An Analysis of Automobiles and How Their Value Is Perceived

An Analysis of Automobiles and How Their Value is Perceived

       Introduction, Statement of the Problem and Literature Review          

Mikhael Gouterman

1467215

Roger Maclean

300-301-AB

3/31/2016

Thursday 11:30

Table of Contents

Introduction........................................................................................................................  3

Statement of the Problem..................................................................................................  4

Literature Review............................................................................................................... 4-9

Bibliography.......................................................................................................................  10

Appendix A.........................................................................................................................  11

Appendix B

Introduction

Since cars have been available to the general public, there have been several models available, all of which were offered at different prices. All these cars, despite having different  prices, would all fulfill the same function. The common function for all cars was transportation. To simply go from point A to point B. A car may cost twice as much as another, but still fulfill the same fundamental function; transportation. Despite fulfilling the same function, certain customers would still spend extra money on a product that fulfills the same exact function as a less expensive counterpart.  

The aforementioned supplementary expenditure is linked with the desire for a certain status and the desire of presenting it to other. The desire for a certain status is also associated with luxury purchases . An individual is fully aware that whether he purchases a car for 10 thousand dollars or 100 thousand dollars, the function of transportation will be equally fulfilled. It is the appeal the individual creates, through the display of status unto others, that creates the difference between the two cars .This whole research is based on the premise that a car represents a status symbol. In fact, luxury and premium automobiles have traditionally enjoyed the aura of status symbols (Nadine, 2015). Although, the display of status through car choice is not one that is evident to all. A car observer would simply be classified as someone who's attention was attracted by a given car, and not every car observer is an automobile expert who has the ability to make very precise estimates about the value of a given car. Due to this, not every person who's attention was attracted by a car is able to make accurate conjectures about the owner's wealth status.

Statement of Problem

The occurrence of a problem becomes a possibility when a false assumption is followed by an action based upon the given assumption. The false assumption being the inaccurate car value estimation, leads to the false assumption about the car owner's wealth status.  This is specifically what this research is addressing. There are many independent variables which can influence an inaccurate value estimation of a car by an automobile observer. Once the dependent variable, which is the perceived value of the car, starts to get influenced, false assumption begins to be formed. The purpose of this project will be to identify which independent variables are the most influential in the making of an inaccurate assumption about an automobile's value.

Literature review

Definition of Key Terms:  "Luxury Vehicle" and  "Status"

The terms "luxury" and "status" have varying definitions, depending on the source and context . The definition of "luxury vehicle" is what is most relevant to this research. According to Wikipedia, a luxury vehicle is a marketing term for a vehicle that provides luxury — pleasant or desirable features beyond strict necessity — at increased expense. Therefore, luxury goes beyond necessity, and the supplementary expenditure that is spent on it is out of personal enjoyment. Personal enjoyment is not the same for all people, and it is a fact that for some, the display of a certain wealth status brings about personal satisfaction.

The term "Status", as well as "luxury", has a very diverse set of definitions which depend entirely on the context. The more relevant term for the context of this research is "Social Status". According to Wikipedia,  Social status is the position or rank of a person or group, within the society. In modern society, a major factor in the ranking of a person is wealth. It has become common sense to know that a CEO of a given company is of a higher social status than a homeless man. The difference in wealth between the two individuals is an undeniable influence on their respective social statuses.

Marketing

If two products are not designed to appeal to the same target audience, they will certainly not be marketed in the same manner. To appeal to their respective target audience, luxury car brands use a class specific approach to marketing which is used to create a certain appeal for the brand. Zheng (2013) conducted a case study on Audi's brand repositioning in China. By reviewing Audi's press releases published from 1999 to 2007, the author was able to identify the brands main marketing strategies, which included media relations, event sponsorship, and corporate social responsibility. All three of these strategies greatly contributed to creating a positive yet prestigious image for Audi in China. The main weakness of this study was the fact that it is a case study. It is difficult to make correct assumptions about other luxury brands based on the findings of this study, due to the possibility that different brands take different approaches.

Pawlowsky (2013) conducted a similar study, but in a different geographical and temporal setting. This article demonstrates  the growing importance of motorists as a target for motor vehicle advertising and as objects of official statistics in the 1930s, through access to detailed numerical vehicle registration data from pre-world war 2. The marketing strategies greatly differentiate from the ones of Audi in China. In  the 1930s, advertizing and marketing was done on a much more personal level, as statistics were widely available for car brands. The car brands were able to obtain the addresses and names of current vehicle owners, as well as their current occupation, in order to personalize the potential advertizing. Once again it was proven that luxury brands used very different approaches when it came to marketing their product. The main weakness of this particular study was that the setting in which the data was collected is no longer relevant to modern luxury brands.