Success Factors for Automotive Premium Brands at the Beginning of

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“Work in Progress” Paper – PhD Project:
Success Factors for Automotive Premium Brands
at the Beginning of the 21st Century
in Response to the Change of Luxury and Societal Changes
Nadine Adam
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University: University of the West of Scotland, School of Business and Enterprise, Paisley, UK
Supervisors: Dr. Declan Bannon, University of the West of Scotland and Franco P. Rota, Hochschule der
Medien Stuttgart
E-mail contact: [email protected]
Key Words: Luxury, premium automobiles, marketing, success factors
The marketing strategies of premium car manufacturers like e.g. Mercedes-Benz, BMW, and
Audi had traditionally been rather status and performance driven in the past decades - a
concept still working very well in emerging markets like Russia or China today.
However, the idea of luxury in industrialised democracies like Europe, Japan, and the USA is
changing due to maturing markets, new status concepts, and changing societal value systems.
Trend researchers agree that in these mature societies a tendency towards a more intelligent,
more private, more immaterial, and more value based way of luxury is noticeable (cf. American
Express, 2006; Enzensberger, 1996; Kapferer and Bastien, 2009; Merten, 2009; Opaschowski,
2008; Opaschowski, 2009). A reason for this development might be the experience of e.g.
European luxury consumers, who have reached a standard of wealth in which pure acquisition
is not a driving motive anymore (Merten, 2009). The rather critical assessment of wealth and
capitalism after the oil crisis in 1972/1973 and the economic crisis in 2008/2009 might be
another factor influencing the new perception of luxury (Opaschowski, 2009). In contrast to
that emerging countries still show the tendency to rather ostentatious luxury consumption
behaviour (Grzanna, 2010a; Grzanna, 2010b).
Apart from that several trends are reshaping the automotive industry at the moment such as
the sustainability trend (American Express, 2006; Ernst & Young, 2010; Lubin and Esty, 2010;
Otto (GmbH & Co KG), 2011)), new power-train technologies (Herz, 2010), new mobility
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solutions (Rees, 2010), and digitalisation (Kapferer and Bastien, 2009; Kotler, Kartajaya and
Setiawan, 2010).
In view of this changing business environment a review and adaption of the positioning and
marketing strategy of automotive premium brands is crucial.
To analyse this research problem this study based on the approach of grounded theory (cf.
Glaser and Strauss, 2007; Nüesch and Vetterli, 2010; Remenyi et al., 2010) was conducted. For
this research project an interdisciplinary literature review and a qualitative expert interview
poll with 34 experts from 9 different countries and 8 industries and science were performed.
Based on the findings conjectures regarding the future of automotive luxury and future
success factors for automotive premium brands were derived.
The study proofed a paradigm change in luxury consumption and the understanding and usage
of premium automobiles and gives recommendations for luxury and premium brands in
general, but automotive premium brands in particular in this context.
In the following the basic outline of the PhD project is presented.
The Definition of Luxury
The first major publication about luxury research was Thorstein Veblen´s book “The Theory of
the Leisure Class” of 1899 (Bruhn, Kirchgeorg and Meier, 2007) analysing and criticising the
ostentatious, status driven consumption of his time (Veblen, 2007).
The term “luxury” originates from the Latin word “luxus”, which stands for “luxury, excess”
(Merriam-Webster, 2012). In general, the term luxury means:
“1archaic: lechery, lust
2: a condition of abundance or great ease and comfort […]
3 a: something adding to pleasure or comfort but not absolutely necessary […] b: an
indulgence in something that provides pleasure, satisfaction, or ease […]“
(Merriam-Webster, 2012)
So luxury has positive and negative connotations. However, today the perception of luxury
seems to change to a rather positive image (Heine, 2010).
All of the definitions of luxury have in common that luxury is always associated with something
which is “not absolutely necessary”, i.e. more than someone needs.
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The Relativity and Individuality of Luxury
Needs are very subjective and change over time, though. They depend on culture, societal,
and social standards, level of wealth, consumption habits, the social and ethical codes of a
certain society or time (Esch, 2009; Kapferer and Bastien, 2009; Merten, 2009) and the value
concept of a person (Merten, 2009).
The “Future 100”1 study by American Express in 2006 showed that luxury consumers seem to
be passing different levels of luxury. After an “acquisitive luxury” phase, in which status
symbols play a significant role (see e.g. the post-war society of the 1950s or emerging
countries today) further phases follow eventually leading to level four: “meditative luxury”. On
this highest luxury level immaterial factors like experiences and self-realization supported by
luxury consumption are finally more important than owning luxury products (see e.g. Europe
or Japan today). (American Express, 2006; Merten, 2009)
Today a phase of a more sustainable, more socially acceptable way of luxury is coming to the
foreground in mature societies (Merten, 2009).
The idea of this phase model is based on Maslow´s theory of the “hierarchy of needs”
according to which an individual will always first satisfy his or her basic needs like hunger or
sleep before it goes for higher targets like wealth, acceptance, or “self-actualization” in the
end (Kotler and Keller, 2006). In general the attitude towards luxury changes the higher his or
her social status is getting (Merten, 2009). Although Maslow´s model is still suitable to explain
the major mechanisms of societal or luxury evolution, it might not be variable enough to
explain the complexity of the behaviour of mature, modern societies anymore.
