................................................. 84
koda ....................................................................................................................................................................... 84
Kia ............................................................................................................................................................................ 86
Mercedes-Benz ........................................................................................................................................................ 87
Audi .......................................................................................................................................................................... 88
Conclusion ................................................................................................................................................................... 89
Limitations ................................................................................................................................................................... 92
Bibliography ................................................................................................................................................................. 93
Appendix ...................................................................................................................................................................... 99


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Introduction

The postmodern society has made it difficult for brands to distinguish themselves. Capitalism has allowed a free
market that generated phenomena like brand cannibalism and a fierce competitiveness. Therefore, companies
have searched for solutions able to become distinguishable and to remain on the market. They have reinvented or
launched new products with the goal of persuading consumers into buying their goods.

If a general definition of a product were to be made, three main levels would be found: the product itself with
tangible features like design, packaging etc., the added services (warranty, after sale services etc.) and the brand
name with its quality perception and reputation (Martinez; Pina, 2003, p. 432).

Brand names convey information about products and their various aspects, that are not so easily quantifiable like
reputation, status, heritage and aesthetics. This aspect occurs in the car industry as well, where brands are very
diverse and play an important role in the buying decision process, especially since car quality is difficult to evaluate
prior to purchase. Thus, consumers have to rely on the carmakers reputation. Concurrently, a cars appeal comes
not only from its functional and tangible level, but also from a symbolic intangible one, the reassurance,
distinctiveness and image of an established brand elevate the perceived value of a car and buyers are willing to
accept a higher price (Baltas; Saridakis, 2009, p. 284).

In the automotive market a specific aspect that reveals the duality residing in the brand is its structure, composed
out of the marque and the model. Baltas and Saridakis afirm that cars are typical examples of products that use a
two-level brand architecture. This implies a sub-branding phenomenon that involves connecting an establish
parent brand name to a product that has his own sub-brand identity. In this manner, a sub-brand may stimulate its
own perception of quality through a consumer inference. For example, Alphanumeric (Nissan 650Z) or foreign
names (Kia Sorento) are types of sub-brands widely used in the industry (Baltas; Saridakis, 2009, pp. 284-285).

Car manufacturers attempt to give their marques distinct images and messages. Their success or failure relies on
how efficiently they do so and on how well this image and messages correspond to the consumers desires, the
reassurance, distinctiveness and image of an established marque elevate the perceived value of a vehicle. Prestige
marques are not only sources of credibility at the functional, tangible level but also at the intangible, symbolic
level. Moreover, cars of a reputable carmaker keep stronger residual values (Baltas; Saridakis, 2009, p. 285).
However, it appears that car companies are interested in creating strong brands not just at the marque level, but
at the model level as well. These sub-brands are connected to a master brand and can therefore augment or
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modify the association with their parent brand. The most common role of sub-brands is to extend the main brand
into meaningful new segments. Following these lines, it is conceivable that model names can produce their own
brand equity, but at the same time they are still dependent on the parents name, brand equity and values. For
example, the brand name Audi A3 has its own identity, but it derives from its master brand Audi (Baltas; Saridakis,
2009, p. 286).

This project aims to look more into the sub-brand actuality, especially in the luxury and non-luxury segment. The
sub-brands will be referred to as line extensions. More on the subject will be elaborated in the theory part.
Nonetheless, it is important to mention in this introduction that line extensions arise when a strong brand is
extended to a new product, in the attempt of capitalizing on the equity that the parent brand has. While the new
product exploits the equity of the main brand, the latter is at risk of wearing out, since there is little doubt that
unsuccessful brand extensions can produce damage to the core product and devalue the parent brand (Baltas;
Saridakis, 2009, p. 287).

Continuing ahead, to the assumption that brands generate perception in the minds of the consumers, it can be
debated that what a consumer associates with a brand is the result of what he or she has felt, learnt, seen and
heard about it. Furthermore, the knowledge that consumers have about certain brands will influence their
reaction when confronted with brand-related stimuli like a brand user, a brand category or a branded product.
This knowledge can generate an impact on the attitudinal and behavioural response of customers and vice versa
(Koll; Wallpach, 2009, p. 338).
The quality of the product is also subjected to perception. Zeithaml perceived quality as the global assessment of
the consumer opinion about the superiority or excellence of a product (Zeithaml, 1998 as quoted in Martinez;
Pina, 2003 p. 436). Aaker and Keller have also made some valid points of view by demonstrating that the
relationship between the perceived quality and line extensions have positive outcomes only when the original and
the extended product create a high degree of similarity. On the other hand, subsequent studies made by
Bottomly and Holden have verified that the perceived quality can exercise a direct consequence on the evaluation
of the line extensions, no matter how high or low the fit between the two is ( Aaker and Keller, 1990; Bottomly
and Holden 2001, as quoted in Martinez; Pina, 2003 p. 436).





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Based on the lines of what was just written the following problem formulation was developed:

How does the line extension affect the differences between the brands identity and the brands image when
referring to luxury and non-luxury goods? Have these line extensions towards different target groups created a
change in the consumers perception of these brands? In what way?
Before moving on to the theoretical framework an edification regarding some of the concepts used in the research
questions has to be made. Thus, when referring to affect the researchers have decided that the concept implies an
alteration between the brand image (consumers perception) and the brand identity. So, if consumers do not see
the same values that the companies want them to, it connotes that line extensions have caused an antithesis
between the two previous mentioned concepts, that reside within a brand (image and identity). As far as
consumers perception goes, this was elaborated in this introductory part. It indicates what people think, believe
or feel as appertaining to a product.

Last but not least, since luxury aggregates itself as an elusive concept, displayed more in the literature review, it
has been decided to provide the reader with a price limit, meant to separate luxury from non-luxury goods. In
consequence, after looking at different car prices for the selected four brands, the amount 350.000 DKK was
decided upon as the borderline.

After this first overview, it has been decided to answer the problem formulation by going through the following
structure. A methodology part, in which the chosen interpretivist paradigm and the research design will be
annotated, then a theoretical framework followed a comparison of two analyses, conclusions and limitations.








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Methodology
Paradigm

When writing a project and conducting a research, it is argued that one of the most essential and important
questions that is to be answered is the question of which research paradigm the research is applicable to. The
paradigm is an important part of the project work as researchers adopt different assumptions about the world,
which influences the choice of methods and the research approach (Saunders, et al, 2009: 108). Guba defines a
paradigm as "a basic set of beliefs that guides action" (Guba, 1990: 17).
In order to determine which paradigm is pertinent to the particular inquiry, two questions are to be answered. An
ontological question: What's the nature of the world and what's the nature of the reality? As well as an
epistemological question: What is the relationship between the researcher and the world?
Depending on which author is used, the paradigmatic stance of this project is interpretivism or constructivism by
Guba's definition. The paradigmatic argumentation of this project will however be based on the definition of
interpretivism by Saunders, et al (2009). Interpretivism lies in strong contrast to the positivistic paradigm which
roots lay deep in the physical sciences. A paradigm dominated by the realist belief that the world consists of one
reality and therefore one truth, this means that everything can be generalized. The interpretivistic paradigm
focuses on people and their roles as social actors. The notion is that people interpret everyday events and social
roles by the meaning that they give these events and roles (Saunders, et al, 2009: 116).
Ontologically the world is viewed through a relativistic perception which means that the world is relative and
consisting of multiple realities (Saunders, et al, 2009:110-111). In relation to the subject of car consumption, there
can be many different situations and social factors that can influence an individual's perception of a certain car
brand. Maybe their parents owned a koda 25 years ago, giving the individual a certain view of this brand, perhaps
as a cheap Eastern European car that broke down on every family vacation, while another person can have a
completely different perception of the brand if they e.g. has only owned a new koda and therefore only has a
positive view of the brand. Thus, exists multiple different realities that can be analyzed.
Epistemologically the relationship between the researcher and the world is that of a subjective nature. This
subjective relationship is a direct result of the existence of multiple realities (Guba, 1990: 25-27). Since multiple
realities exist it can be hard to maintain an objective standpoint, due to the notion that no two people are the
same, which is also the case when it comes to people's perception of car brands. It can however be possible to find
patterns that consist throughout the general perception of different car brands. Though generalizability and the
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collection of reliable data can be difficult to achieve in a subject that is as subjective as this, patterns can prove
valuable in the process of trying to obtain reliable data.
Even though it is possible to appropriately use both qualitative and quantitative methods in any of the research
paradigms (Saunders et al, 2009: 108), interpretivism is usually associated with the use of qualitative methods due
to the subjectivity and the impression that the world consists of multiple realities as well as the aim being to
investigate people as social actors rather than generalizable numbers. As well as the idea that the aim of
quantitative data is to create an objective and systematic analysis that can generate a general conclusion
(Kracauer, 1952: 634) which is also the reason for quantitative methods being used within the positivist paradigm
due to the nature of quantitative research, and how the method fits aim of creating reliable and generalizable
data.
Even though this project has an interpretivist stance, the choice of mixed methods in the form of the
predominantly qualitative content analysis and using quantitative methods such as the survey is to compare the
collected data and uncover if the themes that car brands want to portray correlates with the perception that
people have of the companies. The argument for using a quantitative survey in a project that leans towards the
interpretivistic paradigm is that although the aim is still to understand people as social actors, the desire for a
higher degree of generalizable data is also present. In order to achieve this under the timeline of the project the
best way to achieve this was through the use of a quantitative method.

Research design

A research design can be formed in several ways depending on the purpose of the research. There are several
types of designs like longitudinal, cross-sectional, case study, experimental and comparative. However, in this
study the focus will be on comparative one (Bryman, 2012).
A comparative research strategy uses identical methods to look at different cases in order to answer questions
about the possible differences between the groups investigated. It is important to explain clear which groups are
looked at and thereby is going to be compared (Bryman, 2012, p. 72-76).
In this research a comparative design will be implemented and in order to secure a broad understanding of the
four car companies and the perception of them, mixed methods will be used. A qualitative research focuses more
on words rather than numbers which is a characteristic of quantitative research. This means that for this particular
research, a qualitative content analysis of the four companies commercials will be conducted, focusing on the
companies identities and how they position themselves. In addition, a quantitative questionnaire will be sent out
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among a selected group of consumers, in order to see how their perception of the companies and the products
are (Bryman, 2012, p. 637; Saunders et al, 2009, p. 151-153). Even though, numbers are mostly related to
quantitative analysis, percentages will be used in this research to facilitate the understanding and the comparison
of the obtained from the content analysis results. This also fits with the fact that this study is based on mixed
methods. However, it should be mentioned that even though in the qualitative part percentages and numbers are
used. The researchers have arrived to them through a subjective analysis based on their life experience and
knowledge of the subject. Therefore, the objectivity of the content analysis can be contested due to its lack of
generalizability. Following this knowledge it has been decided to allocate a qualitative nature to this part
(Saunders et al, 2009, p. 151).
In the following sections a further explanation of what a content analysis is and an introduction to the method of
questionnaires will be conducted. In addition it will be shown how these apply to the study.

Content analysis
Leedy and Ormrod describe content analysis in the following way: A content analysis is a detailed and systematic
examination of the contents of particular body of material for the purpose of identifying patterns, themes, or
biases (Leedy & Ormrod, 2010, p. 144).
A content analysis is normally used on forms of human communication such as written, spoken and visual
communication. This e.g. means books, newspapers, blogs, television, movies and music. An example of a content
analysis could be that a researcher looked at how traditional sex-role stereotypes are reflected on television.
Another example is where a researcher looks at how much space in newspapers is devoted to advertisements
(Leedy & Ormrod, 2010, p. 144).
In this research the aim is to look at line extensions (expanding a companys product line) and if they have affected
the relationship between the companies and the consumers. Also the aim is to see, if the consumers perceptions
of the brands have changed or not. Therefore, in order to see how the companies present themselves in
commercials and how it fits their identity, a content analysis of a variety of the companies commercials will be
analyzed.
In order to conduct a proper content analysis, it is important that the following steps are to be followed: The first
step is to identify the material, that should be studied, which in this research will be a selected amount of the four
companies commercials. The second step is to define a set of features to exam within the chosen material. Since
this research focuses on identity, relationship and perception, it has been chosen, as it will be explained in the
theoretical section, to use Pollays appeals to identify which values the companies are using in their commercials.
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These values will be positioned accordingly to the researchers point of views. Thirdly, if the load of material is
heavy, there is a possibility to break it into smaller segments. The last step is identifying the appeals that are
represented in the commercials and afterwards conduct an analysis of the results (Leedy & Ormrod, 2010, p. 144;
Limbistraine, 2006). In the section data generation, it will be elaborated more on which and how the data from the
commercials were collected.

Questionnaire

Parasuraman et al (2007) defines a questionnaire as: A set of questions designed to generate the data necessary
for accomplishing a research projects objectives (p. 280). In other words, it is a way of collecting data and it can
be designed in different ways. First of all, the researcher must have a clear view of how the questionnaire will help
in the research being conducted. Secondly, consider if the questionnaire should consist of non-structured,
structured questions or a mix of them. With a non-structured question the respondent answers the given question
with his/her own words, whereas structured questions mean that there is a given set of options to choose from.
Thirdly, it should be easy for the respondent to answer the questionnaire, meaning that the questions should be
easy to understand and that the layout is clear (Parasuraman et al, 2007, p. 283-286).
In this research the overall aim of the questionnaire is to get an overview of how a selected group of consumers
perceives the four car companies. The questionnaire will be created on the basis of what the content analysis
shows. Meaning that the respondents will be asked to identify which values, from a structured list, they associate
with each brand. The values on the list will be the ones who were most present, less present and not at all present
in the commercials. The purpose is then to see if the values used in the advertisements are also the values that the
respondents tick off. Besides that, the respondents will among others be asked if they see the brands as belonging
to the luxury group or the mainstream group and if their perception of the brands will change, if the companies
extend their product line in reaching another target group than the original. The full questionnaire can be seen in
Appendix 1. How it precisely was created will be elaborated on in the sections about data collection and sampling.




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Data generation

In this research, as said before, both qualitative and quantitative methods will be conducted.
This is done in order to answer the problem statement in the best possible way.
The qualitative methods will be carried out by a content analysis. The analysis will be used to get a better picture
of how the companies want to be perceived, and to investigate the extent of which the four different car brands
are using the Pollay appeals in their commercials, to affect the consumers. This will be done by selecting 15
advertisements from each brand, 60 in total, and analyzing them to see which and how many of the luxury and
non-luxury appeals are present in the commercials. The number of commercials was achieved by the use of a
random number generator at www.random.org. The generator provided the random number, 58. Bearing in mind
that a more even number is easier to divide into four, this value was rounded up to 60.

The 60 selected commercials were chosen on the basis of their versatility, meaning that they are showing the cars
in different surroundings and situation, customized to different segment of the market. Each of the
advertisements will be analyzed from the perspective of each researcher conducting this study. Thereafter, a
comparison will be conducted to gain an overall understanding of which appeals are used and why.

Afterwards the quantitative methods will be conducted through a questionnaire. It will contain closed questions to
make it easier to search for patterns in the respondents answers. However, it could be imagined that closed
questions make it more appealing for people to answer, as they are easier and faster, thereby the chances for
getting a bigger response rate are heightened.
Through the questionnaire it is expected to get a better overview of the consumers perception of the four car
brands.

After these two methods have been conducted, a comparison between the results of the content analysis and the
questionnaire will be carried out, to look for identically and unidentified patterns. This comparison will be used to
answer the problem statement.





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Sampling

Sampling for the content analysis will be done by choosing online commercials for each car brand. For each brand
there will be chosen 15 official commercials, which are in English, however they are not limited to a specific
country or time period. Each has been selected from a variety of different commercials because of its diversity.
The goal will be to get the best and the broadest view of the four car brands, and how they want to be perceived.

The sampling for the questionnaire will be a non-probability sample. This is caused by the fact that the population
is unknown to the research group and therefore there is no way of knowing the size or the effect of sampling
errors (Saunders et al, 2009, p. 213; Survey.cvent.com, 2013). The types of non-probability sampling that will be
used in the research are convenience sampling and snowball sampling. Convenience sampling will be used since
the questionnaire will be sent out through each researchers Facebook page, and thereby the sample is one that is
simply being available for the researchers by its accessibility. The problem with this form of sampling is that it is
impossible to make a generalization of the findings, caused by the population being unknown. However, many
social researches are frequently based on convenience sampling as it is more convenient, less costly and does not
need as much preparation as a probability one (Saunders et al, 2009, p. 233 and 241; Bryman, 2012, p. 201-202;
Survey.cvent.com, 2013).

Snowball sampling occurs when the researcher makes initial contact with a small group of people who are relevant
to the research topic and then uses these to establish contact with others. In this research it is done by the
researcher contacting their social network and getting respondents to post the questionnaire on their Facebook
page, thereby getting respondents that are outside the researchers network. This form of sample is not random,
since do to the nature of the population is unknown it would not be able to be a random sample. The problem
with snowball sampling is that it is unlikely that the sample will be representative of the population (Saunders et
al, 2009 p. 240; Bryman, 2012, p. 202-203). These two types have been chosen on the basis of being the easiest
and most suitable way for the researchers to get as many respondents as possible to the questionnaire. However,
it is important for the researcher to keep in mind that with these two ways of selecting a sample the control over
the sample is quite low and it is hard to find a sample that represents the population (Saunders et al, 2009, p.
236).

As the decisions of who to sample are influenced by the researchers personal judgement and because the
selection is not random this means that the sample is biased. A biased sample means that it does not represent
the population from where it is selected. Bias will also occur if some members of the population have a little or no
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chance of being included in the sample. It is in fact very difficult to remove bias altogether and to deliver a truly
representative sample (Bryman, 2012, p. 188). The members that are most likely to be selected in this research are
students and people in the same age group as the researchers, since the type convenience sampling is used. This
means that people outside these factors have little to no chance of being selected because they are unknown to
the researchers. Therefore it can be argued that the sample is biased.

As mentioned before it will not be possible to generalize a result from the findings of this project. This is caused by
the sampling type and the research paradigm.

Validity

As Bryman states, validity is concerned with the integrity of the conclusions that are generated from a piece of
research (Bryman, 2012, p. 47). With the help of validity the question of what is measured constitutes what really
wants to be measured is answered. Most of the concepts pursued to be measured cannot directly be obtained, so
methods that can calculate a latent variable have to be developed, like questionnaires. By using them every
question becomes a manifest variable that can actually be measured, designed to tease out an underlying latent
concept. (Muijs, 2004, p. 57)

The employment in the analysis of the 60 selected commercials, made it clear that the symbolic issue relevant to
the research could not be addressed without an appropriate coding frame. To do so, a latent variable, not directly
measured has been taken and applied to an instrument to indirectly measure the concepts, through Pollays list of
values. Thus, every appeal became a manifest variable, designed to reveal the underlying latent concept (Muijs,
2004, p. 57).

Content validity refers to how appropriate the manifest variables, in this case Pollays appeals and the survey, are
in order to obtain a fair measurement of the latent concept, which was present in the commercials and in peoples
perception of the brands, and that needed to be identified through qualitative and quantitative methods. The
theory was also of great importance in determining the content validity, since a proof on how well the subject and
its concepts was known, had to be made.

An extensive research upon the theories and the subject this paper is based on have been made in order to
achieve content validity. Therefore, studies on Pollays appeals and their relation to advertising and the
development of materialism have been conducted, and as it was mentioned previously, the list is commonly
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referred to as one of the most comprehensive sets of advertising appeals, a suitable instrument even when not
used in its entirety (Dahl, 2002, p. 46).

Another form of validity present in this research is data oriented validity meant to demonstrate how well the
analysis methods accounts for the information inherent in available data. The four car brands were chosen based
on their well established status as manufacturers in two different consumer segments and on the availability and
diversity of commercials that these companies have, not just for a particular line-up but for their line extensions as
well. Moreover, the respondents of the survey were selected on age basis and occupation. The younger ones
might be more aware of the changes occurring within the brands, while the older ones might be more experienced
and thus, might have a more reliable opinion about the cars, since some might even own one.

Sampling validity is the degree to which a collection of data are either statistically representative of a given
universe or in some specific respect similar to another sample from the same universe so that the sample
can be analyzed in place of the universe of interest. In content analysis, it is the degree to which the
collection of data contains with a minimum of bias a maximum of relevant information about the universe,
correcting particularly for the bias in their selective availability. (Krippendorff, 2004, p. 73). For the first part of
the research simple random sampling was chosen, so that each unit of the population within the sample frame
could have a fair chance of inclusion in the sample. By proceeding in this manner, the changes for a representative
sample and a smaller sampling error were increased.
On the other hand, for the survey part the situation is the opposite since convenience sampling is used, therefore
some units of the sampling population were more privileged than others.

Reliability

Reliability concerns with the repeatability that the studys results might have and it is likely to be in connection
with the research (Bryman, 2012, p. 46).

In this projects case, when referring to reliability it is important to mention the inter-observer consistency,
because a great deal of subjective judgement is involved in the research part, especially in the content analysis
where a decision on how to categorize the media items had to be taken (Bryman, 2012, p. 169).

Another concept related to this type of reliability is intercoder agreement. Krippendorffs understanding of the
difference between agreement and reliability is that while agreement is what we measure, reliability is what we
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wish to infer from it. Moreover, the most important interpretation of reliability is said to be reproducibility
(Krippendorff, 2004, p. 215). Following this judgement, the research took into consideration the authors
recommendations of an agreement coefficient becoming an index of reliability. This index was applied to proper
reliability data. Krippendorff describes such data as a result of duplicating the process of describing, categorizing
or measuring a sample of data obtained from the population of data whose reliability is in question (Krippendorff,
2004, p. 3). These duplications were achieved by the use of four coders, working independently from each other,
applying the same coding instructions to the same units of analysis.

Step two is actually part of the coding process, regarding foreboding the assumption that the knowledge is
necessarily correct. More specifically, what mattered was not truth, correlations or predictability of each coders
use of categories, but the agreements or disagreements among the data, building a coefficient on the observable
coder idiosyncrasies (p. 3). The final step is assuming that the agreement coefficient is in correlation with the
conditions under which enable to rely on imperfect data.

Moreover, in order to ensure the highest possible reliability, threats such as a poorly executed coding scheme,
inadequate coder training or coder fatigue were eliminated in the best possible manner.
As for the second part of the research, the reliability of the survey can be questioned, due to the subjective nature
of the answers provided. Thus, the study cannot be repeatable over long periods of time, since peoples opinions
are likely to change. Another reason that can determine its incapacity of repeating itself, is because the image of
the brand is also dynamic.

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Literature review

The present study will focus on a gray area that the brand extensions and line extensions have created both in the
luxury segment and in the mainstream one. In other words, the research aims to analyze to what extent the brand
image and the brand identity has been changed with these line extensions. In order to do so, a great deal of
attention is going to be paid towards the perception that people have about the brands in question. Because the
gap between luxury and mainstream goods has narrowed down, due to line extensions, the increase in income
and living standards and to the rebranding strategies, the car industry has taken into consideration these factors
and some car brands, that in the past were exclusive luxury products have started addressing the mainstream
segment and vice versa. This aspect can be proved by the fact that car brands such as Mercedes and Audi (Audi,
2013 ; Mercedes, 2013) have started manufacturing smaller and more affordable cars, therefore accommodating a
broader, more mainstream segment. At the same time, these brands have a large history behind them and the
values that have helped build their brand identities are the same as they were in the past. Ever since these brands
have penetrated the market, they have been considered as luxury goods and that is why they are highly sought
after. Therefore, a more affordable model can become popular within the mainstream segment (Audi, 2013).

