Bachelor Thesis (15pt) Does Volvo Cars’ marketing strategy differ according to consumer behavior in Sweden and in France A study of how Volvo Cars adapts its marketing strategy in France compared to Sweden Deborah Samama Jessica Vega Supervisor : Owe R. Hedstrom Spring Semester 2010 Umeå School of Business Acknowledgments We would like to thank our supervisor Owe R. Hedstrom who, with his experience, has helped and guided us in the writing process of our Bachelor thesis. Our thanks also go to our Swedish acquaintances who have helped us translating some of our sources concerning Volvo Cars from Swedish to English. They also gave us precious information about the Swedish culture and values and allowed us to understand better the signification of the results of our questionnaire by explaining us how they and most Swedes they know perceive Volvo Cars. Finally, we believe we should thank Umeå University, the University library and all the librarians for having made available to us interesting and rich literature for our project. Abstract There is a great diversity in marketing strategies that brands can use to develop their name, image and products. The selection of the appropriate strategy is the basis of the image a brand wants to present and how it will be perceived by the market it attempts to approach. However when a brand aims at different segments of a market it has to adapt its marketing strategy to suit better the new segment compared to the first one. Hence in this thesis our interest has brought us to compare Volvo‟s marketing strategy in Sweden and in France as we study in the first country and we come from the second one. We tried to identify the similarities, the differences, and understand how Volvo manages to evaluate and adapt to the needs and expectations of the different consumers in those two countries One of the first things we noticed when arriving in Umeå was the number of Volvo cars in the street in contrast to what we are used to seeing in Paris. We understood that the brand was famous and even natural for the Swedes leaving here, whereas it seemed that the French were not truly aware about the brand‟s products. Thus to comprehend this difference we decided to carry our researches on what defines the brand in the consumer‟s mind: marketing. The method we used to conduct this study was based on the objectivist ontological position and on the positivist epistemological assumption combined to a deductive approach – implying a quantitative study in our case. We used secondary data to create our theoretical framework and then we distributed 100 questionnaires in both countries – 50 each. The observation and the analysis of the results have been divided into two parts in order to elucidate the similarities and differences between the two countries studied. These separated parts then lead to a cross-case observation and analysis. Our conclusion mostly corroborates our assumptions as we observed that the majority of our Swedish respondents had a good idea of what represents Volvo, whereas it is still seen as an outdated car manufacturer for our French sample which does not spot enough advertisement about the new models of the brand and which is more demanding on design. This is why, among other recommendations, we suggest Volvo to advertise more on certain values like ecology which is not well recognized and to focus more on some channels of communication, depending on the location. Key words: Marketing strategy, Volvo, Adaptation, Brand image, Consumer perception, France, Sweden. Table of contents 1. Introduction.......................................................................................................................... 1 1.1. General background ................................................................................................................ 1 1.1.1. Volvo Cars: History and values ........................................................................................ 1 1.1.2. Finding an interesting subject for our thesis: How did we come up with the idea of studying and comparing Volvo Cars’ marketing strategy in France and in Sweden? ..................... 3 1.2. Theoretical background ........................................................................................................... 4 1.2.1. Brand image..................................................................................................................... 4 1.2.2. Consumer perception ...................................................................................................... 6 1.2.3. Adaptation ....................................................................................................................... 7 1.3. Research question ................................................................................................................... 7 1.4. Purpose .................................................................................................................................... 7 1.5. Scope ....................................................................................................................................... 8 1.6. Limitations ............................................................................................................................... 8 2. Methodology chapter.......................................................................................................... 10 2.1. Practical preconceptions ....................................................................................................... 10 2.2. Methodological preconceptions to come up with our research problem and our research questions ........................................................................................................................................... 11 2.3. Methodological assumptions ................................................................................................ 12 2.4. Research design ..................................................................................................................... 13 2.5. Research strategy .................................................................................................................. 14 2.6. Specific data collection methods and literature review ........................................................ 15 2.6.1. Primary data .................................................................................................................. 