The relativity of luxury (Merten, 2009; Esch, 2009; Kapferer and Bastien, 2009; Berry, 1994)
was also confirmed by the experts, which were interviewed for this study (Adam, 2011t; Adam,
2011x; Adam, 2011m; Adam, 2011e; Adam, 2012b). Moreover, the experts also autonomously
mentioned and supported the idea that luxury consumers were passing different levels of
luxury consumption over time developing from rather materially oriented, ostentatious
luxury concepts to rather immaterial ones (Adam, 2011q; Adam, 2011aa; Adam, 2011n; Adam,
2011v; Adam, 2011k).
This relativity and individuality of luxury is also the reason why there is not one ultimate
definition of luxury but a multitude respectively a segregational interpretation.
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Note: The 'Future 100' are 100 opinion leaders from different industries which were interviewed for the „21
Centurion Living Report“ commissioned by American Express in 2006.
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The Evolution of Luxury
From a historic-societal perspective each society and era therefore had its own understanding
of luxury, which was changing in relation to the ethical, political, hierarchical, and cultural
norms of its time. Due to its exclusive character and its image of being not virtuous (see the
Roman´s image of luxury) there have always also existed moral criticism of luxury and
sometimes even legal restrictions. (see e.g. Berry, 1994; Enzensberger, 1996; Roos, 2009)
Nevertheless, luxury has also always been regarded as a driver of sophistication and wealth.
The latter, more positive interpretation was reinforced in the 19th century in the time of the
development of capitalism and global trade (see e.g. Berry, 1994; Kapferer and Bastien, 2009;
Meyer, 2003). Moreover, luxury is not functioning as a social, hierarchical symbol anymore
(Kapferer and Bastien, 2009). Consequently from a historic perspective the attitude towards
luxury in general has become much more positive and democratic today than ever before.
Especially since the beginning of the 1990s there is a boom in the luxury sector (Truong et al.,
2008). The growth in the emerging markets is expected to further fuel this boom.
Nevertheless, especially in times of crisis inequality discussions still arise and social criticism is
high (Ernst & Young, 2010; Sandmaier, 2010).
The Democratisation and Diversification of Luxury
The democratisation of luxury is the perhaps most significant trend with regards to luxury
today: With rising levels of wealth in mature markets former luxury brands have become
achievable to the middle-class as well. To them “trading up” (Silverstein and Fiske, 2008) in the
one or the other product category has become part of their little daily-life luxuries. (Silverstein
and Fiske, 2008)
Many companies introduced a number of democratised premium goods now (see e.g. the
entry model portfolio extensions of the premium car manufacturers) to meet this trend
(Truong, McColl and Kitchen, 2009). The term used for this phenomenon in recent literature is
“new luxury goods” (Truong, McColl and Kitchen, 2009).
Moreover, the diversification of luxury consumption is increasing: In times of a hybrid
consumption behaviour (Merten, 2009) the individual combination of luxury and mass
products in not uncommon (Silverstein and Fiske, 2008).
In addition, there are cultural differences influencing luxury consumption – a factor which
especially globally operating companies like automotive premium manufacturers must pay
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highest attention to. In a strongly simplified way the following major cultural tendencies are
noticeable:
While the history of a brand and the details of a product are major aspects of European luxury
consumption, luxury is rather associated with comfort and size in the USA (Rosengarten and
Stürmer, 2005; Adam, 2010a).
Unlike mature markets like Western Europe the tendencies towards a more demonstrative
way of luxury is prevalent in emerging societies like the Chinese, who already buy more new
cars than any other nation in the world, or the Russians (Grzanna, 2010a; Grzanna, 2010b).
This might be an overreaction after the experience of lack in their past and can again be
explained with the previously described model of different luxury levels, in which emerging
markets would still be on one of the lower levels.
The democratisation and diversification of luxury (cf. Silverstein and Fiske, 2008) was
confirmed by the experts (Adam, 2010a; Adam, 2011t; Adam, 2011q; Adam, 2011ac; Adam,
2011u; Adam, 2011c; Adam, 2011i).
However, from a managerial standpoint Prof. Dr. Stefan Hencke warned of the potential risks
of the resulting democratisation of luxury and premium brands. He saw the risk for a brand like
e.g. Porsche that the new spread of their portfolio might dilute their niche image (Adam,
2011k). However, according to J. Justus Schneider, the dilemma in this context is the challenge
to diversify the product portfolio to take advantage of these market potentials but at the same
time to make no compromises regarding the brands luxury or premium standards (Adam,
2011y).
The Definition of Automotive Premium Brands and their Differentiation
from the Luxury Segment
There are different approaches for the definition and categorization of automotive premium
brands.
The word premium means “first-class” or “high-quality” and is derived from the English
language (Rosengarten and Stürmer, 2005).
Esch (2009) described a brand pyramid according to Jean-Noël Kapferer with mass products at
the bottom. Above that premium products as serial products of high-quality like vehicles by
Mercedes-Benz, BMW, or Audi follow. Then luxury brands like Rolls-Royce with their limited
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serial products follow. And at the top of his brand pyramid there are one of a kind products
like a drawing by a famous artist . (Esch, 2009)
Moreover, Diez (2006) defined a premium brand as follows:
“A premium brand is to be understood as a brand, which succeeds in achieving a
higher price for its products in the market than other brands with products, which
have comparable tangible functions.“2 (Diez, 2006)3
This brand segmentation was also supported by the interviewed experts (Adam, 2011y; Adam,
2011ad; Adam, 2011aa; Adam, 2011n; Adam, 2011m; Adam, 2011j; Adam, 2011b; Adam,
2011l; Adam, 2011p; Adam, 2011u; Adam, 2011a; Adam, 2011c; Adam, 2011ac; Adam, 2011k;
Adam, 2012a).
