School of Business STOCKHOLM UNIVERSITY

Bachelor thesis 10 credits Autumn semester 2004

A Global Premium Automobile Brand on the Chinese Market

- Positioning by means of differentiation

Authors: Susanne Blanke Roger Forsberg Fengyi Li

Supervisor: Tony Fang, Assistant Professor, PhD

Abstract
During the last years, Chinas automobile industry, just like many other industries, has been growing very fast. Although average Chinese people still cannot afford a car of premium brand, the huge population base makes China one of the most interesting automobile markets in the world. Actually, the economy in China has been growing too fast in recent years. This fact, together with the vast geographical area and a huge population, makes the existing marketing theories and the past experiences no longer appropriate in the Chinese market. In this thesis, we have investigated the issue of how a global automobile manufacturer of a premium brand can position itself in the Chinese market. We have taken the hermeneutics and qualitative research approach and used Saab as a case study. Data were collected through literature research, by performing interviews and by using the Internet. We then processed the data through the theoretical framework, which consists of branding, segmentation, differentiation and positioning theories. The competitors were also analyzed. The result of the analysis show that despite increasing competition, the segment for the automobile industry is still large enough to be of high interest for premium brand companies. The best positioning is to highlight the unique, important and desirable points-of-difference and points-of-parity of the brand. Taking Saab as an example, the uniqueness is its heritage, the design and the safety. Furthermore, although Chinese people are getting more and more brand aware they still have limited knowledge of premium brands. It is therefore essential to focus on building brand awareness. Our conclusions are applicable for all premium automobile brands on the Chinese market.

Table of contents
1 INTRODUCTION .......................................................................................................................................... 1 1.1 BACKGROUND .................................................................................................................................................. 1 1.2 DEFINITION OF THE RESEARCH QUESTION ....................................................................................................... 2 1.3 PURPOSE ........................................................................................................................................................... 2 1.4 SCOPE ............................................................................................................................................................... 2 2 METHODOLOGY ......................................................................................................................................... 2 2.1 POSITIVISM AND HERMENEUTICS ..................................................................................................................... 2 2.2 QUANTITATIVE AND QUALITATIVE METHOD................................................................................................... 4 2.3 EXPLORATIVE, DESCRIPTIVE AND EXPLANATORY RESEARCHES..................................................................... 5 2.4 CASE STUDY ..................................................................................................................................................... 5 2.5 DATA COLLECTION........................................................................................................................................... 6 2.6 COMPETITOR ANALYSIS APPROACH ................................................................................................................ 7 2.7 QUALITY IN QUALITATIVE RESEARCH ............................................................................................................. 7 3 THEORETICAL FRAMEWORK ............................................................................................................... 9 3.1 MARKET ANALYSIS .......................................................................................................................................... 9 3.2 BRANDING ........................................................................................................................................................ 9 3.2.1 Brand Analysis....................................................................................................................................... 10 3.2.2 Brand Identity ........................................................................................................................................ 11 3.3 SEGMENTATION .............................................................................................................................................. 13 3.3.1 Criteria for effective segmentation........................................................................................................ 13 3.3.2 Number of Segments .............................................................................................................................. 13 3.3.3 Types of Segmentation Variables .......................................................................................................... 13 3.4 DIFFERENTIATION........................................................................................................................................... 15 3.5 COMPETITION ................................................................................................................................................. 17 3.6 POSITIONING ................................................................................................................................................... 17 3.6.1 Developing a Positioning Strategy........................................................................................................ 17 3.6.2 Implementing the Positioning Strategy ................................................................................................. 19 4 CHINA ........................................................................................................................................................... 20 4.1 CHINA PROFILES ............................................................................................................................................. 20 4.2 CHINESE AUTOMOBILE MARKET ................................................................................................................... 21 4.3 THE LUXURY BRAND SEGMENT ..................................................................................................................... 23 5 THEORIES APPLIED ON THE CHINESE AUTO MARKET............................................................. 24 5.1 BRANDING IN CHINA ...................................................................................................................................... 24 5.2 SEGMENTATION .............................................................................................................................................. 26 5.3 POSITIONING ................................................................................................................................................... 28 5.4 IMPLEMENTING THE POSITIONING STRATEGY................................................................................................. 29 6 CASE STUDY SAAB ................................................................................................................................ 29 6.1 SAAB AUTOMOBILE AB ................................................................................................................................. 29 6.1.1 History of Saab Automobile AB............................................................................................................. 29 6.1.2 Innovation and Safety ............................................................................................................................ 30 6.1.3 Saab Today............................................................................................................................................. 31 6.1.4 Branding and Brand Identity................................................................................................................. 32 6.1.5 Products ................................................................................................................................................. 34 6.2 COMPETITOR ANALYSIS ................................................................................................................................. 35

