The Impact of Price Changes on the Brand Equity of Toyota in Saudi Arabia - Essay Example

Considering the ongoing importation of vehicles, the market competition within the automotive industry in Saudi Arabia is very tight. In line with this, several factors that can affect the purchasing behavior of public consumers include vehicle safety, driving comfort, fuel efficiency, and price (Read, 2012; Jeihani and Sibdari, 2010, p. 1). Considering the instability in the market prices of fuel, anyone can say that factors like fuel efficiency have a huge impact on the purchasing behavior of public consumers.

However, several research studies show otherwise. Even though the demand for gas-efficient cars such as hybrid cars has been high, its annual sales did not pick up as expected (Read, 2012; Tuttle, 2012). For this reason, this study assumes that the market price of automobiles is the main contributor to the demand for new cars. This study will seek to determine how changes in the market price of vehicles can affect consumer behavior particularly when it comes to buying a new vehicle. To ensure that Toyota as an automobile company is capable of grabbing and maintaining the biggest market shares in Saudi Arabia’s automobile industry, marketing managers should have a strong understanding of how changes in price can affect not only the market demand but also Toyota’s brand equity dimension (i.e. brand awareness, brand association, brand loyalty, and perceived quality) (Jazayeri and Jazayeri, 2011, p. 102). To ensure that the marketing manager will be successful in selling a new car model in Saudi Arabia, Hauser (1998) mentioned that the marketing manager should take time to learn more about the impact of price changes on consumer behavior even before exerting an effort to introduce a new vehicle model in the market.

Other than the issue of price changes, Parkin, Powell, and Matthews (2002) explained that other external factors such as the availability of product substitutes, income, the need to purchase a new vehicle, and brand loyalty can also affect consumer behavior. Farris et al (2008, p. 5) assume that marketing managers should fully understand price changes in order to increase their ability to develop and implement effective pricing strategies. For example, Engage Research (n.d.) conducted a study that aims to explore the relationship between price changes and consumer behavior.

Since price is one of the main components of the marketing mix (4P’s), Engage Research (n.d.) exerted an effort to determine how price can affect the public consumers’ expectation with regards to product quality. Based on the research findings, the authors revealed that it is common for public consumers to develop a perception that “higher price means higher product quality” (Engage Research, n.d., p. 1). Likewise, after examining the link between brand equity and price, Engage Research (n.d., p. 2) found out that continuous price promotion will only weaken the company’s long-term brand equity.

 In an article published by Albawaba.com, Toyota was ranked as the best car manufacturer in Saudi Arabia. In particular, the Saudis were impressed with the RAV4, which garnered the Best Value award (Albawaba.com, 2011). Overall, the car manufacturer leads all car manufacturers having 20 out of the 26 recommended models tested. The magazine, Consumer Reports indicated that approximately seven million subscribers and more than 1.3 million vehicles were represented.