Thereby the higher exclusivity of luxury vs. premium brands was regarded as the most
significant factor for their differentiation from each other. ( (Adam, 2011y; Adam, 2011n;
Adam, 2011ac; Adam, 2011b; Adam, 2011p; Adam, 2011u; Adam, 2011a). Premium in contrast
to luxury brands were also characterised by trying to occupy every segment but at the top of
each segment (Adam, 2011ac).
However, several experts also addressed an often unclear differentiation between luxury and
premium and an inflationary use of the term “luxury” especially during the boom of luxury
over the past years (Adam, 2011n; Adam, 2011z; Adam, 2011w; Adam, 2011e; Adam, 2011ac;
Adam, 2011s; Adam, 2011u).
Diez (2006) and Rosengarten & Stürmer (2005) agreed in defining not only Mercedes-Benz,
BMW, and Audi, but also Porsche as the major European automotive premium brands in terms
of brand value and market shares. Jaguar is a premium brand, too, but with a less global
business strategy than e.g. Mercedes-Benz, BMW, and Audi (Diez, 2005). This set of relevant
European automotive premium brands was also confirmed in the open-ended question to the
interviewed experts (Adam, 2011d; Adam, 2010a; Adam, 2011u; Adam, 2011ab; Adam, 2011x;
Adam, 2011ac; Adam, 2011ad; Adam, 2011y; Adam, 2011aa; Adam, 2011n; Adam, 2011l;
Adam, 2011z; Adam, 2011m; Adam, 2011j; Adam, 2011v; Adam, 2011b; Adam, 2011s; Adam,
2011k; Adam, 2011c; Adam, 2011a; Adam, 2011g; Adam, 2011p; Adam, 2012a).
2
Note: Translated this means: A premium brand is regarded a brand, which achieves a higher price in the market
than other brands with products of comparable, tangible functions.
3
Own translation. Original citation: “Unter einer Premiummarke ist eine Marke zu verstehen, der es gelingt bei
ihren Produkten einen höheren Preis im Markt durchzusetzen als andere Marken mit Produkten, die vergleichbare
tangible Funktionen aufweisen.“ Willi Diez, Automobil-Marketing: Navigationssystem für neue Absatzstrategien,
5th ed. (Landsberg am Lech: mi-Fachverlag, Redline GmbH, 2006), p. 550.
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This work concentrates on European premium brands. From a global perspective Toyota´s
high-end brand Lexus would also have to be named as a premium brand (Rosengarten and
Stürmer, 2005). 52% of the experts also named Lexus and 22% Infiniti as major automotive
premium brands, however according to 48% with a much younger history and a much lower
relevance in Europe so far (Adam, 2011d; Adam, 2010a; Adam, 2011x; Adam, 2011ad; Adam,
2011n; Adam, 2011m; Adam, 2011ac; Adam, 2011u; Adam, 2011ab; Adam, 2011a; Adam,
2012a; Adam, 2011g)).
Endurance and Reinforcement of Classic Luxury Values: Exclusivity,
Quality, Design, Authenticity, Heritage, Craftsmanship, Innovation, and
Connoisseurship
The expert interviews led to a comprehensive overview of traditional luxury values, the
endurance of which was confirmed by both the literature review (see e.g. American Express,
2006) and the experts (Adam, 2011d; Adam, 2011e). Rather classic, fundamental luxury
values and luxury product attributes mentioned by most of the experts were exclusivity
(Adam, 2010a; Adam, 2011t; Adam, 2011d; Adam, 2011y; Adam, 2011n; Adam, 2011z; Adam,
2011e; Adam, 2011ac; Adam, 2011b; Adam, 2011p; Adam, 2011u; Adam, 2011a; Adam, 2011c;
Adam, 2012b), and affiliation to a certain exclusive or avant-garde group (Adam, 2011t;
Adam, 2011j; Adam, 2011b; Adam, 2011p; Adam, 2011ab), quality (Adam, 2010a; Adam,
2011q; Adam, 2011d; Adam, 2011n; Adam, 2011z; Adam, 2011w; Adam, 2011o; Adam, 2011e;
Adam, 2011ab; Adam, 2011h; Adam, 2011c; Adam, 2011r) and justification of a higher price
by higher value (Adam, 2011t; Adam, 2011b; Adam, 2011p), beautiful design (Adam, 2010a;
Adam, 2011z; Adam, 2011o; Adam, 2011v; Adam, 2011b; Adam, 2011r; Adam, 2012a) and
mindfulness to details like e.g. materials or tactile characteristics (Adam, 2011y; Adam,
2011w; Adam, 2011r; Adam, 2012b), authenticity (Adam, 2010a; Adam, 2011q; Adam, 2011m;
Adam, 2011o; Adam, 2011e; Adam, 2011u; Adam, 2011h; Adam, 2012a), origin respectively
heritage (Adam, 2011z; Adam, 2011o; Adam, 2011ac; Adam, 2011u; Adam, 2011h; Adam,
2011r), timelessness (Adam, 2011e; Adam, 2011r) and culture (Adam, 2011z), craftsmanship
(Adam, 2011y; Adam, 2011z; Adam, 2011e; Adam, 2011u; Adam, 2011c) and tailor-made
production (Adam, 2011u; Adam, 2011c), and innovation (Adam, 2010a; Adam, 2011t; Adam,
2011q; Adam, 2011z; Adam, 2011e; Adam, 2011r; Adam, 2012b).