6.2.1 Mercedes ................................................................................................................................................ 36 6.2.2 BMW....................................................................................................................................................... 37 6.2.3 Audi ........................................................................................................................................................ 37 6.2.4 Volvo ...................................................................................................................................................... 38 6.2.5 Other competitors .................................................................................................................................. 39 6.3 SAAB VS. COMPETITORS ................................................................................................................................. 40 6.3.1 Strength .................................................................................................................................................. 40 6.3.2 Weakness................................................................................................................................................ 40 7 DISCUSSION AND ANALYSIS................................................................................................................. 40 7.1 SEGMENTATION .............................................................................................................................................. 40 7.2 POSITIONING ................................................................................................................................................... 41 7.3 IMPLEMENTING THE POSITIONING STRATEGY ................................................................................................ 44 8 9 10 CONCLUSIONS ........................................................................................................................................... 45 RECOMMENDATIONS ............................................................................................................................. 47 REFERENCE LIST...................................................................................................................................... 49 10.1 LITERATURE AND ARTICLES......................................................................................................................... 49 10.2 INTERNET ...................................................................................................................................................... 53 10.3 OTHER PUBLICATIONS .................................................................................................................................. 54 APPENDIX A - INTERVIEWS............................................................................................................................ 55 1.0 INTERVIEW WITH PONTUS HGGSTRM 2004-11-03.................................................................................... 55 2.0 INTERVIEW WITH PONTUS HGGSTRM 2004-11-17.................................................................................... 61 3.0 INTERVIEW WITH HANK LIN 2004-11-01, 2004-11-08 ................................................................................. 62

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1 Introduction
1.1 Background
The emerging market of China attracts companies with its huge population, growing economy and large potential. Since the markets opened up a number of business areas have witnessed an incredible growth. One of these areas which have been growing rapidly during the last years is the automobile market. China is already the third largest auto market in the world, after the United States and Japan, with 4.5 million new vehicles sold in 2003, of which 2 million where passenger cars. Foreign automobile manufacturers are rushing to establish themselves on the market to take part of one of the fastest growing emerging markets in the world today (China Daily 2004 a, Euromonitor 2003, Spence et al. 2004). Most of the automobiles sold today, in China, are small and medium sized cars, mostly national brands. The luxury premium brand segment, which has around 5% of the market is growing faster than the automobile market in general and is totally represented by foreign brands, mainly from Western Europe. The competition is tough in this category despite the growing market. The low cost and the great market attracts many of the global automobile manufactures to establish their brands in China and with the membership in the WTO the ground is prepared for high competition. It is an important issue to correctly position the brands in the minds of the Chinese customers in order to keep up with the competitors (Gao 2002, Taylor III 2004). However, as the market looks intriguing there are also risks involved when entering the market. The Chinese market in general is growing a bit too fast and the government tries to cool down the economy to avoid a hard landing, which means to avoid a rapid decrease in the market (China Daily 2004 b). This has had direct effects of decreased demand on the automobile market, which still is growing but with great fluctuations. The decreased demand has in turn resulted in an even harder competition when oversupply was the result and car manufacturers now reduce their prices to sell the cars (Chennai 2004, Lashinsky 2004). Chinese customers usually have limited knowledge of the western luxury premium brands in the newly born automobile market. For some brands they basically have no knowledge at all, due to the extremely small market share. The Swedish brand Saab is one of them. Saab is a relatively small player in the global automobile market of today and they now focus their efforts on establishing their luxury premium brand more distinctively in China. This thesis aims to view positioning in the Chinese market and apply theory, by looking at Saabs possibilities to establish their brand on the market. Saab has previously been represented in China together with General Motors as one of the brands in their import sales centers. In order to expand their business further, Saab now plans to open showrooms on various locations around China to better build their brand in the Chinese market. As this is a new movement for

the company, the issue of how to position the brand in Chinese market is still left open by Saab (Hggstrm 2004, Lin 2004, Schlevogt, 2000).

1.2 Definition of the Research Question

It is crucial for an automobile brand on the Chinese market to be unique, to build the brand and to be seen. This is a challenge for the acting companies since the Chinese market is different than other markets in terms of growth and complexity. This makes ordinary theories and business models harder to be applied. There is always a risk when entering a new market and dealing with new cultures. The brand of the company is as always on stake and the question asked in this thesis is: How can a global automobile manufacturer position its brand in the Chinese market?

1.3 Purpose
The purpose of this thesis is to understand the Chinese automobile market better and to provide guidelines for companies to position their premium brands in the Chinese market. This is done in a process where we first look at the relevant theory on segmentation, positioning, branding and differentiation. The market in focus is then analyzed followed by a segmentation part and a part on branding. These analyses are then the foundation when the positioning strategy is developed for the Chinese market. We hope that premium brands of other markets apart from the automobile industry also will be able to collect useful information in terms of differentiation and positioning in the Chinese market.

1.4 Scope
This thesis focuses on positioning of premium brands in the Chinese market. It will not look at a marketing strategy for automobiles in the Chinese market. We will focus on segmentation, differentiation and branding as the marketing tools for positioning the brand.

2 Methodology
Researches can be categorized into different types according to their characteristics. A research can be done with a positivist or hermeneutist approach, according to the philosophical point of view of science. It can be quantitative or qualitative according to the type of questions asked by the research and how the data and results are presented. It can also be divided into explorative, descriptive and explanatory research according to the research purpose which is based on how much theories are already known when the research is conducted (Gustavsson 2004).

