VALUE CREATION IN THE
BUSINESS-TO-BUSINESS AUTOMOTIVE COATING
MARKET
A research in the dimensions of Brand Equity that create
value in the Automotive Coating market
Groningen, December 2008
Henk de Jong
VALUE CREATION IN THE
BUSINESS-TO-BUSINESS AUTOMOTIVE COATING
MARKET
One of the most valuable assets to any firm is the intangible asset
represented by its brands (Keller, 1993)
Master thesis presented by: Henk de Jong (1348019)
to
The Faculty of Economics and Business
in partial fulfillment of the requirements for the degree of
Master of Science in
Management and Organization
Preface
The idea for this research stemmed from my interest in Brand Equity as an abstract tool in order to create value in any kind of way. The result is this thesis. The topic of this thesis is an investigation of the dimensions of Brand Equity that create value in the Business-to-Business Automotive Coating market.
The research has been conducted for Stinoil BV; however only the organizational division Rust Control is taken into account in this research. This provides me with the opportunity to thank first of all my supervisor of Rust Control mister Harrie Hendriks. Many thanks to your flexible approach in regard to the way this thesis was written and most of all giving me the opportunity to visit the organization on the show in Frankfurt. Without this, it would have almost been an impossible job to finish collecting the data for the quantitative research and as such being able to finish this thesis. Next to this I would like to thank my sister, who was at the time an employee at Stinoil and she opened up the opportunity for writing this thesis at the organization.
Furthermore I would like to thank Marianne and Mark, who were my direct colleagues at Rust Control, for the fine times during my internship we had; I appreciated it. Last but not least I would like to thank ‘breezer Gaab’ for always making me laugh.
I also want to thank mister Hans Berger for his critical comments on the drafts I handed in. The meetings we had always provided me with valuable topics in regard to the optimalization and continuation of the process of completion of this thesis.
Overall I want to thank my parents for giving me the opportunity to study at the university in the first place and the continuous support of them in the fulfillment of this process.
I also want to thank my friends for the interesting and relaxing study- or working years we experienced together and although I may leave the north of the country now, we will still be in touch.
Abstract
This thesis describes how value can be created by building strong brands in the Business-to-Business Automotive Coating market. This is conducted by applying one value generating asset; ‘Brand Equity’, to the Automotive Coating market. First of all an analysis has been made of the material that currently exists in scientific literature; this led to a conceptual framework. Basic foundation of this framework are the principles developed by Aaker (1991) - the ‘Brand Equity framework’ - and Keller (1993) - the ‘Customer-Based-Brand-Equity pyramid’. A combination of these two models is made in order to develop the conceptual framework.
Based on the developed conceptual framework empirical research has been conducted, both qualitative as well as quantitative, in order to test the conceptual framework and to investigate which dimensions of Brand Equity create most value for the organization as well as the customers of Rust Control in the Automotive Coating market.
Table of contents
Preface ... 2
Abstract ... 3
1. Introduction ... 7
1.1 Rust Control ... 8
1.2 Coating Market and corrosion / rust protection ... 8
1.3 Relevance of the research ... 9
1.4 Outline ... 10
2. Research Design ... 12
2.1 Problem Introduction ... 12
2.2 Problem Statement ... 12
2.2.1 Objective of the Research ... 12
2.2.2 Research Question ... 13 2.2.3 Sub Questions ... 13 2.2.4 Additional Conditions ... 14 2.3 Research Method ... 14 3. Literature Review ... 16 3.1 Market Orientation ... 16 3.2 Value Creation ... 18 3.2.1 Customer Equity ... 19
3.3 Background of Brand Equity ... 21
3.3.1 Value Provision ... 21
3.3.1.1 Providing Value to the Customer ... 22
3.3.1.2 Providing Value to the Firm ... 22
3.3.2 Definition of Brand Equity ... 22
3.3.3 Brand Equity Framework Aaker ... 23
3.3.4 Dimensions of Brand Equity ... 23
3.3.4.1 ‘Brand Loyalty’ Dimension ... 24
3.3.4.2 ‘Brand Awareness’ Dimension ... 26
3.3.4.3 ‘Perceived Quality’ Dimension ... 28
3.3.4.5 ‘Other Proprietary Brand Assets’ Dimensions ... 30
3.3.5 CBBE model Keller ... 31
3.3.6 Brand Equity Areas ... 35
3.3.7 ‘Business-to-Business’ Brand Equity ... 36
3.4 Conceptual Model ... 36
3.5 Conclusion chapter 3 ... 38
4. Research Design ... 39
4.1 Measuring the dimensions of Brand Equity ... 39
4.2 Qualitative Research Method ... 40
4.3 Quantitative Research ... 41
4.3.1 Research Instrument ... 41
4.3.2 Data gathering ... 42
4.3.3 Data analysis ... 42
5. Qualitative Research ... 44
5.1 Proposal Qualitative Research ... 44
5.2 Results Qualitative Research ... 44
5.2.1 Market ... 45
5.2.1.1 OEM Market ... 45
5.2.1.2 After- / Repair Market ... 45
5.2.1.3 Conclusion Market ... 48
5.2.2 Competitors ... 48
5.2.3 Value creating assets / dimensions ... 48
5.3 Conclusion ... 49
6. Quantitative Research ... 51
6.1 Introduction ... 51
6.2 (Statistical) Testing ... 51
6.2.1 Frequency analysis of respondent characteristics ... 53
6.2.2 Factor Analyses ... 53
6.2.2.1 Usefulness Factor Analysis ... 54
6.2.2.2 Results Factor Analysis ... 56
6.2.3 Cronbach’s Alpha ... 59
6.2.3.1 Cronbach’s Alpha for each Brand Equity dimension ... 59
6.2.3.2 Cronbach’s Alpha for each component of factor analysis ... 60
7. Conclusion ... 63
7.1 Sub-Questions ... 63
7.1.1 How can value be created in the Business-to-Business market? ... 63
7.1.2 Which Brand Equity dimensions are of significant importance to the supplying organizations in the Automotive Coating market? ... 64
7.1.3 Which Brand Equity dimensions are of significant importance in the decision making process of the customers of Automotive Coating products in the Business-to-Business market? ... 64
7.2 Adjusted Conceptual Model ... 66
1. Introduction
Due to the negative growth prediction for the coming decade, the enormous fluctuation in crude oil prices and the profits which are pressurized, one important question has to be answered in this research; this concerns the realization of value to the organization and the customers for which this research is conducted throughout this turbulent current situation and future.