According to Georges Kern and Vittorio Braguglia especially quality is presupposed and
regarded as essential for any premium and luxury brand today (Adam, 2011o; Adam, 2011b).
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After a decade of fake luxury goods in the 1990s (Adam, 2011q) and probably reinforced by
the world economic crisis of 2008/2009 (Adam, 2011u) several experts reported that an
increased importance and a reorientation towards these original and often so-called “true”
luxury values was noticeable (Adam, 2010a; Adam, 2011q; Adam, 2011z, Adam, 2011u; Adam,
2011c).
(Re-) Pronounced Modern Values: Self-Expression, Individuality, and CoCreation
Apart from these reinforced, rather traditional luxury values, there are further luxury values of
growing significance for developed, modern societies today. One of these major consumer
trends the experts mentioned was the trend towards identification (Adam, 2011m), selfexpression (Adam, 2011d; Adam, 2010a; Adam, 2011ac; Adam, 2011u), and individuality
especially in the luxury segment (Adam, 2011d; Adam, 2011n; Adam, 2011y; Adam, 2011o;
Adam, 2011e; Adam, 2011ac; Adam, 2011v; Adam, 2011k; Adam, 2011u; Adam, 2011f; Adam,
2012b; Adam, 2012a) but also in the mass segment (Adam, 2011y; Adam, 2011ac; Adam,
2011p). In this context a car was regarded as an image building factor (Adam, 2011d; Adam,
2011y; Adam, 2011n; Adam, 2011o) and as an “individual space” (Adam, 2011y). Luxury
objects are expected to give the opportunity to reflect individual style today (Adam, 2011e).
This was said to have changed from a mere product to a customer orientation over the past
decades (Adam, 2011d). As a proof for this development the increasing demand for niche
products and extra equipment was mentioned (Adam, 2011k).
From a managerial standpoint several experts therefore recommended to do more limited
editions in response to the individuality trend (Adam, 2011d; Adam, 2011o; Adam, 2011v).
Furthermore, after centuries of a rather aristocratic, producer-dominated luxury concept,
customers have been empowered (Adam, 2011s) and have become much more demanding
towards the manufacturers today (Adam, 2011j).
For this reason and with the help of new dialogue-based, digital media, producers should be
and are much more listening to their customers` needs and wishes now (Adam, 2011s).
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Values:
Immaterial
Luxury,
Sustainability,
Social
Responsibility, and Experience Orientation
Today philosophers, social researchers, but also many economists foresee for the future that
the value orientation and immaterial luxury values will become more important in relation to
material luxury in mature, industrialised democracies like Europe, the USA, or Japan
(Enzensberger, 1996; American Express, 2006; Kapferer, 2008; Opaschowski, 2008;
Opaschowski, 2009; Roos, 2009; Kotler, Kartajaya and Setiawan, 2010; Phönix, 2013h). This
trend was also confirmed by the expert poll (Adam, 2011t; Adam, 2011q; Adam, 2011aa;
Adam, 2011n; Adam, 2011m; Adam, 2011k). Immaterial representations of today´s luxury can
be, for instance, time, safety, calmness, or the joy of work (Hencke and Behrens, 2007).
Thereby time was the mostly named immaterial representation of luxury during the expert
interviews (Adam, 2011t; Adam, 2011x; Adam, 2011ad; Adam, 2011m; Adam, 2011w; Adam,
2011k; Adam, 2011a; Adam, 2011i; Adam, 2011r). Transferred to the automobile Prof. Dr.
Reeb mentioned autonomous driving as a way to save time for the driver and generate sparetime for e.g. the use of media while driving in a car (Adam, 2011t). Or Missoni associated a
relaxing, comfortable atmosphere, in which one can have an undisturbed chat as quality time
in a car (Adam, 2011r).
According to the interviewed experts further immaterial values gaining importance as
perceived luxuries today are quality of life (Adam, 2011q; Adam, 2011ad; Adam, 2011r),
carefreeness and convenience (Adam, 2011b; Adam, 2011g; ), space (Adam, 2011ad; Adam,
2011m; Adam, 2011w; Adam, 2011c; Adam, 2011g), silence (Adam, 2011m; Adam, 2011w;
Adam, 2011g), and privacy {Adam 24/02/2012 #264: p. 2 The consequences the experts
foresaw for the automotive industry are e.g. an increasing relevance of optimised vehicle
sounds (Adam, 2011g), spacious vehicle interiors (Adam, 2011g; Adam, 2011c), and intelligent
traffic management (Adam, 2011c). For instance airlines are responding to these trends by
individual, private areas for each passenger (Adam, 2011f).
However, again these are still predominantly European movements. From a global perspective,
today´s world is highly materialistic (Adam, 2011q). Nevertheless, Europe and especially the
European car market have eventually almost always been trendsetting for the rest of the world
to a certain extend so far (Adam, 2011aa).
Another trend, which several experts addressed and which is probably also connected to the
trend towards immaterial luxury, is the fact that experiences seem to become more important
than possessions and ostentatious luxury (Adam, 2012b; Adam, 2011m; Adam, 2011ac; Adam,
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2011l; Adam, 2011ab; Adam, 2011a; Adam, 2012b). This also means service experience
becomes more important. Guy Heywood from the hotel sector for instance reported “We go
after service as a luxury. […] ultimately it´s all about the experience and the service.” (Adam,
2012b) Signs in the automotive industry supporting this hypothesis are e.g. increasing leasing
contracts vs. total ownership (Adam, 2011t). Moreover, for more and more young people it
seems to be sufficient to use mobility concepts instead of owning a luxury vehicle themselves
(Adam, 2011l).
