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The Brand Value and its Impact on Sales in Automotive Industry

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  • John von Neumann University, Hungarian National Bank – Research Center

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The aim of this article is to define the theoretical basis of brand value from the viewpoint of domestic (Slovak) and foreign authors and its impact on sales. This includes a regression and correlation analyses focused on investigate the dependence between the brand value and sales in automotive industry. The basic sources of research were secondary data obtained from worldwide surveys in the form of rankings published by Forbes magazine, annual reports of companies and published professional publications. General scientific methods were applied for the processing of the data, as well as mathematical-statistical methods to evaluate the data collated from the results of regression and correlation analyses and test the linear independence. The results of analyses show that the brand value and sales are linearly dependent, specifically it is medium-strong direct linear dependence. Therefore, the brand value has a direct effect on sales volume.
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LOGI Scientific Journal on Transport and Logistics
Vol. 10 No. 1 2019 DOI: 10.2478/logi-2019-0005
© 2019 M. Nadanyiova et al. This is an open access article licensed under the Creative Commons
Attribution-NonCommercial-NoDerivs License (http://creativecommons.org/licenses/by-nc-nd/3.0/).
41
The Brand Value and its Impact on Sales in Automotive Industry
Margareta Nadanyiova1*, Lubica Gajanova1, Dominika Moravcikova1 and Judit Olah2
1University University of Zilina, Faculty of Operation and Economics of Transport and
Communications, Department of Economics, Univerzitna 1, 010 26 Zilina, Slovak Republic; Email:
margareta.nadanyiova@fpedas.uniza.sk, lubica.gajaniova@fpedas.uniza.sk,
dominika.moravcikova@fpedas.uniza.sk
2University of Debrecen, Faculty of Economics and Business, Institute of Apllied Informatics and
Logistics, Böszörményi út 138, H-4032 Debrecen, Hungary; Email: olah.judit@econ.unideb.hu
*Corresponding Author: Margareta Nadanyiova
Abstract: The aim of this article is to define the theoretical basis of brand value from the viewpoint
of domestic (Slovak) and foreign authors and its impact on sales. This includes a regression and
correlation analyses focused on investigate the dependence between the brand value and sales in
automotive industry. The basic sources of research were secondary data obtained from worldwide
surveys in the form of rankings published by Forbes magazine, annual reports of companies and
published professional publications. General scientific methods were applied for the processing of
the data, as well as mathematical-statistical methods to evaluate the data collated from the results of
regression and correlation analyses and test the linear independence. The results of analyses show
that the brand value and sales are linearly dependent, specifically it is medium-strong direct linear
dependence. Therefore, the brand value has a direct effect on sales volume.
Keywords: Brand, brand value, sales, automotive industry, consumers
1. Introduction
The strong brand is one of the most valuable assets of the company and also a very effective tool in
a competitive battle. It is very complicated and costly to get customers who are faithful to another
established brand [1]. If they know what they can expect from verified branded products, it is
challenging to get them to try another brand, even though these products can be even better [2].
This forms a barrier to entry into the market by potential competitors and makes it much more
difficult for the current competitors.
The brand value for the consumer lies in the trust in the unmatched quality of the product at a
stable price, advantageous purchase, product satisfaction, brand communications with consumers,
traditions, customer's associations with a particular brand, the prestige given by using the product
and so on. Associations that a consumer deals with in connection with the brand are such an abstract
aspect that contributes to the brand value creation and can be both positive and negative.
42
The aim of this article is to define the theoretical basis of brand value from the viewpoint of
domestic (Slovak) and foreign authors and its impact on sales. This includes a regression and
correlation analyses focused on investigate the dependence between the brand value and sales in
automotive industry. Based on the results of analyses, we found out that the brand value and sales
are linearly dependent, specifically it is medium-strong direct linear dependence. The basic sources
of research were secondary data obtained from worldwide surveys (Interbrand, BrandZ Top 100,
etc.) in the form of rankings published by Forbes magazine, annual reports of companies and
published professional publications. General scientific methods were applied for the processing of
the data, as well as mathematical-statistical methods to evaluate the data collated from the results of
regression and correlation analyses and test the linear independence.
The issue of the brand value has been researched and analysed by many foreign and domestic
authors, and remains actual.
The result of brand building is the potential to represent a certain value for the company. This
value is often monetizable because companies invest substantial funding in the creation and
management of a brand [3,4]. As a result, this effort leads to increased sales of branded production.
Mostly, this element is referred to as the added value of products or services, which is based on how
consumers perceive a brand in its price, market share, or the profit rate that the brand produces [5].
Leek and Christodoulides define brand value as the value of goods and services, as well as
added value (functional and emotional) from the brand [6].
According to Aaker, the brand value is a set of assets or liabilities linked to a brand’s name and
symbol that adds to or subtracts from the value provided by a product or service. However, in
addition to these standard items, the value of the brand and the company is also made up of
extensive intellectual property, goodwill and last but not least, the price of brands that they have in
their portfolio [7].
