Introduction

In today’s highly globalized, extremely dynamic and incredibly rapid-moving world, there is an
abundance of diversity of products in virtually all market segments, and the automobile industry marks
an overload of manufacturers and models exploiting every possible market niche in order to
accommodate effectively all the possible needs of potential customers. The time-tested synergy of
technology, mechanics and craftsmanship now offer us inexhaustible variations of products with
remarkable capabilities in different shapes and sizes, ranging from budget prices of approximately ten
thousand euro, all the way up to over one and a half million.
Regardless of what country a person lives in, almost everyone has access to a huge amount of choice
when it comes to manufacturer availability, able to easily see, test, purchase, run and service vehicles
of all possible origins, and so it therefore becomes apparent that such a heavy market saturation is
likely to result in a large amount of complication when it comes to manufacturer and model
differentiation. Nonetheless, three brands always enjoy the largest amount of interest and desirability,
and stand out above the others – Audi, BMW and Mercedes-Benz.

Rationale
There are a myriad of different opinions and attempts to provide a logical explanation to the absolute
and unshakeable dominance of Audi, BMW and Mercedes-Benz in the premium segment of the
automobile industry, ranging from statements about their mechanical and technical innovation and
superiority to descriptions of their heritage and history. However there is reason to believe that while
all these theories are valid, the truth lies elsewhere. A large number of other brands offer vehicles with
matching, if not superior blends of mechanical durability and technological refinement while also being
able to exhibit rivaling history, however they are still unable to match the stature of the German trio.

The logical assumption is that the reasons for the dominance of Audi, BMW and Mercedes-Benz is
based on the key resources and capabilities they possess that cannot be mimicked, utilized or
implemented by any other manufacturer. Even though a large number of patents and intellectual
property protection measures are taken to ensure that the technology developed by individual car
companies, it is unlikely that any mechanical or tangible aspect of their vehicles is the aforementioned
resource or competence. For that reason, this study will follow the supposition that the three brands’
soft skills, namely their brand images, are in fact the inimitable resource that the German trio
possesses and grants them market segment dominance.

This study hypothesizes that they key strength behind the success of Audi, BMW and Mercedes-Benz
lies in their brand images, and that the value of those images is the most influential factor in swaying
the customer’s buying behavior in favor of the three marques.
Research Questions
1. What are the key elements that form the brand images of Audi, BMW and Mercedes-Benz?
2. What effect does brand image have on the customer’s buying behavior?

Literature Review
Brand Image
Brand image is one of the most important concepts in this literature review, as it is one of the focal
points of this dissertation. In essence, the term “brand image” is a representation of the views and
opinions that customers have about a certain brand (Glynn, Woodside, 2009, p.276). While it has no
concrete structure, brand image is often the combination of all of the possible facts and perceptions
that surround a certain brand and have an effect on the formation of the customer’s perception of it. It
is of crucial importance to highlight the fact that a brand image does not pertain only to the visual and
physical characteristics that a brand exhibits, but also all of the emotional and non-tangible reactions
it provokes in the consciousness of the potential customer (Franzen & Moriarty, 2009, p.19).
Obviously, the symbols and trademarks, products and services, core values and key competences of
the brand all play a significant role in the formation of the brand image, due to the fact that they are
physical projections of what a brand stands for, hence provide the standpoint for the creation of the
client’s perception. However, while the brand image might draw upon certain tangible aspects, the
reality is that they only serve to allow customers to make certain assumptions and judgments about
the brand in question, assumptions and judgments that sometimes are not based on actual facts and
figures, hence revealing the highly prejudicial and subjective nature of brand image (Wilson &
Blumenthal, 2008, p.58-59).

While companies themselves are capable of affecting their brand image, often the influence they can
exert is marginal. Various techniques that can be employed are often the different types of marketing
and promotional campaigns that brands embark on in an attempt to strengthen, focus, narrow, widen
and sometime redefine certain aspects of the brand image (Sengupta, 2005, p.138), as it is arguably
the most influential factor when it comes to differentiation from the competition – often an invaluable
asset, especially in highly competitive markets (such as the automobile industry). Despite this, brand
image is still based on personal or social customer perception and opinion, therefore significantly
diminishing the ability of the brands to be able to alter already established brand images through
various demonstrations.