Modern Status Concepts and Luxury Consumption
Another major trend connected to the trend towards immaterial luxury is the change of status
concepts: Several experts reported that in contrast to emerging markets especially in saturated
markets like first and foremost in Europe there exists a trend towards non-demonstrative
luxury consumption (Adam, 2011d; Adam, 2011n; Adam, 2011j; Adam, 2011ac; Adam, 2011a;
Adam, 2011r; Adam, 2012b).
This trend goes rather towards a dominance of intrinsic, self-directed motives like selffulfilment (Adam, 2011m), personal satisfaction (Adam, 2011d), rewarding and treating
oneself (Adam, 2011ad; Adam, 2011j; Adam, 2011a; Adam, 2011g), and one´s personal
pleasure of consuming luxury instead of the urge to display it to the outside (Adam, 2011ac;
Adam, 2011a; Adam, 2011r).
As reported earlier this trend towards understatement in mature, Western markets especially
challenges the luxury and premium manufacturers to mind and meet the norms that are
socially accepted, as they are selling material, traditionally rather ostentatious status symbols,
which are responsible for a considerable share of emissions. Thereby such luxury items were
said to be better accepted, which mirrored a certain connoisseurship and taste of the owner
regarding its origin, rarity, or craftsmanship in contrast to those, who simply displayed one´s
monetary wealth (Adam, 2011y).
Again transferred to the automobile this also means it´s rather about the interior than the
outer appearance (Adam, 2011d) and about qualitative characteristics of a car like a higher
residual value, better service (Adam, 2011p), better quality (Adam, 2011d; Adam, 2011r) or
sustainability than about its performance now (Adam, 2011j).
As said the trend towards non-demonstrative luxury concepts in Europe stands in contrast to
the rather ostentatious luxury concepts of emerging markets like China, Russia or the Middle
East (Adam, 2010b; Adam, 2011t; Adam, 2011aa; Adam, 2011j; Adam, 2011v; Adam, 2011ac;
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Adam, 2011l; Adam, 2011k; Adam, 2011h; Adam, 2012b; Adam, 2012a). However, there are
also certain differences on a European level: For instance Spanish car buyers in contrast to
Germans were said to have a comparably higher tendency to spend their money on visible
equipment than on “inner values” like safety features (Adam, 2011p). J. Justus Schneider also
reported about the Germans tendency to understatement (Adam, 2011y).
How these changes affect the role of the automobile as a status symbol is also currently
analysed in the corresponding PhD project this paper refers to.
Facing the Challenges
During the course of the interviews the experts addressed a number of current and future
challenges for premium car manufacturers, which give a good overview of the most relevant
questions the automotive premium manufacturers should focus on now: It is a constant
challenge for the premium brands to always stay up-to-date, relevant, and not to miss major
trends (Adam, 2011a) with regards to values, but also with regards to the fast technological
advancement (Adam, 2012b). A consequential question is: How to adapt the brand to modern
luxury concepts and to new growth segments without risking its identity (Adam, 2011x;
Adam, 2011c)? Since the brands are on a technologically similar level, the next question is how
to excel the others (Adam, 2012b)? The premium car design looks very similar, too, today. So
how to differentiate oneself in terms of product design is another challenge (Adam, 2011s).
Moreover, the automotive premium brands should come back into a position where they
actively set the trends themselves (Adam, 2011b) and also have the courage to define luxury
themselves (Adam, 2011g). Moreover, as Heine put it, the big challenge is to create products
which deliver fun and status, but also sustainability, which are socially acceptable, and
thereby successful across different international markets (Adam, 2011j). Being democratised,
approachable and socially acceptable in order to grow but yet offering the exclusivity a
premium brand needs is one of the biggest dilemmas for the automotive premium brands now
(Adam, 2011t; Adam, 2011y; Adam, 2011n; Adam, 2011ac; Adam, 2011k; Adam, 2011i).
Despite all diversification the luxury standard must be consistent through all the model
segments of a brand (Adam, 2011t). There is another dilemma between adapting to the
preferences of the increasingly dominating customer groups from emerging markets like China
without risking the brands identity (Adam, 2011y). The big question is how customers in the
growth markets will see luxury in the future. What if luxury is less accepted or what if the
growth in China does not come as expected (Adam, 2011k)? In view of the increasing value
and immaterial luxury orientation the major question is how the product can make the
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customers spend their time with more life quality (Adam, 2011r). Moreover, how to transfer
luxury concepts and a brands differentiating positioning into the online world are further
critical questions for premium car marketers today (Adam, 2011n; Adam, 2011s). In this
context Ungerer stressed the challenge to handle public opinions in view of the new
dominance of social media (Adam, 2011ac). Another communicative challenge is choosing the
right channels to reach the selective younger target groups (Adam, 2011f). The trend towards
individualisation collides with the omnipresent cost pressure in the industry today (Adam,
2011v). A further challenge in the new age of electric mobility is how to emotionally load
soundless and odourless electric vehicles (Adam, 2011k; Adam, 2011c). Looking at the trend
towards alternative mobility concepts the car manufacturers must manage the turnaround
from an automobile manufacturer to a mobility service provider (Adam, 2011k; Adam,
2011u) including new competitors and the study of mobility concepts rather than only
automotive trends (Adam, 2011t). Moreover, this turnaround involves a relaunch of the
dealership concept in terms of premium experience, location, and service concept (Adam,
2011ad; Adam, 2011w; Adam, 2011o; Adam, 2011ac; Adam, 2011u; Adam, 2011c).