At the same time, car brands such as koda (koda, 2013) and Kia (Kia, 2013) have started manufacturing better
cars in design and technology. Still, in comparison with the above mentioned brands, these are more affordable
and people do not tend to see them as luxuries. That is why they have chosen a change in their brand identity and
for the last couple of years they have tried to rebrand their products either through mergers with bigger and more
successful companies like Volkswagen, or through a change in the communication strategy and in the production
design.

So, starting from the research question: How does the line extension affect the differences between the brands
identity and the brands image when referring to luxury and non-luxury goods? Have these line extensions
towards different target groups created a change in the consumers perception of these brands? In what way?,
in which by affect refers to peoples perception and to the image that they have in respect to the four brands, a
need to clarify a series of concepts like brand identity, brand image, line extension rises. These will be debated in
the theoretical framework of this paper. However, even with a clear image of these concepts, a full understanding
of this research, cannot take place without providing the reader with an in-depth view of what luxury is and how
this concept has evolved over time. Since this project is interested in some brands that are considered luxurious,
this part is considered vital for further steps.

16

So, what exactly is luxury? There has been significant literature written on this subject. Authors were interested in
luxury in the fashion sector, others in counterfeits and some even in the luxury consumers. Therefore, this review
aims to look at what they had to say in respect to luxury and to sum up, in a critical manner their points of view. In
pursuance of this, academic journal articles and books which focus on luxury are going to be consulted.

As Kapferer says, luxury is an elusive concept. Most people can identify which brands can be called luxury and
which cannot, but despite this most people find it hard to provide a precise definition of the term luxury
(Schroeder et. Al., 2006, p. 67). Thus, he proposes a multifaceted approach to luxury, from an economic, semiotic,
sociological and psychological angle (Schroeder et. Al., 2006, p. 68).

Economic approach
For economists, goods that belong to the luxury segment are an oddity, in economic terms, luxury objects are
those whose price/quality relationship is the highest on the market. However, for an economist quality means
tangible functions (Schroeder et. Al., 2006, p. 68).

Therefore, luxury brands are the ones that have been able to justify a higher price in comparison to other products
that have comparable tangible functions (Schroeder et. Al., 2006, p. 68). But is this definition enough? If it is to be
considered, that would mean that all products can become luxurious, as long as they have a higher price than the
competition. Another economic perspective is Veblens, one of the first authors who analyzed luxury goods in the
social economic context. These initial economic theories focused on distinctions between luxury and necessity
(Klaus-Peter Wiedmann , Nadine Hennigs (Eds.), 2013, p. 40). Today, the focus has switched towards the influence
of pricing strategies, which associate luxury with a high or exclusive price. Based on the connection that was
created between price and exclusivity, Groth and McDaniel developed the so called Exclusive Value Principle,
through which marketing strategies could achieve brand exclusivity (Groth, J.C./McDaniel, W. as quoted in Klaus-
Peter Wiedmann, Nadine Hennigs (Eds.), 2013, p. 40). According to this principle, the market price for a product is
the sum of pure utilitarian value and the exclusive value principle. The pure utilitarian value refers to the utility
that a product has, and in the case of luxury goods, sources of utility include aesthetic design, quality, excellence
of service, while the exclusive value principle incorporates external factors like advertising and promotion
campaigns, that motivate the consumption of such goods (Klaus-Peter Wiedmann, Nadine Hennigs (Eds.), 2013, p.
40). So, basically from this perspective luxury goods are the ones that have a higher price due to their higher
quality. Good marketing campaigns are highlighting such features, and trough this way they can generate
consumer behaviour. Unfortunately, the economic angle is not enough to understand a concept that has been
used since antiquity and that has changed throughout history.
17


Etymological approach
If a look at the etymology of the word is to be taken, it is considered to have some connotations with Lux, the Latin
word for light (Schroeder et. Al., 2006, p. 68). But why do people associate luxury with light? Apparently, the
answer resides in the fact that they are flattering the ego, and thus the semantic halo is justified. If one believes
that luxury comes from Lux, one accepts the fact that just like light luxury glitters, is enlightening and brilliant:
each and every item is like a jewel and shines like gold (Schroeder et. Al., 2006, p. 68). The fact that luxury can be
seen, just like the light, is important. Luxury is meant to be visible by oneself, but most importantly it is important
to be seen by others. Despite this, the real etymology of the word comes from agriculture where Luxus means
growing apart, or in a non-straight manner (Schroeder et. Al., 2006, p. 68). Therefore, Luxus is a difference, a
step-aside from the normal conventions. Furthermore, if the origins of the word are researched more, they can
also relate to luxuriance, which means something that is characterized by the richness, abundance and
extravagance, something that tends to excess (Websters Dictionary as quoted in Schroeder et. Al., 2006, p. 68). In
other words, etymology is trying to say that luxury is meant to be rich, extravagant, is supposed to excess and
more importantly is supposed to be visible.

Psychological approach
But if its meant to be perceived by others, this means that it has some sociological and psychological implications
as well.

Psychology states that if the word luxury has only one root, then its meaning is shaped by the local culture. Luxury
brands are global, however there are hidden differences of understanding when it comes to dealing globally.
There is an illusion of shared understanding, but research has shown that among the same age group, the term
luxury was not associated with the same attributes (Schroeder et. Al., 2006, p. 69). Another psychological view
defines luxury from the consumption motivations point of view, based on interpersonal or external factors like
suggestions or interactions with others, opinion and approval, and on personal or internal factors such as
emotions and feelings that can stimulate the consumption (Klaus-Peter Wiedmann, Nadine Hennigs (Eds.), 2013,
p. 40).

Thus, people buy luxury products for social recognition, positive impression and status or for hedonic and
pleasure-seeking purposes (Klaus-Peter Wiedmann, Nadine Hennigs (Eds.), 2013, p. 40). As a matter of fact, Dubois
and Laurent pointed out that emotional values are vital for luxury brands, because due to them a majority of
18

people subscribe to the hedonic motives for buying luxury for their own pleasure (Dubois, B. /Laurent, G. 1996 as
quoted in Klaus-Peter Wiedmann , Nadine Hennigs (Eds.), 2013, p. 40).

The fact that marketing theories on luxury brands have a ground in economic and psychological theories is
acknowledged, since they primarily deal with the differentiations of luxury from non-luxury goods, as well as with
defining salient product features that might constitute luxury (Klaus-Peter Wiedmann , Nadine Hennigs (Eds.),
2013, p. 40).

Vickers and Renand are two authors who developed a three dimensional model that differentiates luxury brands
from the non-luxury ones based on the symbolic meanings that these brands have in terms of functionalism,
experientialism and symbolic interaction. In their vision, functionalism is defined as the features of a product, such
as superior quality, durability, strength, confidence of item's replacement, able to solve a problem or at least a
potential one. Experientialism is based on features like traditional and exclusive design, special richness and tone
of decoration, elegance of days gone by, that can stimulate hedonic consumption and sensory pleasure. Last but
not least, symbolic interaction refers to products components, like a prestigious brand name or a recognizable
designer style, that relate to status, group membership and self-enhancement (Vickers, S.J./Renand, F. 2003 as
quoted in Klaus-Peter Wiedmann, Nadine Hennigs (Eds.), 2013, p. 40).

Sociological and historical approach
Moving on, to what sociology and history have to teach about the concept, if a look back in time is taken, for
decades luxury has been the appendage of the aristocracy. In order for one to be invited and live at the court of a
king or queen, he or she had to stand up to the royals rank, by spending a large amount of money on goods of the
highest quality.

Since aristocracy was a non-working class, these goods were judged by their rarity and by the amount of pleasure
they delivered, and not by their functionality. For example, the clothes that the court designers were appointed to
design were made from the rarest material and the most sophisticated fabric. Furthermore, being appointed to
design something for the monarch was a great honour since luxury was the product itself and it was supposed to
be rare, unique and unseen before (Schroeder et. Al., 2006, p. 69).

The situation has changed, though. In time the designers, the obscure tailors, opened shops and their name made
them famous. It was a turning tables phenomenon, because the aristocracy and the rising bourgeoisie started
coming to their stores, fashionable places to patronize, where one had to be seen (Schroeder et. Al., 2006, p. 69).
19

The name of the shop along with the name of its creator started receiving visibility and importance, since it was an
indicator of if one was trendy or not, and it was also an indicator of the amount of money one was willing to pay
for certain goods. This visibility was of extreme importance for the bourgeoisie, found in a constant struggle to
devoid of aristocratic lineage and to create its own hierarchy of work and money. Thus, since luxury was most
visible, it positioned the owner (Schroeder et. Al., 2006, p. 69).

Advancing in history, it can be argued that the luxury market is no longer described by income levels, spending
budgets or personal wealth. It has become something accessible for everyone. Furthermore, in the American
society of the 21
st
century, where the economy is patronized by information, luxury is where the action is, no
matter where you start (Danzinger, 2005, p. xvii).

New luxury-old luxury
Todays luxury market can be described with an innovative concept called the new luxury. The official birth year
of this new luxury is 1984, when President Reagan won his second term. By that time the economy had rebounded
from a national recession and the American consumerism returned in its full force. The presidential couple set the
tone for the hoi polloi to follow, when they spent $11 million for the most extravagant inaugural celebration
that the history has seen, at that time. In addition, encouraged by Reagans commitment and enthusiasm for free-
market politics, Americans felt safe about the economy, so this rising consumer confidence helped the economy
rise with 7.2 percent in 1984. Based on this growth, two landmark events took place. That same year Bernard
Anault purchased the luxury fashion house Christian Dior, which later on became the luxury goods conglomerate
LVMH, a luxury empire that extends across jewelry and watches, wine and spirits, fashion and leather goods,
cosmetics and perfumes and luxury retailing. The second occurrence was the launch of the super premium
American Express Platinum Card, a card designed for luxury consumers passionate about travel (Danzinger, 2005,
p. 1-2).

Following these two trendsetters, the decade of the 90s was an exciting one for marketers, who staked their claim
to luxury. While the availability of luxurious goods was expanded to a wider range of consumers, the emergence
of a younger, more affluent luxury consumer was transforming the luxury market from its traditional conspicuous
consumption model (Danzinger, 2005, p. 7). These young consumers had a passion for self-indulgence and an
iconoclastic world view that disdained conspicuous consumption for the sake of conspicuous consumption
(Danzinger, 2005, p. 7).

20

The model for the new luxury market was based on an individualistic consumer, who was driven by new needs and
desires for experiences. This paradigm shift in the luxury segment from conspicuous consumption to the new
experiential luxury was marked by a change in the definition that people attribute to luxury. Thus, old luxury was
about attributes, features of the product and the appeal derived from prestige and status, while the new luxury
thinks about the product from the consumers point of view, it focuses on the experience of luxury enclosed in the
goods and services they purchase. Rejecting status and prestige, the people that consume luxury today have
embraced a democratic ideal of the concept, they feel that luxury is for everybody, but at the same time it is a
notion that is different in meaning for each and every one (Danzinger, 2005, p. 7-8).

Concurrently, for the new generation of baby-boomers the focus was more on the desire for living the good life,
they did not care so much about what they had or what they owned, but focused more on the pleasure that they
received from that specific product. The experience was what mattered (Danzinger, 2005, p. 13).

The word luxury is recognized as the opposite of necessity, at its roots being experienced as a voluptuous self-
indulgence. However, during the past century, luxury has lost much of the decadence and moral taint that it
implied. So, during the 20
th
century it was used to describe a product, an industry and an objective thing, its
meaning started including descriptions like expensive, the best of the best, affordable only to the rich, and an
object of high quality. For the majority part of the 20
th
century, luxury was used to describe the elite lifestyle, but
during the mid-1980s the baby boom generation caused a shift in paradigm towards an experientially based view,
as mentioned before (Danzinger, 2005, p. 13-18).

The new luxury term refers to more recent and more affordable luxury concepts. It is often associated with the
democratization of luxury, but the paradigm shift that represents new luxury is the consumer centric way
people are defining luxury as an experience or feelings. In other words, old luxury is about the thing, whereas new
luxury is about the consumers experience (Danzinger, 2005, p. 19).

Danzinger affirms that this consumer centric definition focuses on the feeling, on the experience, the personal
dimension that consumers have towards luxury. Moreover, when referred to luxury from the consumers
experiential perspective, the brand becomes irrelevant. All that matters is how brands can deliver or not the
promised feeling of luxury or the luxury experience (Danzinger, 2005, p. 19-21).

On the other hand, Glyn Atwal and Allistair Williams, both Marketing Professors at different universities, define
new luxury as products and services that possess higher levels of quality, taste, and aspiration than other goods in
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the category but are not so expensive as to be out of reach (Silverstein , M . And Fiske , N . 2003 as quoted in
Atwal, Williams, 2008, p. 339).

An example of this new direction that luxury has started following was the launch of a clothing line by Karl
Lagerfeld or Stella McCartney for the fashion retail chain H&M. By manufacturing such products, middle-market
consumers have started trading up for products that met their aspirational needs, which scholars call the
luxurification of society.

Furthermore, the quoted authors have even compared the contemporary luxury consumption with
postmodernism, a western philosophy that encourages people to think away from the modern, functional and
rational, also described as the evasion of the subconscious. In terms of the experiential marketing, the
postmodernist discourse has two relevant aspects: hyper-reality and image. The first one occurs when the
distinction between real and unreal is blurred, and the prefix hyper signifies more real than unreal. As an example
that can help the reader grasp this concept is a situation in which the real that is the environment is no longer a
given, but instead it is a reproduction by a simulated environment, which does not make it unreal, but rather
realer than real. However, this hyper-reality has some negative implications, since it can induce a loss in the sense
of authenticity, and one cannot distinguish reality from non-reality anymore. For example, visitors at the
Kempinski Hotel at the Mall of the Emirates can enjoy an Alpine experience indoors, in the worlds third largest
resort of this nature. The result is that in contemporary societies people consume the imaginary, and no longer
focus on the meanings of the images (Atwal, Williams, 2008, p. 339-340).

The two authors also acknowledge that there has been a change in marketing because of the branding,
communication and information revolution that the world is facing at the moment. Therefore, marketers have
started viewing consumers as emotional beings concerned with achieving pleasurable experiences. So, in the end
it all comes down to experiential marketing in the luxury segment. This experiential marketing, a growing trend
worldwide, was first introduced by Pine and Gilmore. According to them, when a person purchases an experience
he expects to spend some time enjoying a series of memorable events, in which the company/brand promises to
engage him in. Thus, this new way of marketing is about taking the essence of a product and amplifying it into a
set of tangible, physical and interactive experiences that reinforce the offer (Atwal, Williams, 2008, p. 341).

Among the experiential aspects of consumption Holbrook and Hirschmann identify the following: feelings, fun,
fantasies (Holbrook , M . B . And Hirschman , E . C .1982, as quoted in Atwal, Williams, 2008, p. 341).

22

Returning to Danzinger, she proposes four dimensions identified and described by consumers that put the new
and old luxury into perspective. The first one is luxury as a brand. Only 24% of the luxury consumers she
interviewed agreed with this one. So, according to them luxury is defined by the brand of the product. Brands like
Mercedes Benz, Tiffany, Rolex, Cartier, Gucci, Prada and Rolls Royce are among those luxury brands that
consumers have mentioned. These are status conferring brands that took decades to create. They have a heritage
and can emotionally connect with the consumers. Still, even though some of these brands have achieved the
luxury status, some might not consider them as a luxury, since this concept is subjective and it connects with ones
individual passion. The second dimension is luxury as luxe product features. People are more likely to describe
luxury as specific qualities, features that are generally recognized as belonging to a luxury goods category. Thus, a
platinum jewelry is considered luxury while the golden one is not. Among the most important features people
have included: handcrafting, superior quality, cutting-edge design, long lasting, and careful attention to detail.
Within the experiential dimension, the intrinsic product features that can transform something ordinary into
extraordinary are the ones that truly matter. For example, a person might select an ordinary car brand but equip it
with all sorts of luxurious features. So, instead of buying the Nissan Infinity, the luxury car from Nissan, you can
buy the Nissan Altima with the full luxury package. You might not have the brand value that the Infiniti confers,
but the full package experience can make you feel more satisfied since you paid less and got the virtual luxury car.
Mercedes Benz is using this strategy. The company is trying to extend down into the near-luxury price range. Their
new way of thinking is why not deliver the Mercedes Benz brand features and qualities at a more affordable price,
this way they can build brand loyalty, because they are meeting automobile consumers at nearly every price point
throughout their lives. By doing so, 30+ C-class consumers can become 40+ E-class drivers, then on to a 50+ S-class
buyer and then return to a C-class model after retirement. Moving on to the third dimension, luxury as non-
necessities, some consumers feel like luxury is more of what you want and less of what you need. It is different
from one person to another. For example, what luxury is for some, is a way of living for others. Last but not least,
the fourth one is luxury as the power to pursue. This ultimate expression is defined as the power to pursue
passions and dreams. Totally separated from the intrinsic product-based definition of luxury, this dimension makes
us think about that place deep inside where luxury resides (Danzinger, 2005, p. 21-26).

The more luxury is analyzed from consumers perspective, the bigger it distances itself from the marketers point
of view. So, if luxury is about the experience and not about the item per se, then it is no longer a noun, but a verb
instead, connoting the action and the delivery of the luxury experience and feeling to the consumer (Danzinger,
2005, p. 27). More active than passive, luxury becomes luxury when the individual experiences it, the object,
thing, brand that delivers the luxury feeling is a catalyst for the feeling, but it isnt the cause of the feeling. The
luxury feeling comes from how the consumer personally interprets the luxury (Danzinger, 2005, p. 21-26).
23


Another article that deals with the old luxury-new luxury comparison is Probing brand luxury: A multiple lens
approach by Karen Miller and Michael Mills.
The authors quote Nueno and Quelch (1998), who see the old luxe, derived from Latin, as indulgence of the
senses regardless of the costs (Miller and Mills, 2011, p. 43). They also associate old luxury with a more product-
centered approach, with rare or hard to obtain products, handcrafted and of excellent quality, where high prices,
aesthetics and history are defining factors. The old luxe consumer is a person of good taste, savvy, he does not
need to see the label in order to recognize the brand and most importantly is willing to be put on a waiting list, so
that he/she can receive a limited edition good, which he/she can share with significant others (Miller and Mills,
2011, p. 43).

As for the new luxury part, the two agree that with the new luxe the products are more accessible and that
symbolism is more important than aesthetics. The new luxury consumers make money quicker, are mobile,
flexible, willing to trade-up in order to obtain and display the luxury (Miller and Mills, 2011, p. 44). Moreover, to
the new luxury consumer the tangible elements of brand luxury are a badge, a measure of social stratification by
which consumers measure their own self-worth and the worth of others by the luxury brands worn and/or
conspicuously displayed(Gao et al, 2008; Park et al, 2008 as quoted in Miller and Mills, 2011, p. 44).

Uniqueness is an attribute associated with old luxury, a brand element linked with originality, scarcity, creative
excellence and imagination, innovative design, symbols, logos and package design. However, Miller and Mills
argue that uniqueness, culture, country of origin, success and leadership are not strictly limited to luxury brands.
Instead, they can be associated with brands in general (Miller and Mills, 2011, p. 44).

If luxury is seen as a more affordable experience, then where is the rarity in it? Is it not meant to be rare, to be for
the classes and not for the masses?

Kapferer seems to identify two visions of luxury separating the East and the West: one associates luxury with
rarity, while the other one does not. For instance, this is the reason why the well known brand Louis Vuitton
makes 40 percent of its sales in Japan, where most office ladies can be seen carrying such a bag. Still, if this were
to happen anywhere else in the Western world, the brands equity would be harmed. So, how can a brand grow in
these conditions and still remain rare? The answer can be found in the distinction between actual and virtual
rarity. The actual rarity resides in the craftsmanship and in the ingredients, like a handbag made out of ostrich or
24

sharkskin, quite rare and quite desired. But when the companies are not using rare materials, then they should
create impressions of rarity, virtual rarity (Schroeder et al, 2006, p. 70).

Luxury consumers
Going forward, in a literature review about luxury, the consumers cannot be overlooked, since without them,
brands cannot call themselves brands anymore. So, the question is why do people buy luxury goods?

A lot of consumers spend significant amounts of money from their income on luxury goods, luxuries being
products with a premium quality and a design that has an aesthetic appeal. However, the higher income is not a
sufficient explanation for luxury acquisitions. Even people that have a lower income buy this type of goods. So why
is that? If the classical economic theory were to be considered, according to which humans have a rational buying
behaviour, then there cannot be a reason for why they purchase products which are so expensive and do not have
an additional utilitarian benefit, compared to their cheaper counterparts. Despite this, luxury offers some
psychological benefits which the cheaper products do not (Vigneron and Johnson, 2004 as quoted in Hudders,
2011, p. 609-610).

Miller says that the luxury brand consumption occurs on account of their power to signal hidden information, such
as wealth, status, personality characteristics about the owner to significant others (Miller, 2009 as quoted in
Hudders 2011, p. 610). Generally, the motives for buying expensive brands can be summed up in three categories:
the need for uniqueness, the need for conformity and need for communicating ones own identity. First, luxuries
can be used to distinguish oneself from the lower classes (Veblen 1899/1979, Mason, 1981 as quoted in Hudders,
2011, p. 610).

Leibstein refers to the above described phenomenon as the snob effect. This effect appears when a consumer
can afford a luxury brand when others cannot. Also, when a consumer makes a purchase just because he/she
wants to conform to the consumption pattern of the group they reference themselves, the same author calls this
the bandwagon effect(Leibstein, 1950 as quoted in Hudders, 2011, p. 610).

On the other hand, Thai argues that in general, the impressive motives for buying luxuries are divided into two
components: emotional and functional, since firstly the consumers are searching for personal rewards and
pleasing qualities and secondly they are looking for brands that offer a superior quality (Thai, 2005, as quoted in
Hudders 2011, p. 610-611).
25

With the above presented in mind, the next part of the project will focus on explaining the brand related concepts,
mentioned in the beginning of the review.
Theoretical background

Brand identity

The following section will account for the theoretical background of brand identity, mainly focusing on the
theoretical works of David A. Aaker. During this exploration of the concept brand identity, the branding in general
will also be touched, as well as a modern critique of the concept of branding as a marketing tool.

Branding

In the modern world of marketing, the branding imperative has become one of the major buzzwords. Starting in
the 1920's with Marlboro patenting a particular shade of the colour red because they thought that it could make
consumers associate that shade of red with the Marlboro brand, therefore utilizing this as a particular brand
symbol. However, the concept of making associations between different brands/corporations and colours or
different objects has been around for much longer. As an example, the Roman Emperor made his soldiers wear a
certain kind of armour, which came along with a set of values. It was easily recognizable and conferred a certain
status etc. Branding is also something that is associated with the tradition of cattle branding where farmers burn
their brand on the hind of their cattle, so potential buyers know that this meat comes from a certain farm. It was a
symbol of quality, making the purchase decision easier for potential buyers. Lately the concept of branding has
really made its move into the field of marketing. This is largely due to the increased variety of products and
services, rendering them indistinguishable from each other. The consumer is faced with infinite choices in
products, therefore differentiation is imperative. It is important to stand out and be remembered in order to sell a
product or service. Good brands build companies while ineffective brands undermine success (Wheeler, 2006: 4).

