Global Prestige: An Examination Of The Role Of Brand Reputation On Products' Interna-tionalization Success. -the Case Of Mercedes In China Market

INTRODUCTION

Background Information

Internationalisation has been the order of the day for most big companies in the world.  Companies in almost all industries are internationalising today and one of such is the automobile industry. Mercedes for instance is one of the companies in the automobile industries that has internationalised widely to almost all countries in the world. Mercedes or Mercedes-Benz, as sometimes referred to, is a German automobile company headquartered in Stuttgart and known for its manufacturer of luxury cars, Coaches, Trucks and buses (Yao & Schwarz, 2017). Mercedes Benz was founded in 1926 by Karl Benz and Gottlieb Daimler and for the 90 years in which it has been operational, it has internationalised from just serving the German market to its current worldwide operational status (McDermott, 2014). Viewed from certain perspective, it can easily be assumed that Mercedes Benz’s elegant brand is behind its efficiency in internationalisation. For instance, in 2014 alone Mercedes registered a growth of 18% and was ranked among the fastest growing top brands (Yao & Schwarz, 2017). This growth was somehow linked to the company slogan “the best or nothing”. This leads to the question: How influential is the Mercedes Benz’s brand in the company’s internationalisation? This study will serve to provide an answer to this question.

Study Aims and Objectives

The aim of this study is to assess the role of brand reputation in Mercedes’ internationalisation. To ensure that this aim is adequately explored a number of objectives have been formulated to guide the study. These objectives are as follows:

1. To critically examine the relationship between brand image and consumer purchase of Mercedes in China market
2. To critically examine the relationship between brand identity and consumer purchase of Mercedes in China market
3. To examine whether perceptions of luxury influences consumer purchase of the Mercedes brand reputation in China market

Research Questions

Based on these objectives, the study questions that arise are

1. How does the brand image of Mercedes influence consumer purchase of the brand in China market?
2. What is the association between brand identity and consumer purchase of the brand in China market?
3. How does the consumer perceptions of luxury influence consumer purchase of the Mercedes brand reputation in China market?

These research questions are feasible for this research and these will be successfully answered through empirical research where a survey will be conducted and customers of Mercedes will be targeted as the sample for the primary research.

LITERATURE REVIEW

According to Marinova, Nummela and Larimo (2017), internationalisation as a topic has received notable coverage. This section serves to discuss the theories as well as past studies that have touched on this field of research.

Theoretical Framework: Eclectic Paradigm

This study will be premised on the theory of Eclectic Paradigm. Eclectic Paradigm or the OLI-Model is an economic theory brought forward by John Dunning in 1979 (Dunning, 1980). This theory posits that any business transaction in a market is argued as worth only if the cost of the transaction is comparatively higher that the internal costs (Arnett &Madhavaram, 2012). That is to say, a business transaction is only worth if it stands to be profitable. As such, a company’s operations / entry into any market is only worth if it stands to remit some profit to the company.  In operating in international markets, what is important is the ability of the customers to purchase from the firm. The reputation of the brand can impact significantly on the performance of the firm in these markets based on how consumers perceive and interact with the brand.

 

Past Studies

So much has been touched on this topic going by the past studies. Past studies have outlined a number of factors as being helpful with foreign market entry and survival. Some of these points include (a) brand reputation, (b) customer preference (c) psychological satisfaction that comes with brand

Brand Reputation

It is argued that brand reputation can be a facilitator in internationalisation. That is to say, it can ease a company’s entry into new markets. Using IKEA as an example, the company’s brand reputation has been acknowledged for its easy entry into the Indian market which is one of its biggest markets now (Ehsan Ullah, Karlsson & Dada Olanrewaju, 2016). IKEA is a Swedish company well known for its reputable flat-pack furniture (Baxter & Landry, 2017). This makes brand reputation a factor worth considering as far as internationalisation is concerned.

Customer Preference

Customer preference has as well been outlined as a key contributor to internationalisation efficiency. Companies often move into new markets to boost sales. Having a huge customer base/customer preference is therefore a good recipe for efficiency of internationalisation. According to Marinova, Nummela and Larimo (2017) customer preference is a key factor in internationalisation as it dictates the futurity of company sales in the new market. Johanson and Mattsson (2015) supports this view by arguing that customer preference is directly proportional to sales as customer only buy what they like/love. As such, customer preference is a key factor worth consideration for successful internationalisation

Psychological Satisfaction Associated With the Brand

According to some studies, the psychological satisfaction that comes with brand has a hand in internationalisation efficiency. This factor has been associated with luxury brands watches like Patek Phillipe and Rolex among other prestigious brands (Carneiro et al, 2014; Chandon, Laurent & Valette-Florence, 2016). Self-actualisation stage of the Abraham Maslow’s hierarchy of needs argues that humans at times buy goods/services as a show-off to others that they have achieved the best lifestyle as judged by the society (Thomas & Millar, 2013). Some studies have proved that most wrist watch customers buy Patek Phillipe and Rolex watches due to the elegance associated with the watch brands and this helped the brands work their ways to the global market (Chandon et al, 2016). Could this be similar for Mercedes Benz?