Conclusions about the Success Factors for Automotive Premium Brands
in Response to the New Way of Luxury
To summarise the results of the study so far the following can be said: Luxury is constantly
changing. However, it is certainly doing so faster than ever before. Moreover, it is more
diverse and dealt with more democratically than ever before. Together with further societal
changes like diluting social structures, a trend towards non-demonstrative status concepts,
new mobility concepts, and the sustainability trend it is eligible to talk about a paradigm
change in the concept of luxury and the role of the automobile. These developments currently
challenge the automotive manufacturers and urge them to review and adapt their traditional
positioning.
In summary the future success factors for the manufacturers in this context identified by this
study are a higher consumer orientation, a more holistic positioning e.g. as a mobility provider,
a more holistic sustainability strategy, integration of the identified, new motives of
contemporary luxury in mature markets like immaterial luxury, sustainability, or lifestyle into
the communication strategy, the pronunciation of lifestyle versus status aspects of the
products, an improvement of the experience and service orientation at the point of sale,
benchmarking with non-automotive, faster moving industries like the IT or the service
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industry, an intelligent portfolio diversification catering to the different identified status needs
as well as value and luxury concepts, and at the same time a re-pronunciation of the original
values of the brand.
The described research questions and consequent success factors for automotive premium
brands are currently investigated in further detail in the corresponding PhD project of the
author, which is in progress.
------------------------ABOUT THE AUTHOR:
Nadine Adam is a German PhD student at the School of Business and Enterprise of the University of the West of
Scotland in Paisley, UK under the supervision of Dr. Declan Bannon, University of the West of Scotland, Paisley, UK,
and Prof. Dr. Franco P. Rota M.A., Hochschule der Medien, Stuttgart, Germany. She has been working in
international Sales & Marketing in the automotive premium industry since 2007 now. E-mail contact:
[email protected]
13
PhD Project
Nadine Adam
th
“Work in Progress” Paper, October 24 , 2015
Bibliography
American Express. “21st Century Living Report: The Trends changing our perception of luxury in the 21st century.”
2006.
Berry, Chistopher J. The Idea of Luxury: A Conceptual and Historical Investigation. Cambridge: Cambridge University
Press, 1994. http://www.worldcat.org/oclc/431502974.
Blickhäuser, Joachim H. Expert interview with Joachim H. Blickhäuser, BMW Group, General Manager International
Motorshows and Events. Interview by Nadine Adam. Munich; Stuttgart, July 12, 2011a.
Braguglia, Vittorio. Expert interview with Vittorio Braguglia, President of Mercedes-Benz Roma. Interview by Nadine
Adam. Stuttgart; Rome, May 08, 2011b.
Bruhn, Manfred, Manfred Kirchgeorg, and Johannes Meier, eds. Marktorientierte Führung. 1st ed. s.l: Gabler Verlag,
2007.
Brujó, Gonzalo. Expert interview with Gonzalo Brujó, Interbrand, Chairman Iberia & Latin America. Interview by
Nadine Adam. Stuttgart; Madrid, December 14, 2011c.
Butterfield, Leslie. Expert interview with Leslie Butterfield, Interbrand, Global Chief Strategy Officer. Interview by
Nadine Adam. Stuttgart; London, May 04, 2011d.
Cologni, Franco Dr. Expert interview with Dr. Franco Cologni, Non-Executive Director of Compagnie Financière
Richemont SA. Interview by Nadine Adam. Bellevue, Switzerland, December 07, 2011e.
Debbané, Andrea. Expert interview with Andrea Debbané, Airbus, Vice President Environmental Affairs. Interview by
Nadine Adam. Stuttgart; Toulouse, December 13, 2011f.
Diez, Willi. “Strategiewahl - Premium- oder Massenmarkt?” In Markenmanagement in der Automobilindustrie: Die
Erfolgsstrategien internationaler Top-Manager. 2nd ed., edited by Bernd Gottschalk, Ralf Kalmbach and Jan
Dannenberg. Wiesbaden: Gabler Verlag, 2005.
Diez, Willi. Automobil-Marketing: Navigationssystem für neue Absatzstrategien. 5th ed. Landsberg am Lech: miFachverlag, Redline GmbH, 2006.
Diez, Willi Prof. Dr. Expert interview with Prof. Dr. Willi Diez, Hochschule für Wirtschaft und Umwelt NürtingenGeislingen, Director of the Institute of Automotive Economy. Interview by Nadine Adam. Stuttgart; Geislingen,
December 03, 2012a.
Enzensberger, Magnus. “Reminiszenzen an den Überfluß: Der alte und der neue Luxus.” Der Spiegel 51 (1996): p.
108 - 118. http://www.spiegel.de/spiegel/print/d-9134042.html.
“Business redefined: A look at the global trends that are changing the world of business.” 2010.
Esch, Franz-Rudolf. “Glänzend markiert: Luxusmarken.” Marketingprofile 2009, 11/12 (2009): 10–12.
Fischer, Jan. Expert interview with Jan Fischer, Daimler AG, Specialist for Strategy and Conception of New Interiors.
Interview by Nadine Adam. Stuttgart; Sindelfingen, August 06, 2011g.
Foulkes, Nick. Expert interview with Nick Foulkes, journalist, author, historian. Interview by Nadine Adam. Stuttgart;
London, September 12, 2011h.