Critique of Branding

Not everyone believes that branding is such an effective marketing tool. Augustine Fou calls branding ineffective,
irrelevant, irritating and impotent and says that it only plays a small role in the overall purchase decision (Fou,
2009). Fou points out that all these different brand tools are just a way of getting people to purchase products
26

without offering anything innovative. Many companies spend millions of dollars on using brand strategies, making
consumers believe what they want them to believe about the companies, and blasting these messages at the
consumers through advertising campaigns (Fou, 2009). Fou argues that the exact shade of pink on Victoria's
Secret's logo in reality has little to no effect on the buying decision of the consumer.

But the biggest problem Fou has with branding is that it seems old fashioned. With the digitalization of everything,
it meant that consumers could be able to communicate with each other offering reviews and ratings as wells as
feedback and recommendations. This means that the advertising created by the brand is not the only way that the
consumer can get information on products. They now have many different sources of varying degrees of
trustworthy and objective information. Fou claims that many times the opinions of peers rather than the claims
from the brand are what affects a consumer's buying decision, making branding claims irrelevant (Fou, 2009).

Furthermore, he states that in order to create sales, they should not focus on elaborate branding campaigns but
should rather focus on making good and innovative products. If the products are good, then that will show
through the sales. He mentions Apple as an example. They have never stated that they made aesthetically pleasing
products that are easy to use, but this is what many consumers thought and that has stuck with them. So his
argument is that true brands do not do elaborate branding campaigns, and make up things that the companies
want the consumers to think about them. They create a reputation through their products, so the brands become
a symbol of this reputation and help new customers in making a purchasing decision (Fou, 2009).

However, this does not mean that branding is completely useless, but it states that the old way of branding does
not cut it anymore. It is about, being true to the brand, and create products that the consumer can vouch for
instead of trying to brand a company into being something that it is not, in order to sell their products, because
the consumers simply do not believe that anymore.

Fous contribution is acknowledged, since he proposes a series of valid challenges to the use of branding in
marketing. However, this paper sides with David A. Aacker, who believes that an effective brand is essential to
getting customers to identify and distinguish your product (Aaker, 2010). Plus, the history that stands behind two
of the brands the project focuses on can form an argument against Fous attitude towards branding. It is true that
they have brand elements such as logos, slogans, sounds, smell, advertising and so on, but people have started
trusting companies like Mercedes Benz and Audi mostly because of the quality they are provided with, quality that
over time has transformed into an experience. And since mentioned product quality was mentioned as an
27

important part of the trust building between a company and its target group, could this quality aspect be included
in the brand identity concept? And what is brand identity exactly?

Brand Identity

The brand identity is the visual and verbal representation of a brand and it is a portrayal of the way a company
wants to be perceived by the consumer. It is a depiction of a company's core values that manifests itself through
the name, logo and other communicatory tools that are present in the company's communication both internally
and externally. A good brand identity is memorable, authentic, meaningful, differentiated, sustainable and adds
value to the brand. Having a strong brand identity helps build brand equity (Wheeler, 2006: 6). David Aaker
organizes brand identity around four different perspectives: Brand as Product, Brand as Organization, Brand as
Person and Brand as Symbol (Aaker, 2010).

The Four Traps
These four perspectives are determining for the brand identity, and they are a portrayal of the values and
properties that the company wants to be associated with. Aaker also talks about four traps that brand strategists
often fall into. These are the Brand Image Trap, the Brand Position Trap, the External Perspective Trap and the
Product-attribute Fixation Trap. These four traps can lead to creating a brand identity that is ineffective and/or
dysfunctional for the company (Aaker, 2010).

The Brand Image Trap is based on the knowledge a company has of how the consumer perceives the brand. This
knowledge can be beneficial for the company and give some important background information when working
with a company's brand identity. However, due to lack of resources, patience and expertise this information
sometimes creates the brand identity purely based on the brand image as perceived by the consumers. This
means that the consumer is the one that determines what values belong to a certain company. Of course,
companies can regard this as a potential problem since the brand identity should contain their visions and their
soul (Aaker, 2010).

The Brand Position Trap usually happens when the information of the brand identity is passed on to the
developers of the communication programs. Sometimes this transition causes a shift where the properties and
benefits of the brand become central rather than the personality of the brand and the brand symbols. This often
28

leads to the creation of a new line of marketing material that does not cater to the identity of the brand (Aaker,
2010).

The External Perspective trap occurs when the brand strategists only focus the brand identity on creating a larger
revenue for the company and forget that a brand identity can play a crucial role internally in the company. By
making sure that the strengths, values and visions of the company are an integrated part of the employee's
perception of the company, it is easier to ensure that the employees work goal is oriented and strives to achieve
the visions of the company (Aaker, 2010).

The Product-attribute Fixation trap occurs when the strategic and communicatory marketing is primarily focusing
on highlighting the attributes and benefits of the product. By doing this the brand identity can become hard to
differentiate from other brands. At the same time it becomes easier for other brands to copy the brand identity.
This kind of marketing appeals to the rational consumer who either does not understand the information
provided, or is more interested in the design, status, etc. that are connected to the product. If a company is
associated with a certain attribute it becomes harder to expand the marketing later on, and it becomes even
harder to adapt the brand to a new and changed market (Aaker, 2010).

The Four Perspectives
Brand as Product
The Brand as Product is the first of the four perspectives that Aaker mentions and that have an important role in
creating a brand identity. Even though the Product-attribute Fixation trap states that product attributes should be
avoided when creating a brand identity, it is important to relate to different elements of the Brand as a Product.
Aaker relates to this perspective by looking at the visual aesthetics of the product, and the attributes and
characteristics of the product. He mentions six elements that describe the product: Product scope, product
attributes, quality/value, use occasion, users and country/region (Aaker, 2010).

The product scope establishes the product-category that the brand belongs to. This element is important because
it establishes which product/products the company is associated with. In this element it is important that products
are associated with the brand rather than the brand being associated with certain products. For example that a
consumer thinks of McDonald's when they want a burger, rather than just thinking of burgers when McDonald's is
mentioned (Aaker, 2010).

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Product Attributes establishes the attributes and benefits of the products. It is working with this element when the
Product-Attribute Fixation trap can become a danger, if the strategist only focuses on product attributes such as
price, design and quality (Aaker, 2010).

The quality/value element is concerning the quality and/or the value of the product. A lot of companies emphasize
on the quality of their product in their marketing, which makes this an element in their brand identity. It is
important to consider the value of the product since focus on the quality of the product creates a continuous
demand from the consumer about the price and the products (Aaker, 2010). It is essential to create a balance
between quality and value in order to make sure that the product and brand is perceived in the desired way.

Use occasion determines what the brand is associated with. When creating a brand identity it is important to
consider if the brand should be associated with the use of the product, or if it should be associated with an
emotional feeling that is connected to the company as a whole. A restaurant can for example be associated with
the food there, or maybe with a certain interior decor that is special to that restaurant (Aaker, 2010).

Users and country/region are the last two elements that Aaker mentions in the Brand as Product perspective. The
users element is concerning the opportunity to market a product to a certain group of users, if the product has
some attributes that are attractive to a certain group of consumers (Aaker, 2010). The country region element is
concerning the opportunity to associate a product with a certain country or region, which could have some
benefits since some countries of regions are known for quality within a certain product group (Aaker, 2010). This
could e.g. be wines, where certain countries such as France have a long tradition of making good quality wines or
Germany making good and reliable cars.

Brand as Organization
Brand as Organization views the brand from an organizational context. This perspective is different from Brand as
Product because it focuses on the characteristics of the company as an organization rather than looking at the
characteristics of the products. For example quality can be product related if it is concerning the design and the
functions of the product, but it can also be organizationally related, if it is an integrated part of the employees,
culture, values and programs of the company (Aaker, 2010).




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Brand as Person
The Brand as Person considers the brand from the human characteristics that are associated with the brand. Aaker
argues that a brand can be attributed a certain personality and it can be described in the same way that one would
describe the personality of an individual. This gives the company some more elements to work with. Firstly, the
brand's personality can become a way for the consumer to express their own personality. Secondly, a mutual
relationship between the consumers and the brand can develop since consumers value the same criteria as when
choosing friends. Thirdly, an explicated brand personality can create attention to the attributes of the product.

Brand as Symbol
Brand as Symbol is concerning the audio and visual expression that is associated with the brand. By using a strong
visual symbol a brand can create a larger cohesion and structure to an identity and make it easier for a consumer
to recognize and remember a brand (Aaker, 2010). A logo can act as a strong visual symbol for the company, and
be a way for the company to be recognized by the consumer. Advertising material can also be a way for companies
to use symbols to portray different attributes and values of the brand identity.

Symbols can be strong if they contain a metaphor that represents a functional, emotional or self-expressive
attribute (Aaker, 2010). Aaker also states that heritage can be a strong symbol. By connecting the brand identity to
a certain heritage, this can act as a strong symbol of certain values that the company wants to portray. This could
e.g. be if Audi made a connection between a launching a campaign for a new car with their heritage in rally car
racing.

The Core Identity and The Extended Identity
Aaker also mentions the importance of knowing the core identity of the brand. He describes it as: "The timeless
essence of the brand" (Aaker, 2010, p. 85). It is the foundation of the brand. It is what is left when all the outer
layers are peeled off. Metaphorically speaking it is the heart of the artichoke. The core identity is constant even if
the brand moves into new markets or produces new products. It is the soul of the brand and it portrays the
fundamental values that drive the brand (Aaker, 2010, p. 85). One of the ways to communicate the core identity of
the brand is through a slogan, even though it can be hard to communicate the whole core identity through few
words. The core identity contains the elements and values that lie behind the brand and differentiate the brand
and makes it unique (Aaker, 2010, p. 85).

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The extended identity is the outer layers that surround the core identity. Aaker mentions that the extended
identity is a product of the core identity and these layers can be explicated through looking at the aforementioned
four perspectives. The core identity and the extended identity are what makes up the brand identity.

Consumer Benefits
A brand identity can create value for the consumer through functional, emotional and self-expressive benefits. If
these are utilized effectively the values of the brand identity will create a brand-consumer relationship that will
lead to the consumer buying the product (Aaker, 2010). The functional benefits seek to express the benefits of a
product's attributes and functions which can help differentiate the brand from competing brands. The emotional
and self-expressive benefits can however be hard to distinguish between because they are both striving to create
an emotion in the consumer. The emotional benefits can occur when the consumer experiences a positive feeling
from buying a product from the brand, or by the associations that the brand creates with the consumer. The self-
expressive benefits occur when the consumer gets the opportunity to express their own identity through the
brand (Aaker, 2010).

The Role of the Price
Like the functional, emotional and self-expressive benefits, the price can also play a role in how the consumer
perceives the benefits of the brand. If the price is deemed too high, it can deter a consumer from buying a
product, even though the other benefits of the brand is deemed valuable for the consumer (Aaker, 2010).
Therefore it can be very valuable for the company to know the target group in order to know how high the price of
their products can be.

Brand equity, Brand image

During the last years, the four car brands included in this research have started producing car models to
consumers outside their main target group in order to reach new markets. To understand, if this and/or other
modifications in the companies change consumers relationship to and their perception of the brands, it is
necessary to have an understanding of the elements included in the relationship between a consumer and a
company. Therefore, theories about brand equity and brand image have been included in this research because, it
gives a fundamental understanding of how these relationships arise, how brands can be perceived and how this
perception can change.
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Brand equity
Brand equity is about the relationship between brands and customers. David Aaker (1996, p. 7-8) defines brand
equity as being a set of assets (and liabilities) linked to a brand name and symbol that adds to (or subtracts from)
the value provided by a product or service to a firm and/or firms customers. In other words, brand equity is
generally about the value a certain brand produces in the minds of the consumers.

Furthermore, brand equity is about the power that derives from the goodwill and name recognition which it has
earned over time. This can be translated into a high degree of loyalty, growth in the sale and profit compared to
the competing brands (Wood, 2000, p. 662; Aaker, 1996, p. 7-8; BusinessDictionary, n.d.a.).

There are four major asset categories within brand equity: brand name awareness, perceived quality, brand
loyalty and brand associations. These assets can create value in different ways, both for the customer as well as
for the company. In addition, the assets must be linked to the name and symbol of the brand in order to underlie
brand equity (Aaker, 1996 p. 8). In the following paragraphs the four asset categories will be discussed.

Brand awareness
Brand awareness is concerned with visibility, recognition and the fact that recognizing a familiar product has an
impact on the buying behaviour that consumers have, because if they see something familiar which they have had
a good experience with, it is more likely for them to buy it again. Furthermore, this repeated buying behaviour is a
key asset for a company because a higher level of sale means a higher level of profit (Dahln et al, 2010, p. 207-
208; Aaker, 1996, p. 9-10).

The brand awareness can be measured in different ways depending on the way the consumer remembers the
brand. One way of measuring is Recognition, where the aim is to see if the consumer has seen the brand before. A
second way is Recall where this time the purpose is to look at which brands that belong to a specific product group
a consumer can recall. For example how many sports car brands can the consumer mention. A third way is called
Top of mind where the consumer mentions the first brand that comes into mind, when asked about a certain
product category. The last measure is called Dominant, where only one brand it recalled by the consumer when
thinking of a certain product category (Aaker, 1996, p. 10-15).

In order for a company to successfully employ one of these measures, it is important for it to create not only
awareness about their product but also make it clear about what needs the brand is designed to satisfy. In other
words, what do the consumers get out of buying this brand? Furthermore, they should make sure there is a link
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between the brand name, logo, function etc., so it becomes easier for the consumers to recognize and hopefully
associate the brand with something positive, and thereby in the end remember the brand (Keller, 2001, p. 8).

The four car brands Mercedes-Benz, Audi, koda and Kia have all been aware of the importance that consumers
have when it comes to recognizing their products. Therefore, each one of them have started focusing on elements
as name, logo and slogan, that should be something that put emphasize on what the company stands for and at
the same time making it easier for the consumers to recognize and remember the company (Argenti, 2009, p. 69,
71-74). In the table below there is a short view of the four car brands, their logos and slogans (Mercedes, 2013;
Audi, 2013: koda, 2013; Kia, 2013).

Car name Logo Slogan
Mercedes-Benz


The best or nothing
Audi

Vorsprung durch Technik
(keeping ahead through
technology)
koda

Simply clever
Kia

The power to surprise

Perceived quality
The perceived quality focuses on the values and the feelings a consumer has about a product/brand. It is
concerned with what the consumer thinks about a product and whether or not this product can live up to his/her
expectations. It does not necessarily have to have anything to do with the product/brand itself and what it can do,
but it is rather more linked to the public image of the brand. Furthermore, the customers that have previously
experienced the brand and the impact provided by the surroundings, can influence how the consumer perceives
the quality of the brand.
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For example, if a person has heard only positive things about an Audi from the surroundings, then he/she will
most likely have a positive image of the car (Aaker, 1996, p. 17-20; Dahln et al, 2010, p. 207; BusinessDictionary,
n.d.b.).

Brand loyalty
Brand loyalty refers to the faithfulness that a consumer might manifest towards a particular brand. Due to this
fealty they will keep purchasing it even though a competing brand is trying to persuade the consumer into buying
their products instead (Dahln et al, 2010, p. 208; BusinessDictionary, n.d.c.).

Brand loyalty is important for a company because it provides a loyal customer base and, thereby helps to generate
a predictable sale and profit stream. In other words a loyal customer base will help ensure that the company earns
money (Aaker, 1996, p. 21).

Another aspect of why brand loyalty is important is because it is cheaper to maintain the relationship to already
existing customers than attracting new ones. Plus, these faithful customers can become great ambassadors for the
brand. In addition, it will be difficult and expensive for a company to steal a competitors customers, especially
since they are satisfied and loyal to the competition. Also, it is hard to convince consumers to shift from one brand
to another (Aaker, 1996, p. 21-22; Dahln et al, 2010, p. 208). However, this does not mean that a company should
not try to attract new customers. A loyal customer base can be translated into a good foundation for that
company, then having this you can take your time on finding the right way to attract new customers (Dahln et al,
2010, p. 227-228).

An example of brand loyalty can be found among car owners because a lot of them stay loyal to one car brand
throughout their lives. A reason for this can be found in the good experience that they have had with a specific
brand and therefore keep buying it (White, 2013).

Brand associations
Brand associations are connected to brand identity, because they focus on how the brand should be perceived by
the consumers according to the company. For example, what values the company would like to be known for.
Furthermore, how the company connects the brand and the consumers, so that they remain loyal to the brand
(Aaker, 1996, p. 25; Dahln et al, 2010, p. 208).

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Brand image
There are different definitions of what an image is. The following will concentrate and elaborate more on some of
them. According to Collins Cobuild Dictionary an image can be defined in the following way: the image of a
person, a group or organization is the way that they appear to other people (Cobuild, 2006). Cornelissen more or
less agrees with the above mentioned statement, since his own definition of an image is as follows: ...an
individuals perception of an organization, product or service at a certain point of time (Cornelissen, 2011, p. 259).

With the above mentioned in mind and together with Argentis explanation, a brands image can be regarded as
how the brand is perceived. It is a reflection of the constituencies viewpoints upon the actual brand/product of
the company. Therefore, a brands image is more intangible compared to a companys identity, because the
constituencies interpret things differently and will therefore have different opinions about the specific brand
(Argenti, 2009, p. 68-69). For example, one person can have an image in which a koda is synonymous with poor
quality, whereas another one might find it to be a good car.

In addition, it should be kept in mind that the constituencies are not only interested in the companys product, but
also in the company itself e.g. in the values. This happens mostly because the constituencies wish to be able to
relate and have some sort of relationship with the company behind the product (Argenti 2009, p. 68; Argenti &
Forman, 2002, p. 81). How the constituencies look at a company and its products can be affected by for instance,
the companys values, symbols, logo, behaviour and how it communicates. With this in mind, it is important for
the company to have a good relationship with different constituencies, so that it can keep its positive image and
react in case something happens in the constituencies perception of the brand (Brnn & Berg, 2009, p. 107-108;
Argenti & Forman, 2002, p. 81; Cornelissen, 2011, p. 69-71).

In order to maintain a good reputation and thereby attract new constituencies while at the same time keep the
relationship with the existing ones, it is important for the brand/company to focus on sustaining the hopefully
positive image they have. This can be done by having an honest communications strategy about what occurs
within the company and listen to what the constituencies have to say (Riel & Fomburn, 2008, 48; Cornelissen,
2011, p. 69-71).

An example that can justify that images have an impact on which brand people prefer, is the battle between Coca-
Cola and Pepsi. A blind test conducted back in the 1990s showed that 51% of the consumers preferred Pepsi to
Coca-Cola whereas, in an open test 65% of the consumers preferred Coca-Cola to Pepsi. This clearly showed that
soft drinkers preferences are based on the brand image rather than the taste (Hollensen, 2011, p. 480). In other
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words, the emotion a consumer has about a brand plays a larger role, than for example the taste, when he/she
chooses among two or several brands. In this specific case, it had an impact that Coca-Cola has been good at
creating a positive atmosphere about their brand, so the consumers thereby associate Coca-Cola with something
nice. This image, Coca-Cola has built up during the last many years, so when consumers see the Coca-Cola logo,
colours, design and commercials they associate it with something good, perhaps a good memory from their
childhood (Lindstrom, 2012, p. 35).

Another example is the image of koda cars. For a long time these cars had an image of being of poor quality and a
lot of jokes were made about them (e.g. What do you call a koda with a sunroof? - A dumpster). However, during
the last years this image has changed, since koda has started focusing on producing better cars and changing
consumers perception of their products (Edmondson, 2007, p. 46).
The overall purpose of this project is to look at which images Mercedes-Benz, Audi, koda and Kia wish to have
among the constituencies and which images the constituencies have of the four car brands. However, to narrow it
down, the focus will be on the consumers perceptions of these brands.

Brand extensions and line extensions

Theory on brand extension and line extension is included in the research, since through the media it has become
clear that many car brands are producing car models, that target consumers outside their main consumer group.
Using this theory a picture of why and how different car brands are using such tools to increase their turnover will
be provided, market share and extend their product line.

Depending on which authors are looked at, the used theory has different terminology. David Jobber calls it brand
extension and brand stretching (2010, p. 325), while Philip Kotler calls it line extensions and category extension
(2009, p. 440). However, in this study, the terms given by Jean-Nel Kapferer will use, brand extension and line
extension (2004, p. 236).

Managing a brand is challenging and to get it to grow in a mature market where consumers can have their needs
fulfilled is even harder. There are different strategies which can be used to sustain growth in a non growing
market, and they are divided in both short-term and long-term. The short-term strategies focus on existing
customers, and is done by using CRM factors or by carrying out more research in order to figure out how the
customers wishes can be satisfied even more (Kapferer, 2004, p. 167).
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The long-term which can be argued to be the most attractive for a company to use has to do with exploring
foreign markets and innovation (Kapferer, 2004, p. 167). One form of innovation is to develop new models or
variations of the present product, another way is to create a completely new product. When a company extends
its product line they have to decide if it should be a part of their current brand or if they want to make a new
brand. This choice is important for the company, especially since the way in which a company brands the product
can make it or break it. So, it can be said that there are a lot of things that influence this choice. (Kotler, 2009, p.
438).

Therefore, If the company chooses to make a whole new product belonging to a new category still use their
current brand, they are using brand extensions. On the other hand if they decide to make a new model or
variation and also give it their current brand name, it is a line extension (Kapferer, 2004, p. 236-238; Jobber, 2010
p. 325).

Brand extensions
Brand extensions are extremely popular, and even though it is not a new phenomenon, companies such as
Siemens and Mitsubishi have been using brand extensions for a long time. Many companies use brand extensions
as a way to enter new parts of markets which they have not penetrated before. Instead of making a new brand
they use their existing one, for the sole purpose of entering the market with their existing values and their brand
equities (Kapferer, 2004, p. 233).

This form of extensions is normal in the luxury segment, especially for some fashion and haute couture brands
which have extended to accessories, leather goods, jewelry and cosmetics. Moreover, brand extension is
becoming more common, as it is one of the hottest things at the moment in brand management. A brand such as
Mars is not only a chocolate bar any more. Now it is a chocolate drink and an ice cream among other things. Virgin
is also a good example of brand extensions, since they cover everything from an airline to soft drinks (Kapferer,
2004, p. 233).

A lot of the times Brand extensions are seen as necessary, since they are linked directly to the competition
process, according to which there are a lot of products on the market. Some of these products have been there for
a long time, but some emerge constantly, challenging existing brands to reinvent themselves. Thus, brand
extensions are a way to grow and get profit, as it can strengthen the brands power (Kotler, 2009, p. 440).

38

Another reason for choosing brand extensions, is that they can increase the chances that a new product has in
order to succeed and this way the companies lower their launching and advertising budget. Only 30% of all new
brands survives longer than their first four years, whereas with a brand extension the rate is 50%. This occurs
when distributors are more willing to allocate space in their store to established brands rather than to give it to
newcomers. On the other hand, brand extension also has a big influence on the consumers.

They are more willing to try the product, easier to convert especially if they are more loyal towards a well-known
and prestigious brand and are reticent to new ones (Kapferer, 2004, p. 249-250 and Kotler, 2009, p. 440).
Moreover, as another argument for how beneficial a brand extension is, if looking at the success rate when
launching a new product. The percentage is 57% for a growing market and 43% for a mature market, but when
there is a brand extension launch the situation changes to 46 and 68% (Kapferer, 2004, p. 253). Therefore, this
might explain why famous brands have rethought themselves and have started manufacturing products, that
werent initially in the companys portfolio.