Brand image is essentially the reputation of a brand, and is a representation of the attributes, appeal,
heritage, values and benefits of a certain brand, in the eyes of the customer. As such, it is something
developed and strengthened over time and applied almost without exception to all of the products and
services offered by the brand. Prominent examples of this in the automobile industry include the
perception of Mercedes-Benz for impeccable engineering, quality and class, Volvo as being the
benchmark for car safety, Honda and Toyota for their unfaltering reliability, BMW for dynamic and
performance capabilities, and Rolls-Royce as the ultimate expression of luxury. The actual validity of
these opinions is highly debatable as different manufacturers often provide models that offer these
aforementioned attributes much more than the brands they are typically associated with. Especially in
recent years, Audi have offered higher quality and more advanced engineering than Mercedes, Ford
and Renault have surpassed Volvo in terms of safety, Honda and Toyota cannot begin to compete
with Volkswagen when it comes to reliability, Jaguar, Lexus and Cadillac’s vehicles offer better
performance than BMW’s, and Bentley has dethroned Rolls-Royce as the leader in top-luxury. Despite
all these facts, the established perceptions endure and continue to greatly benefit the brands, almost
entirely due to the firmly rooted brand images of the different manufacturers. It is important to make
the distinction between brand image and brand identity, as there is a crucial difference between the
concepts and they must not be confused for one-another.

Consumer Behavior
Consumer behavior is the theoretical and practical attempt to identify and categorize all of the different
factors that a potential customer takes under consideration, and how he reacts to them on the way to
forming the decision to purchase a given product, or in other words, the buying behavior (Krishna,
1999, p.2). Similar to the formation of brand image, there is no exact structure or fixed elements that
constitute consumer behavior, although there are certain factors which usually taken into account.
Generally, there are two main categories that different influences could be divided into - tangible and
intangible. The former are usually directly concerned with the traits and characteristics with the product
a customer is thinking or purchasing such as the benefits and attributes it offers, the buying price and
supplementary expenses, the functionality it offers and to what extent its various features
accommodate the specific needs of the buyer The latter category pertains more to the prejudices,
biases, social pressure, personal opinions and perceptions (where the product’s brand image plays a
crucial role) and the emotional responses and connections (feelings) the potential buyer has towards
the product in question. While these factors often provide the fundament of consumer behavior, the
study of its specifics are highly unscientific and unpredictable due to the non-tangible aspect that forms
a significant portion of buyer’s behavior. A certain product might accommodate all of the possible
needs that a customer has, be available at a good price and provide the potential owner with adequate
responses to all of his requirements, that person might automatically dismiss the product based on
effectively unidentifiable and irrational emotional influences (De Mooij, 2011, p.212). Therefore, while
the analysis and understanding of consumer behavior is extremely important to many companies, their
ability to be able to construct a framework for predicting how their potential customers would react
would be heavily deprived or certainty and thorough behavioral understanding and insight.

While the importance of knowing how the potential customer thinks, what he feels and which factors
bear the most influence in finalizing the buying decision would be an invaluable knowledge to a
company, but the inherent lack of rationalizations, commonly illogical assessments, seemingly
irrational presumptions and sometimes contradictory decisions often deprive investigations attempting
to pin-point buyers’ behavior from the possibility to thoroughly and accurately identify and determine
scientifically proven trends with facts and figures. It can therefore be commented that while consumer
behavior may at times exhibit certain patterns, there is no guarantee that these tendencies would
continue, and furthermore, no viable way to signal unexpected variations to these trends, and as such
makes it a very complicated, highly subjective and inaccurate concept to study and analyze (Khan,
2007, p.2). An additional issue is the strong influence that external factors may have on the client’s
buying decision. Personal or impersonal advice from non-credible sources, peer pressure, social
opinions and dogma’s and the interests of other people are only a small portion of the stimuli that could
drastically alter or sway the buying decision of a customer, either directly in favor of a previously
unconsidered product, or against one that was viewed as a potential favorite (Kumar, 2009, p.65).