On the above, we can say that brand value is measured by the consumer's willingness to buy or
not to buy the brand's products. The measurement of brand value is strongly linked to loyalty and it
measures segments starting with loyal users, ending with those who can move to the brand from
competitors.
The term brand value is often used interchangeably with the term brand equity (also known as
market or consumer equity). Both terms are viewed as synonymous, whether in the academic field
or within the practitioners. In our opinion, the definition of brand equity includes the perceived or
behavioural value as well as the economic value and can be regarded as an indicator of the success
of a brand [8,9]. Brand equity is a set of assets that are associated with a brand in customers’ minds.
Generally, brand equity indicates a brand’s strength (i.e., brand worth). A brand’s strength is linked
with different brand associations, which allow a brand name to be more successful than non-
43
branded products [10,11]. The main aspects of brand equity are awareness, loyalty, and quality
[12,13].
For marketers, their main purpose is to influence the perception of consumers and their attitude
toward a brand, increase the brand value, establish the brand image in consumers’ minds and
stimulate their actual purchasing behaviour of the brand. All of this consequently increases sales,
maximizes market share and develops brand equity.
Over the years, many authors have dealt with the relationship between brand value and sales.
According to Yeboah, companies which create and effectively manage their brand stand to gain
more sales in the long run and the focus should not be on immediate impact of branding but its long
run impact. Product branding is increasingly important in the phase of increasing competition in
product market [14].
Customer satisfaction plays an important role in boosting the sales of goods, hence, in
increasing a given enterprise's profits. Brand loyalty and thus brand value significantly affects sales
volumes. A branded product helps increase customer value - customers become the embodiment of
the brand's promise [15].
2. Data and Methods
As part of the science project APVV - Slovak abbreviation of Slovak Research and Development
Agency, our study “Integrated model of management support for building and managing the brand
value in the specific conditions of the Slovak Republic” investigated the brand value and its impact
on business success. We focused on the world’s most valuable brands, based on rankings published
by Forbes magazine, Interbrand, and BrandZ Top 100, as well as on the Slovak brands.
When customers attach a level of quality or prestige to a brand, they perceive that brand's
products as being worth more than products made by competitors, so they are willing to pay more.
In effect, the market bears higher prices for brands that have high levels of brand value. Positive
brand value increases profit margin per customer because it allows a company to charge more for a
product than competitors, even though it was obtained at the same price.
Based on the above, we can claim, that brand value has a direct effect on sales volume because
consumers gravitate toward products with great reputations.
Our survey focused on the rapidly developing automotive industry. Automotive companies are
constantly coming into the market with new innovative products, to which competitors immediately
react by offering substitute products with comparable characteristics. Therefore, it is necessary for a
company to strengthen its brand value, which should result in a competitive advantage.
The impact of brand value on sales is very difficult to quantify because sales are affected by
many other factors in addition to brand value.
44
Our sample included 10 of the most valuable global automotive brands based on the previously
mentioned worldwide surveys (Interbrand, BrandZ Top 100, etc.) published in Forbes magazine.
We assessed the impact of the brand value set for the year 2018 on sales. In our study, the
consistency of input data played a key role in the methodical approach for quantifying brand value.
Table 1 shows the world’s most valuable brands in the automotive industry with information
about their rank, brand value, change in brand value, brand revenue, and company sales [16].
Table 1 World's most valuable automotive brands. Source: authors according to [16]
Statistical hypothesis testing is one of the most important statistical inference procedures. The
role of statistical inference is to decide on the basis of information from the available choice
whether we accept or reject certain hypotheses regarding the basic set. In verifying the correctness
or incorrectness we proceeded in accordance with the methodology of statistical hypothesis testing,
which consists of the following steps [16]:
1. Formulation of the null hypothesis (H0).
2. Formulation of the alternative hypothesis (H1).
3. Determining the level of significance (α).
4. Calculation of test statistics and probability.
5. Decision.
Hypothesis 1
Hypothesis H0: Between the brand value and the amount of sales in automotive industry there
is no statistically significant relationship.
Hypothesis H1: Between the brand value and the amount of sales in automotive industry there
is statistically significant relationship.
Significance level α was determined at 0.05. To calculate the test statistic, we used Microsoft
Excel software.
Rank
Brand
Brand Value
($B)
Change in Brand
Value (%)
Brand Revenue
($B)
Sales ($B)
9
Toyota
44,7
9
176,4
265,2
13
Mercedes-Benz
34,4
18
116,9
116,9
20
BMW
31,4
9
86,8
114,4
24
Honda
25,5
6
120,4
138,6
37
Audi
14,8
5
59,1
59,1
42
Ford
14,1
3
149,3
159,6
56
Chevrolet
11,5
11
81
81
58
Porsche
11
11
25,5
25,5
69
Lexus
9,5
9,5
20,7
20,7
70
Nissan
9,4
9,4
95,2
106,9
45
We evaluated the relationship between brand value and the amount of sales using the Pearson
correlation coefficient (PCC), which is a measure of the linear dependence (correlation) between
two variables, x and y:
  





(1)
3. Results
Figure 1 shows a graphical representation (scatter plot) of the relationship between a brand value
and sales, which we tried to express by means of a linear function.