Research Gap

There is a significant amount of research conducted on the relationship between brand reputation and the performance of the firm in international markets. At the same time, it has been found that a good reputation drives consumers to engage in purchase of the brand in international markets driving the sales and profitability of the firm. Along this perspective therefore, the study will examine the role of brand reputation and consumer purchase in international markets. The following hypotheses will be studied:

H1:  The brand reputation has a significant impact on consume purchase in international markets.

 

METHODOLOGY

Research approach

This study will adopt a quantitative research approach in which quantitative data will be collected from the market in order to understand and test different hypotheses (Bryman, 2012). This will be important in helping to identify whether there are relationships that exist between brand reputation and consumer purchase in international markets in the context of Mercedes. Correlation among brand reputation and consumer purchase will be performed where SPSS will be used for analysis.

Research Strategy

This study will use a survey research strategy, because it seeks to gather and analyse data from a sample of respondents in the market which will then be generalised to the entire study population (Cohen, Manion, & Morrison, 2013). The choice of survey strategy is based on the fact that it allows for the generalization of the study findings. At the same time, it is versatile and flexible in helping to conduct the study (Kothari, 2004 ). This therefore ruled qualitative strategy as inappropriate because it is more descriptive in nature.

Data Collection

Both primary and secondary data will be used in this study. Primary data will be collected via questionnaires whereas secondary data from books, journals, company websites as well as industry publications and reports (Salter & Mutlu, 2013). A total of 100 Mercedes Benz customers from China will be used which is representative of the population because Mercedes Benz is a luxury car which is not owned by many and only few hundreds have this car. The researcher will take time to find these customers both offline and online. For online, Survey Monkey will be used while for offline, the researcher will visit outlets and showrooms of this brand. Closed ended questionnaires are preferred because of ease of data collection and analysis quantitatively (Thomas, Nelson, & Silverman, 2011).

 

Timetable

Patch1	IRP Proposal ?1000?	10th June
Patch2	Research aims and objectives ?5000?	15th July
Patch3a	Research Methodology?plus ethics form?2000?	4th August
Patch3b	Data Collection	10th August
Patch4	Data analysis and interpretation?3000?	20th August
Patch5	Conclusions and Recommendations?1000?	18th September

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

REFERENCES

Arnett, D.B. and Madhavaram, S. (2012). Multinational enterprise competition: grounding the eclectic paradigm of foreign production in resource-advantage theory. Journal of Business & Industrial Marketing, 27(7), pp.572-581.

Baxter, M., & Landry, A. (2017). IKEA: product, pricing, and pass-through. Research in Economics.

Bryman, A. (2012). Social Research Methods. Oxford : Oxford University Press.

Carneiro, J., Tonoli, G., Barbosa Matos Peixoto, T., Magalhães Costa, R., de Matos Domingues, F., Falcão Maranhão, C., & David Tostes dos Santos, P. (2014). Internationalizing concept or product? H. Stern Jewelers in Asia. Management Decision, 52(9), 1703-1723.

Chandon, J. L., Laurent, G., & Valette-Florence, P. (2016). Pursuing the concept of luxury: Introduction to the JBR Special Issue on “Luxury Marketing from Tradition to Innovation”. Journal of Business Research, 69(1), 299-303.

Cohen, L., Manion, L., & Morrison, K. (2013). Research Methods in Education. New York: Routledge.

Dunning, J. (1980). Toward an eclectic theory of international production: some empirical tests. Journal of International Business Studies 11, pp 9–31

Ehsan Ullah, E., Karlsson, B., & Dada Olanrewaju, D. (2016). Foreign Market Entry Srategies.: A Case study of IKEA entering Indian Market.

Johanson, J., & Mattsson, L. G. (2015). Internationalisation in industrial systems—a network approach. In Knowledge, Networks and Power (pp. 111-132). Palgrave Macmillan UK.

Kothari, C. R. (2004 ). Research Methodology: Methods and Techniques. London: New Age International.

Marinova, S., Nummela, N., & Larimo, J. (2017). Value Creation in the Internationalization of SMEs. In Value Creation in International Business (pp. 1-15). Springer International Publishing.

McDermott, M. C. (2014). BMW and Mercedes-Benz first international plant location decision: the site selection and negotiation process in the USA. International Journal of Automotive Technology and Management 20, 14(2), 172-193.

Salter, M. B., & Mutlu, C. E. (2013). Research Methods in Critical Security Studies: An Introduction. London: Routledge,.

Thomas, J. R., Nelson, J. K., & Silverman, S. J. (2011). Research Methods in Physical Activity. New York: Human Kinetics.

Thomas, R., & Millar, M. (2013). The effects of material and experiential discretionary purchases on consumer happiness: Moderators and mediators. The Journal of psychology, 147(4), 345-356.

Yao, Q., & Schwarz, E. (2017). Transnational venue management corporations and local embeddedness: a case study on the Mercedes-Benz Arena in Shanghai, China. International Journal of Sports Marketing and Sponsorship, 18(1).