In order to answer this question, the process of value creation is analyzed by using the dimensions of Brand Equity which is regarded as an important determinant in the value creation process. The antecedents of which the dimensions of Brand Equity consists are tested in detail in this research related to the Automotive Coating market.
‘Value’ and ‘value creation’ are important to an organization, because value is the keystone of the customer’s relationship with the firm (Lemon et al. 2001). Value is the total worth of the benefits received for the price that is being paid in a relationship between a supplier and a customer. Value consists of different components. One component is brand equity. This research focuses on value creation by using the asset brand equity.
Brand Equity is a value generating asset. ‘Brand Equity’ concerns the ‘added value’ with which a brand endows a product.
Brand Equity has been an important topic in scientific literature for decades and nowadays still is. Most of the times Brand Equity is used in relation to the Business-to-Consumer market; less is known between the combination of Brand Equity and the Business-to-Business market. In this research the combination of Brand Equity and Business-to-Business is investigated and in relation to already existing material on these topics conclusions are drawn on the way Brand Equity influences the Business-to-Business market most. This is done in order to get a clearer view on the possible tools organizations in the Business-to-Business market have to influence the dimensions of Brand Equity.
‘Value creation’ and ‘brand equity’ are in detail analysed in chapter 3 of this research.
1.1 Rust Control
This research has been conducted as a final thesis at the organization Stinoil B.V. in Veendam The Netherlands. The research specifically focuses on the organizational division Rust Control B.V. The other organizational divisions Mobacc B.V. and Eurofill B.V. are not taken into account. In this research Rust Control will be interpreted as an organization on its own; as such the organization has its own strategy development.
Rust Control manufactures industrial products for the ‘Business-to-Business’ market in the Automotive Coatings area. This area shows a negative growth prediction for the upcoming decade. The organization is manufacturing aerosols and larger quantity products. These are highly inflammable products and special certificates have to be acquired in order to get the allowance to produce these goods.
Initially the organization was founded as a subsidiary of Royal Dutch Shell N.V. At a certain stage Shell wanted to sell their aerosol business and this way Stinoil B.V. became an individual organization.
Marketing does not play a significant role within the organization Rust Control. There is no separate department within the organization for these activities, as there also isn’t a marketing department for the whole organization Stinoil B.V. Rust Control has direct contact with their clients, so brand value is important to the organization to attract and maintain customers.
1.2 Coating Market and corrosion / rust protection
The coatings, which are discussed in this research, do not include the so-called paints and top coats (Diffutherm presentation). Coatings are widely used in the transport sector to protect against corrosion. In this context corrosion is seen as an
electrochemical process, which is caused by a combination of the following three conditions:
¾ Oxygen: present in the air surrounding us; ¾ Moisture: present in the air surrounding us; ¾ Electricity: always present in metals.
A boundary condition to start corrosion is a (local)
Split corrosion, which can be caused by slowly or not evaporating water and or accumulating
salts and acids. Due to absence of oxygen the inside of the split (crack) becomes anodic. Even split joints in galvanised steel can corrode within 4 to 5 years. This type of joint should be avoided or should be placed at dry places. An alternative is to seal the joint completely or to fill the split with a wax.
Contact corrosion, this type of corrosion is as dangerous as split corrosion and is occurring if two
different metals are joined together. Contact corrosion can be avoided by isolating the metals involved e.g. by using an appropriate lacquer.
In general the edges of metal plates are the most sensitive to corrosion and should therefore be protected. The protection against stone chip impact is an important issue to avoid corrosion. Specially developed coatings can give stone chip protection and thus avoid corrosion by avoiding open areas on the metal.
Besides corrosion protection these coatings serve several other purposes:
Protection against gravel, the surface is affected by small stones, rocks and even sands;
Sound damping, by putting weight and elastic materials on the metal, the vibrations of the metal
will be absorbed by the coating and thus reduce the total sound production;
Paintability, depending on the chemical base of the product, it can be painted over or even be
mixed with lacquers.
1.3 Relevance of the research
Control to create value by using the dimensions of Brand Equity in the appropriate way to build a strong brand, or increase the strength of the current brand Rust Control.
1.4 Outline
The goal of this paragraph is to make clear in what way this research is conducted. The following figure (1.1) shows this:
Figure 1.1: Structure of the research
In chapter 2 first of all the overall research design is presented. This consists of the problem statement of the research. The objective, main research- as well as the sub-questions of the research are explored. Additional conditions in relation to this research are given as well as the research method.
When this has become clear it is important in chapter 3 to investigate the different aspects which play a central role in this research (value (market) creation, Brand Equity) by using literature. This is done by using a funnel strategy. First a short explanation of the market orientation is provided, hereafter value creation is explained. Since value creation consists of different aspects, Brand Equity is explained next in the theoretical literature since this has the most value for the organization Rust Control. First the basic principles are explored, afterwards a frequently used model in the Business-to-Business market. This results in a solid exploration and foundation for the empirical research.
Chapter 4 presents the research design. Decisions are made on the type of qualitative- and quantitative research method that are used.
Next in chapter 5 it is important to gain insights in the Automotive Coating market. Not much is actually known about this market and hardly nothing is written about it. Insights need to be gained in order to eventually develop conclusions that make sense and are applicable to the Automotive Coating market. This is done by conducting a qualitative research; the results at the
same time are used as input for the quantitative research. The sub-questions are answered by conducting a quantitative empirical research, for which a questionnaire is developed. Before this can be done, it is necessary to conduct interviews and telephone conversations to understand the Automotive Coating market. The goal of the qualitative research is to make clear which aspects are important in the Automotive Coating market, however aspects like for instance the structure of the market are important as well. All questions are related to the dimensions of Brand Equity.
Afterwards the empirical quantitative research is conducted in chapter 6 by using a questionnaire (111 respondents). The questionnaire was built on the internet site thesistools.com. It proved that information gathering through this site on such a difficult market as the Automotive Coating market is, was hardly possible. A radical change was made in the information gathering process; the questionnaire was printed and information was collected at a huge Automotive Material show in Frankfurt (Germany). Plenty of suppliers of products similar as the ones of Rust Control from all over the world were present at this show and all of a sudden the empirical quantitative research became a lot easier. At the same time the possible ‘validity issue’ of the research was taken care of as well; since every respondent was an expert with lots of knowledge of the Automotive Coating market. The information that is acquired by the quantitative research is analysed with the statistical program SPSS. With this program it is possible to indicate important value creating dimensions in the Automotive Coating market. First of all the reliability of the questions and the research information is at stake. This is analysed by using factor analysis and cronbach’s alpha. Factor analysis shows if all antecedents of one brand equity dimension really say something about that particular dimension and cronbach’s alpha is used in order to indicate the reliability of the information. Next to this general information is required on all dimensions; which is done by using the ‘compare means’ approach. This way it is possible to see which antecedents and so which dimension of Brand Equity is the most important one. Next to this it might also provide additional interesting insights for the management of Rust Control in the development process of a future strategy for the brand.