15 2.6.2. Secondary data .............................................................................................................. 15 2.6.3. Criticism of secondary data ........................................................................................... 16 2.7. Ethical considerations ........................................................................................................... 17 3. Theoretical framework ........................................................................................................ 18 3.1. Brand image .......................................................................................................................... 18 3.1.1. Brand positioning .......................................................................................................... 18 3.1.2. Consumer loyalty ........................................................................................................... 20 3.1.3. Use of Communication .................................................................................................. 22 3.2. Consumer perception ............................................................................................................ 23 3.2.1. About the values ............................................................................................................ 23 3.2.2. About the name ............................................................................................................. 24 3.2.3. About the exposure ....................................................................................................... 25 3.3. Adaptation ............................................................................................................................. 26 4. Practical methodology ........................................................................................................ 28 4.1. Our questionnaire ................................................................................................................. 28 4.1.1. Conception .................................................................................................................... 28 4.1.2. Administration of the questionnaire and processing of the data ................................. 28 4.2. Main difficulties ..................................................................................................................... 28 5. Empirical observations ........................................................................................................ 30 5.1. Volvo Cars’ marketing strategy ............................................................................................. 30 5.1.1 Global marketing strategy ............................................................................................. 30 5.1.2. Marketing strategy in Sweden ...................................................................................... 32 5.1.3. Marketing strategy in France ........................................................................................ 32 5.2. Description of the findings .................................................................................................... 33 5.2.1 In Sweden ...................................................................................................................... 33 5.2.2. In France ........................................................................................................................ 36 5.2.3. Comparison of the data in the two countries ............................................................... 38 6. Analysis .............................................................................................................................. 41 6.1. Analysis of the collected data in Sweden .............................................................................. 41 6.1.1 Band image and positioning .......................................................................................... 41 6.1.2. Consumer perception .................................................................................................... 43 6.2. Analysis of the collected data in France ................................................................................ 46 6.2.1 Brand image and positioning ......................................................................................... 46 6.2.2. Consumer perception .......................................................................................................... 47 6.3. Adaptation: discussion about Volvo’s Marketing strategy in France compared to Sweden 49 6.3.1. How did Volvo adapt to France compared to Sweden? ...................................................... 49 6.3.2. How is Volvo perceived in France compared to Sweden? .................................................. 53 6.4. Criticism of the method ......................................................................................................... 55 7. Conclusion .......................................................................................................................... 56 7.1. Findings.................................................................................................................................. 56 7.2. Suggestions ............................................................................................................................ 56 8. Quality criteria .................................................................................................................... 58 8.1 Validity ................................................................................................................................... 58 8.2 Reliability ............................................................................................................................... 58 8.3 Replicability ........................................................................................................................... 58 9. References .......................................................................................................................... 60 10. Appendixes ......................................................................................................................... 