Glaser, Barney G., and Strauss, Anselm L. The Discovery of Grounded Theory: Strategies for Qualitative Research.
New Brunswick: Aldine Transaction, 2007.
Grzanna, Marcel. “Ein Land im Kaufrausch: Nirgendwo werden so viele Autos erworben wie in China. Die
Konsumlust ist ganz im Sinne der autoritären Führung.” Süddeutsche Zeitung, September 30, 2010a, p. 23.
Grzanna, Marcel. “Protz ist Trumpf: Hauptsache teuer - unterwegs mit reichen Kunden in Peking.” Süddeutsche
Zeitung, September 30, 2010b, p. 23.
Haake, Albrecht Dr. Expert interview with Dr. Albrecht Haake, Carl F. Bucherer, Vice President Technology. Interview
by Nadine Adam. Stuttgart; Luzern, December 16, 2011i.
Heine, Klaus. Luxury & Sustainability: Implications of a Consumer-Oriented Concept of Luxury Brands: (Extended
Abstract). Istanbul, Turkey, 2010.
Heine, Philipp. Expert interview with Philipp Heine, Bentley Motors, Franchise Development Manager Europe.
Interview by Nadine Adam. Stuttgart; Crewe, July 20, 2011j.
Hencke, Stefan, and Behrens, Nora. Phänomen Luxus: Verhalten, Märkte, Trends. München, 2007.
http://download.messemuenchen.de/media_pub/mediacenter/inhorgenta.com/documents/sonstiges/henke_phaenomen_luxus.pdf.
Hencke, Stefan Prof. Dr. Expert interview with Prof. Dr. Stefan Hencke, Convensis Group, CEO. Interview by Nadine
Adam. Stuttgart, November 17, 2011k.
Hering, Ekbert Prof. Dr. Dr. Expert interview with Prof. Dr. Dr. Ekbert Hering, University of Aalen, Rector off duty.
Interview by Nadine Adam. Stuttgart; Heubach-Lautern, June 11, 2011l.
Herz, Carsten. “Die zweite Erfindung des Automobils.” Handelsblatt, December 31, 2010, p. 37.
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PhD Project
Nadine Adam
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“Work in Progress” Paper, October 24 , 2015
Heywood, Guy. Expert interview with Guy Heywood, COO of Alila Hotels & Resorts. Interview by Nadine Adam.
Stuttgart; Singapore, February 24, 2012b.
Hoffmann, Oliver. Expert interview with Oliver Hoffmann, Porsche AG, Director of Face-to-Face Marketing. Interview
by Nadine Adam. Stuttgart, June 29, 2011m.
Jensen, Anders Sundt. Expert interview with Anders Sundt Jensen, Daimler AG, Vice President Brand
Communications Mercedes-Benz Cars. Interview by Nadine Adam. Stuttgart, May 25, 2011n.
Kapferer, Jean-Noël. The New Strategic Brand Management: Creating and Sustaining Brand Equity Long Term. 4th
ed. London: Kogan Page, 2008.
Kapferer, Jean-Noël, and Bastien, Vincent. The Luxury Strategy: Break the Rules of Marketing to Build Luxury Brands.
London; Philadelphia: Kogan Page, 2009.
Kern, Georges. Expert interview with Georges Kern, CEO of IWC. Interview by Nadine Adam. Schaffhausen,
Switzerland, January 07, 2011o.
Kotler, Philip, Kartajaya, Hermawan, and Setiawan, Iwan. Die neue Dimension des Marketings: Vom Kunden zum
Menschen. Frankfurt am Main [u.a.]: Campus-Verlag, 2010.
Kotler, Philip, and Keller, Kevin Lane. Marketing Management. 12th ed. New Delhi: Prentice-Hall of India Private
Ltd., 2006.
Larsen, Eric. Expert interview with Dr. Eric Larsen, Mercedes-Benz Research & Development North America, Inc.
Interview by Nadine Adam. Stuttgart; Palo Alto, August 25, 2010a.
López-Schümmer Treviño, Jose Luis. Expert interview with Jose Luis López-Schümmer Treviño, CEO Mercedes-Benz
España, S.A. Interview by Nadine Adam. Stuttgart; Madrid, November 23, 2011p.
Lubin, David A., and Esty, Daniel C. “The Sustainability Imperative.” Harvard Business Review, 05/2010 (2010).
http://hbr.org/2010/05/the-sustainability-imperative/.
Mankowsky, Alexander. Expert interview with Alexander Mankowsky, Daimler AG, Social and Technology Research.
Interview by Nadine Adam. Sindelfingen, March 24, 2011q.
Merriam-Webster. “luxury.” 2012. http://www.merriam-webster.com/dictionary/luxury, accessed June 2012.
Merten, Hans-Lothar. In Luxus investieren: Wie Anleger vom Konsumrausch der Reichen profitieren. Wiesbaden:
Gabler Verlag / GWV Fachverlage, Wiesbaden, 2009.
Meyer, Torsten. “Zwischen sozialer Restriktion und ökonomischer Notwendigkeit: Konsum in ökonomischen Texten
der frühen Neuzeit.” In "Luxus und Konsum", edited by Reinhold Reith and Torsten Meyer. Münster: Waxmann
Verlag, 2003.
Missoni, Vittorio. Expert interview with Vittorio Missoni, Director Institutional Affairs and owner of the brand
Missoni. Interview by Nadine Adam. Stuttgart; Milan, December 21, 2011r.