Fig. 1 The Correlation between brand value and sales. Source: authors
Table 2 shows the results of our regression and correlation analysis, which we performed using
Data Analysis in Excel.
The PPC value is 0.756950253, which means that the brand value and sales are linearly
dependent, specifically it is medium-strong direct linear dependence. However, it is necessary to
verify whether examined parameters are indeed linear dependent or not. For verification, we use the
test of linear independence.
We evaluated the degree of causal dependence between the brand value and amount of sales by
applying a coefficient of determination, which is defined as the square of the correlation coefficient
R. The value of the coefficient of determination in this case is R2 = 0,572973686, which means that
57.30% of the variance sales is explained by a linear relationship with brand value (regression line).
Up to 43.70% of the variability sales can be explained by other causes, such as a linear relationship
between the brand value and sales.
y = 4,3201x + 19,666
R² = 0,573
0
50
100
150
200
250
300
0 5 10 15 20 25 30 35 40 45 50
Sales ($B)
Brand Value ($B)
The Correlation between Brand Value and Sales
($B)
46
Table 2 Summary output of regression statistics. Source: authors
Regression Statistics
Multiple R
0,75695025
3
R Square
0,57297368
6
Adjusted R
Square
0,51959539
7
Standard Error
49,5378111
6
Observations
10
ANOVA (Analysis of Variance)
df
SS
MS
F
Significance
F
Regression
1
26342
2634
2
10,73
4
0,01124964
Residual
8
19632
2454
Total
9
45974
Coefficients
Standard
Error
t Stat
P-
value
Lower 95%
Upper
95%
Lower
95,0%
Upper
95,0%
Intercept
19,6657590
6
31,391
0,626
0,548
5
-52,721556
92,05
-52,72
92,0530
74
Brand Value ($B)
4,32012801
5
1,3186
3,276
0,011
2
1,27944124
4
7,361
1,2794
7,36081
48
The test of linear independence includes the following steps:
1. Determination of the null hypothesis:
   (2)
The correlation coefficient is considered to be null, so the variables are linearly independent.
2. Determination of the alternative hypothesis:
   (3)
The correlation coefficient is significantly different from zero. Thus, the variables are linearly
dependent.
3. Selection of the significance level
   (4)
4. Application of the test criteria:
  
 (5)
47
The test criteria is 3.276310195.
5. Critical field of the test:
 (6)
where  is the critical value of the t-distribution at the significance level α with n-2
degrees of freedom, to be 2.306004135.
6. Decision:
The inequality applies, so we do not accept the hypothesis H0, we accept the hypothesis H1.
Therefore, the correlation coefficient is significantly different from zero and the variables are
linearly dependent. It means, that the correlation between brand value and sales exists.
4. Discussion
Nowadays, building a strong, competitive position and securing success in market of automotive
industry is not at all easy for companies. One of the most effective ways is to promote sales through
building strong brand value.
As an example of a successful and strong brand, we can mention Japanese brand Toyota, which
is ranked first in the automotive industry in the current ranking of "The World’s Most Valuable
Brands" 2018 according to Forbes Magazine. Its position is 9th in the overall ranking. The Japanese
brand this year is $ 44.7 billion, up 9% than last year.
For years, Toyota has been one of the top brands in the world. In Forbes Magazine's "The
World's Most Valuable Brands". This major success of Toyota in the global automotive market is
the result of years of company effort, such as the quality of the produced vehicles, revolutionary
technology solutions (e.g. car electrification, hybrid technology and investment in hydrogen fuel
cell technology), as well as investment in innovation research, which are changing the perception of
automotive industry and are significantly contributing to increasing brand value of Toyota.
5. Conclusion
Our results indicate that sales included in our analysis were directly determined by the brand value.
The business success in automotive industry and therefore sales volume is therefore significantly
dependent on the level of brand value.
In the current competitive environment, it is necessary for companies to improve the value of
their brands. Based on our analysis, brand building provides several competitive advantages, which
can be summarized as follows:
increased sales volume and profit;
48
higher margins;
improved customer loyalty;
decreased vulnerability to competitive marketing events and crises;
greater cooperation and support from traders;
increased effectiveness of marketing communications.
The issue of brand value and its impact of business success such as sales volume has the
potential for deeper research in the future - both qualitatively and quantitatively. To obtain
statistical relevance, it would be appropriate to investigate the findings of qualitative research
quantitatively. A further qualitative investigation would be appropriate for expanding knowledge
and comparing the impact of the brand value on sales in other industries, possibly exploring the
impact of other factors on sales volume and their comparison.
Acknowledgments
This paper is an outcome of the science project APVV-15-0505: Integrated model of management
support for building and managing the brand value in the specific conditions of the Slovak
Republic.
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