There are also a lot of disadvantages when using brand extensions. One of them is that they can cause the brand
name to be less identified with any of their products. This might generate confusion among the consumers.
Furthermore, when a consumer no longer associates the brand with a particular or at least similar product, which
was sort of a trademark for that brand, they might start thinking less of it, phenomenon which is called brand
dilution. This brand dilution often takes place when the brand extension is aiming for a lower price market. In this
case, the risk for the consumer to change his/her perception of the brand is higher than in any other given
situation. For example, in our case if Mercedes and Audi have started manufacturing car models in a lower price
range for a broader consumer segment, then some of the consumers from a higher economical position, might
change their opinion about these brands. A brand name is often the companies key asset, and if a brand
extension is launched and the consumer considers it as being inappropriate, it can deeply hurt the brand. This is
caused by the fact that consumers could question the integrity of the brand or become confused, frustrated or
even think that the brands name is being exploited, and therefore stop buying it. The worst thing that can happen
is not only for the brand extension to fail, but to harm the parent brand image. From the above examples it is clear
that in some cases the brand extension can hurt the brand even more by being a success than a failure (Kotler,
2009, p. 440-441; Aker, 1990; Aker and Keller, 1990, p. 32)

When looking at brand extensions in the car industry, Mitsubishi is a good example, as mentioned before. This
company has successfully managed to use these extensions for a long period of time. Since they have been using it
39

systematically, today the Mitsubishi brand covers nuclear plants, shipyards, cars, high-fidelity systems, banks and
food (Kapferer, 2004, p. 233).

Analyzing the car brand researched in this study, it cannot really be said that they have big brand extensions.
However, they do sell different merchandise products, some more than others. For example, Audi is selling the
biggest amount of merchandise from clothes, accessories, driving experiences to toys for children, on their web
page. In turn, Mercedes is selling more or less the same kind of merchandise, in a smaller selection. koda in
comparison with Kia offer more products, the difference is that the koda logo is not present on all the
merchandise (Audi, 2013; Mercedes, 2013; koda Shop, 2013; Kia, 2013). Also, Ferrari is a good example of a car
brand that can offer a wide range of product from clothes, accessories, computers, toys, jewellery, perfumes to
many other things (Ferrari, 2013).

Line extensions
Line extension is an under-researched area (Riley, n.d. p. 2; Lei, 2008, p. 276), but out of the existing theory, when
referring to line extension a reference to the situation where a main brand uses its name for a new product within
the current category, that the brand serves, is made, the only difference consisting in the fact that a new market
segment is targeted (Kotler, 2009, p. 865; Jobber, 2010, p. 325; Reddy et. al, 1994, p. 243). Most commonly line
extensions are encountered within the cars and food industry and it typically takes the shape of different models
and sizes. They provide different models, tastes and flavors, for example Coca-Cola has made sugarfree variations
of their soft drink, like the light and zero versions (Kapferer, 2004, p. 172; Jobber, 2010, p. 325).
Line extensions are an important way to keep a brand alive and to create economical growth for the company. The
main reasons for introducing line extensions are to target consumers' needs for variation' and to expand.
Consumers want variety and this has magnified the opportunity for line extensions, involving new flavors and
sizes, but at the same time it has made it harder for them to be reachable (Aaker, 1991).

The line extensions that involve new flavors and new packaging/sizes are the most successful, and the extensions
that improve product quality were found to be the most unsuccessful in a research by Edwin J. Nijssen in 1997
(Nijssen, 1997).

Line extensions can be divided into two different categories, vertical extension or horizontal, all depending on the
new products effects on the price-quality relationship. Horizontal extensions normally involve extensions with
products that show a new functional feature, while vertical ones take place when the brand is entering a new
market segment either by upscaling or downscaling, and thereby changing the price and positioning. Upscale
40

extensions are done by improving the product, so therefore trying to target the premium part of a market.
Downscale extensions usually imply lower quality and lower prices, and thus are targeting consumers on the
market that only want a product out of necessity. Upscaling may be seen as an accomplishment, and therefore
have a positive effect on the main brand, while downscaling can make it seem like the brand is stepping down
from the original quality, so it might have a negative influence (Riley, n.d. p. 3; Lei, 2008, p. 268-269,275).

The vertical extensions pose a big threat for the brand image dilution, and therefore are considered a risk. This
happens because the brand equity is based on the image and perceived worth. This might explain why for a brand
to enter a different market may dilute or distort these qualities. A key advantage by using the vertical extension is
that the current brand equity also influences the new product (Riley, n.d. p. 3; Lei, 2008, p. 268-269).
Connecting this theory to the brands within the research, it can be argued that they are using vertical extensions.
Audi and Mercedes are downscaling while Kia and koda are upscaling.

However, it cannot be said that Audi and Mercedes are producing discount cars, but rather manufacturing cars for
another market segment, that has demands for smaller but still quality cars, and vice versa with koda and Kia.

According to a research done by Srinivas K. Reddy et. al. a line extension success is affected by three things. First
there are the characteristics of the extensions company, its size, number of brands that is has and their market
share. The second are the characteristics of the extensions parent brand, like the brand strength and symbolic
value as the age of the brand, advertising share and consumer ratings. The last one is constituated of
characteristics of the extension, where the focus is on the sequence of entry and the support of the extensions as
sales force, distribution and advertising.

The findings of the research have also shown that for a line extension to thrive, it has to come from a strong
brand, receive strong advertising and promotional support and that the other line extensions that have entered
into a product subcategory earlier to be successful. It has also been shown that early line extensions can help
expand the market of the main brand and that the incremental sales generated by them are more than enough to
compensate for the loss in sales due to cannibalization. A Line extension is more likely to have success if it fits well
with the main product and thereby make sense to the consumer. (Reddy, 1994, p. 245-246, 257; Jobber, 2010, p.
327).

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According to Aaker (1991), 89% of all new products are line extensions, 6% are brand extensions and only 5%
involve a new brand name, therefore it is clear that line extensions represent the most popular way of introducing
new products.
Still, even though a main brand is helping the new product to get acceptance in the market, about 27% of all line
extensions end up in failure (Nijssen, 1997).
The research by Nijssen also showed that most line extensions add very little value to the main and original
brand's product. Extensions that involve new flavors or new package designs gave the most added value, but even
then this value was relatively low (Nijssen, 1997).

Line extensions that were concerned with new flavors, price differentiation, different sizes or new packaging
increased market share and increased the financial returns. Nevertheless, the companies did not or just slightly
improved their financial performance. This was caused by the cannibalization phenomenon and lowering of the
prices. Moreover, it has been shown that products with different levels of quality from what the mother brand has
accustomed its consumers with are received negatively (Nijssen, 1997; Riley, n.d. p. 3).

When analyzing line extensions in the car industry, the most frequent ones involve the size and models, which can
cause differentiation in the price, in order to reach new target groups and to cover the different needs that people
might have. Leading from this, it can be seen that Mercedes- Benz and Audi have started making car models in a
lower price range with the aim of reaching customers with a smaller budget than their normal target group. In
addition, koda and Kia are doing the same thing, just the other way around.

After the two ways in which a brand can extend have been presented, it must be mentioned that the attention will
be drawn upon the line extensions, since there is a greater interest in seeing whether or not they have caused a
change in peoples perception about the four chosen brands.







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Richard Pollays Advertising Appeals

The best way for companies to reach consumers is through advertising, whether if it is in print, TV commercials or
any other media form. Companies make use of these means in order to make a brand out of their name and to
persuade the public into buying their products.

Hofstedes description of a value sounds like a broad tendency to prefer certain states of affairs over others
(Hofstede, 1980, p. 18), while an appeal it is message about a need that has the power to arouse innate or latent
desires (Moriarty, 1991, p. 76). Hetsroni (2000) also tries to explain what the difference between values and
appeals consists of, by arguing that appeals are produced by design and by the advertiser, while a value is already
present in the consumers life (as quoted on Begu, 2008, p. 23). Thus, the appeal can be a tool used by the
advertisers to induce consumer behaviour, by reinforcing values that are most suitable for their interests (Pollay,
1987). On the other hand, when designing advertising, it has to be kept in mind the pressure that the existing
values might manifest themselves (Hong, Mudderisoglu and Zinkhan 1987, as quoted in Begu, 2008, p. 24).
Another author that has provided a definition of values is Kahle, who says that these are stable, slow-evolving,
desirable end-states with an important role in shaping buying behaviours. It can therefore be argued that this
represents a reason for why measuring values is important for companies. This way they can understand what
drives the consumers, and in turn they can respond to their actions. Of course, there are a lot of values that can be
measured, but it depends on the analyzed advertisement, since this can contain different amounts of values
ranging from a few to a variety (Dahl, 2010).

This study wants to analyze a series of commercials making use of the indexed list of values, belonging to Richard
Pollay in order to see whether the four brands are using values belonging to the luxury segment or the non-luxury
one. Specifically, this study will explore a series of hypotheses, regarding how the luxury concept influences the
use of values. The list that is going to be used in the analysis part, is an exhaustive category scheme, divided in 42
appeals, which describe the most encountered ones in advertising (Pollays 1987).

It is said that this list is not complete, but still it is viewed as a starting point when looking at values and appeals.
Its usefulness has been proven through content analysis of advertising (Dahl, 2010).

It is important to remember that the advertising material is seen through the eyes of the beholder, and therefore
the results of the value analysis can change depending on the person. Also, some authors have argued that fear
43

is missing from the list, an important value in medicine commercials, that might generate a positive reaction
instead of a negative one (Dahl, 2010).

Precisely because Pollays list might be regarded as incomplete, it is acknowledge that his work is not the only one
to have surfaced in this domain. Research performed by Rokeach (1973) and Schwartz (1992, 1994, 1999) have
withstood the test of time, with the distinction between terminal and instrumental values, that the former
mentioned author has compiled. This has proved to be highly useful in segmenting advertising and it has been
adopted by other researchers who were interested in this domain (Okazaki and Mueller, 2007). However, it has
been decided to rule these out and to opt for Pollays research. The decision was based partly on the relevant use
of the appeals in advertising research (Albers-Miller and Gelb, 1996, Belk, Bryce and Pollay, 1985; Lin, 2001), on
the fact that Pollay developed his list of 42 common cultural appeals, based on works of White (1951), Rokeach
(1973) and Fowles (1976), and partly because of the extensive refining and crystallizing that Pollay and his
colleagues from fields such as sociology, anthropology and consumer behaviour applied on the concepts, grouping
them into dualistic pairs of competitive values (Pollay, 1987, p. 79). This distinction may prove to be useful when
dealing with a dual situation, since the aim is for a comparative study. The complete list with the 42 appeals can be
seen in Appendix 2.

Analysis of the companies
Data Generation

According to Bryman, data generation are the gathering of data obtained from the sample, and they help to
provide an answer to the research questions (Bryman, 2012, p. 14).

Along these lines, for this particular research, divided in two sections, a content analysis and a questionnaire, the
data that is going to be used is of two types, qualitative and quantitative.
This part is going to focus on the content analysis, therefore it is of a qualitative nature. In order to investigate the
brand identity and brand values of the four selected brands, a study of how they promote themselves and which
elements they use in order to persuade consumers into buying their products has to be conducted.

To investigate this, the content analysis will be consisting of an analysis of 60 commercials, 15 for each brand,
where the Pollay appeals are used as a tool to analyze which of them are represented in the commercials for the
four brands.

44

As mentioned in the methodology section, the number of the commercials was obtained with the help of the true
random number generator at www.random.org. After accessing the website, the generator provided a random
number, 58. Considering that a more even number is easier to be divided into four, this value was rounded up to
60. Therefore, a number of 15 commercials were obtained for each brand (Appendix 3). With the relatively small
number, it is acknowledged that the generalisability of the sum might be argued to be insufficient. However, it
could be argued that the number is high enough to show tendencies and patterns that are consistent throughout
the commercials.

The advertisements that were chosen, are in English, belong to different periods of time and present different car
models from the premium versions to the cheap ones. They were retrieved from the official YouTube channels and
from their official websites. To have more popular ones, the selection was made from the Popular Uploads
segment. Also, their diversity was a key factor in the designation process. This way, a broader view of the brand
identity was obtained, and at the same time it was easier to notice whether or not the brands stick to their values
throughout time and line extensions.

Coding

We as the authors, assumed the role of coders based on our knowledge and experiences with the subject. Each
and every one received a detailed list with the Pollay values and was instructed to identify as much as possible, no
matter the category they were allocated to, while looking at the total amount of 60 commercials, part of the
sample subjected to analysis.

Therefore, each coder individually viewed and analyzed the commercials, the results being confronted afterwards.
A mutual agreement was reached about the presence or absence of the appeals in the commercials. Also, the
eventual disparities were resolved after a common review of the advertisements, so a merger between opinions
took place translated into a coder agreement.

The first step in the coding process was to divide Pollays 42 appeals into luxury and non-luxury categories. Based
on the luxury description provided in the literature review, it has been decided to use only 34 values, out of the
total amount. Thus, by agreement of the researchers, values like freedom, healty, magic, morality, natural,
relaxation and wisdom were excluded for reasons of duality, since according to the description provided by
Pollay, they seemed suitable for both categories. No matter if they are mainstream or luxury, brands can promote
values that depict scenes with spontaneity, uninhibition, passion, miracles and scences that can fill with wonder.
45

Moreover, healthy is more of a food commercial value, since it is based on vigor, vitality, fitness and strength, so it
was considered not fit for an enquiry of car commercials. Also, fair, just and honest, adjectives that describe
morality cannot be divided into one category or the other. It cannot be argued that luxury is more moral while the
mainstream is not, or the other way around. Natural was omitted, since natural elements can be present in all
sorts of commercials. As for the last three remaining ones, relaxation, traditional and wisdom, their removal was
decided after realizing that brands with a notoriety are long lasting ones with a fruitful history and awareness
supporting them. Starting from the assumption that Kia, koda, Mercedes and Audi are acclaimed brands within
the automotive industry, it would be difficult to situate them in either of the two categories. Finally, in order to
avoid being biased, relaxation was not included, since it can have a connection with experience. So, for not tilting
the balance in favour of one group over the other, saying that experience belongs to luxury or not, this value was
also ruled out. Furthermore, in the beginning of this study a distinction between new luxury and old luxury was
showcased, in which experience was regarded as pertaining to both. Thus, it was difficult to adjudicate the value.

Out of the 34 appeals, 18 were placed in the luxury category, while the remaining 16 in the non-luxury one, as
follows.
Luxury Non-luxury
Adventure Casual
Affiliation Cheap
Dear Community
Distinctive Convenient
Durable Effective
Independence Enjoyment
Maturity Family
Modern Frail
Neat Humility
Ornamental Modesty
Productivity Nurturance
Safety Plain
Security Popular
Sexuality Succorance
Status Tame
Technological Youth
Untamed
Vain

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Since luxury is meant to be daring, bold and over the boundaries, adventure was considered as being suitable.
Affiliation an appeal that adduces acceptance by peers, community and social gatherings seemed more
appropriate for luxury, since from apparent reasons consumers tend to buy such goods, in order to gain social
acceptance. Bringing forward the clarification, dear, distinctive, neat, ornamental, and vain, all refer to
expensiveness, extravagance, uniqueness, superiority, exclusiveness and unsoiled beauty. All of them are in a
strong connection with appeals such as independence, status and security. They are the ones that provide the
consumers with self-sufficiency, autonomy, originality, confidence and self-esteem, and generate envy, power,
prestige and pride in ownership at the same time.

Durable, modern, productivity, safety, technological are about high enduring, strong quality, that has evolved
over time, quality that adds a feeling of stability and reassurance that hazards will be successfully avoided.
Engineered and manufactured in a modern, new and improved way with a focus on innovation, luxury has a
stronger ambition for evolving and improving, as well as creating sustainability. Also, due to bigger financial
investments, in comparison with non-luxury brands, the achievements and accomplishments of luxury goods could
be more visible.

Maturity was appended to this particular category, because it was thought that in order to fully enjoy and relish
the perks of luxury, you need to reach a certain maturity level both in your life and in your economic status, a level
that will entail you to savour luxurys finest attributes.

Lastly, untamed and sexuality are embodied in luxury, thinking of the nature of the analyzed goods, relating to the
premise that luxury cars are meant to be fierce, voracious and untamed when referring to performance. Sexuality
was determined by the modality in which companies choose to promote such cars, making use supermodels and
fashionable girls with a socially desirable appearance.

Moving on to the non-luxury category, considering this is a more affordable, economical and accessible segment,
cheap, convenient and effective seemed like an appropriate choice to describe mainstream products destined for
the masses.

Appeals such as casual and plain are antonyms of the above mentioned appeals neat and ornamental, which are
located in the luxury category. It could be imagined that non-luxury products are designed to be unpretentious
and simple, values pertaining to the casual and plain appeals.
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Thinking of the products in focus of this research, mainstream cars seem to be more destined for families, because
such a car should be affordable, practical and versatile. At the same time it is concomitant with the mentioned
attributes, will make the car largely accessible to communities.

Along with the family appeal, frail, nurturance and succorance come along, in view of a family's nature where
tender, soft and genteel expressions of love are being exchanged.
Mainstream products have a tendency to be down to earth, without trying to create a lot of attention to the
products. It is more restrained, which is the reason why humility, modesty and tamed fall into the non-luxury
category.

Being more open to the public and not so exclusive, mainstream category is most likely to offer the enjoyment
value, because more people can benefit from it. It should be mentioned, that the intention of including this appeal
in the non-luxury part, is not to affirm that luxury goods cannot produce joy, but since the non-luxury goods are
easily accessible, it is possible for everyone to participate and to have fun on account of them.
Youth, a concept referring to both a biological and a mental state of mind, being the opposite of maturity can infer
that in the early stages of your life, mainstream products are more accessible and affordable in comparison to
luxury products.
Subsequently, luxury characterized by scarcity and uniqueness, popularity entrails the opposite, that it is
commonplace, everyday and regular. Therefore, popular should be conceived as a non-luxury appeal.

KODA-Background

koda is one of the oldest car companies in the world. It all started in 1895 in Czechoslovakia where Vaclav Laurin
and Vaclav Klement started manufacturing bicycles and named the company Slavia. Within, the next ten years the
company, now named Laurin & Klement Co. also started producing motorcycles and cars. Because World War I
and the economic conditions in Czechoslovakia Laurin & Klement Co. needed a strong partner so they could
strengthen and modernize the company. This modernization was needed because apart from manufacturing cars,
the company now also produced material for the army, aeroplane engines and agricultural machinery. In 1925 the
fusion with kodaworks Pilsen was finally accomplished and the company was named koda, as we know it today
(koda UK, 2013; koda, 2013).

In the beginning of the 1930s koda had a difficult time, but with the release of the Type A KODA Popular things
changes, because the car was seen as being reliable, it became popular in the society. During World War II the
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production of cars was limited because of the German occupation of Czechoslovakia. Instead the production
facilities were used to produce material in effort of the German war machine (koda UK, 2013; koda, 2013).

After the Second World War, the political and economic changes in the Czechoslovakia meant that the koda plant
became a national enterprise and thereby the Government took over the production. Until the beginning of the
1960s everything went well, but changes in the economy and keeping up with the new technology in the western
world, made it difficult for koda. However, they kept producing cars and among others the first Octavia model
was launched (koda UK, 2013; koda, 2013).

The fall of the Berlin Wall in 1989 signified an opening of new market conditions in which koda started looking for
foreign partners in order to secure an international competitiveness. In 1990 the company became part of the
Volkswagen Group, which already included Volkswagen, Audi and Seat. (koda UK, 2013; koda, 2013).
At the present time, koda has seven model lines and is present in more than 100 countries (koda UK, 2013;
koda, 2013).

Brand identity - koda
As stated in the theoretical section, brand identity is the visual and verbal representation of a brand and how the
company wants to be perceived by the consumers (Wheeler, 2006 p. 6). In the following sections, an analysis of
kodas identity will be conducted.

koda Brand Products
As stated in the history of the company, even though, in the beginning koda produced bicycles, the company is
first and foremost known for producing cars and has become more successful especially since it joined the
Volkswagen Group in 1991. For koda, it is important that their products radiate spaciousness and are high-
practicality cars that offer excellent value for money (koda Annual report 2012).

In the following section a short overview of each of kodas car models will be given, based on the companys own
description of them. koda offers a wide line of car models in order to reach different target groups and markets.
The model lines are as follows: Citigo, Fabia, Roomster, Rapid, Octavia, Yeti, Superb (koda Annual report 2012).

The company describes the Citigo, introduced to the market in 2011, as being a simply, clever and comfortable
small car. This car especially fits the consumers who live in the city because it is small, efficient, has a good fuel
economy and is modern. The Fabia model offers fuel efficiency, space, and reliability. It is sold at a reasonable
49

price and is a really good car for everyday use. As the name also indicates the koda Roomster, is spacious. It has a
clean design, has a versatile interior and is useful for the consumer who needs a car for different purposes. The
Rapid model released in 2012 with a lot of space, a timeless design and is considered to be good family car (koda
UK, 2013; koda Annual report 2012).

koda Octavia is the core product of the brand. It is spacious, has a high degree of functionality, clever technology,
comfortable, has a sharp design and fits different target groups. The koda Octavia contains a wide range of
Simply Clever solutions, which is the companys slogan. The koda Yeti belongs to the SUV segment. Like the
other car models there are have been thoughts about the details. This car is also ideal for off-road use. With the
koda Superb the upper middle class consumers get a high quality car at an affordable price. It is an elegant and
spacious car, where thought has been put into the design and technology and at the same it provides a high
degree of comfort (koda UK, 2013; koda Annual report 2012).

A final comment to the companys products is that the wide range of car models shows that koda aims to be a car
for everyone.

koda Brand as an organization
The slogan Simply Clever does not only represent the image that the consumers should have of the brand koda,
but it also defines the thoughts and actions throughout the entire company. The slogan communicates kodas
core identity in few words. To the consumers the slogan should together with the logo symbolize sophisticated,
smart solutions with a high practical value. Inside the organization the slogan Simply Clever also applies, because
it means that all employees should aim to achieve Simply Clever solutions which not only are thoroughly
thought out but are also smart and cost-effective (koda Annual report 2012).

Furthermore, the companys tradition and the reputation that has been built over years are considered to be two
of the keywords. They are the ones that will successfully sustain development in future business activities (koda
Annual report 2012).

A way used by koda to create awareness about the company and to become more visible is through
sponsorships. One of the events that koda sponsor is the Tour de France which they have been affiliated with for
almost ten years. Furthermore, koda has also been for more than 20 years one of the largest sponsors within the
ice hockey world (koda Annual report 2011).

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The personality of the brand koda
A brands personality can help express what the product's strengths are and like a person also has his/her own
personality, so does a brand. Both a person and a brand can be seen, as for example trustworthy, fun, modern,
casual etc. An example of how a brands personality can be shown is the Michelin Man. He has a strong, dynamic
and energetic personality and thereby, Michelin tries to tell the car consumers, that if they buy their tires, then
they will get the strongest and most dynamic tires on the market (Aaker, 1996, p. 83-84). Through the
commercials kodas personality is reflected through the cars, by showing that owning a koda means reliability,
convenience, smart solutions and at the same time they appeal to different types of consumers.