2. Research Design
In this chapter the problem statement of the research is developed. First of all the problem is introduced, afterwards a problem statement is developed, consisting of the objective and definition of the problem and the additional conditions. Based on this problem statement the objective of the research becomes clear. Within this chapter additional attention is given to the conceptual research model and the research methodology.
2.1 Problem Introduction
This research is conducted because of the current- and expected future developments in the market for Automotive Coatings. Since cars are becoming better and better resistant to rust, the demand for products related to these coatings is decreasing. Since Rust Control B.V. is only active on this market with its products, it is important to the organization to know exactly which dimensions of brand equity create value in this specific market in order to develop an appropriate strategy for the organization to approach this market. Based on this information the management of the organization can take their conclusions on the strategy of the brand for the future.
One important implication however is the fact that Rust Control generates clients/orders for the other organizational divisions of Stinoil as well.
2.2 Problem Statement
The function of the problem statement is twofold, both synchronizing with the client, as well as the provider of the internal research (De Leeuw, 2003). The client is most of the times the organization or person that/who has a problem. Synchronizing with the client is important in order to have the same view on the problem at hand. Based on this information a deeper investigation is necessary to unfold the causes of the problem yet existing.
The problem statement contains according to De Leeuw three important parts: - Objective of the Research
- Research Question - Additional Conditions
The objective of the research provides insights for whom the research is conducted, what the results will look like, and why these results are of importance to them (De Leeuw, 2003). The objective of this research is as follows:
“Gain insights in the dimensions that are of influence on Brand Equity which are the basis of the value creation process of Rust Control and the decision making process of (potential) customers. Conclusions are presented on the dimensions that have the largest influence on the value creation process of customers and as such has the most impact on the brand Rust Control. These results are important to the management of the organization in order to develop an appropriate strategy for the brand Rust Control in the future”.
2.2.2 Research Question
The research question is the main question that matches the objective of the research, but is formulated in more general terms (De Leeuw, 2003). Based on the already formulated objective, the research question is as follows:
“Which dimensions of Brand Equity are of main importance in relation to the value creating process to organizations and (potential) customers in the Business-to-Business Automotive Coating market?”
This research is fenced off in such a way that the value creation process contains solely Brand Equity, its dimensions and as such also the antecedents (Aaker, 1991). This is done because value can be created in different ways, this is explored in paragraph 3.2. Brand Equity however, has the closest fit in relation to the organization Rust Control. Rust et al. (2005) conducted research on this. According to them Brand Equity matters most (1) when purchases requiring only low levels of involvement and simple decision processes; (2) when the product or service is highly visible to others; (3) when experiences associated with the product or service can be passed from one individual or generation to the next or (4) when it is difficult to evaluate the quality of a product or service prior to consumption. The four mentioned aspects are all applicable and closely related to Rust Control. For this reason, the research focuses on Brand Equity in particular.
2.2.3 Sub Questions
2. Which Brand Equity dimensions are of significant importance to the supplying organizations in the Automotive Coating market?
3. Which Brand Equity dimensions are of significant importance in the decision making process of the customers of Automotive Coating products in the Business-to-Business market?
2.2.4 Additional Conditions
Last part of the problem statement consists of the additional conditions of the research. According to De Leeuw (2003) these conditions shape the boundaries of the research results and function as boundary for the research method as well.
For this research the following boundaries were constructed:
- The research focuses on the dimensions of Brand Equity. Since the dimensions of Brand Equity are build on antecedents, these are taken into account as well.
- Dimensions that directly influence the decision making process from the customers perspective are disregarded in this research, other than the antecedents which influence the dimensions of Brand Equity and as such the decision making process of the customers. - Only Rust Control plays a role in this research, the other organizational business units of
Stinoil are ignored. The other organizational divisions do generate customers for each other; however the products provided by these divisions are so different from one another, that it is possible to only take the division Rust Control into account in this research. For this reason conclusions are not generalisable to other divisions of the organization.
2.3 Research Method
In this paragraph a short explanation is provided to the type of research and the way the collected data is presented in this research.
In this research, literature- and survey research is combined in order to realize useful conclusions. The literature research is used as the basic principle of the survey research; it provides important input for the survey research. This has been done to create the necessary understanding of the aspects of which this research consists. This causes the conclusions to be valuable in the right way.
life research in the empirical environment in which all the other dimensions are being equal (Baarda & De Goede, 2001). This is used in the quantitative part of the research. Using this approach has the advantage that large groups of respondents can be reached in a relatively easy way. This is necessary in order to draw reliable conclusions.
3. Literature Review
A funnel strategy is used throughout this literature chapter in order to create a framework that functions as a foundation of the empirical part of this research. This ‘funnel strategy’ is chosen because the reader gains the necessary background information in order to understand the empirical research (results). This means that this chapter starts in a broad way with a short explanation of the importance of the market orientation of an organization. The market orientation says something about the way the target market is approached by an organization (figure 3.1). This provides information on the way the management of the organization believes it can create value, or the best kind of value, or most value. So this is a very important decision in relation to the value creating assets, since it is most rewarding when the value creating asset(s) is in-line with the decisions made in regard to the market orientation. So after the discussion of market orientation in the first paragraph of this chapter, value is discussed in the two paragraphs afterwards.
In these two paragraphs is becomes clear that Brand Equity is one important asset in the value creation process. Since Brand Equity fits the organization Rust Control best, the additional paragraphs of this chapter are about Brand Equity. First of all the dimensions of Brand Equity are introduced from a well known view developed by Aaker (1991). This is specifically a Business-to-Consumer approach, however also applicable in the Business-to-Business market as different authors have explored in more recent years. One of these authors is Keller. He developed a model of Consumer Based Brand Equity. This model is introduced at the end of this chapter because it is also applicable to the Business-to-Business market and as such can provide additional information on this market. The two models of Aaker and Keller are combined in the developed conceptual framework at the end of this chapter.
3.1 Market Orientation
The orientation of an organization on the market is important in relation to other strategic decisions, since business performance is affected by market orientation (Narver and Slater, 1990). The model in figure 3.1 is based on this assumption and functions as foundation and starting point in the value creation process in order to create strong brand equity.
value for its customers. The desire to create superior value for customers and attain a Strategic Competitive Advantage drives a business to create and maintain the culture that will produce the necessary behaviors. Market orientation is the organization culture that most effectively and efficiently creates the necessary behaviors for the creation of superior value for buyers and thus continues superior performance for the business (Narver and Slater, 1990).