Different manufacturers in the automobile industry have employed two main methods for combatting
the volatility and uncertainty of consumer behavior when it comes to deciding against their products
or attracting them towards a certain model. They strongly focus and constantly manifest their brand
identity, which - if in-line with their brand image - could potentially serve as a reaffirmation of the
attractiveness and value of that car maker in the eyes of the customer and hopefully could positively
affect the buying decision. On the other hand, they have resorted to constantly expanding their portfolio
of complementary services, mainly oriented towards providing a better post-purchase experience and
establishing a loyal customer base in an attempt to significantly diminish the number of factors that a
client takes into account prior to buying a vehicle and channel that person’s attention solely towards
all the positive experiences, emotions and capabilities he or she has enjoyed with the brand and its’
products.

Effect of Brand Image on Consumer Behavior

Through a large variety of different communication channels, we are literally showered with hundreds
of different products from different brands, where numerous products and items from different
manufacturers all attempt to obtain the same customer base. There are many ways that a customer
could potentially begin to differentiate one product from its competition, although it would often require
an in-depth examination of the product specifics, as well as a good comparison and contrast to the
potential substitutes in order to weigh the advantages of one offer against the others (Trehan, Trehan,
2007, p.197). Depending on the complexity of the product, this could be a very lengthy and time-
consuming process, sometimes impossible for a customer to perform due to a lack of detailed
competences about the intricacies of certain products. We now understand that the customer’s
perception of brand is a combination of both the traits and characteristics brand products all exhibit as
well as that customer’s relationship and experience with the offerings of that brand.
Hence, the effect of brand image on consumer behavior becomes apparent. If the perception and
opinion of a potential customer regarding a given brand is positive, then that customer is highly likely
to be influenced by the factors that have contributed in the formation of that image, and give them the
largest amount of consideration prior to the purchase of a product, usually resulting in buying a product
offered by the brand with which the client already shares an enjoyable experience (Blythe, 2013,
p.122).

Furthermore, brand image is something that is highly communicable through word of mouth, and can
therefore spread like wildfire, both in a positive and negative aspect. Given the necessary amount of
time, brand image can take over the entire perception and attitude of a community or society towards
a certain brand, hence either allowing the attraction of new clients based on the recommendations of
previously satisfied ones, or alienating entire groups of people due to the unpleasant experiences of
a number of people with a given product (East, Wright, Vanhuelle, 2013, p.52). When a customer does
not have any background information or the past experiences of others to draw upon, his buying
decision may incorporate a much longer and detailed analysis of a certain product, however if there
are number of reviews and recommendations concerning a certain brand, one is likely to base their
purchase decision on the experience of others (Hoyer, Pieters, MaCinnis, 2012, p.110).

Methodology
The sample will be limited to owners of vehicles that are part of the premium market segment
(manufactured by Audi, Aston Martin, Bentley, BMW, Ferrari, Infiniti, Jaguar, Lamborghini, Lexus,
Maserati, Mercedes-Benz, Porsche, and Rolls-Royce). While certain vehicle manufacturers such as
Bugatti, Pagani, Koenigsegg and McLaren are also considered to be part of the premium segment,
due to their exceptional rarity and lack of mass-market presence, their owners will not be considered
as part of the survey population. The sole limitation in terms of potential respondents’ age shall be the
minimum requirement of 18 and will not feature any upper limit.

The research of this dissertation will be carried out according to a non-random sampling method that
allows for the utilization of personal selection of the targets for the distribution of the questionnaire-
type survey (Black, 2012, p.232). Through the application of selective sampling (Armstrong, Cummins,
2008, p.143), the questionnaire will be directed specifically towards individuals who have had first-
hand experience in owning, driving, purchasing and using a vehicle from Audi, BMW and Mercedes-
Benz, hence allowing the collection of research that is based on actual first-hand experience with one
of the main subjects of this dissertation.

Findings

The figure above is a graphic representation of respondent’s preferences regarding the three brands
this dissertation focuses on. We can see from the results that BMW and Mercedes-Benz are more
preferred than Audi, where they share 40% preference each, as opposed to 20%.
The graph above displays the traits and characteristics the respondents value most in a vehicle. It
becomes evident that luxury and refinement have been given the highest value at over 40%, followed
by comfort and performance at roughly 20%.

Figure 3 is a table that demonstrates a summary of three traits most often associated with each of the
three brands. While there have been substantial variations in the responses of the different
questionnaires, an interesting tendency is that over two thirds of the replies denoted “quality” as a trait
that applies to all three of the brands.
The table above displays the prevailing traits ascribed to the stereotypical drivers of Audi, BMW and
Mercedes-Benz. Due to the different brand images, there is no similarity between the traits that each
driver supposedly exhibits, however more than 60% of the respondents have indicated the traits
above.