As stated in the theoretical framework, it is important for a company to have a symbol that represents what the
brand stands for. A logo can be an important visual symbol for the company because in many situations, it is easier
for the consumers to remember a logo than a company name. koda is known for the winged arrow, but its
exact origin is still a mystery. During the years the logo has been redesigned several times. The latest modification
took place in 2011, where the colours were renewed, in order to make the logo more distinct and precise. The
colour of the winged arrow was changed from a natural green to the special koda Green and the ring
around the winged arrow was highlighted with a chrome look (koda AU, 2013, koda News, 2013).


In order to reach a high degree of equity between the consumers and the company, koda seems to have been
aware of the importance of the brand being visible, recognizable and that it emphasizes what the company stands
for. Therefore, the company has paid a great deal of attention to their logo and slogan so they could fulfill these
demands, in order to ensure that the consumers would recognize and remember the brand easily.



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koda commercial analysis

In the following sections, a discussion of the values presence in the 15 koda commercials will be discussed. On
the basis of the aspects explained in the sections above, koda is considered as a mainstream brand. Thus, it will
be plausible that the commercials will contain a higher amount of values from the non-luxury category and
therefore, the first hypothesis is as follows:

H1A: koda, considered a mainstream brand will have more values belonging to the mainstream category.

However, since koda has made a line extension and released a more luxurious model, it could point towards that
the company is implementing more luxury values in their commercials, to reach a wealthier segment. Therefore,
the second hypothesis is:

H2A: Due to the vertical line extensions, koda will have more values belonging to the luxury category.

Values
The table below provides an overview of which values are present or not in the koda commercials as well as their
percentages. Out of 34 possible values 32 were present in the 15 commercials.

The final score for each category was calculated in the following way: a total number of 77 luxury values and a
total of 89 non-luxury values sum up an amount of 166 values in total. In order to achieve a comparative result the
percentage for each category, out of the 166, had to be appraised. Therefore, using the formula: (number of
values within a group / values in total) * 100, the result of the luxury category was (77/166) *100 = 46 % and the
score of the non-luxury category was (89/166) *100 = 54 %.








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Luxury Non-luxury
Adventure 4 27 % Casual 5 33 %
Affiliation 9 60 % Cheap 2 13 %
Dear 0 0 % Community 6 40 %
Distinctive 6 40 % Convenient 9 60 %
Durable 5 33 % Effective 12 80 %
Independence 3 20 % Enjoyment 9 60 %
Maturity 4 27 % Family 8 53 %
Modern 7 47 % Frail 6 40 %
Neat 3 20 % Humility 2 13 %
Ornamental 3 20 % Modesty 3 20 %
Productivity 10 67 % Nurturance 9 60 %
Safety 3 20 % Plain 2 13 %
Security 4 27 % Popular 1 7 %
Sexuality 0 0 % Succorance 3 20 %
Status 2 13 % Tamed 5 33 %
Technological 6 40 % Youth 7 47 %
Untamed 3 20 %
Vain 5 33 %

The highest value shown in the koda commercials is effective. Present in 80% of the commercials or in other
words in 12 out of 15, effective focuses, among others, on workability, usefulness, pragmatically, functionality and
efficiency. This high level of effectiveness in the commercials clearly shows that koda wants to emphasize that it
is important to show that their cars are useful for a wide age group and in different situations.

koda has done this by filming the cars in different locations like the city, the countryside and in all weather
conditions. In addition, they want to present practical and functional aspects of the car like space and safety nets
that can keep control of loose affects. Closely followed is the value productivity which is present in 10 out of 15
(67%) of the commercials and refers to achievement, accomplishment and success. These two values can easily be
linked together and fit well with kodas mission Simply Clever which stands for practical, sophisticated and
smart solutions (koda Annual report 2011). In other words, a functional and pragmatic car can help a person to
53

achieve his/her goals. For example, one of the commercials shows how koda is promoted as being the motor of
the Tour de France. It seems evident that koda wants to show the most versatile, practical and functional side of
their cars and that these attributes can assist the teams in helping their riders quickly e.g. with a flat tire, so that in
the end they might achieve a better result.

The lowest values represented in the commercials were status, cheap, humility, plain and popular, whose
occurrence was noticed in merely one or two commercials out of 15. Even though it is possible to buy a really good
car for a reasonable price, it is not something koda especially chooses to focus on in the commercials. However,
an exception is a commercial showing the koda Superb in which it is clear that koda wants to show that they
offer a luxurious car for a reasonable price and that they are aware that people will think it is expensive, because
in the commercial it is said: We know what youre are thinking Looks pricey be surprised.... This is clearly
linked to the line extension koda had done to up-scale their product and thereby, to reach a new market
segment.

Another aspect that the brand does not particularly focuses on is social status and rank. Instead koda is
fabricating cars to a broad segment and thereby offers cars in different price classes. The value popular can
represent that a famous person is a part of the commercial. koda uses the singer Anastacia in one of the
commercials. However, making use of famous people is not something the brand uses to the same extent as
Mercedes-Benz, where the racing drivers Michael Schumacher and Mika Hkkinen are shown in several
commercials.

Taking an overall look at the advertisements, it can be observed that koda focuses on showing the core values of
the brand like reliability, practicality and value for the money.
These were all added to the koda brand after it became a part of the Volkswagen Group. It was not something
obtained overnight but has been created through investments in development, production and hard work (koda
Annual Report 2011).

As mentioned earlier, it was decided to divide the values into luxury vs. non-luxury. A closer look at the results
from the table above showed that 54% of the values, in the commercials, came from the non-luxury category,
whereas 46% came from the luxury one. Even though there is a difference of 9% or 12 values, it can be argued that
a small change could end up making an almost equal appearance between the two categories. However, if a closer
look at each of the values is taken, and at how large a percentage each represents, it can be concluded that the
non-luxury values have a larger appearance than the luxury ones in the commercials.
54

As stated in the beginning the aim with this analysis is to confirm or disconfirm the following two hypotheses:

H1A: koda, considered a mainstream stream brand will have more values belonging to the mainstream category.

H2A: Due to the vertical line extensions, koda will have more values belonging to the luxury category.

Based on the above mentioned collected data and analysis, H1A is confirmed, based on the total amount of
appeals in the non-luxury category, from which it can be concluded that the mainstream categorys presence in
the commercials is frequent. The appeals convenient, effective, enjoyment, family and nurturance are present in
respectively 9, 12, 9, and 9 times out of the 15 commercials. In the advertisement these values emphasize that
owning a koda means that the details are taken care, so that such a car can be convenient, and for the entire
family.

H2A cannot be confirmed, due to the fact that even though koda has started producing cars appealing more to
the luxury segment and thereby through line extensions have up-scaled their product, many of the values are still
the same and belong to the non-luxury category. Furthermore, it is important to underline that because a
company up-scales their product, it does not mean that they also change their core identity. The core identity is
the soul of the brand and portrays the fundamental values that drive the brand. This means that a company such
as koda will still have the core values that they always have had, but of course with time other values can be
added. As explained in the section about kodas identity their slogan Simply Clever is the core identity of koda
explained with few words.

However, it is clear after analyzing the 15 commercials that the values affiliation, modern and productivity, all
belonging to the luxury category, have a regular appearance in the koda commercials (respectively 7, 9 and 10
out of 15). As mentioned before productivity focuses on achievement, accomplishment and success. Affiliation
focuses on being accepted, to be social, and to join. During its history koda has had some difficulties in being
accepted as a good car in Western Europe, especially before the fall of the Berlin Wall, for products from Eastern
Europe had a negative association. Before this, koda had a really hard time of keeping up with the new
technology developed in the West. However, after 1989 koda maintained a reputation of being a poor car, that
lasted for many years. But, through hard work, development and the clever move of becoming a part of the
Volkswagen Group in 1991 has gradually changed the brands image to something more positive (koda UK, 2013:
Edmondson, 2007, p. 46). This also fits with the value modern, since koda has improved their cars and made
them more contemporary.
55

All in all, it can be concluded, based on the analysis, that koda belongs to the mainstream group but that more
luxury values had been added during time.

Kia Motors-Background

Kia (Korean for "arise from Asia") was established in 1944 as a manufacturer of handcrafted steel tubing and
bicycle parts, under the name Hyungsung Precision Industry.
In 1973 they started producing cars, among which some of them were the Peugeot 604 and the Fiat 132 Sedan. In
1987 Kia started working closely with Ford to build the Avella and the Pride models and thereafter the Sportage
and the Sephia models. Through this Kia also got more success on the commercial car market (Centralcontracts,
2013; Fundinguniverse, 2013).

Approximately in the same period Kia opened their first integrated automotive assembly plant, which became the
first of its kind in Korea. The first Kia- built car was revealed a year later, a medium passenger car with the named
Brisa (Centralcontracts, 2013; Fundinguniverse, 2013).

By the 80's Kia had expanded to a size compatible with their main competitors, and begun establishing plants in
the Western market. Still, Hyundai was still the number one producer in Korea, and would soon own a big share of
Kia. This was caused by the event that Kia faced bankruptcy during the Asian financial crisis in 1997. Therefore, the
company was forced to sell 51% of the shares to the Hyundai Motor Company (Central contracts, 2013;
Fundinguniverse, 2013; Autoevolution, 2013). By 1999 Kia had recovered its financial composure and by 2002 has
produced its tenth million car. Following this success the company went on to produce numerous highly praised
vehicles in a varied range to meet different segments of the market; these included the Forte Koup, Spectra5,
Optima, Sedona and Rio. Recently Kia released the Kia Mohave which is an SUV with adjustable air-suspension,
hill-descent control and a high and low range gearbox (Centralcontracts, 2013; Fundinguniverse, 2013;
Autoevolution, 2013).

Before Kia merged with Hyundai in 1998, they were the second largest manufacturer of automobiles and trucks in
South Korea. In addition to the Korea market, Kia exported to Europe, North America, and several Asian countries.
In 1992 Kia entered the United States the world's largest potential market, and later Kia Motors America was
founded.

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Today, Kia is a global company that exports around 1.5 million cars annually, and has a full line-up of passenger
cars, commercial vehicles and buses. A wide range of Kia vehicles can be seen in different places in about 170
countries around the world. Additionally, Kia now has independent manufacturing facilities and research- and
design centers globally. In 2012 the Hyundai Motor Company owned 32.8 % of Kia Motors (Centralcontracts, 2013;
Fundinguniverse, 2013; Autoevolution, 2013; Kia-buzz, 2013).

Kias slogan is Power to Surprise, and the main selling point is their affordability, later compromised by their
expansion into other segments with the introduction of their first SUV in 1995. From that point on, Kia could not
distinguish itself anymore, and had in some way moved away from their normal selling point. Therefore, it started
blending in with other the car brands (Autoevolution, 2013).

The ordinary and fairly featureless brand was not exactly what consumers were looking for. Kia therefore found
itself in need of rejuvenation and by 2001 they started working on a new vehicle line-up with an emphasis on
quality and long-warranty offerings. Since then, Kia has been steadily conquering segments of the European
market, especially through the Cee'd, Sorento and Rio models. The development of newer, bolder designs is also
among Kia's priorities, predating a future line-up with the announcement of concepts like the Soul and the Kee
(Autoevolution, 2013).

Kias Brand Identity
In this section an analysis of Kias brand identity will be conducted and therefore an investigation of the core
values that are manifested in their name, logo and their marketing material. Kias brand will be looked at from
different angles, such as product, organization, person and symbol, in order to explicate the brand identity and
how they want the consumers to perceive them.

Kia Brand as product
Kia produces many different cars from small city, medium family to big expensive cars. This is done to reach a
broad consumer market and to satisfy the demand from different segments. However, all models are not sold on
every market, they customize their product lines for every individual market. A clarifying example of this is the
difference between the Danish and the American market. In the US Kia is selling some of their bigger expensive
cars such as the Kia GT and Cadenza, while in Denmark Kia they focus on the smaller cars like the Picanto 3D and
the Rio (Kia US, 2013; Kia DK, 2013).

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When looking at the use occasion for Kia it can be argued that the company is focusing on both the product and
the emotional feeling associated with the brand. This is caused by the premise that a car has a functional use, to
get you from A to B, but then again any car could achieve this.
Kia stated that buying one of their cars is not a rational buy, but rather an emotional one. This defends the
emotional part, and it is also a way for a company to differentiate themselves from competitors, and give the
consumers a reason for buying their product (Kia, 2013).

Kia Brand as an organization
Kia has five core values that represent the corporate culture they strive for and that are meant for all their
employees to follow. The goal is to build a highly-creative corporate culture based on challenge, cooperation, and
respect for customers and workers.

Kia describes their core values, quoted from their annual report, as follows:
Customers
We promote a customer-driven corporate culture by providing the best quality and impeccable service with all
values centered on our customers.

Collaboration
We create synergy through a sense of togetherness that is fostered by mutual communication and cooperation
within the company and with our business partners.

Globality
We respect the diversity of cultures and customs, aspire to be the worlds best at what we do, and strive to become
a respected global corporate citizen.

Challenge
We refuse to be complacent, embrace every opportunity for greater challenge, and are confident in achieving our
goals with unwavering passion and ingenious thinking.

People
We believe the future of our organization lies in the hearts and capabilities of individual members, and will help
them develop their potential by creating a corporate culture that respects talent. (Kias annual report p. 10, 2012)

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Besides the core values Kia also has a corporate social responsibility (CSR) program and a code of conduct they
follow (Kias annual report, 2012 p. 10, 33).

Kia Brand as Person
Kia has updated the brand in a long-term commitment towards ensuring sustainable growth, but still be true to
their identity. The Kia brand was redefined as vibrant, distinctive and reliable, and therefore it promotes itself as a
young and dynamic brand. In addition, they want to be visible in places where people are not expecting them to
be, and therefore the Kia brand is visible are at many different sporting events (Kias annual report, 2012 p. 29-31;
Kia, 2013).
It is a goal for Kia to be perceived as a fun and free spirited company that does not take itself too seriously. This is
stated well by Kia in their commercials, where they often add a fun aspect to them, as it will result from the
content analysis of Kia (Kia US1, 2013).
In their commercials they also make use of different young and famous people, thought to be fit for their brand
identity. The advertisements are utilizing their talent to showcase that their identity is compatible to that of Kia
and that the brand is in connection with these people.

Kia Brand as Symbol
The companys logo consists of the name Kia, encircled by an oval shape representing the earth and symbolizing
Kias growth in the world market. The oval shape and passionate red colour, which is their main colour, deliver
their vibrant nature while the colour gradation conveys a stylish and premium image. The name Kia is placed in
the middle of the oval to communicate a reliable and trustworthy image and to show Kias pride in becoming one
of the major global automakers (Kia worldwide, 2013).

The way Kia is communicating with customers is by being creative and dynamic through diverse online and offline
channels. They are especially trying to be close to the global customers and they want to promote their
competitiveness by sponsoring some of the worlds most prestigious sporting events. For example, Kia is the
official sponsor of FIFA, UEFA and the Australian Open Tennis Championships. They also promote their brand to
consumers through different online channels such as the official website of the Australian Open, Kia Motors
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Facebook fan page, Twitter, YouTube channel and mobile applications. Kias brand exposure in 2012 had a brand
exposure of 6,463 hours of television and a media value worth USD 355 million, up 54 % and 105 %, respectively,
from 2009 (Kias annual report, 2012 p. 29-31).

Kia was selected as one of the worlds top 100 brands in 2012, in the Best Global Brands by Interbrand. Kia rated
as the 87th place, with a brand value of USD 4.089 billion, this was a rise of 50 % from 2011. Kia was the third
Korean brand, following Samsung Electronics and Hyundai Motor Company, to enter this prestigious list of
companies. Kias brand value was USD 1.1 billion in 2007, but over the last five years it has skyrocketed about 273
%, despite the slow performance of other automotive brands (Kias annual report p. 29-31, 2012).

Kia commercial analysis

In this section a discussion based on the appeals that are present in the 15 selected Kia commercials will be carried
out. This is necessary in order to get a better view of which appeals Kia uses in commercials to influence the
consumers, but also to see if the two following hypotheses are confirmed or unconfirmed. Based on the elements
that have been explained in the above sections on history and brand identity, Kia is considered a mainstream
brand. Therefore, it is believable that the commercials will contain a higher quantity of appeals from the non-
luxury category therefore, the first hypothesis is as follows:

H3A: Kia, considered a mainstream brand will have more values belonging to the mainstream category.

Though, Kia is making line extensions and therefore introduced a more luxurious model, it could be a sign that the
company is implementing more luxury values in their commercials, to reach a high end segment. Thus, the second
hypothesis is hereby:

H4A: Due to vertical line extensions, Kia will have more values belonging to the luxury category.

The Table below shows the different scores for Pollays appeals from the selected Kia commercials by their
occurrence and percentages. These figures will be used in order to test the hypotheses.



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Luxury Non-luxury
Adventure 5 33 % Casual 5 33 %
Affiliation 6 40 % Cheap 6 40 %
Dear 1 7 % Convenient 7 47 %
Distinctive 13 87 % Community 7 47 %
Durable 4 27 % Effective 11 73 %
Independence 3 20 % Family 4 27 %
Maturity 6 40 % Enjoyment 7 47 %
Modern 12 80 % Frail 4 27 %
Neat 5 33 % Humility 1 7 %
Ornamental 3 20 % Modesty 0 0 %
Productivity 3 20 % Nurturance 3 20 %
Safety 2 13 % Plain 0 0 %
Security 1 7 % Popular 4 27 %
Sexuality 3 20 % Succorance 1 7 %
Status 1 7 % Tamed 3 20 %
Technological 7 47 % Youth 5 33 %
Untamed 7 47 %
Vain 2 13 %

From the table above it is clear that the appeal that Kia is using the most is distinctive, with an occurrence of 87 %
or 13 of the 15 commercials. Distinctive is described as rare, unique, unusual, scarce, infrequent, exclusive,
tasteful, elegant, subtle, esoteric and handcrafted (Limbistraine, 2013). This appeal is often used by Kia in
commercials in order to make them special and therefore, stand out from other car commercials. A good example
of this is their commercial for the Kia Soul called In My Mind. It takes place in a theatre where the audience is
wearing renaissance clothing and listening to a woman singing opera, while others are dancing ballet on the stage.
Suddenly, a Kia Soul appears from the floor, the music change and four big hamsters start dancing street-dance.
After a few seconds, the audience gets carried away and starts dancing along with the hamsters, who in the end fly
away through time. This type of commercial is far from a normal car commercial, where you see the car driving
and see/hear about its features.

Modern is the appeal Kia uses most after distinctive, as it appears in 80 % of their commercials. Words such as
contemporary, modern, new, improved, progressive, advanced, introducing and announcing are words used to
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describe modern (Limbistraine, 2013). Kia uses this appeal by showing their cars in modern societies, with families
and by introducing new models.

73% is a percentage that illustrates how much Kia uses the effective appeal. Through an amusing method, the
brand intends to showcase different functions of their cars, which can give a sense of usefulness and pragmatism.
An example of this is the commercial for the Kia Sorento, where it is portrayed how the trunk door closes by itself,
the side-view mirror fold out, there is a glass roof and there are three rows of seats. However, this is done in a way
that reminds the viewer of the Little Red Riding Hood story, because a boy asks his father a lot of questions
about the car, just like the girls does in the story.

Moving on, one appeal that is consistent throughout the advertisement is enjoyment, present in 47%. This is done
with the help of a fun aspect in the commercials, like for example one for a sales event in which the salesperson is
dancing around in the showroom while selling cars.

Kia utilizes the appeal popular in 27 % of the chosen commercials, by using known music, like in the before
mentioned commercial with the hamsters. The music that is playing is In My Mind by Ivan Gough & Feenixpawl feat.
Georgi Kay. In the commercial whit the salesman, the soundtrack from the movie Flashdance and the Maniac scene are being
reproduced. The brand is also using famous people, for example Michelle Wie a young American golf player. In the
commercial she is playing golf and driving around in the Kia Soul. Other people appear to promote Kia like Nathan
Barnatt (American actor and comedian), Blake Griffin (NBA player), Mtley Cre (metal-band) and Adriana Lima (model).

In the chosen commercial it is observed that 27% of them are using the family appeal. This makes sense since Kia is considered to be
a mainstream family car. The emphasis on family is achieved by presenting family scenes that portray how functional the cars are
and how well they can cater to the needs of a family.

However, the brand is not using the appeals modesty and plain because it could be argued that these appeals are
perhaps not the most favourable for selling cars, and therefore this is why Kia is not using them.

There are also appeals that Kia is using only once, like dear and status. These can be argued not to be to most
compelling selling features for a Kia, it is also believed that consumers buy their cars for other reasons, and
therefore Kia is not using these appeals for selling their cars.

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If one was to look at the overall for the selected 15 commercials, it seems evident that almost every one of them is
different from normal car commercials, and that almost all of them have a fun twist. When looking for Kia
commercial to select, it was hard to find one where they were focused on the car and its features alone.

This corresponds well with the way Kia wants the consumers to see them, according to the brand identity. They
want to be perceived as a fun and free spirited company that does not take them itself too seriously. Kia wants to
appear in places where people are not expecting to see them, as in the NBA and in motor sports. Kia also says that
buying a Kia is not a rational buy, but an emotional one, they want the consumers to enjoy the product (Kia US1,
2013).

When looking for whether Kia is using most appeals from the mainstream or luxury part, it has become evident
that they most often use luxury appeals. In fact, Kia uses luxury appeals in 84 times in the 15 commercial,
compared to 68 times of the mainstream appeals. This means that there is a big difference between the two parts,
especially if Kia is looked at as a mainstream brand. It could perhaps be explained by the fact that Kia is trying to
reach a high end clientele with their line extensions.

As stated before this discussion is done to get a view of which appeals Kia is using and to see if the chosen
hypotheses can be confirmed or not. From the discussion it has become clear that hypothesis H3A is unconfirmed
as 55 % ((84/152) *100) of all the appeals Kia is used in the selected commercial are from the luxurys category,
and only 45 % ((68/152) *100) are mainstream appeals.

However hypothesis H4A can be confirmed by the same reason that Kia is using luxury appeals in 55% of the
selected commercials. This can be seen as a sign that Kia is trying to reach a new higher segment than they
normally have, which fits well with a reason for a line extension.

The chosen appeals can from Kias point of view also be seen as a clear way to differentiate themselves from the
other car brands, as it has been stated in their history since this has been a problem for Kia in the past, and
therefore they want to make a clear message now.

The result of the appeal analysis places Kia as a luxury car brand, which must be said is surprising, as Kia is
considered to be a mainstream brand, and therefore were believed to use mostly mainstream appeals. However,
this is how Kia wants to be perceived, their brand identity, and when the consumers point of view (brand image)
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is being researched later in the project the placement of Kia can change. Kias placement can also be caused by the
division, done by the research group, of the different appeals in respectively mainstream and luxury.