Customer Orientation is the sufficient understanding of one’s target buyers to be able to create
superior value for them continuously (Narver and Slater, 1990). A seller creates value for a buyer in only two ways: by increasing profits to the buyer in relation to the buyer’s costs in relation to the buyer’s benefits.
Competitor Orientation means that a seller understands the short-term strengths and weaknesses
and long term capabilities and strategies of both the key current and key potential competitors (Narver and Slater, 1990).
The third of the three behavioral components is Interfunctional Coordination. This is the coordinated utilization of company resources in creating superior value for target customers. Any point in the buyer’s value chain affords an opportunity for a seller to create value for the buyer firm. Therefore, any individual in any function in a seller firm can potentially contribute to the creation of value for buyers (Porter, 1985).
The orientations are summarized in figure 3.1.
Figure: 3.1 Market Orientation; Source: Narver and Slater (1990)
1990). For long-term survival in the presence of competition, a business cannot avoid a long-run perspective (Hutton, 1997). To prevent its competitors from overcoming the superior created buyer value, a business must constantly discover and implement additional value for its customers, which necessitate a range of appropriate tactics and investments. Anderson (2001) stresses that a long-run investment perspective is implicit in a market orientation to create value.
The chosen market orientation has its impact on the creation of value since value consists of different components. It is most rewarding when the market orientation that is used/chosen is in-line with or complementary to the chosen value creation component(s). The different components of value creation are discussed in the next paragraph. One thing is important in regard to the analysation in the next paragraph, this concerns the fact that the process of value creation is analysed from a customer oriented perspective in this research, since this is the focus that matches the researched organization best and customers play a very important role in the value creation process of an organization as becomes clear in the next paragraph.
3.2 Value Creation
Value is created by having as many customers as possible pay as high of a price (for a brand) as possible (Leone et al. 2006). A close relation exists between a customer and a brand, they go hand in hand (Leone et al. 2006). Customers need and value brands, but a brand ultimately is only as good as the customers it attracts (Leone et al. 2006). So it is necessary to recognize the importance of both brands and customers in order to create value. The way this is conducted becomes clear right now.
Value is the keystone of the customer’s relationship with the firm (Lemon et al. 2001). Value in business markets is defined as ‘the worth in monetary terms of the economic, technical, service and social benefits a customer firm receives in exchange for the price it pays for a marketing offering’ (Johnson & Narus, 2004). Simpson et al. (2001) use the following definition of value: the total worth of the benefits received for the price paid. This definition is in coherence with the one of Johnson and Narus (2004). Both definitions suggest that any model of total value must consider both benefits that add value to the channel relationship and factors that offset the value added.
because of: (1) the value offered; (2) it has a stronger brand and (3) switching away from the brand is too costly (Lemon et al. 2001). In the next part of this paragraph value creation and the important role of Customer Equity in this process is discussed.
Customer Equity
How do I manage the brand? Should I raise prices? These questions can be answered by focusing on Customer Equity. Customer Equity is critical to a firm’s long-term success. Lemon et al. (2001) developed a strategic marketing framework that puts the customer and growth in the value of the customer at the heart of the organization. Lemon et al. (2001) define Customer Equity as the total of the discounted lifetime values of all the firm’s customers. An other definition is the one developed by Hogan et al. (2002): a comprehensive management approach that focuses the efforts of the firm on increasing the lifetime value of individual customers in a way that maximizes Customer Equity.
‘Equity’ is defined by Dorsch et al. (2001) as the value of the invested resources.
The questions above can be answered by focussing on Customer Equity. A strategy based on Customer Equity allows firms to trade off between customer value, brand equity and customer relationship management. These three are the key drivers of firm growth (Lemon et al. 2001). For most firms, customer equity is certain to be the most important determinant of the long-term value of the firm however not the only determining factor (for instance physical assets and intellectual property can be important as well).
Rust et al. (2005) say Customer Equity consists of three components: (1) Value Equity, (2) Brand Equity and (3) Relationship Equity. Value Equity is: the customer’s objective assessment of the utility of a brand, based on perceptions of what is given up for what is received. The three Value Equity drivers are: (1) Quality, (2) Price and (3) Convenience.
Brand Equity is build through image and meaning (Lemon et al. 2001). Lemon et al. define Brand Equity in a narrow way as: the customer’s subjective and intangible assessment of the brand, above and beyond its objectively perceived value. The three brand drivers are: (1) Awareness, (2) Attitude and (3) Ethics.
organization. Relationship Equity provides this tool. It is defined as the tendency of the customer to stick with the brand, above and beyond the customers’ objective and subjective assessment of the brand. The three most important drivers of Relationship Equity are: (1) Loyalty programs, (2) Affinity and (3) Knowledge building.
Figure 3.2 shows these types of equity and their drivers in detail.
Figure 3.2: Customer Equity Framework (Rust et al. 2005)
According to Rust et al. (2005) Brand Equity matters most (1) when purchases requiring only low levels of involvement and simple decision processes; (2) when the product or service is highly visible to others; (3) when experiences associated with the product or service can be passed from one individual or generation to the next or (4) when it is difficult to evaluate the quality of a product or service prior to consumption.
Rust et al. (2005) argue Value Equity matters most (1) when the customer can discern differences between competing products; (2) when innovative products and services are introduced; (3) when customers face complex purchase decisions and (4) when firms want to reinvigorate mature products or services. So the competitor plays an important role in the value creation process as well, since in commodity markets when products and competitors are often fungible, Value Equity is difficult to build. However, when differences exist between competing products, a firm can grow Value Equity by influencing customer perceptions of value.
Rust et al. (2005) do not give guidelines when Relationship Equity matters most like they did with Brand Equity and Value Equity, however Lemon et al. already did this in their article published in 2001. Relationship Equity matters most (1) when the benefits the customer associates with the firm’s loyalty program are significantly greater than the actual ‘cash value’ of the benefits received. Lemon et al. (2001) define this as the ‘aspirational value’ of a loyalty program which presents a solid opportunity for firms to strengthen Relationship Equity by
Customer Equity
Value Equity Brand Equity Relationship Equity
creating a strong brand incentive for the customer to return to the firm for future purchases. (2) Relationship Equity will be key when the community associated with the product or service is as important as the product or service itself. Relationship Equity is (3) important when firms have the opportunity to create learning relationships with customers. Finally (4) Relationship Equity becomes crucial in situations where customer action is required to discontinue the service.
