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Effect of the Chinese Acquisition on the Brand Image of Volvo Cars

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Effect of the Chinese Acquisition on the Brand Image of Volvo Cars School of Sustainable Development of Society and Technology Master Thesis in International Marketing Effect of the Chinese acquisition on the brand image of Volvo Cars June 1, 2011 Course: EFO 705 Authors: Uliana Zakladna (850526) Maximilian Ehrl (821120) Supervisor: Leif Linnskog Examiner: Ole Liljefors Abstract Title: The Effect of the Chinese Acquisition on the Brand Image of Volvo Cars Authors: Uliana Zakladna - 850526, Maximilian Ehrl - 821120 Supervisor: Leif Linnskog Examiner: Ole Liljefors Institution: Mälardalen University Sweden, School of Sustainable Development of Society and Technology Course: Master Thesis in International Marketing, 15 ECTS-points Problem Statement: Volvo is one of the most visible and famous symbols of Swedish engineering industry. After the recent world economic crisis the Chinese-based Geely Holding Group became the new owner of Volvo Cars. The question is whether the acquisition affects the image of the brand, and if so what is the character of this effect. Thus, this thesis provides the insight in the situation and attempts to give the answer to this question. It identifies the tendencies and provides an example of what changes in the brand image of Volvo have already occurred and what can be expected. Purpose: The purpose of this research is to identify, describe and analyze the effect that the acquisition by Geely Holding Group had on the brand image of Volvo. Method: Within this research a survey was conducted. The issues of concern regarding the change of the Volvo brand image were identified through literature study and observations in the specialized automobile on-line discussion panels. Based on the collected information and theoretical background, a questionnaire was designed and placed in the Volvo discussion forums in three countries – USA, Germany, and Great Britain. The total of 172 responses were received. The obtained data was processed statistically and theoretically on the basis of the theoretical framework. Results The obtained results demonstrate that the brand image has been affected by the acquisition, and the character of this effect varies depending on the aspect of the brand image. Such attributes of Volvo, as safety, quality, and design have been influenced positively, whereas the associations with environment and family are found to be affected in a negative way. The image of a typical Volvo owner has been blurred too. Table of Content 1. INTRODUCTION .............................................................................................................................. 1 1.1 Purpose of the study ................................................................................................................ 1 1.2 Research question .................................................................................................................... 1 1.3 Target Group ............................................................................................................................ 1 2. BACKGROUND ................................................................................................................................ 3 2.1 Recent Acquisitions in the Car Industry ..................................................................................... 3 2.2 Volvo ........................................................................................................................................ 3 2.3 Geely ........................................................................................................................................ 4 2.4 The New Way of Volvo ............................................................................................................. 5 2.5 Volvo Brand .............................................................................................................................. 5 3. LITERATURE REVIEW ...................................................................................................................... 8 3.1 Brand ....................................................................................................................................... 8 3.2 Importance of Brands ............................................................................................................... 9 3.3 Brand Image and Brand Associations .......................................................................................10 3.4 Brand Vulnerability ..................................................................................................................12 3.5 Country of Origin .....................................................................................................................13 4. CONCEPTUAL FRAMEWORK ..........................................................................................................15 4.1 Main Model .............................................................................................................................15 4.2 Sub-model (Brand Image by Keller)..........................................................................................16 5. METHODOLOGY ............................................................................................................................17 5.1 Categorizing the Research .......................................................................................................17 5.2 The Research Approach ...........................................................................................................17 5.3 Methods of Data Collection .....................................................................................................17 5.4 Data Sources ...........................................................................................................................18 5.4.1 Secondary Data ................................................................................................................19 5.4.2 Primary Data.....................................................................................................................19 6. EMPIRICAL RESULTS AND ANALYSIS...............................................................................................29 6.1 Product-related attributes .......................................................................................................29 6.2 Non-Product-Related Attributes ..............................................................................................33 6.2.1 Brand personality .............................................................................................................33 6.2.2 User Imaginary .................................................................................................................36 6.2.3 Usage Imaginary ...............................................................................................................37 i 6.2.4 Feelings and Experiences ..................................................................................................39 6.2.5 Price .................................................................................................................................41 6.3 Benefits ...................................................................................................................................43 6.3.1 Functional Benefits ...........................................................................................................43 6.3.2 Experiential Benefits .........................................................................................................46 6.3.3 Symbolic Benefits .............................................................................................................47 6.4 Attitude ...................................................................................................................................49 6.5 Strength of Brand Associations ................................................................................................50 6.6 Uniqueness of Brand Associations ...........................................................................................52 6.7 Favorability of Brand Associations ...........................................................................................53 7. CONCLUSION ................................................................................................................................55 REFERENCES .....................................................................................................................................57 Table of Figures Figure 1: Brand pyramid of Volvo…………………………………………………………………………………………………..….6 Figure 2: Brand image structure……………………………………………………………………………………………………….11 Figure 3: Conceptual Framework…………………………………………………………………………………………………….15 List of Tables Table 1: Number of responses per questionnaire per country ...........................................................26 Table 2: Product-related attributes, Safety. Means ...........................................................................29 Table 3: Product-related attributes, Safety. Percentages ...................................................................29 Table 4: Product-related attributes, Quality. Means ..........................................................................30 Table 5: Product-related attributes, Quality. Percentages .................................................................30 Table 6: Product-related attributes, Design. Means ...........................................................................31 Table 7: Product-related attributes,
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