Mercedes Benz-Background

Before analyzing the content of a section of Mercedes-Benz's marketing material, a short review of the history of
the brand is intended, which will provide a foundation for the content analysis. Mercedes-Benz is a company with
a history that goes back more than a century. In the 1880's two men named Gottlieb Daimler and Carl Benz -
independently of each other, worked on developing what would become the stepping stone for the modern
combustion engine. They had two competitive companies that were both located in Southern Germany. Benz
started the company Benz & Cie. in October 1883 and Daimler started the Daimler-Moteren-Gesellschaft (DMG) in
1890 (Daimler, 2008).
During the turn of the century DMG gained the most attention and success, primarily through motor racing. This
success in racing gained the attention of a wealthy Austrian businessman named Emil Jellinek. He offered a
business proposal in April 1900 that would enable Daimler to create and sell more cars, in the return that the
company changed their name to Mercedes (which was the name of Jellinek's daughter and the pseudonym he
used when he raced cars), and that he would have a say in the design and sale strategy of the cars (Daimler, 2008).
After the First World War, the German economy was hit hard. Especially luxury goods such as passenger cars had a
lot of problems keeping afloat. This forced DMG and Benz & Cie to merge their companies in 1926 creating the
Daimler-Benz AG. When they merged they also merged their logos, making the logo that to this day still takes
place on all Mercedes-Benz cars. A three-point star from the DMG surrounded by the names Mercedes and Benz,
entwined by the laurel wreath that previously adorned the Benz & Cie logo.

After the merger Mercedes-Benz became world-renowned for making high quality luxury cars and limousines that
became favoured by far-from-average clients ranging from state leaders, media moguls, actors and other wealthy
people. Other than being known for their wealthy and infamous clientele, Mercedes-Benz also became renowned
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for their many innovations such as being the first to use superchargers on passenger cars, as well as fitting ABS
and ESP systems to their cars, putting Mercedes-Benz on the forefront of the automotive world, making
innovations in the fields of performance, safety and design (Mercedes-Benz USA, 2013).
During the time from DMG and Benz & Cie and until present time, Mercedes-Benz has built a reputable brand with
its no compromise in their attention to detail, a philosophy that is also present in their slogan "The Best or
Nothing". This seems to be an apt description of the company's identity that they do not want to compromise on
anything in order to give the customer the best driving experience possible, whether it is through performance,
design, safety or other technical innovations. At the same time Mercedes-Benz has also achieved to build a strong
brand with a high level of brand equity. The aforementioned prominent clientele of Mercedes-Benz has
undoubtedly helped build brand equity since the general consumer has seen these prominent people drive around
in stylish Mercedes-Benz cars, making the consumers think that if they drive a Mercedes-Benz it must be a great
car. If one looks at customer loyalty Mercedes-Benz scores high on a survey created by J.D Power. 57% of
Mercedes-Benz owners consider themselves loyal to the brand (JD Power, 2012). This point towards customer
satisfaction, a high regard of the brand and therefore brand equity.
It has not been all smooth sailing for Mercedes-Benz, during World War II Mercedes-Benz was accused of utilizing
forced labour and disregarding human rights, but they persevered through this and went on to create the
automotive empire that consists of the Daimler-Benz AG (Daimler, 2008).
Another automotive crisis that Mercedes-Benz encountered was when they launched the first A-class in 1997 in
order to gain way into the market of compact cars. The car was quite uncharacteristic for Mercedes-Benz since it
was categorized as a supermini. Featuring a front wheel drive layout and a tall yet short body, straying away from
Mercedes-Benzs usual cars that were characteristic for being large executive, rear wheel drive sedans or durable,
all wheel drive SUVs. However this was not where the problem laid. The problem came when a Swedish car-
magazine tested the car, and exposed it for the "Elk test", where the driver does an evasive move to avoid hitting
an obstacle. 98% of all cars that are put to this test pass, however the A-class did not and the test made the car
capsize. This event damaged Mercedes-Benz's reputation and safety credibility for its cars. Initially Mercedes-Benz
denied the incident, but eventually recalled all the cars sold, and suspended sales, in order to fix the problem.
They added ESC (Electronic stability control) and modified the suspension. On the marketing front, they made a
commercial starring the McLaren-Mercedes Formula1 drivers of the time, Mika Hkkinen and David Coulthard,
where they race two A-class Mercedes-Benz cars avoiding obstacles, in order to showcase the stability and safety
features of the car, as well as the company's sporting heritage. In 2012 Mercedes-Benz launched a new and
redesigned version of the car, with a sportier design, that seems to fit the brand identity better than the first
version of the car. In 2013 they launched an A-class tuned by their in house tuning company, AMG that boasts of
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355 bhp, earning up to Mercedes-Benz's sporting heritage, and giving the impression that even though it is a small
Mercedes-Benz, it still packs a punch.

Mercedes Benz Brand Identity
In order to reveal the brand identity of Mercedes-Benz, an analysis of the core values, the visual and verbal
representation of the brand is necessary, starting with some of the products that Mercedes-Benz offers.

Mercedes Benz Brand as Product
Mercedes-Benz offers a wide variety of products in different categories, such as passenger cars, commercial
vehicles and busses. As mentioned previously this project focuses on the passenger car category. In this category
Mercedes-Benz also offers a wide variety of cars, ranging from the small and relatively affordable A-class which
starts at 300.000 DKK, to the executive saloons of the S class, as well as the extreme performance supercar SLS
AMG, which starts at 3.8 million DKK. In between they also offer smaller saloons and station-cars, coups, an MPV
(which is also out of the ordinary for the Mercedes-Benz brand) and SUVs (Mercedes-Benz, 2013). As mentioned
the cheapest car that Mercedes-Benz has to offer is the A-class, but that is priced at more than 300.000 DKK which
most people would consider quite expensive for a compact car. For the same price one could buy a koda Superb,
which is a much larger car. This points to the notion that buying a Mercedes-Benz is not a rational decision. It is a
decision made through status and the recognition of the three-point star. Furthermore Mercedes-Benz also
focuses on relating their cars to passion, adventure and driving joy (Mercedes-Benz, 2013).

Mercedes Benz Brand as an Organization
The slogan "The Best or Nothing" which is a reflection of the core identity of Mercedes-Benz is not only something
that should merely represent the image that consumers should have of the brand. It should also be a reflection of
the thoughts and actions of the entire company, and something that encompasses the internal image that the
employees have of Mercedes-Benz. The slogan should give the consumer a feeling that Mercedes-Benz is quality
and detail oriented, meticulous in their process. This should also be values that are important to the employees of
the company. As mentioned in the background history of Mercedes-Benz that they have a high level of customer
loyalty and customer satisfaction, which points towards the notion that a Mercedes-Benz is a good car that
encompasses quality.
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Like many other companies, Mercedes-Benz does sponsorships for everything from the PGA tour to the New York
Fashion Week as well as the purchase of the naming rights to the Louisiana Superdome, which is now called the
Mercedes-Benz Superdome. Sponsorships are mainly used to get the attention of people and the purchase of the
naming rights for the Superdome, could have been a great move for Mercedes-Benz since this particular stadium
hosted the 2013 NFL Superbowl, which is the single most watched sports event in the world.

Mercedes Benz Brand as a Symbol
One of the most important and recognized visual symbols for Mercedes-Benz is their logo. As mentioned in the
historical background of Mercedes-Benz, the first joint logo surfaced in 1926, which featured a three-point star
surrounded by the name Mercedes-Benz and laurels that connect the two names. The meaning behind the three-
point star was that it was supposed to symbolize their domination of the land, sea and air. Through the years, the
logo has not been altered a lot, and the three-point star still prides the grille of every model that Mercedes-Benz
offer. The laurels have been removed and a simpler design has been opted for, with just a ring around a silver
coloured star. The name has been moved down below the logo, or removed all together so only the three-point
star remains. The newest addition to the logo is the option that customers can get an illuminated logo on their
grille, so that the three-point star is actually a shining star. This is an option for the C-class model and upwards.


Mercedes Benz Commercial Analysis

In order to do the content analysis of the chosen commercials, the creation of hypotheses is necessary. These are
to be proven or disproved through a discussion of the appeals present in the commercials. For the Mercedes-Benz
commercials two hypotheses were created. Since Mercedes-Benz is a brand with a long history behind it, and a
brand that has been favoured by prominent and wealthy people, it would be plausible that the commercials will
contain a higher amount of appeals that belongs to the luxury category. Therefore the first hypothesis is:
H5A: Mercedes-Benz, considered a luxury brand, will have more appeals belonging to the luxury category.
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However, since Mercedes-Benz has made a line extension and launched a car in the compact car segment, that is
more affordable to the public, it might be possible that Mercedes-Benz is implementing more mainstream appeals
in their commercials, creating the feeling of a company that accommodates its' mainstream customers. Therefore
the second hypothesis is:
H6A: Due to vertical line extensions, Mercedes-Benz will have more appeals belonging to the mainstream category.
In order to answer these hypotheses, the occurrence of the 34 appeals has been counted and put into a chart in
order to showcase the number of times each appeal is present in the 15 Mercedes-Benz commercials that have
been chosen. This will show what the Mercedes-Benz promotes itself on and be evidence for the confirmation of
disconfirmation of the two hypotheses.
Luxury Non-luxury
Adventure 9 60% Casual 6 40%
Affiliation 8 53% Cheap 2 13%
Dear 8 53% Community 2 13%
Distinctive 15 100% Convenient 0 0%
Durable 12 80% Effective 8 53%
Independence 7 47% Enjoyment 7 47%
Maturity 8 53% Family 4 27%
Modern 12 80% Frail 3 20%
Neat 13 87% Humility 1 7%
Ornamental 5 33% Modesty 0 ---
Productivity 9 60% Nurturance 4 27%
Safety 7 47% Plain 2 13%
Security 8 53% Popular 5 33%
Sexuality 4 27% Succorance 3 20%
Status 8 53% Tamed 2 13%
Technological 8 53% Youth 6 40%
Untamed 9 60%
Vain 5 33%

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The appeal occurring the most is the luxury appeal, distinctive, which is present in all of the commercials. Some of
the values that are connected to this appeal are: Rare, unique, scarce, exclusive, elegant, esoteric and subtle.
These are all values that are luxury related and they are distinctive portrayals of luxuriousness. Mercedes-Benz has
undoubtedly used this appeal to show their design prowess that gives a feel of distinctiveness and luxury, through
design and the feel of the cars. This portrayal of luxurious and superior cars is also present in the use of the dear,
status and ornamental appeals that respectively are present 8, 8 and 5 times in the commercials. The dear appeal
focuses on giving off a feeling of luxury and extravagance, which goes hand in hand with the status appeal that
focuses on showcasing prestige, wealth and dominance, while the ornamental appeal focuses on beauty and
design which manifests in the showing of the cars as things of beauty.
This is something that is also present in their use of the neat appeal, which appears in 13 of the 15 commercials.
One of the ways that this appeal is manifested is through the cleanliness of the cars, as well as the choice of
colours. The cars are predominantly white or silver, and even in rugged terrain the cars still appear spotless. In
some of the commercials the colour white is also used in the surroundings, giving a pure and clean feel. All of
these appeals are of course luxury values that boast of the luxury of owning a Mercedes-Benz, and some of these
appeals are also present in the commercial for the new A-class, which is supposed to be the affordable Mercedes-
Benz, but this seems to be a way of saying even the smallest Mercedes-Benz is a real Mercedes-Benz.
The commercials also focus on performance and the technical and mechanical prowess of Mercedes-Benz,
through their use of the appeals modern, technological, effective and productivity that are respectively present in
12, 8, 8 and 9 commercials. Here they show the technical attributes of their cars and that they are a modern
company which is at the forefront of technological advances. For example showing cars that can stop for you if
you are about to get into an accident, which is also something that gives a feeling of comfort and that a Mercedes-
Benz is a safe car that cares for you and your surroundings, it installs confidence. There is also a focus on the
performance of the cars through the liberal use of their in house tuning company AMG that, to car enthusiasts
around the world, this is a symbol of performance and power.
Another way that Mercedes-Benz implicitly showcases the might and prowess of the company is through their use
of the popular appeal. This appeal is present 5 times in the 15 commercials, and in two out of these five
commercials, the popularity aspect is manifested by Mercedes-Benz casting their formula1 race car drivers to
appear in their commercials. In the two commercials the drivers are placed in some situations that seems out of
place in regards to their profession, such as Michael Schumacher (7 time world champion) driving slowly and being
referred to as a Sunday driver. Nevertheless this is recognizable and referrers to their racing history. The other
three times that this appeal is present is through the use of other celebrities such as musician P. Diddy and actor
Willem Dafoe, as well as the presence of the fictional character Santa Claus.
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Another aspect that Mercedes-Benz seems to want to convey is that even though it can be a safe car, owning a
Mercedes-Benz can also be adventurous, this is shown through the use of the appeals adventure, enjoyment and
untamed that respectively are present in 9, 7 and 9 commercials. The main uses of these appeals are to show the
joy and adventure that can come with owning a Mercedes-Benz, either through the sheer joy that the handling
capabilities can give or the places that a Mercedes-Benz can take you, figuratively and literally. In one commercial
where the protagonist is about to sign a deal with the devil (Willem Dafoe) to get a Mercedes-Benz which will give
him access to the best parties, fame and fortune. However this new Mercedes-Benz is so cheap that you don't
have to sell your soul. It is however still a luxurious Mercedes-Benz and the premise of the commercial is that the
car will still give you the same status. In this commercial the affiliation appeal is also present (as it is in seven other
commercials), where owning a Mercedes-Benz will make you accepted by peers.
Some of the appeals that are least present are cheap, community, convenient, humility, modesty, plain and
tamed. All of these appeals are inside the mainstream category and it seems that Mercedes-Benz does not want to
be associated with something plain and mainstream, which seems to be a strong indication against the second
hypothesis that most of the appeals are located in the mainstream category.
Taking a look at the entirety of the appeals in the 15 commercials, there is a total number of 210 appeals present.
Out of these 155 are in the luxury category and the remaining 55 are in the mainstream category. This means that
the percentage of appeals shown in the luxury category is 74% and the percentage in the mainstream category is
26%. This means that out of the two previously mentioned hypotheses H5A is confirmed and H6A is disproved.
One of the reasons that Mercedes-Benz seems to hold on to the luxury appeals rather than utilizing more of the
mainstream appeals, is that even though they have made a vertical line extension and made a car that is smaller
and more affordable, they still want to maintain the old brand identity, that from the looks of their slogan
promotes "the best or nothing" and a symbol of quality and status catering to the old and wealthy clientele.
Thereby, not damaging their brand equity.

Audi Brand Background

The technological advances during the turn of the nineteenth century started influencing daily life. The working
methods within factories began changing, domestic life as well, and progress was starting being translated into
greater mobility on the roads, by rail or by water. The society was caught up in these changes, among which the
development of the motor vehicle was one. The motor vehicle had something special to offer its consumers, since
the freedom that came from mobility developed into a personal desire. As a proof of that, every year tens of
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thousands of people joined the ones who were prepared to spend their money for satisfying this desire.
Therefore, the need of a reliable form of motorized transport emerged. Even before the end of the century, more
than three dozen companies were building cars in Germany. Among them was August Horch & Cie., a company
established in 1899 with headquarters in Cologne. Its founder, Horch, is now considered a pioneer in the motor-
vehicle field (Audi-journals, 2013).

Audi Brand as a Symbol
In 1909 Horch was forced out of his own company, due to some trademark infringements. After this occurrence,
he started his own company, under the same name, which of course generated a share of troubles, to which he
put an end when he decided to change the name to Audi. The idea came from Franz Fikentschers son, who at that
moment was studying Latin. Fikentscher was one of Horchs friends, who helped him set up the new company. In
one of their meetings, his son just came up with the idea to change the name to Audi, as a translation of Horch
which in old German meant listen (Autoevolution, 2013).

Audis start to the German market took place with the appearance of 2.6 litre engine powered vehicles, followed
by a series of a more powerful ones. A few years later, a merger took place between Audi, DKW, Horch and
Wanderer, and thus, the Audi Union was formed in 1932. Resulting from this, was the birth of the new logo, with
the four interlocked rings, as a sign of unity and identity of the new formed conglomerate. With this union,
technological improvement became a top priority. Because of this, Audi actually came to create an armoured car
for the German Army during World War II. However, all progress was soon to be stopped, due to heavy bombings.
Furthermore, by the end of the war the Zwickau area, in which the factory was placed, had been caught in the
Soviet occupation zone. So, the company had to restart on new grounds, in Ingolstadt, Bavaria (Autoevolution,
2013).

On September the 3
rd
, 1949 a new company came into being in Ingolstadt that upheld the automotive tradition of
the four rings. This is the actual precursor of todays Audi AG. In the beginning of the re-establishment they were
forced to produce small, economical vehicles, since life at that time was frugal (Audiworld, 2013). By 1958,
Daimler-Benz had acquired 87% of the company, which soon became the property of Volkswagen, who had
bought the factory and the brands in 1964 (Autoevolution, 2013).
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After a second merger in 1970 with NSU, another car producer based in Stuttgart, Audi established itself as a
reliable growing brand. Joining a row of successful car producers, the company has also obtained acclamations in
the racing world with several World Record Holdings, including one for Top Speed Endurance (Autoevolution,
2013). The extensive of NSU and Audi models, that covered a wide assortment of engines and drive concepts
facilitated in 1971 a new advertising slogan, one that has been the companys mission statement ever since:
Vorsprung durch Technik (Audi, 2013). As it will be shown later on in the analysis part, this slogan is a foundation
stone in the over years built up brand identity.

Audi Brand as Product
Just like its competitor Mercedes Benz, Audi offers its customers a wide range of car models. The main line-ups are
the A series, Q series, TT and R series. There is also an S series, but these models are adjacent to the main
categories. The A series is the largest one, and it also includes the newest and most affordable line extension, the
A1 model followed by the A3. As the company itself describes these models, they are ideal for urban
conglomerates where parking spaces are hard to find, so a smaller and more compact car transforms driving in a
hectic environment in a much more relaxing experience. Price ranges for these two are between 217.000 and
388.218 DKK, depending on the features the buyer desires. Of course, as said before, these are the most
affordable ones, since the A-series also include the A8, the most expensive A- model that can reach 1.887.995
DKK. The Q-series is an SUV line-up, that started with the Q7. After the success of this model, the company
decided to create a more affordable line extension, and thus the Q3 and Q5 were launched, Audis cheapest SUVs,
that in a basic version can cost around 500.000-670.000 DKK. Finally, the TT and R8 are the sporty coupe versions,
the R8 being at the same time the most expensive car that Audi has to offer. For example, a R8 Spryder can come
to cost between 2.788.088 and 3.607.219 DKK (Audi, 2013).

Audi Brand Identity
As for the brand, the Audi brand has placed evoking customer delight worldwide at the very heart of its strategy,
as the key component of its mission. The brand values sportiness, progressiveness and sophistication are
convincingly embodied by the products of the Audi brand. In addition to supplying technologically advanced,
innovative automobiles, it aims to generate customer delight in a wide variety of other ways (Audi, 2013).

The Audi brand has set as a main task, to offer its customers high-quality, sporty and innovative vehicles as well as
mobility solutions. This ambition is expressed through the brand essence Vorsprung durch Technik. Important
technologies which will play a significant role in the future development like electric drive systems, lightweight
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construction and connectivity are brought to production maturity. The company aims to create special
experiences and to constantly delight its customers through modern sales concepts like Audi City, the Cyber-store
for urban centers. The Audi brand can also be experienced at exclusive events that take place in German cities, like
the 2012 Audi Classic Open Air Festival in Berlin. Emotion-packed moments are also provided by the company
through driving experiences, such as various driving and safety training events, acting as a gateway to
memorable experiences of the Audi brand (Audi, 2013).

Moreover, Audis corporate self-perception extends beyond business success to also include social and ecological
aspects as part of being a balanced contributor to society. The Audi Board of Management approved
approximately a dozen corporate projects in the course of the 2012 fiscal year. These range from the development
of drive energy from renewable sources, through the first Audi Stakeholder Forum, to support for voluntary
employee activities and a pilot study of the corporate carbon footprint a calculation of how much CO2 is emitted
throughout a products entire life cycle (Audi, 2013). In order to maintain its profitable and sustainable growth in
the long term, the companys structures and processes are being modified constantly. Qualitative growth is a top
priority for Audi, an objective which is achieved through effective structures, the ongoing optimization of costs
and a systematic management investment. As a proof of their continuous growth, in 2012 the Audi brand set a
new deliveries record by selling over more than 1.45 million vehicles. From this it can be argued that a strong
brand and a positive image are key success factors for a premium manufacturer. They pave the way for lasting
corporate success (Audi, 2013). That is why the companys goal is to improve the image position and the product
range, while emotionally binding customers to the Audi brand (Audi, 2013).

According to a survey conducted by the Auto Zeitung in 2012, the Audi is perceived as the brand with the most
sporty image. The brand identity, regarded as the core of the company, embodies modern and distinctive design,
technological innovation and a high quality standard. The ambition of providing high quality vehicles to consumers
is expressed in the brand essence Vorsprung durch Technik. The positive image of the brand is also a key aspect
that enables sustained development. The amount of national and international awards owned by the company
reflects the growing popularity of the four rings brand. The focus is always on sportiness, progressiveness and
sophistication, thus the positive perception helps the Audi Group to maintain growth of such nature for the future
(Audi annual report, pdf, pp. 97-200).



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Audi Commercial Analysis

As expounded above, Audi proclaims itself as a premium manufacturer for sporty, sophisticated and of high
quality cars. Along these lines, being one of the car brands forming the luxury segment in the industry, the
following hypothesis was formulated:

H7A: Audi, considered a luxury brand will more values belonging to the luxury category

However, taking into considerations the vertical line extensions that Audi has started fabricating, like the A1, A3
and Q3 models, consequently the company is trying to access another target group of more mainstream, middle
class consumers, that probably was not always in their range of vision. They are attempting to deliver luxury to
the mainstream market. For example, in one of the commercials destined for the A1 model, the motto is the
technology of a limousine without the limousine (Audi, 2013). So, the experience of a limousine is now more at
reach. With this in mind, the next hypothesis was formulated:

H8A: Due to vertical line extensions, Audi will have more values belonging to the mainstream category

To verify them, a content analysis was conducted on a number of 15 commercials as previously mentioned in this
section. After careful considerations and debates, a total number of 124 values were gathered for the Audi brand
alone, and it was partitioned into the two categories, luxury and non-luxury, as it can be observed from the
adjunct table.

Luxury Non-luxury
Adventure 6 40% Casual 3 19%
Affiliation 6 40% Cheap 0 0%
Dear 3 20% Community 4 25%
Distinctive 14 93% Convenient 6 28%
Durable 2 13% Effective 7 44%
Independence 7 47% Enjoyment 4 25%
Maturity 4 27% Family 4 25%
Modern 14 93% Frail 1 6%
Neat 9 30% Humility 0 0%
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Ornamental 5 33% Modesty 0 0%
Productivity 13 87% Nurturance 2 13%
Safety 4 27% Plain 0 0%
Security 3 20% Popular 3 13%
Sexuality 2 13% Succorance 2 13%
Status 8 53% Tamed 1 6%
Technological 11 73% Youth 4 25%
Untamed 5 33%
Vain 8 53%

The final score for each category was calculated as follows: there is a total amount of 124 luxury values and a total
one of 41 non-luxury ones. Together they sum up an amount of 165 values. In order to obtain a comparative
result, the percentage for each category, out of 165, had to be appraised. Therefore, applying the formula, for
luxury (124: 165) *100= 0.75*100=75% resulted, while for non-luxury: (41:165) *100= 0.25*100= 25% was the
final score.

Thus, accordingly to the aftermath, the following relation can be established.

H7A: Audi, considered a luxury brand will more values belonging to the luxury category- Confirmed

H8A: Due to vertical line extensions, Audi will have more values belonging to the mainstream category-
Unconfirmed

When advertising its products the Audi brand appears to have a tendency to position itself as a luxury good. They
communicate according to the brand values, acknowledged on the official website.