As has been explored in detail in this paragraph; value can be created in many different ways. In this research the focus is on Brand Equity and the dimensions of Brand Equity that create value. This research is conducted by making an in depth analyses of the dimensions of Brand Equity with the fundamentals developed by Aaker (1991) that create value in combination with the CBBE pyramid developed by Keller (1993). This value creating method is afterwards applied to the Automotive Coating market and this way conclusions on dimensions of brand equity that create value in the Automotive Coating market are drawn. In order to do this it is first of all necessary to introduce the different dimensions of brand equity as these were developed by Aaker (1991). What does Brand Equity actually mean? What are its dimensions? Detailed knowledge on these questions is necessary in order to understand the results of the empirical research in the appropriate way. All these answers are provided in the next paragraph.
3.3 Background of Brand Equity
Based on the definition of Brand Equity different perspectives have been developed that each discusses a certain part of this topic. This is also important in the determination of the most important dimensions of Brand Equity that create value in the Business-to-Business Automotive Coating market; eventually this is the question that needs to be answered within this research. In order to answer this question, the first step is to define the concept ‘Brand Equity’ and discuss the two models most frequently used in scientific literature when Value Creation based on Brand Equity is mentioned. These are the models developed by Aaker (1991) and Keller (1993). However, first it is important to understand the way value can be provided to the firm by using the dimensions of Brand Equity.
3.3.1 Value Provision
3.3.1.1 Providing Value to the Customer
Brand Equity assets generally add or subtract value for customers (Aaker, 1991). These assets can be useful in relation to the storage, interpretation and processing of huge quantities of information about products and brands. These assets can also influence the customers’ confidence in the purchase decision due to for instance past experience. However even more important is the fact that both perceived quality and brand associations can enhance customers’ satisfaction with the use experience.
3.3.1.2 Providing Value to the Firm
Brand Equity also has the potential to add value to the firm by generating marginal cash flow in a lot of different ways (Aaker, 1991).
- First of all it can enhance programs to attract new customers, create retention of the current customers or recapture old customers.
- Second; perceived quality, the associations and the well-known name of the brand can provide reasons to buy the brand and this can affect use satisfaction. These dimensions have a significant influence on loyalty that it is explicitly listed as one of the ways that Brand Equity provides value to the firm. However Aaker does state that other interrelationships exist as well between the different Brand Equity dimensions.
- Third, Brand Equity will usually allow higher margins by permitting both premium pricing and reduced reliance upon promotions.
- Fourth, Brand Equity can provide a platform for growth via brand extensions. - Fifth, leverage in the distribution channel can be provided by Brand Equity.
- Finally, a competitive advantage is provided by the Brand Equity assets. This advantage is usually a huge barrier to competitors.
3.3.2 Definition of Brand Equity
‘Brand Equity is the ‘added value’ with which a brand endows a product: this added value can be viewed from the perspective of the firm, the trade, or the consumer. The author's focus is on how to build strong brands with the consumer, how to sustain that Brand Equity over time, and how to expand and protect a business by leveraging Brand Equity’.
3.3.3 Brand Equity Framework Aaker
Aaker (1991) developed the following definition of Brand Equity:
Brand Equity is a set of assets (and liabilities) linked to a brand’s name and symbol that adds to (or subtracts from) the value provided by a product or service to a firm and/or that firm’s customers.
In addition to this definition Aaker (1991) defined asset categories. The five major asset categories are:
Aaker (1991) Brand Equity Framework
Asset Categories
1. Brand Name Awareness
2. Brand Loyalty
3. Perceived Quality
4. Brand Associations
5. Other Proprietary Brand Assets
Table 3.1: Asset Categories Brand Equity Framework Aaker (1991)
In this research the different asset categories are called dimensions; as it is used more widely throughout literature. Each dimension is discussed in detail with the antecedents of which the dimensions are built in the next sub-paragraph. A proper understanding of the antecedents of each dimension is necessary, since these antecedents have an important function in the empirical part of this research.
3.3.4 Dimensions of Brand Equity
implication for this additional explanation is the fact that in order to give a correct answer on which dimensions of Brand Equity have most influence on the generation of value in the Business-to-Business environment in the Automotive Coating market it is of essential importance to have a one dimensional view on the different dimensions. For this reason only the dimensions of Aaker are used as basic foundation of the empirical research. These are presented below, sometimes a couple of definitions of Keller are taken into account as well, however only in addition to the principles of Aaker that are leading here.
- Brand Loyalty: The intention to purchase the brand as a first choice (Keller, 1993). This is an important dimension due to the fact that it is much more expensive to gain new customers instead of creating retention of the current customers (Aaker, 1991).
- Brand Awareness: The ability of the customer to recognize the brand and at the same time also the possibility of the customer to mention the brand when he gets into contact with a service category related to the product/brand (Keller, 1993). The awareness factor is especially important in contexts in which the brand must first enter the consideration set (Aaker, 1991).
- Perceived Quality: The appraisal of the customer about the whole service excellence and/or superiority. Brand Equity will always be a measurable, important brand characteristic (Aaker, 1991). Furthermore, perceived quality can be the basis for a brand extension, when a brand is well-regarded in one context, the assumption will be that this will be the same in a related context.
- Brand Associations: Everything inside the head of a consumer linked to a brand and the – image as a set of brand associations. The associations have a certain strength, which is stronger when a customer had more positive experiences with the brand in the past (Aaker, 1991).
- Other (Proprietary) Assets: this dimension contains the composition like partners, patents and leads to a competitive advantage for the brand.
3.3.4.1 ‘Brand Loyalty’ Dimension
Aaker defined Brand Loyalty as ‘the attachment that a customer has to a brand’.
in different dimensions, Yoo and Donthu (2001) do take notice of this; the subdivision mentioned is the one by Oliver (1997) and consists of the cognitive, affective and conative component.
The research of Michell et al. (2001) concluded that the dimensions quality, reliability and performance of the organization are the most important dimensions to generate brand loyalty. These dimensions partially support the proposition that brand loyalty generating dimensions are important ones in relation to the creation of success of industrial brands. Service and value for money are also regarded as important dimensions as price and promotions are the least important in the creation process of loyalty. Other dimensions which are less important are: availability, familiarity- and relation with the sales team. All these dimensions lead to a higher brand loyalty which eventually leads to a higher Brand Equity. The dimensions quality, reliability and price are according to Aaker components of the dimension ‘perceived quality’ instead of brand loyalty, however service is a component of the brand loyalty dimension. In this research the method used by Aaker (1991) will be obtained. Bendixen et al. (2003) did not separately investigate the loyalty dimension as Michell et al. (2001) did in their research. Bendixen et al. concluded that dimensions as after-sales service and presentation of the organization are of influence on Brand Equity.