64 1. Introduction Our study will focus on comparing Volvo Cars‟ marketing strategy in France and in Sweden. Indeed, from one country to another, people may have different perceptions of a brand and react in different ways to marketing campaigns, but they may also have different expectations. Our purpose is to study Volvo Cars positioning in both France and Sweden and how their potential customers perceive this positioning. Does Volvo manage to impact its potential customers with the marketing strategy it has chosen for each of the two countries or not, how do the targets react, and how does Volvo adapt to their expectations. To begin with, we will introduce Volvo and its marketing strategy in a background section; then, we will present our methodological considerations (2. Methodology chapter) and detail the theories we will use to carry our study (3.Theoretical framework chapter). After having collected our data in both France and Sweden - through self completion questionnaires - and processed it in SPSS, we will present our findings in the Empirical study chapter. Eventually, we will compare our findings with the theories presented in the theoretical framework in order to analyze Volvo Cars‟ positioning and marketing strategy in both countries, how the brand is perceived, and how well it has managed to adapt to its targets‟ needs and expectations. 1.1. General background In this section, we will first present Volvo Cars focusing on the company‟s history and its values, and then explain briefly how we came with the idea of studying Volvo Cars‟ marketing strategy. 1.1.1. Volvo Cars: History and values Volvo Cars is a Swedish upper-scale automobile manufacturer from Gothenburg which was created in 1927 by Gustaf Larson and Assar Gabrielsson (Volvocars.com 2010)1. Volvo was owned by Ford Motors Company from 28th of January 1999 to the 28th of March 2010 when it was bought by Geely - China‟s first private automobile manufacturer (LesEchos.fr 2010)2. The fact that Volvo now belongs to Geely will allow the Swedish automobile manufacturer to be more visible on the Chinese market (which is a very important one) and maybe finally become profitable again: last year, Volvo made a deficit before taxes of $-1,465 million USD (Volvo 2008)3. Nevertheless, Geely promised that Volvo Cars‟ strategy and conception would remain controlled by Volvo AB which has been in charge of the control and protection of the brand‟s use. The car production should not be delocalized to China either (LeParisien.fr 2010)4. Indeed, most Volvo cars are currently mainly manufactured in Belgium (Ghent for the regular models such as the C30 or the S60) and in Sweden (Gothenburg for the bigger models such as the XC 70 and the S80). It is a very important fact that Geely plans to let Volvo remain independent because Volvo Cars‟ reputation worldwide as a trusted upscale automobile manufacturer would certainly have been impacted if the company had become completely controlled by Geely and if the production had been delocalized to China. So far, this take over does not seem to have affected Volvo sales since Volvo Cars is the automobile manufacturer that has seen its European market share grow the most in 2010 with a progression superior of 35% (European Automobile Manufacturers‟ Association 2010) 32 - 1 only overpassed by Nissan. This raise is probably to be linked with the renewal of the design of Volvos and to the efficiency of Volvo Cars‟ marketing strategy: we may indeed assume that they have managed to convey their values (and that these values are perceived as good by the customers) and to promote their products in a way that has convinced customers that Volvo is a good choice for a car. Volvo‟s reputation relies on very strong values: quality, safety, ecology and design (Volvocars.com 2010)5. Moreover, the Swedish origin of the automobile manufacturer is synonym of quality and security. Safety has always been one of the most important values for Volvo Cars since the creation of the brand and Volvo is seen as a precursor in terms of security: Nils Bohlin, engineer for Volvo invented the three point seat belt and since 1959, and Volvo was the first automobile manufacturer to equip their cars with it. Other examples include the fact that Volvo has also been the first to equip its cars with head rests in the front (to reduce risks of breaking one‟s neck in case of an accident), the central survival security cell (that protects the passengers even more from the shock) and the seat belts on rear passengers‟ seats (especially the middle seat). These are only a few examples to illustrate how security is and has always been very important for Volvo Cars, but many other examples can be found on its corporate website in the section dedicated to safety (Volvocars.com 2010)6. Moreover, Volvo has also developed a new system to protect pedestrians which will be available in the new S60 model: the car will be able to detect the pedestrian and according to the distance from him or her, either stop or strongly slow down the car increasing by 80% the chances of survival of the victims (DHnet.be 2010)7. The protection of environment is also a very important value for Volvo who has developed new models which have been found to emit very low amounts of carbon dioxide. It is obvious for Volvo that people still need cars, but on the other hand, as an automobile manufacturer, it is aware of the concerns for the environment and the need to reduce the emissions of carbon dioxide when driving. Volvo has developed several models which cope with governments‟ expectations regarding the reduction of carbon dioxide emissions. For instance, Volvo‟s Hybrid models or cars that work with ethanol have been found to release less than 105 grams of carbon dioxide per kilometer (Volvocars.com 2010). Quality and design are the two other main values that are characteristic of Volvo: the Scandinavian design and the high quality of the Swedish steel allow Volvo Cars to lay emphasis on the sustainability of its cars over time and under extreme conditions - Volvo cars have indeed been submitted to the same tests as anti seismic buildings in order to test their quality- (Volvocars.com 2010)8. Finally, as mentioned earlier, design is important for Volvo, but according to Volvo‟s Swedish philosophy, a car which is not practical cannot really be beautiful. This is the reason why it favors sober designs that are both elegant and functional. Nevertheless, being conscious that a car cannot only be practical and that design is an important factor of choice when buying a car (for instance, as we will see it later, it is the first feature that French people consider when buying a car), Volvo has renewed the design of its cars. 2 1.1.2. Finding an interesting subject for our thesis: How did we come up with the idea of studying and comparing