However, it should be mentioned that when analyzing commercials for this car brand a series of values were more
predominant than others, even if they were included in the same category, respectively luxury and non-luxury.
Therefore, values like distinctive, modern, productivity and technological are among those that had the highest
presence in the looked at commercials. No matter, the car model, from the cheapest A1 to the most expensive R8,
Audi puts a great emphasis on contemporary, new and improved technology implemented through hard work,
ambition and very skilled engineers, who put all their research in designing models, able to produce innovation in
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a progressive world. Also, the achievement, the success of the company and all its accomplishments are attributes
in which Audi takes pride. Moreover, they wish to position themselves in the car industry as a unique, exclusive
and tasteful brand, with products in accordance.

Another aspect, that is important to be taken into consideration is that Audi uses a lot of its competitors, in
commercials destined for premium models like the R8 or the A8. By comparing themselves with brands like
Mercedes, BMW and Lexus, also car producers in the same niche, Audi wants to escape the confines of old
luxury and the stereotypes formed around the three previously mentioned brands (status provider, the best of
the best, richness and admiration, etc.) and to promote the new luxury that includes illuminating and
revolutionary technology, innovation and unequaled inspiration.

Other values like status, neat, vain and independence rank high, since Audi aspires to be distinguished as a brand
that produces beautiful, fashionable and glamorous cars, which offer social status, power and prestige. An Audi
owner is a self-reliant, original and nonconformist person who should take pride in his/her ownership. Out of the
enumeration, neat has the highest value, as a result of the way in which the cars are portrayed. All the cars are
showcased as spotless, unsoiled, bright and shiny. However, an allegation that other car commercials, for different
brands are using dirty and stained cars, is not made. The difference in this case, is the way in which the neat
appeal is emphasized. Their filming approach of the commercials, intends to create a connection between light
and luxury, and as it was described in the first part of the project, luxury is just like light, meant to bright up and to
be seen. Also, vain and ornamental are in a strong connection with neat. The cars have a beautiful appearance
and are designed in a stylish and glamorous fashion. Of course, having such an aspect, they are susceptible of
offering a feeling of autonomy, power and prestige.
Adventure, affiliation and untamed, are similar in value, but do not rank so high compared with the so far
displayed appeals. It is expected to encounter adventure and untamed in a brand that nominates sportiness as
one of its main values. Therefore, the Audi car buyers can undergo thrills and excitement when driving. They can
become braver, bolder and more courageous behind the wheel of an Audi. Also, due to the implemented
technology, driving models like the R8 can turn into a fierce, rowdy and frenzied experience. As for affiliation, it
was noticed that Audi is searching to build a so called Audi users community, who wishes to break the socially
accepted norms and to dismantle prejudices and stereotypes on how luxury cars are supposed to be.
The remaining dear, durable, maturity, safety, security and sexuality are low in value, but this does not mean that
they do not count when it comes to including Audi in the luxury segment.

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Continuing with the non-luxury values, plain, modesty, humility and cheap scored 0. Audi does not want to
promote its products as simple, unpretentious, economical, or as a bargain, so none of these values were able to
be identified. The highest appeal in the non-luxury part is effective, with a score of 7 spotted appeals. It came
across so many times, because the Audi automobiles are designed to be pragmatic, functional, but at the same
time comfortable and strong. After effective, convenient follows, since the cars are handy, they can help save
time, and they are versatile and easy to use. Community, youth, family and enjoyment all have the same result, 4
out of 15. Community is present because there are a few scenes related to society and other social organizations.;
family because the line extension models have small attempts of being branded as a family car, here the casual
appeal is in relation with the family scenes; youth has been identified because some of the commercials illustrate
parts in which children and teenagers are shown through, also a reason why nurturance, frail and succorance
were present; last but not least, enjoyment was able to be picked out, as a result of the happy and fun feeling that
comes from driving an Audi.

Ending this analysis part with the two remaining non-luxury appeals, tamed and popular, in comparative term
with its competitor Mercedes Benz that has a 33% result for popular, Audi chooses to not make such a big use of
celebrities and well-known figures. Therefore, in only 3 out of the 15 commercials this appeal was present, like for
example when actors from the Star Trek TV series were hired to advertise for the company.

Questionnaire analysis
In the following section an analysis of the questionnaire results will be conducted.

Data generation

The questions concerning which values the respondents associate with the four car brands are based on the result
obtained in content analysis. In order to avoid a long and perplexing list of values, it was decided to narrow it
down by selecting the four most used appeals within the luxury and non-luxury categories, plus the four which
were used the least. In this way the respondents had the possibility to place the brands in luxury or non-luxury
depending on their perception. Furthermore, the four least used values were also included in the list as it was
thought that the possible for the respondents to disagree with the chosen values might occur.
In order to see the diversity of the respondents, questions regarding age, gender, nationality and occupation were
included. Furthermore, to see if factors such as age and/or whether you have a car or not have an influence on the
respondents perception of the different brands.
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To see if the consumers believe that line extension would benefit or damage the image of the companies,
questions regarding whether Audi and Mercedes-Benz should produce a down-scaled model and whether koda
and Kia should produce an up-scaled model were included. In addition, the respondents were asked to rank the
brands compared to each other and afterwards place each brand within the luxury or non-luxury category.
As explained in the methodology chapter the questionnaire was distributed by using the methods convenience-
and snowball sampling, which in this research means that it was sent out via Facebook and the researchers
primary and secondary social networks.

Coding

According to Parasuraman et al (2007) coding broadly refers to the set of all tasks associated with transforming
edited responses into a form that is ready for analysis (p. 372). In other words, transforming the incoming data, so
it is possible to use them for an analysis. Depending on how the questionnaire is constructed this step can be
difficult and confounding. However, a questionnaire with structured questions makes it relatively easy to sort the
data into categories and thereby facilitating the analysis. To create the questionnaire, for this research, an online
survey generator (SurveyCrest) was used and at the same time this program could help structuring and
automatically analyzing the gathered data. The questionnaire for this research contained structured questions and
therefore, its coding has been limited because it was merely necessary to review the data for incomplete data
(Parasuraman et al, 2007, p. 372; Saunders et al, 2009, p. 422-423; SurveyCrest, 2013). After reviewing the
submitted responses and removing the incomplete answers, a total amount of 102 responses was left.
In order to avoid misunderstandings and make sure that the respondents understood the values, the following
Pollay appeals were renamed in the questionnaire:
Dear = Luxurious
Distinctive = Characteristic
Neat = Smart
Nurturance = Caring
Productivity = Ambitious
Untamed = Wild



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In order to justify the analysis of the questionnaire, the following scale will be implemented.

If a question has two options the chosen answer would have to be the answer with a percentage of 50% or above.
If the margin is small between the two options, the highest value will be chosen. However, an argumentation of
the two options will be made.

In the case of questions with three options the chosen answer would be the answer with a percentage of 33% or
above. If two answers have a percentage above 33% the one with the highest value will be chosen.

When it comes to the questions regarding which values the respondents associate with the brands it is not
possible to scale it, since the respondents were able to choose as many values as they felt necessary.

The same applies to the question concerning the ranking of the car brands. Since the respondents were able to
rank more than one car brand to the four available places. In these cases where a scale could not be explicated,
the answers were chosen in an ascending order.

Analysis

First, the hypotheses for this analysis will be stated. Secondly, an overall view of the answers will be given plus
looking into different groups perceptions e.g. a car owners view compared to the general perception of the
respondents. Last but not least, confirm/unconfirm the hypotheses
The hypotheses used in the content analysis will also be the ones used in this case. However, contrary to the
hypotheses used in the content analysis where the focus was on the brand identity and how the companies
promote themselves, the ones for this analysis will regard how the consumers perception of the four brands are.
Thereby, it is possible in the end to see if there is a coherence between the brand identity and the brand image.
Since koda and Kia are considered to be mainstream brands, it can be assumed that the consumers will identify
more of the mainstream values belonging to these two brands. However, it can also be a possibility that the
vertical line extensions have influenced the consumers perception of the brand and therefore associate more
luxury values to them. On the basis of this the hypotheses for koda and Kia will be:
H1B: koda, considered a mainstream brand will have more values belonging to the mainstream category.
H2B: Due to the vertical line extensions, koda will have more values belonging to the luxury category.
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H3B: Kia, considered a mainstream brand will have more values belonging to the mainstream category.
H4B: Due to the vertical line extensions, Kia will have more values belonging to the luxury category.
Since Mercedes-Benz and Audi are considered to be luxury brands, it can be assumed that the consumers will
identify more of the luxury values belonging to these two brands. However, it can also be a possibility that the
vertical line extensions have influenced the consumers perception of the brand and therefore associate more
mainstream values to them. On the basis of this the hypotheses for Mercedes-Benz and Audi will be:
H5B: Mercedes-Benz, considered a luxury brand, will have more appeals belonging to the luxury category.
H6B: Due to vertical line extensions, Mercedes-Benz will have more appeals belonging to the mainstream category.
H7B: Audi, considered a luxury brand, will have more appeals belonging to the luxury category.
H8B: Due to vertical line extensions, Audi will have more appeals belonging to the mainstream category.

General result of the questionnaire

The results (Appendix 4) of the survey show that 67% of the respondents were between 18-25 years old, 27% were
between 26-32 years and the last 6% were over 41 years. There were no respondents between 33-40 years. This
fits well with the selected sample method and what was expected from the researchers. In addition 73% were
students which also correspond to the division of the age groups. The remaining 20% were employed and 8%
unemployed. Out of the 102 respondents 67% of them were female and 30% of the total respondents owned a
car. The country of origin is divided between 22 nationalities, where the largest groups represented is Danes with
47% and Romanians with 16%. The rest is spread among the remaining 20 countries.
The following table shows the values that the respondents associated most with the brands and the percentages
show how many associate the values with the brands:
Kia koda Mercedes-Benz Audi
Cheap
69%
Cheap
48%
Modern*
61%
Modern*
75%
Plain
40%
Convenient
47%
Characteristic/Distinctive*
55 %
Technological*
69%
Convenient Effective Popular Ambitious/Productivity*
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34% 41% 54% 66%
Modest
30%
Popular
33%
Durable*
41%
Characteristic/Distinctive*,
Effective, Enjoyment
44%.
*Belong to the luxury group
The answers from the respondents also show that they have a negative approach towards Mercedes-Benz
launching a cheaper and more affordable compact-car as 59% answered that it would be a bad idea and 39% said
it would change their perception of the brand for the worse. However, 52% think it would be a good idea if Audi
launched a more affordable compact-car and 45% of the respondents say that it will not affect their perception.
If Kia launched a large and luxurious sedan 61% stated that it would be a bad idea. However, 59% say that it will
not change their perception while only 23% say it would change for the worse. The answers also show that 53%
believe it is a bad idea if koda launched a more luxurious car, but still 58% would not change their perception.
These numbers show that even though the companies change their product line it does not necessarily mean their
image is damaged.
Both in the Audi and the koda cases, it can be argued that making line extensions could be a good idea since
there is a small difference between opponents and supporters. Substantiating that 45% of the respondents would
not change their perception of Audi and 58% would not change their perception of koda. It can be argued that
the companies can expand their product line but at the same time keep their current brand image.
In connection with the line extensions the respondents were also asked if they would place the models in the
luxury category or non-luxury category. Both Mercedes-Benz and Audis small cars were placed as non-luxury with
53% and 54%. Kia and kodas larger models were also placed as being non-luxury with 73% and 60%. It can be
debated, if looked at the numbers, that the respondents look at the companys brand when it comes to Kia and
koda because only a small group of respondents associate a large pricey Kia or koda with luxury. However, in the
Mercedes-Benz and Audi cases it can be argued that features such as luxury and large are connected to the brand
and, therefore a small Mercedes-Benz or Audi is not considered as luxury.
When the respondents were asked to rank the car brands compared to each other on a scale from one to four,
where number one was the highest: Audi was placed as number one in 50% of the times, Mercedes-Benz score the
highest amount for the second place with 35%, koda was placed in the third place with 36% and at last Kia took
fourth place with 44%. However, the reason to why there are no coherences between the percentages is that
Mercedes-Benz and Audi were ranked at the same place.
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It is clear that Mercedes-Benz and Audi were categorized as luxury brands with respectively 99% and 95%. It also
showed that Kia and koda obviously are non-luxury brands in the mind of the respondents with respectively 96%
and 89%.
The two next sections will focus on the groups that differentiated mostly from the general opinion of the
respondents.
Age group 41+
The different age groups perception of the four brands is similar to each other, however when looking at the age
group 41+ the results change in several of the questions (Appendix 5).
The values that this group associate with Kia change in the way that now modern shares the first place with cheap
with 50% and the value plain is removed. This group also associates modern with koda and therefore it now
replaces convenient which scores 0%.
Even though popular generally represent 54% in the Mercedes-Benz situation, this group associates the appeal
effective (33%) more with the brand than popular (0%). Audi is associated with almost the same values however,
this group replaces enjoyment (0%) with effective (33%).
This age group does not seem to have an opinion about whether it would be a good or bad idea if Mercedes-Benz,
Kia or koda extended their product line since the result is 50/50 for each brand. Nevertheless, in the Audi case
two out three state that it is a bad idea. Furthermore, this group rank Audi and Mercedes as number one and Kia is
now better placed than koda. On the other hand, this group shows that they focus more on the brand than the
product as they see a small Mercedes-Benz and Audi as luxury. This also fits with koda being ranked last and as
mentioned earlier the companys old image could still determine the way in which this group perceives the brand.

Car owners
Like the age group 41+, car owners (Appendix 6) also associate modern with both Kia (29%) and koda (35%) and it
respectively replaces convenient (34%) and popular (33%). Mercedes-Benz is more associated with smart/neat
(48%) than durable (41%) by the car owners. The values associated with Audi are the same as the general opinion
that the respondents have.
The car owners are mainly negative (55%) towards a smaller Audi whereas, for the other brands the opinion is
more positive especially when it comes to koda (61%) producing a more luxurious car.
Again Audi has the highest percentages for the first place with 52%, but now koda ranked second since 52% of
the car owners positions them as the second best car. They rated Kia as being the third best car with 29% and
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since Mercedes-Benz does not score highest within any of the places it gets ranked as number four with 13%.
These numbers were at first surprising, however, they fit with the reason for asking if the respondents own a car
or not and how it influences their perception. It can be argued that car owners look at value for the money and as
seen from the results they might consider that they get more when buying a koda compared to a Mercedes-Benz.

Hypotheses

Based on the aforementioned analysis of the data, the next section will focus on the hypotheses and state if they
will be confirmed or unconfirmed according to the general answers of the questionnaire.
H1B: koda, considered a mainstream brand will have more values belonging to the mainstream category.
The results of the questionnaire show that koda is viewed as being a mainstream brand. The total amount of
values associated with the company was 291. Of these 43% belonged to the luxury category and 57% to the non-
luxury category. Therefore, hypothesis 1B is confirmed since the non-luxury values are represented the most. This
also fits well with that the fact that the top four of the chosen values associated with the company are cheap
(48%), convenient (47%), effective (41%) and popular (33%), which all belong to the non-luxury group. In addition,
89% of the respondents also placed the brand as being a non-luxury product which together with the above
mentioned appeals underline that koda is seen as a mainstream brand.
H2B: Due to the vertical line extensions, koda will have more values belonging to the luxury category.
H2B is unconfirmed because a total of 43% of the values associated with koda belonged to the luxury category
and thereby the company is still considered as a mainstream brand. The value from the luxury category that scores
highest is modern with an association of 32% from behalf of the respondents. The answers from the questionnaire
also show that 53% do not believe it is a good idea if koda launched a more luxurious model. However, it is
interesting to see that 58% state that a line extension will not have either a good or bad influence on their
perception of the company. In addition, a more luxurious model is still placed in the non-luxury category by 60% of
the respondents and koda is ranked third place when compared with the four brands. Thereby, line extension will
not in the eyes of the respondents add more luxury values. Their opinion about the company will not change.
H3B: Kia, considered a mainstream brand will have more values belonging to the mainstream category.
The above analysis of the respondents perception of Kia has made it evident that they see the brand as a non-
luxury one. It became visible when the respondents were asked to associate selected series of values with Kia. The
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respondents could, as mentioned, choose between 12 values, and as it was possible for them to select more than
one value. The 102 respondents had in total chosen 266 values that they associated with the Kia brand. This is the
lowest result for all of the car brands in this analysis. It can therefore be argued that Kia is the brand that is the
least present in the minds of the respondents, and thereby they are perhaps not so aware about the values that
this brand wants to be associated with. It could furthermore be that the respondents did not associate the same
values with Kia as Kia themselves, or that the respondents associated other values with the brand that the
researchers have chosen to include. The 226 values were divided into 23% luxury and 77% non-luxury. Therefore
hypothesis H3B can be confirmed.

H4B: Due to the vertical line extensions, Kia will have more values belonging to the luxury category.
Kia has made different vertical line extensions trying to address new parts of the market. Through the analysis it
has become apparent that this has not affected the respondents perception of Kia since 77% of the chosen values
were non-luxury. When asked if they saw Kias line extensions as luxury or non-luxury 73% answered non-luxury.
This is the highest percentages for all the brands line extensions placed in the non-luxury category. This showed
that Kia is the car brand that the respondent saw as the most non-luxurious of them all. Thereby hypothesis H4B is
unconfirmed since the respondents do not connect Kia with luxury values.

H5B: Mercedes-Benz, considered a luxury brand, will have more appeals belonging to the luxury category.
Based on the aforementioned analysis of the questionnaire, H5B is confirmed, due to a majority of the appeals
leaning towards the luxury category. The margin that separates the two categories is however not big, with a mere
difference of 6%. The main reason for this slight difference is the high number of respondents contributing the
non-luxury value popular to the Mercedes-Benz brand. This might be based on the idea that the popular value is
referring to the brand being well known and perhaps something that is sought after, this notion is supported by
the fact that 356 values were associated with the brand which is the second highest number among the four core
brands. The popular appeal does not appear to associate with something that is common and ordinary, which are
some of the key aspects of Pollay's definition of this appeal. Although these are just speculations based on the
data, since there is no actual evidence of this connection. However, due to some of the other questions answered
a majority of the respondents classify Mercedes-Benz as a luxury brand, which points to the notion that it is not
something that is commonplace, and ordinary but exclusive and sought after.
H6B: Due to vertical line extensions, Mercedes-Benz will have more appeals belonging to the mainstream category.
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Besides confirming H5B the results also disproved H6B since, there is a majority of values belonging to the luxury-
category and not the mainstream category as the hypothesis suggests. Even though the difference is not big, it
seems that the majority of respondents' perception of Mercedes-Benz is that it is a luxury brand and that it does
not appear to have changed through the implementation of the vertical line extensions.
After expanding more on the questionnaire analysis it was demonstrated that the following hypotheses were
confirmed/unconfirmed for the Audi brand.
H7B: Audi, considered a luxury brand, will have more appeals belonging to the luxury category.- Confirmed
H8B: Due to vertical line extensions, Audi will have more appeals belonging to the mainstream category.-
Unconfirmed
Following these lines, it appears that the respondents perceive this brand the way the company intends them to.
The biggest tendency in the consumers perception is towards modern. So, the Audi car models are seen as
improved, contemporary and progressive. Of course, the technological features and the achievements that the
company has, are in a strong connection with contemporaneity and modernity. All the other values identified in
44% are referring to distinctiveness and the enjoyment that come along with a car that has the Audi brand on it.
On the other hand, the respondents failed to identify values assigned to the non-luxury category, which means
that they clearly see Audi as a luxury car producer. Moreover, the cheaper line extensions would not affect the
brands image and the brand equity, a small affordable Audi being still having luxury features. So, from this it can
be inferred that the brands values are extended all the same.
Before ending this conclusion of the questionnaire it is important to mention that out of the four brands Audi is
the one with the highest number of values, 390. This can suggest that Audi might be the most well-known car
brand with the highest brand equity.
Comparison between the analyses

In the following section a comparison of the results of the content analysis and the questionnaire will be
conducted.

koda

H1A: koda, considered a mainstream brand will have more values belonging to the mainstream category-
Confirmed.
85


H2A: Due to the vertical line extensions, koda will have more values belonging to the luxury category-
Unconfirmed.

H1B: koda, considered a mainstream brand will have more values belonging to the mainstream category-
Confirmed.

H2B: Due to the vertical line extensions, koda will have more values belonging to the luxury category-
Unconfirmed.

As displayed above the hypotheses that classify koda as a mainstream brand were confirmed, while the ones
meant to describe luxury features failed to do so. Based on this knowledge the following conclusions can be
drawn. The content analysis reviled the fact that koda is a mainstream brand whose primary target segment
consist of middle class consumers. At the same time, the product is characterized as pragmatic, efficient,
comfortable, designed to generate enjoyment and create a secure family environment. Even if the company wants
to put an emphasis on some of the values that the researchers have allocated to the luxury category like
productivity with a score of 67 % in the content analysis, the questionnaire respondents found values like
economical, inexpensive and accessible more predominant. While the analysis performed on the commercials did
not distinguish features related to expensiveness, extravagance and wealth, 5% of the respondents found it
appropriate to associate the value dear/luxurious to the brand. An aspect that might draw attention to it, is that
the appeal affiliation rated scores that might be considered as opposing poles. In the commercials, communities
at large, acceptance of peers and colleagues and bonds of friendship are values that were alluded to in more than
50%, to be more precise the appeal affiliation aggregated a percentage of 60%. On the other hand, the
respondents considered koda as a car that can help them gain access to the community only in a small degree of
7%.
The two parts of analysis disclosed that the accomplishments and the self-development that the company went
through are both advertised and acknowledged by the public at large. Ergo, the company promotes the value
productivity/ambitious in 67%, while the public identifies it in 25%. From this, it can be argued that the changes
caused by merging with Volkswagen made it more visible that the company is thriving and aiming for
transformation. This points to the notion that the consumers are acknowledging the koda is trying to change
their image for the better and recognize some of the values that the company is trying to convey. Effective is also
an appeal that seems to emerge by 80% of the advertisements, and at the same time to be recognized in 41% of
the total amount of answers provided in the questionnaire.
86

Before concluding the part for koda, it has to be communicated that the hypotheses concerning line extensions
for both research methods were unconfirmed. Even though more luxury attributes are added to the brand, koda
is still predominantly viewed as a mainstream, affordable car brand. Even the premium version that the company
has released are categorized as non-luxury by 60 % of the respondents.

Kia

H3A: Kia, considered a mainstream brand will have more values belonging to the mainstream category-
Unconfirmed.

H4A: Due to vertical line extensions, Kia will have more values belonging to the luxury category- Confirmed.

H3B: Kia, considered a mainstream brand will have more values belonging to the mainstream category-
Confirmed.

H4B: Due to the vertical line extensions, Kia will have more values belonging to the luxury category-Unconfirmed.

In the beginning of this project, it was assumed that Kia is a mainstream brand, but after the content analysis it
turned out that this conjecture was false. Even though one might be persuaded to categorize Kia cars as non-
luxury, it appears that the company intends to be perceived differently. Thus, the results from the first piece of
analysis have revealed that Kia is pursuing appeals like distinctive/characteristic (87%), modern (80%) and
technological (47%). This conducted to the disapproval of the H3A hypothesis. However, when inquiring the
consumers, the situation took a completely different turn, by reasons of the response level associated with non-
luxury appeals were 77% to 23%.