The brand loyalty of existing customers can provide a strategic asset and as such provide value when it is managed properly (Aaker, 1991). The way brand loyalty can create value is presented in figure 3.3.
Figure 3.3: Value of Brand Loyalty
- Reduced Marketing Costs; customers who are loyal to the organization reduce the marketing costs of doing business. It costs less to retain customers than to find new ones. Finding new customers is expensive, because they will usually be satisfied, and as such
not take any effort in finding an alternative product/brand. Loyalty of existing customers represents a substantial entry barrier to competitors.
- Trade Leverage; brand loyalty provides trade leverage; strong loyalty towards brands will ensure preferred shelf space, because stores know that customers will have such brands on their shopping list. Trade leverage is especially important when introducing new sizes, new varieties, variations or brand extensions.
- Attracting New Customers; a customer base with segments that are satisfied and others that like the brand can provide assurance to a prospective customer, this is explicitly important when the purchase is somewhat risky.
- Time to Respond to Competitive Threats; brand loyalty provides a firm with time to respond to competitive moves. If a competitor develops a superior product, a loyal following will allow the firm time needed for the product improvements to be matched or neutralized.
3.3.4.2 ‘Brand Awareness’ Dimension
Brand awareness refers to the strength of a brand’s presence in consumer’s minds (Keller, 1993, Aaker, 1991).
Brand awareness consists of brand recognition and brand recall (Keller, 1993). Brand recognition is important in the decision making process of consumers because of three reasons:
- Consumers have to remember the brand when they think about the product category. Enlargement of the brand awareness improves the probability that a consumer thinks about the brand when he has to make a purchase decision.
- Brand recognition can influence decisions of the amount of brands that are taken into consideration when a purchase process is taking place, even when there are no other brand associations.
- Brand awareness has an influence on purchase decisions of consumers, by influencing the formation and the strength of the brand associations and brand image.
divided in sub-dimensions. The brand personality dimensions of Aaker (1997) can be related to the brand association, brand awareness dimension.
Yoo and Donthu (2001) and Washburn and Plank (2002) applied for the three dimensional model, however in this research the original four dimensional model of Aaker (1991) will be applied, due to the large amount of discussion that is still there in relation to the developed three dimensional model.
Brand awareness creates value in four ways as figure 3.4 indicates.
Figure 3.4: Value of Brand Awareness
- Anchor to Which Other Associations Can Be Attached; brand recognition is the basic first step in the communication task. It is usually wasteful to attempt to communicate brand attributes until a name is established with which to associate the attributes. In this relation the awareness is important. A folder of the brand must exist in the mind of the (potential) customer which can be filled with name-related facts and feelings.
- Familiarity; recognition provides the brand with a sense of familiarity. Especially for low involvement products (Percy & Elliott, 2004), familiarity can sometimes drive the buying decision.
- Signal of Substance/Commitment; brand awareness can also be of significant importance for industrial buyers, because it can provide a signal of presence, commitment and substance. These attributes are also important to industrial buyers. When a name is recognized, there must be a reason for this recognition, such as extensive advertising of the firm, the firm has been in the business for a long time, the firm is widely distributed or the brand is successful, like others use it.
- Brand to Be Considered; a consideration set is first of all important, to be in the selected group of brands in the buying process. Brand recall is important in relation to the presence in this consideration set-group. Studies have shown a relationship between
recall and consideration sets; in general the conclusion was that if a brand does not achieve recall it will not be included in the consideration set. The opposite side is that people usually also recall brands which they strongly dislike.
3.3.4.3 ‘Perceived Quality’ Dimension
Perceived quality is not the actual quality of the product but the consumer’s subjective evaluation of the product (Zeithaml, 1988). Perceived quality is an intangible, overall feeling about a brand (Aaker, 1991).
Perceived Quality is an important determinant in relation to the level of prices that can be demanded to the customers (Bendixen et al. (2003), Netemeyer et al. (2004)). Michell et al. (2001) concluded that perceived quality has the most influence on Brand Equity ‘Perceived quality is the primary Brand-Equity generating variable’. The antecedents behind this dimension were not taken into account in the determination of Brand Equity, but they did use them to determine the brand loyalty. Bendixen (2003) concluded that the height of the price is of less importance in combination with technologically innovative products. This research also concluded that Brand Equity really exists in the ‘Business-to-Business’ market. According to Bendixen et al. (2003) the ‘perceived quality’ is the most important determinant in relation to Brand Equity. Pappu et al. (2005) divided perceived quality in three antecedents; all of these three were of significant importance in relation to the building of Brand Equity.
Perceived quality differs from satisfaction. A customer can be satisfied because he or she had low expectations about the performance level. High perceived quality is not consistent with low expectations. To understand perceived quality it is useful to identify and measure the underlying antecedents as is graphically shown in the figure below (Aaker, 1991).
The following determinants are important in relation to the value of perceived quality. These are the antecedents of the Brand Equity dimension perceived quality (Aaker, 1991).
- Reason to buy; in many contexts, perceived quality of a brand provides a central reason to buy; it influences which brands are included and excluded from consideration and the brand that is to be selected.
- Differentiate/Position; an important positioning characteristic of a brand is its position on the perceived quality dimension. This concerns the partitioning in super premium, premium, value, economy…
- A Price Premium; a perceived quality advantage provides the option of charging a premium price. This can result in a profit advantage in regard to competitors.
- Channel Member Interest; perceived quality can also be meaningful to retailers, distributors and other channel members. It is proven that the image of a channel member is affected by the products or services included in its line, so keeping ‘quality products’ in stock can matter.
- Brand Extensions; perceived quality can also be exploited by introducing brand extensions, using the brand name to enter new product categories.
3.3.4.4 ‘Brand Associations’ Dimension
Brand associations are believed to contain ‘the meaning of the brand for consumers’ (Keller, 1993). The underlying value of a brand name often is its set of associations; its meaning to people (Aaker, 1991). Associations represent reasons for purchase decisions and brand loyalty.
Based on the research of Faircloth et al. (2001) brand associations are separated in brand image and brand attitude. When these variables are tested on the height of the significance level, it becomes clear that brand image has a direct influence on Brand Equity, but brand attitude doesn’t.
Based on the research of Michell et al. (2001) dimensions like image, market leadership and differentiated positioning have a strong influence on Brand Equity. Supplier reputation and friendliness of the organization and employees are the most important brand association dimensions according to Bendixen et al. (2003).