This diagram represents the respondents’ opinions regarding the influence of a car on the perception
society has on its owner, if they perception of society regarding them has been affected by their cars,
and if society’s perception of a given brand has influenced their perception of that brand. Clearly, there
is high number of positive responses towards all three of the statements.
This figure shows the percentage division in terms of the opinion of the respondents whether they
consider that the brand image of their vehicle can considered to be an adequate representation of
themselves and their character. The combined 90% affirmation is a categorical declaration that almost
all the respondents believe this is the case.
The figure above shows in percentages the answers of the respondents regarding the inquiry about
the importance of brand value. As the graph indicates, approximately nine out of ten respondents
believe that brand image is an important factor to consider prior to vehicle purchase.

As demonstrated by the chart above, when the respondents were asked if they would purchase a
vehicle that answers all of their requirements, but has a brand image they don’t sympathize with, there
were no drastic differences between the 5 categories, although the results indicate most of the
respondents (55%) would not make the purchase.
Figure 9 manifests the most common reasons that respondents have for choosing Audi, BMW and
Mercedes-Benz, where a superior combination of traits (at 40%) and the offering of style, luxury and
class (at 30.5%) were deemed to be the most influential reasons.

The diagram above indicates what percentages of the respondents belong to which age group. The
majority are identified at 18-25 and 26-30 (35% and 30% respectively).

Figure 11 indicates the gender division of the respondents, showing that 65% were male, and 35%
were female.
The graph above depicts the division of respondents according to their occupational field, indicating
than nearly 70% are in the business and finance sector, with minimal percentages for the other 5
categories.

This diagram exhibits how many vehicles the survey respondents own or have owned, where nearly
40% have had two or three vehicles, followed by one car (or none) at 30.2%.
This final figure indicates the main source of income for the respondents, where a categorical majority
of 80% have answered their primary earnings come from salaries and wages, followed by roughly
equal yet minimal in contrast, other four categories.

Analysis

We can see that the traits that recur most often in regard to Audi are reliability, quality and tranquility.
The majority of respondents view BMW as a company that stands for performance, quality and
excitement, where Mercedes-Benz is mostly categorized as a brand of comfort, luxury and quality.
These results are indications that all three of the companies are well aware of their customers'
perception due to the almost direct correlation between the identified brand images by the
respondents, and the projected brand identities. Clearly the existing images of the brands are highly
influenced by the different core values that each of the companies have constantly demonstrated
throughout the years. An interesting observation can be made that a large part of the respondents
have identified “quality” as being one of the key traits of all three of brands, which in itself serves to
demonstrate the strength of the established brand images.

The results have categorically demonstrated that vehicles, and by extension the brand of the
manufacturer do affect society’s perception of a certain person. There are a large number of
stereotypes that prevail in defining what exactly the ownership of a given vehicle says about the driver,
but regardless of the actual projection, the existence of an influence remains unaltered (see Fig. 4).
This statement can further be reinforced by the commonly identified statement that the way a person’s
community perceives him has been affected by the ownership of a certain vehicle. An interesting
observation regarding brand images has been exhibited by an overwhelming indication that the
individual perception of a car manufacturer in the eyes of certain person has been strongly affected
by society’s perception and opinion of the same company (see Fig. 5). This supports the theoretical
supposition regarding the inherent subjectivity of brand image, and the large number of exterior
influences that may affect its formation.

Perhaps the two most important conclusions are the very categorical and clearly visible indications of
the importance of brand image prior to the purchase of a new vehicle (see Fig. 7). The research directly
shows that almost all of the respondents believe that the brand image of car is a factor of exceptional
importance to be taken under consideration before purchasing a vehicle. While there is a slight
variation in terms of the intensity of this importance, the almost 100 percent valuation of brand image
significance is undisputable. Therefore the brand value that the products of different manufacturers
carry could theoretically be the factor which exhibits the final and most influential factor in forming the
buying decision.