When comparing the two analyses a clear difference between how the company promotes itself and how the
consumers perceive it, emerges. The dichotomy of the two parts is entailed by the consumers way of
distinguishing the brand. Hence, values like cheap (69%), plain (40%), modest (31%) and convenient (34%) seem
to be more liable of selection while dear/luxurious (0%), status (2%) and characteristic (12%) are not. After
reviewing the feedback received from the respondents it can be argued that the initial assumption in regards to
this car brand has a base. Despite the fact that Kia aims to elude the mainstream segment, this attempt remains
futile.
87

As for the line extensions, a more pricey and large Kia model would still be considered non-luxury by 73% of the
respondents, since launching a large and luxurious sedan is not considered to be such a good idea. Only 39% find
this as an acceptable concept.

Mercedes-Benz

H5A: Mercedes-Benz, considered a luxury brand, will have more appeals belonging to the luxury category-
Confirmed.

H6A: Due to vertical line extensions, Mercedes-Benz will have more appeals belonging to the mainstream category-
Unconfirmed.

H5B: Mercedes-Benz, considered a luxury brand, will have more appeals belonging to the luxury category-
Confirmed.

H6B: Due to vertical line extensions, Mercedes-Benz will have more appeals belonging to the mainstream category-
Unconfirmed.

The content analysis revealed that distinctive/characteristic is one appeal present in 100% of the commercials.
This means that Mercedes-Benz attempts to be a brand described by values such as uniqueness, tastefulness,
elegance and exclusivity. The intention was to observe whether the public at large catalogs this appeal as
predominant as well. After examining the answers it appears that this value comes in second (55%) after modern
(61%). Even though the percentages are diverse from one situation to another, it cannot be contested that
Mercedes-Benz belongs and is associated with luxury, especially since 45 % of the respondents appointed it to this
category of goods and ranked it as number one. Moreover, a small affordable Mercedes-Benz would be
considered a bad idea, since it could alter the brands image for the worse. Mercedes is luxury and is supposed to
remain this way, primarily since a car with the previously mentioned qualities does not seem to fit the luxury
pattern, from the consumers point of view.




88

Audi

H7A: Audi, considered a luxury brand will more values belonging to the luxury category- Confirmed

H8A: Due to vertical line extensions, Audi will have more values belonging to the mainstream category-
Unconfirmed

H7B: Audi, considered a luxury brand, will have more appeals belonging to the luxury category-Confirmed.

H8B: Due to vertical line extensions, Audi will have more appeals belonging to the mainstream category-
Unconfirmed.

Audi defines its brand through values such as distinctive/characteristic (93%), modern (93%), and productivity
(87%). At least this is what emerges from the commercials. Judging from the responses obtained in the
questionnaire it can be asserted that the company succeeds in inoculating these appeals in the consumers minds.
The survey has shown that modern (75%), technological (69%), ambitious/productivity (66%) and
characteristic/distinctive (44%) are predominant appeals selected by the consumers. At the same time, they
propitiously place it within the division of luxury car brands. Unlike its competitor Mercedes-Benz, consumers the
idea of a small, affordable Audi agreeable, but this type of car would be considered as non-luxury. Still, this does
not seem to affect the brands image, since 45% responded that their opinion of the company would remain
untouched. Hence, in consequence Audi appears to fail in carrying their values on to the vertical, downscaled line
extensions.









89

Conclusion

In this study the focus has been on the four car companies Audi, Mercedes-Benz, koda and Kia. These brands
were chosen because one of the focus points in this study was on luxury and non-luxury products. Two brands
representing each category - Audi and Mercedes-Benz as luxury and koda and Kia as non-luxury. The division of
the brands was confirmed by the result of the questionnaire. More precisely the aim of this research was to look
at the following problem formulation:
How does the line extension affect the differences between the brands identity and the brands image when
referring to luxury and non-luxury goods? Have these line extensions towards different target groups created a
change in the consumers perception of these brands? In what way?
This research established that it is important for companies to have an overall consistent identity which is visible
throughout the company and to the consumers. This visibility is important because it makes the consumers aware
of the companys identity, values, products etc. Thereby, the consumers know who the company is, what they
stand for and therefore have a bigger tendency to trust it particularly if they previously have had a good
experience with the brand. All these elements help create a strong relationship and loyalty between the company
and the consumers which thereby give a high level of brand equity.
In order to see which of Pollays values are attached to the companies identity 15 commercials from each
company were analyzed. Overall koda was characterized by pragmatism, efficiency, comfortability, enjoyment
and family. Kia focuses on appeals like distinctive/ characteristic, modern and technological. Mercedes-Benz
attempts to be a brand described by values like uniqueness, tastefulness, elegance and exclusivity. Audi defines
its brand through values such as distinctive /characteristic, modern and productivity. The result of the
questionnaire showed that the respondents recognized Audis values whereas; with Kia there was a visible
difference between the brand identity and the image. The respondents recognized both Mercedes-Benz and koda
values with small deviations to what the companies wanted to portray.
From the above mentioned combined with the analysis, it can be argued that all four car brands have been aware
of their identity and the importance of it being visible towards the consumers. The process of keeping a focus on
the brand identity was evident when looking at the mainstream brands koda and Kia. koda has for many years
worked hard to change their image of being a plain car to be considered an all around car. When looking at Kias
identity it showed that in the 1990s they caused problems for themselves by going away from their main selling
points (affordable) to offering cars to other segments. This created confusion among the consumers because Kia
diverted from their known image. Therefore, the company in 2001 began to reinvent their identity.
90

In order to increase the possibility of a successful turnover, expand their market share and to extend their product
line all four companies have used line extensions. They have made use of vertical line extensions and, depending
on the company, either upscale or downscale extensions have been used. Mercedes-Benz and Audi have both
made a more affordable car in their product line and thereby used a downscale extension. Upscale extensions
have been used by koda and Kia to produce a more luxurious and larger model. However, this projects goal is to
see how the consumers perceive these models, according to the questionnaire. For the mainstream cars the
respondents see it as a bad idea for Kia to make a line extension, however they are more positive towards koda
making one, but still see it as a bad idea. According to the respondents it would not be a good initiative if
Mercedes-Benz made a cheaper model. Nevertheless, they do not have a problem with Audi producing a smaller
car. This suggests that a positive attitude towards line extension is not reserved to one category, but it can be
argued that the brands identity and image play a bigger role.
To conclude, in the questionnaire the opinions about line extension for the luxury brands (Audi , Mercedes-Benz)
are clearer in comparison to the non-luxury brands (Kia , koda). This is evident from the result, since it appears
the respondents have a clear opinion about it being a bad plan for Mercedes-Benz to produce a cheaper model.
However, in the Audi case the respondents are predominately positive towards a cheaper model. From this it can
be argued that the respondents have a clear opinion on what the companies can or cannot do within the luxury
category. In addition, when it comes to the mainstream brands the respondents are more equivocal and confused
in their answers because they state that for both Kia and koda it would be bad to produce a more luxurious car.
Still, they would not change their opinion if the companies proceed in this manner. It can be disputed that this
result is affected by the respondents having higher demands for products, they consider as luxury, and
consequently have a lower tolerance level for what these brands are allowed to do. However, due to high brand
equity it appears to be easier to downscale a product rather than upscalling it, and still maintain the brands
image.
The difference in whether Mercedes-Benz and Audi are allowed to downscale their products has to be mentioned.
It can be considered that Audi has a better image among the respondents than Mercedes-Benz and therefore,
people know what they get when buying an Audi even if it is a smaller model because the brands image is
unchangeable. On the other hand, perhaps Mercedes-Benz is more associated with big executive cars, hence a
small car would not fit the image.
Summing up, the problem formulation is answered as follows. After the two research parts have been conducted,
it has been demonstrated that two of the chosen brands belong to luxury category and the remaining two to the
non-luxury one, like it was assumed in the preliminary part. After establishing the category each brand belongs to,
the questionnaire aimed to envail the effect of vertical line extensions on the brand's identity. Based on the
91

consumers' perception of the brand image a subsequent answer can be provided. It appears that for mainstream
car brands (koda, Kia) the concept of a premium car is not so well received by the public, since the companies
have initially penetrated the middle-class market. However, the respondents' opinion will only change for the
worse in Kia's case. It can be argued that this occurs due to a higher level of brand equity for koda since they have
been on the market for longer than Kia, therefore being a more renowned brand. It must be kept in mind that
koda has gone through significant changes in the communication strategies and production, assumingly on
account of the merger with the VW Group.
In respect to the cars assigned to the luxury category (Mercedes-Benz, Audi) when it comes to downscale
extensions, it transpires that cheaper Mercedes-Benz models are not so positively encountered, since the
perception would change for the worse. On the other hand, Mercedes-Benz's adversary Audi, appears to have a
better reception on the market with their smaller and more affordable models. Per contra smaller versions of the
car models for two brands would not be considered as part of the luxury category, since it can be argued that a
general opinion on luxury cars describes them as something that relates to the feeling of a limousine.
A final comment is that it appears that line extensions can have an influence on the perception of the brand
image, meaning that this will deviate from the brand identity. This seems to be more pertinent when it comes to
car brands belonging to the luxury category, whereas the consumers' perception does not occur to be as affected
by line extensions in the mainstream category.


92

Limitations

Like any other project work, this one has its own limitations as well.
First of all, in the history and brand analysis it was difficult to gather homogeneous data of the four car brands
making it complicated to arrive at the same outcome for all the brands. This could have had an effect on the
analyzed brand identity.
Second of all, when conducting the content analysis the division of the appeals was based on the researchers
subjective perception of them. If the analysis was to be conducted by another set of researchers this division could
have looked entirely different. This subjectivity could also have had an effect on the analysis of the 60
commercials. The fact that the analysis is based on merely four peoples subjective perception of the analyzed
material, makes it difficult to generalize. If it would have been based on the perception of more people it could
have generated data with a higher level of reliability.
In the beginning of the questionnaire there should have been a proper introduction stating what the purpose is
and what types of questions the respondents are going to answer about.
Another aspect concerning the questionnaire is that there could have been added more values from the luxury
category to the questions related to Mercedes-Benz and Audi, so that the respondents could have chosen among.
In addition, for several of the questions it should not have been possible to tick off more than one option. For
example, when the respondents were asked to rank the brands compared to each other, they could have had the
possibility to place more one brand in more than just one case. This caused some confusion when looking at which
brand was seen as number one, which reflected one in the analysis part.
It should also be kept in mind that the final number of respondents might be considered insufficient. Another
aspect that constitutes a limitation is the bias in both the content analysis and the questionnaire sample. The way
in which the survey was distributed and the way in which the commercials were selected might also be argued as
factors limiting the project. In connection with the survey, some respondents have complained about the
questions, stating that they were not clear enough, so maybe a different phrasing would have been more
beneficial and would have had a higher response rate. As for the commercial number, it can be contested that the
amount might not be sufficient enough for a pattern to be established.
Finally, the fact that there is not an even number of values allocated to the two categories (luxury, non-luxury)
could have had an effect upon the content analysis and implicitly on the survey as well.
93

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99

Appendix
Appendix 1 Questionnaire
100

101

102


103

Appendix 2 Pollays Appeals


#

Pollay
Appeals

Description

1 Adventure Boldness, daring, bravery, courage, seeking adventure, thrills, or
excitement
2 Affiliation To be accepted, liked by peers, colleagues and community at
large, to associate or gather with, to be social, to join, unite or
otherwise bond in friendship, fellowship, companionship, co-
operation, reciprocity, to conform to social customs, have
manners, social graces and decorum, tact and finesse
3 Casual Unkempt, disheveled, messy, disordered, untidy, rugged,
rumpled, sloppy, casual, irregular, noncompulsive, imperfect
4 Cheap Economical, inexpensive, bargain, cut-rate, penny pinching,
discounted, at cost, undervalued, a good value
5 Community Relating to community, state, national publics, public
spiritedness, group unity, national identity, society, patriotism,
civic and community organizations or other social organizations
6 Convenient Handy, time-saving, quick, easy, suitable, accessible, versatile
7 Dear Expensive, rich, valuable, highly regarded, costly, extravagant,
exorbitant, luxurious, priceless
8 Distinctive Rare, unique, unusual, scarce, infrequent, exclusive, tasteful,
elegant, subtle, esoteric, hand-crafted
9 Durable Long-lasting, permanent, stable, enduring, strong, powerful,
hearty, tough
10 Effective Feasible, workable, useful, pragmatic, appropriate, functional,
consistent, efficient, helpful, comfortable (clothes), tasty (food),
strength, longevity of effect
11 Enjoyment To have fun, laugh, be happy, celebrate, to enjoy games, parties,
feasts and festivities, to participate
12 Family Nurturance within the family, having a home, being at home,
family privacy, companionship of siblings, kinship, getting married
13 Frail Delicate, frail, dainty, sensitive, tender, susceptible, vulnerable,
soft, genteel
14 Freedom Spontaneous, carefree, abandoned, indulgent, at liberty,
uninhibited, passionate
15 Healthy Fitness, vim, vigor, vitality, strength, heartiness, to be active,
athletic, robust, peppy, free from disease, illness, infection, or
addiction
16 Humility Unaffected, unassuming, unobtrusive, patient, fate-accepting,
resigned, meek, plain-folk, down-to earth
17 Independence Self-sufficiency, self-reliance, autonomy, unattached, to-do-it
104

yourself, to do your own thing, original, unconventional, singular,
nonconformist
18 Magic Miracles, magic, mysticism, mystery, witchcraft, wizardry,
superstitions, occult sciences, mythic characters, to mesmerize,
astonish, bewitch, fill with wonder
19 Maturity Being adult, grown-up, middle aged, senior, elderly, having
associated insight, wisdom, mellowness, adjustment, references
to ageing, death, retirement, or age related disabilities or
compensations.
20 Modern Contemporary, modern, new, improved, progressive, advanced
introducing, announcing
21 Modesty Being modest, nave, demure, innocent, inhibited, bashful,
reserved, timid, coy, virtuous, pure, shy, Virginal
22 Morality Humane, just, fair, honest, ethical, reputable, principled,
religious, devoted, spiritual
23 Natural References to the elements, animals, vegetables, minerals,
farming, unadulterated, purity (of product), organic, grown,
nutritious
24 Neat Orderly, neat, precise, tidy, clean, spotless, unsoiled, sweet-
smelling, bright, free from dirt, refuse, pests, vermin, stains and
smells, sanitary
25 Nurturance To give gifts, especially sympathy, help love, charity, support,
comfort, protection, nursing, consolation, or otherwise care for
the weak, disabled, inexperienced, tried, young, elderly, etc
26 Ornamental Beautiful, decorative, ornate, adorned, embellished, detailed,
designed, styled
27 Plain Unaffected, natural, prosaic, homespun, simple, artless,
unpretentious
28 Popular Commonplace, customary, well-known, conventional, regular,
usual, ordinary, normal standard, typical, universal, general,
everyday
29 Productivity References to achievement, accomplishment, ambition, success,
careers, self-development, being skilled, accomplished,
proficient, pulling your weight, contributing, doing your share
30 Relaxation Rest, retire, retreat, loaf, contentment, be at ease, be laid-back,
vacations, holiday, to observe
31 Safety Security (from external threat), carefulness, caution, stability,
absence of hazards, potential injury or other risks, guarantees,
warranties, manufacturers' reassurances
32 Security Confident, secure, possessing dignity, self-worth, self-esteem,
self-respect, peace of mind
33 Sexuality Erotic relations, holding hands, kissing, embracing between
lovers, dating, romance, intense sensuality, feeling sexual, erotic
behavior, lust, earthiness, indecency, attractiveness of clearly
sexual nature
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34 Status Envy, social status or competitiveness, conceit, boasting, prestige,
power, dominance, exhibitionism, pride in ownership, wealth
(including the sudden wealth of prizes), trend setting, to seek
compliments
35 Succorance To receive expressions of love (all expressions except sexuality),
gratitude, pats on the back, to feel deserving
36 Tamed Docile, civilized, restrained, obedient, compliant, faithful, reliable,
responsible, domesticated, sacrificing, self-denying
37 Technological Engineered, fabricated, formulated, manufactured, constructed,
processed, resulting from science, invention, discovery, research,
containing secret ingredients
38 Traditional Classic, historical, antique, legendary, time-honored,
longstanding, venerable, nostalgic
39 Untamed Primitive, untamed, fierce, course, rowdy, ribald, obscene,
voracious, gluttonous, frenzied, uncontrolled, unreliable, corrupt,
obscene, deceitful, savage
40 Vain Having a socially desirable appearance, being beautiful, pretty,
handsome, being fashionable, well groomed, tailored, graceful,
glamorous
41 Wisdom Knowledge, education, awareness, intelligence, curiosity,
satisfaction, comprehension, sagacity, expertise, judgment,
experience
42 Youth Being young or rejuvenated, children, kids, immature,
underdeveloped, junior, adolescent generation is shown through





106

Appendix 3 Car commercials

Skoda Commercials
1. The new Skoda Octavia 2013 Amazing everyday
http://www.youtube.com/watch?v=c2na2ZqM72I
2. Skoda Octavia Great Escape
http://www.youtube.com/watch?v=MXm5YFPaffs&list=PLECF0D876607BF847
3. Skoda Octavia Built to enjoy
http://www.youtube.com/watch?v=czZgGdVO9vo&list=PLECF0D876607BF847
4. Skoda Fabia Life of Jack
http://www.youtube.com/watch?v=tTsUZlTzRl8
5. Skoda Fabia Cake
http://www.youtube.com/watch?v=NwBE1l6QexU
6. Skoda Fabia Made of meaner stuff
http://www.youtube.com/watch?v=BQq_Rzn-yu0
7. Skoda Australia Sand Car
http://www.youtube.com/watch?feature=endscreen&v=rWCahgsER0M&NR=1
8. Skoda Citigo Your new communication tool
http://www.youtube.com/watch?v=nvn9-esY9qg
9. Skoda Citigo 5 door Trailer
http://www.youtube.com/watch?v=L7mg8EAViDM
10. Skoda Tour de France
http://www.youtube.com/watch?v=inxqIa8jgA4
11. Skoda Rapid
http://www.youtube.com/watch?v=vuQkNehyWMo
12. Skoda Superb
http://www.youtube.com/watch?v=_EjpI-SeQ1I
13. Skoda Superb Combi mood
http://www.youtube.com/watch?v=e1YhCS3tK-k
14. Skoda 4x4 range snow commercial
http://www.youtube.com/watch?v=lJmMrU3Jf8E
15. Skoda repositioning Ad
http://www.youtube.com/watch?v=ZWTJ_TPraLQ

Kia Commercials
1. In my mind 2013 Kia Soul Hamster Commercial
http://www.youtube.com/watch?v=o0B5vuAYk94
2. Space Babies 2014
http://www.youtube.com/watch?v=t535BjVmXq8
3. Super Bowl 2012
http://www.youtube.com/watch?v=Y0T7p5aIGRU
4. Kia Forte 2013 Super Bowl Ad Hotbot Female Robot
http://www.youtube.com/watch?v=5wrYAD8X2rI
5. Kia Maniac
http://www.youtube.com/watch?v=QOyQK5jBalE
107

6. 2014 Kia Sorento Landscape Commercial
http://www.youtube.com/watch?v=qe3J-dH-eFI
7. New Kia Sportage Australian Commercial The Message
http://www.youtube.com/watch?v=FN2Q7HTyPZQ
8. Kia 2011 One Epic Ride
http://www.youtube.com/watch?v=8DDzjtnick0
9. Nathan Barnatt Kia Commercial
http://www.youtube.com/watch?v=SWYYsENyk30
10. Kia Goth Commercial
http://www.youtube.com/watch?v=HjiKv4A-7OY
11. 2014 Kia Sorento Commercial
http://www.youtube.com/watch?v=Fp-uTgwrvA4
12. Man of now
http://www.youtube.com/watch?v=9UB68ryn35s
13. 2014 Kia Cadenza
http://www.youtube.com/watch?v=USTmQfEHFek
14. Michelle Wie 2012
http://www.youtube.com/watch?v=AdveUk6FP3E
15. 2013 Kia Optima SX
http://www.youtube.com/watch?v=0CYxIiIkEMk

Mercedes-Benz Commercials
1. The New C 63 AMG Coup
http://www.youtube.com/watch?v=wzsz0W2ZZF0
2. Sorry
http://www.youtube.com/watch?v=BtbjCWLuIzc
3. Super Bowl 2011
http://www.youtube.com/watch?v=4h4Ne4go3F4
4. Sunday Driver
http://www.youtube.com/watch?v=rSMQM4ASGRg
5. Memories
http://www.youtube.com/watch?v=-UNrabsehsM
6. Blond in library
http://www.youtube.com/watch?v=0ZE3ccT7VC8
7. Mercedes Benz E Class Coupe
http://www.youtube.com/watch?v=tQpun_wTyu4
8. A Class TV Commercial Pulse
http://www.youtube.com/watch?v=XS6S8qSMvBE
9. Mercedes Commercial with the devil
http://www.youtube.com/watch?v=hxclYyoXc-M
10. 2013 New Mercedes CLA in detail
http://www.youtube.com/watch?v=V6_85cSOIcE
11. Christmas
http://www.youtube.com/watch?v=2SaCTz21wwQ
12. The 2013 Mercedes-Benz ML63 AMG Commercial
http://www.youtube.com/watch?v=lGgxIUK9VG8
13. Decision
http://www.youtube.com/watch?v=2uE67arNYhM
108

14. 2014 E-Class Commercial Hard to Imagine
http://www.youtube.com/watch?v=4QmMZwfMlDU
15. Escaped to the mountains
http://www.youtube.com/watch?v=_i5VnEsuvUo
Audi Commercials
1. Audi Goodnight
http://www.youtube.com/watch?v=Dvw9N-P7mKU
2. Super Bowl 2011 Prison break
http://www.youtube.com/watch?v=rmROGsIN12M
3. Prom
http://www.youtube.com/v/ANhmS6QLd5Q
4. Funny Ferrari + Audi R8 Exotic Car Rental Sexy Commercial
http://www.youtube.com/watch?v=pH7cvIiuRg8
5. Freedom
http://www.youtube.com/watch?v=8f-1QHYiJJ4
6. Audi A1 Sportback TV Commercial Good morning
http://www.youtube.com/watch?v=vgoNSbBf0OQ
7. Audi A6 - Alien
http://www.youtube.com/watch?v=89uJz_us4PM
8. Audi the spell 2010 commercial
http://www.youtube.com/watch?v=XfTyVL9TQmA
9. 2013 Audi exclusive commercial
http://www.youtube.com/watch?v=lkNrQdfJiLY
10. Audi A1 TV Ad Car Commercial 2012
http://www.youtube.com/watch?v=SVAlAXOcEU0
11. Audi Brand Film 2012
http://www.youtube.com/watch?v=xNaNTYqSo5k
12. Zachary Quinto vs. Leonard Nimoy: The Challenge
http://www.youtube.com/watch?v=WPkByAkAdZs
13. Super Bowl 2009
http://www.youtube.com/watch?v=Ey-CVisKFEw
14. Audi A6 The road
http://www.youtube.com/watch?v=KUv5XZoPQ7k
15. New Audi R8 V10 plus 2013 commercial
http://www.youtube.com/watch?v=e0gvqLZIQss







109

Appendix 4 Questionnaire total results
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111

112

113

114

115

116

Appendix 5 Questionnaire age group 41+
117

118

119

120

121

122





123

Appendix 6 Questionnaire, do you own a car
124

125

126

127

128

129