Figure 3.6: Value of Brand Associations
- Help Process/Retrieve Information; associations can serve to summarize a set of facts and specifications that otherwise would be difficult for the customer to process and access and expensive for the firm to communicate. Associations can also influence the interpretation of facts and also influence the recall of information.
- Differentiate/Position; an association can provide an important basis for differentiation. In some product categories, like wine and perfumes, the various brands are not distinguishable by most customers. Associations of the brand name can then play a critical role in separating the brands from one another. A differentiating association can also provide a key competitive advantage when the brand is really well positioned. - Reason-to-buy; many brand associations involve product attributes or customer benefits
that provide a specific reason to buy and use the brand. The associations represent a basis for purchase decisions and brand loyalty. Some associations can also influence purchase decisions by providing credibility and confidence in the brand.
- Create Positive Attitudes/Feelings; associations that are liked by (potential) customers can stimulate positive feelings that are transferred to the brand, like for instance celebrities. Other associations can create positive feelings during the use experience, serving to transform it in something different than it would otherwise be.
- Basis for Extensions; associations can also provide the basis for an extension by creating a sense of fit between the brand name and a new product and as such providing a reason to buy the extension.
3.3.4.5 ‘Other Proprietary Brand Assets’ Dimensions
There is not much literature that explicitly takes this dimension of Aaker into account. Aaker (1991) himself mentions that relation partners and patents can be taken into account in relation to this dimension of Brand Equity.
Bendixen et al. (2003) do take one additional asset in relation to this dimension into account; this is the delivery time, which is especially important in the Business-to-Business market. In relation to this Michell et al. (2001) take global presence, or location into account as an important asset which can create Brand Equity.
Other important proprietary brand assets which are known from literature are: location, delivery time and partners.
3.3.5 CBBE model Keller
As has already been mentioned shortly before, Keller (1993) developed a model to build strong Brand Equity. This model is based on the guides Aaker (1991, 1996) presented to build strong Brand Equity and strong brands, because Keller uses the principles of Aaker in his model. Aaker developed different guides for the model, like for instance, brand identification, value proposition of the brand and the definition of the brands positioning. Despite the fact that this model is customer oriented, it is also applicable to the Business-to-Business market (Kuhn et al. 2008). Keller (1993) named his developed model the ‘Customer Based Brand Equity’ pyramid (CBBE). Within this model Keller uses the following definition for Brand Equity:
‘The differential effect of brand knowledge on consumer response to the marketing of the brand’.
Keller uses the words ‘Customer Based Brand Equity’ in order to indicate:
‘Customer Based Brand Equity occurs when the consumer has a high level of awareness and familiarity with the brand and holds strong, favorable, and unique brand associations in memory’.
Figure 3.7: CBBE-Pyramid Keller (1993)
The CBBE model builds a brand as a sequence of steps. This consists of four steps: brand identity, brand meaning, brand responses and brand relationship. The top of the pyramid must be reached (starting with salience) in order to create significant Brand Equity (Keller, 2003). The steps are now explored one by one.
1. Brand Identity; First of all the brand has to identify itself. This can be done with the question: ‘Who are you?’ This first step belongs to the building block ‘brand salience’.
o Brand Salience; salience is related to the antecedents of brand awareness. In order to build a strong brand it is necessary to develop the brand awareness as well in the breadth as in the depth.
The depth of brand awareness measures how likely it is for a brand element to come to mind, and the ease with which it does so.
The breadth of brand awareness measures the range of purchase and usage situations in which the brand element comes to mind and depends to a large extent on the organization of brand and product knowledge in memory.
So the brand should not only be ‘top of mind’ and contain a clear ‘mind share’ but it also needs to have this on the right time and place.
2. Brand Meaning; this is important in relation to the building of strong brands because it can provoke brand reactions. In order to give a brand a meaning it is important to create an image and to build a performance. Keller developed the following question in relation to this brand building block: ‘What are you?’ This question can be answered with the building blocks ‘brand performance’ and ‘brand image’.
o Brand Performance; this is the most important component of building Brand Equity, because it concerns the primary function of the product and it influences the experience of the customer with the brand; what the customer hears about the brand from others and what messages the communication means contain about the brand are important in relation to the perceived performance of a brand by a customer. In order to build brand loyalty and resonance the expectations of the customer must be equalized or exceeded. Keller (1993) speaks about five types of attributes and advantages that give shape to brand performance:
Primary ingredients and supplementary features Product reliability, durability and serviceability Service effectiveness, efficiency and empathy Style and design
Price
o Brand Imagery; this depends on the extrinsic properties of the product or service, including the ways in which the brand attempts to meet customers’ psychological and social needs. It is about the abstract way of thinking of a customer. Thus, imagery refers to more intangible aspects of the brands. Many kinds of intangibles can be linked to the brand, but four main ones are:
User profiles, description of the target group
Purchase and usage situation, how and where can it be used Personality and values, this is about the character of the product History, heritage and experiences
3. Brand Responses; brand responses refer to the way customers respond to the brand, its marketing activities and other sources of information. Brand responses can be divided in brand judgments and brand feelings.
performance and imagery associations. Customers make all kinds of judgments with respect to a brand; however four types are of additional importance:
Brand quality
Brand credibility; the extent to which customers see the brand as credible in terms of three conditions:
• Brand expertise • Brand trustworthiness • Brand likability
Brand consideration; depends in large part on the extent to which strong and favorable brand associations can be created as part of the brand image.
Brand superiority; this measures the extent to which customers view the brand as unique as and better than other brands.
o Brand Feelings; feelings are customers’ emotional responses and reactions to the brand. These emotions evoked by a brand can become so strongly associated that they are accessible during product consumption or use. Research has tried to use this by developing transformational advertising as advertising designed to change customers’ perceptions of the actual usage experience with the product. The following six important types of brand-building feelings exist:
Warmth Fun Excitement Security Social Approval Self-respect
4. Brand Relationship; this last step of the model focuses itself on the ultimate relationship and level of identification that a customer has with the brand.
o Brand Resonance; resonance describes the nature of this relationship and the extent to which customers feel that they have a ‘fit’ with the brand. Resonance can be divided in four different categories:
Attitudinal attachment; customers should not only have a positive attitude towards the brand, but also view the brand as something special. Sense of community; identification with a brand community by
customers may result in customers that feel a kinship or affiliation with other people associated with the brand.
Active engagement; this is perhaps the strongest affirmation of brand loyalty, when customers are engaged, or willing to invest time, energy, money or other sources in the brand beyond those expended during purchase or consumption of the brand.