A large number of the respondents have further testified to the validity of the previous statement by
firmly claiming that while considering their options prior to the purchase of a given vehicle, they would
not decide to buy a car that fulfills all of their requirements and accommodates all of their needs if the
brand image of the manufacturer is not one that they like and are attracted by (see Fig. 8). This is
arguably one of the most important pieces of information obtained from the study as it provides the
clearest collected verification that brand image could “make or break” the decision to purchase, hence
serving as supporting evidence of the aforementioned declaration that the influence of brand image
could be considered as the factor that carries the largest weight and importance during the formation
of the buying decision in the mind of the potential client.

The final significant logical assumption that can be made as a result of the obtained results is the
outcome to a direct inquiry regarding the main reasons why they have chosen to purchase a vehicle
manufactured by Audi, BMW or Mercedes-Benz, rather than another company, especially considering
the huge availability, highly competitive prices and generally similar running and maintenance terms
and costs offered by other premium segment manufacturers. Taking under consideration the observed
responses it becomes immediately clear that there is no single reason, but rather the combination of
different tangible and non-tangible such as class, style and luxuriousness, as well as a number of
physical vehicle characteristics (see Fig. 9). After juxtaposing these results with the initial definitions
of the theoretical concepts expressed in this dissertation, we can understand that in fact the brand
image of Audi, BMW and Mercedes-Benz is what has persuaded the respondents into purchasing
vehicles manufactured by these three companies.
Taking into account all of the above into account, we could deduce that while all three companies are
prospering and performing admirably, BMW and Mercedes-Benz appear to have a higher preference
percentage in the eyes of the respondents (see Fig. 1), and within the demographic scope of the study
(see Fig’s. 10-14), have a “stronger” brand image than Audi.

Conclusion
Answer to 1st Research Question

There are a large number of factors that go into the formation of the brand images of Audi, BMW and
Mercedes-Benz, however there has been an indication that one general theme is the main reoccurring
factor which bear the greatest influence in the creation of their brand images – quality (see Fig. 3).
There are many possible expressions of quality when it comes to the automobile industry, including
engineering excellence, highly advanced technology, construction refinement and many others,
however one could theorize that the perceived quality in the eyes of potential customers is not an
assessment of the tangible aspects of the manufacturer’s vehicles, but rather a stereotypical term
utilized to describe the combination of all the characteristics and capabilities the German trio’s vehicles
exhibit. Audi have transferred their brand identity of constant technological advancement and
development to the customers, BMW have thoroughly maintained their image of dynamic prowess and
exhilarating performance, and Mercedes have consistently exhibited their standards of comfort, luxury
and class. While the disseminated questionnaire has allowed us to testify the extent to which brand
image and brand identity correspond while taking under consideration the specifics of each
manufacturer, more importantly, we have been able to identify the crucial factor underlying all three of
them – the customer’s perception of their vehicles as the benchmark for automobile quality in all
possible vehicle and company aspects, hence strengthening their brand images to an extent that
allows their successful exploitation for customer retention, attraction, sales increase and profit
augmentation (see Fig. 9).

Answer to 2nd Research Question

The conduction of the research has also allowed us to clearly identify and determine the extent and
shape of the effect of brand image on the customer behavior, and namely their buying behavior in the
premium segment of the automobile industry in Bulgaria. After the analysis of the study and a thorough
examination of the obtained results, we are able to conclude that specifically in this market, the
influence that brand image exerts on the formation of customers buying decision is substantial, almost
to the extent where it exists as the most significant factor. The respondents of the survey have
profoundly identified that brand image plays and essential role in making up their minds (see Fig. 8),
and hence we can palpably deduce if and what the effects of brand image are on consumer behavior.
Clearly, the exerted influence is substantial in all cases (see Fig’s. 6 & 7), at least in the premium
automobile sector, however its effect is solely dependent on the brand image itself, in the sense that
the strength of the brand image is not as important as the attitude towards the brand. If the customers
perceive a company of being incapable of offering decent products, or a manufacturer who is not likely
to produce satisfactory vehicles, the customer would decide not to purchase a vehicle by that make,
even if the car itself will answer all the clients need. Congruently, if the customer’s perception of a
given brand is that all of their products are the physical representations of the highest possible levels
of quality (such as the common ground for the brand images of Audi, BMW and Mercedes-Benz), a
potential customer could expected to purchase a car from on these three manufacturers, even if there
are certain aspects of the vehicle specifics which are not exactly to the exact client’s liking.