Volvo Cars’ marketing strategy in France and in Sweden? When we arrived at Umeå last August, we have both been struck by the amount of Volvo cars we saw. Indeed, we were expecting to see many Volvo cars because it is a Swedish car manufacturer, but we were surprised to see as many because in France, even though Renault and Peugeot are French, we also have lots of cars from Germany, Japan, Italy, America, Spain and so on. Moreover in France, few people own a Volvo, and the few Volvo we had seen so far were rather old, big and owned by old people. Besides, in France, Volvo cars have a brand image associated to family, Sweden, quality and safety, but definitely not design. In Sweden, on the other hand, Volvo cars are very popular (they are the most sold cars), and we discovered that some of them actually had a very good design. After having talked with Swedish people and explained them that in France, Volvo were not so well known and do not benefit of a very good brand image, some of them were surprised. They indeed explained us that Volvo cars are among the best cars in the world as far as safety and quality are concerned, and that to them they do not have an image of old unpractical cars, on the contrary, there are cars that are resistant to extreme temperatures and provide a lot of space without having the size of an SUV (Suburban Utility Vehicle). As marketing students we found it interesting to see the differences of perception between France and Sweden on the same brand. We did not know yet that it would soon become the subject of our bachelor thesis. Indeed, a few months after, we needed to find an interesting subject that would correspond to our field of study. We are both students in marketing and both oriented towards international marketing. We thought that studying the management of a brand internationally would be very interesting and would bring us valuable knowledge for the continuation of our studies. We came up with several topics involving amongst others Carrefour and it‟s adaptation to the Chinese market, and Volvo, and the adaptation of their marketing strategy in both France and Sweden since we are French students in Sweden. We submitted our different ideas to our supervisor Owe R. Hedstrom who advised us to choose the topic about Volvo Cars‟ marketing strategy and adaptation according to the different cultural features of the countries. We therefore decided to study this subject for our thesis, and more precisely, we are going to focus on Volvo‟s marketing strategy and perception of the brand in Paris (where we come from) and Umeå (where we study). By choosing this subject we expect to find very interesting results knowing that Paris is a big capital city (with more than 2 million inhabitants in Paris itself, and a rather tempered climate) and Umeå a city from Northern Sweden (with a very cold climate most of the year and around 100 000 inhabitants). Moreover, the two cities present differences of concentration of their population, Umeå being very spread (with a surface of 2.317km² for around 100.000 inhabitants – precisely 112.732 inhabitants (Paris‟ Official website 2010)29) and Paris being very concentrated (105 km² for more than 2.200.000 inhabitants – precisely 2 201 578 inhabitants (Umeå „s Official website 2010)30). Therefore the needs as far as cars are concerned will be different. Indeed, as Parisians, we can say that when choosing a car, we think about how easy it will be for us to drive and to park it in Paris, because it is always very hard when having a big car to find a 3 free place to park. Moreover, we do not really need a car within Paris since it would cost us more than the public transportation and probably take longer since we have a metro every 3 minutes and a bus every 5 to 15 minutes. On the other hand, in Umeå, we realized how useful a car is, especially knowing that the temperature can go down to -30°C in winter and that if you miss your bus, you will have to wait another half hour in the cold for the next one. Moreover, as Umeå is a very spread city, it is more difficult to walk from one point to another if you miss your bus. Finally, we may mention that here, in Umeå, whenever we have taken the car, we have never had any trouble in finding a place to park, therefore, the size of the car might matter less in comparison to Paris, and the ability to resist to extreme temperature might on the contrary be more important. Those factors might probably be part of the explanation of why there are more Volvo cars in Umeå/Sweden than in Paris/France because they influence the consumers‟ choice of a car. We wanted to understand how Volvo managed with those differences and how it adapts to these two unlike cultures. Indeed, cultural factors can be added to the ones proper to the country since we suppose that many French people see design as a very important factor when buying a car whereas the Swedes that we have had the occasion to talk to when arriving in Sweden usually give more importance to environmental factors and practicality. We will of course see if those statements are confirmed in our empirical observations in both countries. The information that we had about Umeå and Paris and the fact that we realized that our perception of Volvo was very different from Swedish people‟s one definitely comforted us in our choice to study Volvo cars‟ marketing strategy and adaptation in both France and Sweden. 1.2. Theoretical background In this sub chapter, we will focus on presenting the different theories that appeared to be relevant for our study and which will help us formulate our problem. We will first deal with brand image, then we will broach consumer perception, and finally, we will speak about adaptation. 1.2.1. Brand image Brand positioning In order to position itself in France, in Sweden, or on any other market segments, Volvo has established four main values – quality, safety, environment and design. Indeed, according to Keller (2008), the establishment of strong values is crucial in brand positioning and in creating “brand superiority in the minds of consumers” and showing them “the advantages or points of difference a brand has over competitors” (Keller 2008: 38-39) in order to allow them to classify the brand in comparison to its competitors according to their values and personal images. In this study, we are going to examine if Volvo Cars has the same brand positioning in France and in Sweden, and we will deepen this notion of brand positioning in the Theoretical framework chapter. 4