Implications for building a strong brand
The main strength of the CBBE model is the degree to witch the model offers the necessary guidance in order to build a strong brand. With this model brands can judge on their improvements made in regard to their efforts in building strong brands; however it can also serve as a guide to all the marketing initiatives (Keller, 1993).
3.3.6 Brand Equity Areas
Since Brand Equity is divided in different areas, it is important to fence this off in relation to this research. A lot of reasons can be formulated for building Brand Equity, mostly announced as huge advantages of the brand. The customer- and financial perspective are related to most of these advantages. The following Brand Equity areas exist: service area, ‘Business-to-Business’ area and the ‘Business-to-Consumer’ area; differences between these areas exist as well. Combinations between these areas are also possible as well as the fact that an advantage in one area, can at the same time also provide an advantage in other areas.
One area is of main importance, because this research is conducted in this area. This is the ‘Business-to-Business’ area.
‘Business-to-Business’ Area
In the next sub-paragraph ‘Business-to-Business’ Brand Equity is explained shortly because differences might exist between B-to-B Brand Equity and B-to-C Brand Equity.
3.3.7 ‘Business-to-Business’ Brand Equity
Since the definitions as well as the perspectives and areas of Brand Equity are known now, a short paragraph continues to discuss the literature on ‘Business-to-Business’ Brand Equity; this because of the reason that this research focuses itself on Brand Equity dimensions in the ‘Business-to-Business’ market. Proper understanding of this difference is important in relation to the interpretation of the results.
The overall Brand Identity is of greater importance for industrial buyers instead of an individual product that the buyer wants to purchase according to De Chernatony and McDonald (1998). A further depiction between ‘Business-to-Business’ product and ‘Business-to-Business’ service is also possible. Little research has been conducted on ‘Business-to-Business’ services yet, however brand development is important (Ballantyne et al. 2007).
Furthermore in the ‘Business-to-Business’ market the organization is the brand and the brand is the organization at the same time (Blythe and Zimmerman, 2004).
Now that market orientation, value creation and brand equity in relation to the Business-to-Business market have been explored, it is time to develop a conceptual framework that is used throughout the empirical part of this research. The framework presents a combination of the literature that has been discussed in this chapter so far.
3.4 Conceptual Framework
Figure 3.8: Conceptual Framework Brand Equity Brand Associations Brand Loyalty Perceived Quality Brand Awareness Other Proprietary Aspects
Brand
Equity
Provide Value to the Firm by Enhancing:
3.5 Conclusion chapter 3
In the creation of value Brand Equity is a very useful and important tool.
Marketing literature is already paying attention to Brand Equity for decades. However discussion still exists on the exact application of the theory (Aaker, 1991; Keller, 1993; Yoo & Donthu, 2001; Washburn & Plank, 2002). Still one important conclusion is that based on the articles mentioned throughout the paragraph it becomes clear that the Brand Equity measurement scale of Aaker (1991) is a frequently used instrument in the current existing literature on branding and building strong brands. This provides this research with a solid foundation of literature knowledge on which the empirical research is built.
4. Research Design
In this chapter the research design for the empirical research is investigated. First of all it is necessary to concretize the way the data from the empirical field research is collected. The different research designs that are known in literature and frequently used are mentioned shortly and afterwards the research method that is used in this research is discussed.
4.1 Measuring the dimensions of Brand Equity
From the scientific literature research on this area that has been conducted in chapter 3 it became clear that there are five important dimensions of Brand Equity. These dimensions consist of multiple antecedents which will eventually determine the possible brand choice by a customer. In order to determine to which degree these dimensions influence the decision making process by a customer, attention is paid in this paragraph on how the current existing instruments can answer this question.
The current existing measure methods with which Brand Equity can be measured can be subdivided based on their nature; qualitative and quantitative. The measure methods are discussed throughout the existing literature. The most essential differences between qualitative and quantitative research are now discussed in the table below (Malhotra, 2004).
Qualitative Research Quantitative Research Especially suitable for Gaining qualitative
understanding of the underlying motivations and reasons
Quantifying the data and generalization of the results from the sample to the population
Sample size Small amount, not
representative cases
Large amount of
representative respondents
Data collection Unstructured Structured
Data analyses Not statistical / subjective Statistical / objective
Target Developed initial
understanding
Eventual recommendation of the used method
Table 4.1: Differences between Qualitative and Quantitative Research (Malhotra, 2004)
this research is usually low, because it is time consuming and expensive. A possible way to solve this is to conduct quantitative research, since generalization is the main goal of quantitative research. In this research both the qualitative- as well as the quantitative research method are used. This is necessary because there is hardly any information on the Automotive Coating market in general. This is an issue in order to understand the market, for this reason the qualitative research is conducted. With the knowledge on the Automotive Coating market, the quantitative research is used to provide answers to the main research question (and sub-questions) of this research.
4.2 Qualitative Research method
Answers to general appropriate questions on the Automotive Coating market like for instance: how is the market built, how is the competition organized and how could value be created in this market, were nowhere to be found. Hardly anything is written down or known about this market. For this reason the decision has been made to conduct first of all a qualitative research in order to be able to provide an answer to these questions. With these answers a picture is created of the Automotive Coating market and at the same time provides the foundation of the quantitative research in chapter 6. The three above mentioned questions were developed by the interviewer because with the answers on these general questions it would be possible to create a better understanding of the market.
A total of 5 respondents has been interviewed in order to satisfy the goal of this qualitative research. Only the three questions on which information had to be acquired were used as a basic structure of all the interviews. All the rest of the acquired information from the respondents was seen as possible useful additional information, that could be used in the quantitative research. The respondents who were interviewed are all competitors of Rust Control except for one respondent who is account manager for Rust Control. This decision was made because all the acquired information would come from the persons having the same viewpoint as Rust Control, that is being a supplier in the Automotive Coating market.
4.3 Quantitative Research method
In order to achieve large quantities of data that can be analyzed to draw reliable and viable conclusions it is useful to use the quantitative research approach. Primary data is collected most of the times by using questionnaires. Different definitions of a questionnaire exists (Saunders et al. 2003). Some authors (Bell, 1999) reserve it exclusively for surveys where the person answering the question actually records their own answers. Other use it as a more general term to include all techniques of data collection in which each person is asked to respond to the same set of questions in a predetermined order (deVaus, 2002).
The exact method that is used in the quantitative research is now discussed step-by-step in 3 sub-paragraphs concerning the research instrument, the data gathering and the analysis of the data.
4.3.1 Research Instrument