Nüesch, Marc, and Vetterli, Christophe. Was versteht man unter GroundedTheory? St. Gallen, Switzerland, 2010.
http://www.tim.ethz.ch/education/courses/courses_fs_2010/course_docsem_fs_2010/Slides/F19_GroundedTh
eory_Nueesch_Vetterli, accessed January 2012.
Opaschowski, Horst W. Deutschland 2030: Wie wir in Zukunft leben. Gütersloh: Gütersloher Verl.-haus, 2008.
Opaschowski, Horst W. Wohlstand neu denken: Wie die nächste Generation leben wird. 1st ed. Gütersloh:
Gütersloher Verlagshaus, 2009.
“Otto Group Trendstudie 2011: Verbrauchervertrauen - Auf dem Weg zu einer neuen Wertekultur: 3. Studie zum
ethischen Konsum.” 2011.
Pahud, Guillaume. Expert interview with Guillaume Pahud, Richemont International SA, Director of Digital Projects.
Interview by Nadine Adam. Stuttgart, Geneva, August 25, 2011s.
Phönix, “Das Glück,” January 02, 2013h.
Reeb, Marianne Dr. Expert interview with Dr. Marianne Reeb, Daimler AG, Manager Trend Research – Future
Customers and Markets for Mercedes-Benz Passenger Cars. Interview by Nadine Adam. Stuttgart, March 22,
2011t.
Rees, Jürgen. “Autobauer müssen Premium-Segment neu definieren: Studie.” 2010. http://www.wiwo.de/technikwissen/autobauer-muessen-premium-segment-neu-definieren-423447/, accessed August 2010.
Remenyi, Dan, Williams, Brian, Money, Arthur, and Swartz, Ethné. Doing Research in Business and Management: An
Introduction to Process and Method. London: SAGE, 2010.
Ricca, Manfredi. Expert interview with Manfredi Ricca, Interbrand, Managing Director Italy. Interview by Nadine
Adam. Stuttgart; Milan, February 12, 2011u.
Roos, Martin. “Die Lust, anders zu sein.: Die Vorstellungen von Luxus wandeln sich. In der Wohlstandsgesellschaft
taugt Protzerei nicht mehr zur Selbstdarstellung.” Handelsblatt, October 15, 2009, p. 7.
Rosengarten, Philipp G., and Stürmer, Christoph B. Premium-Power: Das Geheimnis des Erfolgs von Mercedes-Benz,
BMW, Porsche und Audi. 2nd ed. Weinheim: Wiley-VCH-Verl, 2005.
15
PhD Project
Nadine Adam
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“Work in Progress” Paper, October 24 , 2015
Rota, Pasquale. Expert interview with Pasquale Rota, Mercedes-Benz Espana, Senior Manager Production Control
Vito/Viano. Interview by Nadine Adam. Stuttgart; Vitoria, July 27, 2011v.
Sandmaier, Peter. Die Finanzkrise oder das Ende des Casino-Kapitalismus?: Gedanken zu einer großen Krise. 3rd ed.
München: Grin Verlag, 2010.
Santoni, Guiseppe. Expert interview with Guiseppe Santoni, CEO of Santoni s.p.a. Interview by Nadine Adam.
Corridonia; Stuttgart, June 30, 2011w.
Schaller, Michael. Expert interview with Michael Schaller, Daimler AG, Senior Manager of Brand Communications
Strategy. Interview by Nadine Adam. Stuttgart, March 31, 2011x.
Schneider, J. Justus. Expert interview with J. Justus Schneider, Global Game GmbH, Managing Partner. Interview by
Nadine Adam. Stuttgart, April 29, 2011y.
Shadow, Monty. Expert interview with Monty Shadow, CEO of Concept Edge. Interview by Nadine Adam. Stuttgart,
June 28, 2011z.
Silverstein, Michael J., and Fiske, Neil. Trading up: Why consumers want new luxury goods - and how companies
create them. New York: Portfolio, 2008.
Smith, Colin Dr. Expert interview with Dr. Colin Smith, Head of Market Research and Marketing Analysis of
Mercedes-Benz Cars. Interview by Nadine Adam. Stuttgart, August 31, 2010b.
Tai, Eric. Expert interview with Eric Tai, Mercedes-Benz China Ltd., Manager Customer Insights. Interview by Nadine
Adam. Stuttgart; Beijing, May 18, 2011aa.
Trommsdorff, Volker Prof. Dr. Expert interview with Prof. Dr. Volker Trommsdorff, Technische Universität Berlin,
Director of the Marketing chair. Interview by Nadine Adam. Stuttgart; Berlin, February 12, 2011ab.
Truong, Yann, McColl, Rod, and Kitchen, Philip J. “New luxury brand positioning and the emergence of Masstige
brands.” Journal of Brand Management 16, 5/6 (2009): 375–382.
Truong, Yann, Simmons, Geoff, McColl, Rod, and Kitchen, Philip J. “Status and Conspicuousness - Are They
Related?: Strategic Marketing Implications for Luxury Brands.” Journal of Strategic Marketing 16, no. 3
(2008): 189–203.
Ungerer, Wolfgang. Expert interview with Wolfgang Ungerer, General Manager Jaguar Brand Europe. Interview by
Nadine Adam. Stuttgart; Gaydon, April 08, 2011ac.
Veblen, Thorstein. The Theory of the Leisure Class. Oxford; New York: Oxford University Press, 2007.
von Thaden, Christian Dr. Expert interview with Dr. Christian von Thaden, Batton & Company, Principal. Interview by
Nadine Adam. Stuttgart; Düsseldorf, April 29, 2011ad.
16

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