2.1 Positivism and Hermeneutics

Positivism originates from natural science. It looks for absolute and objective truth. To get the truth, positivism first removes everything that is unsure, leaving only the core which is called hard facts, and then builds science on the hard facts by only two sources: observing by

senses or deriving by logic. Positivism collects as much facts as possible and when enough data are collected the data are handled statistically so that patterns can be developed and conclusions can be drawn. Positivism is considered subsiding nowadays because it aims to create a uniformed point of view for all sciences. It is difficult to apply positivism on social science where the conclusions are more relative and more subjective than natural science (Thurn 1996). Comparing with positivism, hermeneutics takes more consideration for understanding and relativity. It puts more emphasis on human thinking. One example is interpreting the authors attention of a drawing or a poem of one hundred years ago. Its impossible to claim that interpretation is objective and exact. There are only possibilities to analyze how likely the interpretation is correct (Thurn 1996). Our research is hermeneutics because this work is about interpreting and understanding of the phenomena. Hermeneutics is the art of interpretation. The word hermeneutics originated from the name of the Greek god Hermes who was the messenger, the interpreter for bridging the gap between the thinking of gods and that of human beings. Later on, the concept hermeneutics was widened into general meanings for interpreting and understanding. It is implied in many areas such as social science and cultural studies (dman 1979). Hermeneutics researchers interpret phenomena in the real world to get better understandings of the reality (Gustavsson 2004). The purpose of the researchers is not to find the absolute truth, because the human world is complex and different people have different understandings, thus can interpret a phenomenon differently. Its often unsafe to claim what is true and what is false. Instead, the hermeneutics researchers look for how true the results can be, i.e. the probability that the results are true (Thurn 1996). During this work we have provided a brand positioning solution according to the best knowledge we have, but we do not claim that we have found the perfect truth. Human beings can understand because we all have certain backgrounds, and our knowledge and experience have equipped us with preconceptions which enable us to understand. However, this preconception also gives us prejudices and expectations when interpreting phenomena, resulting in wrong understandings. This preconception exists in both positivism and hermeneutics. Hence, there is the argument about the relativism of knowledge (Thurn 1996). In this work, we look for a correct reply to our question, and we are aware that it involves a substantial amount of subjective information, especially from the interviews, which can influence the objectivity of the conclusion. Our own preconceptions can also influence our way of judgments in the analysis, although we have tried hard not to let the preconceptions mislead us.

2.2 Quantitative and Qualitative Method

Both quantitative and qualitative methods rely on empirical data for findings and conclusions, but there are big differences between them. Quantitative research is the study of numbers. The questions asked in quantitative research is "how many", and the aim is to find numerical patterns in responses to indicate a quantity or amount. The data collected are numbers. Qualitative research is the study of the meaning behind phenomena. It seeks to answer the question why and how certain phenomena or behaviours appear. The data it collects and its results are expressed in words, instead of numbers (Padgett 1998). Qualitative research is about understanding (Merriam 2002). We categorize our research as qualitative because it has four key properties that characterize a qualitative research according to Merriam (2002). First, qualitative researchers strive to understand situations in their particular contexts and their interactions with the outside world. The effort in this project is to understand the issues of positioning automobiles in the Chinese market of today in the new historical and economical context. Our analysis strives for an in-depth understanding of this subject. Second, the researchers are the primary instruments for data collection and data analysis in qualitative research, thus immediately responsive and interactive. Understanding can be increased by direct communication with the respondents such as checking the correctness of the interpretation. However, researchers might have biases that lead to wrong conclusions. We, as the instruments for data collection and data analysis, have tried not to let our preconceptions affect us when working with our data. However, parts of the data come from subjective sources, like the interviews, and we have needed to check different sources for the correctness of them. Third, qualitative methods are inherently inductive; they seek to discover explanatory theories instead of testing them. Qualitative researchers undertake a study because there is a lack of theory or the existing theories fail to explain a phenomenon. The theories are built on data rather than are derived from hypotheses. We undertake our research because the marketing situation in China is new and the existing theories are not enough to explain it. We collect empirical data to improve the existing theories for this new situation. Of course the existing theories are the base for our understanding. We must take help from them by assuming them true and taking them for granted, and during the course of the work our data will unavoidably test them, making the deductive elements in the work. However, our heavier focus lies on the inductive part. Finally, the conclusions of a qualitative research are descriptive. This means that the conclusions are represented by words, rather than statistics.

2.3 Explorative, Descriptive and Explanatory Researches

Depending on how much theory that is already known when a research is conducted, the research can be classified as explorative, descriptive or explanatory (Gustavsson 2004). Explorative research. When the theories are poorly developed in the area and the objective of the research is to be searching and innovative, the research can be classified as explorative. As the name suggests, the knowledge about phenomena in the studying area is little and the topic is explored. Descriptive research. When there are existing theories and certain knowledge in the area, but there are more to learn about the subject and the aim is to find particulars about how something is. The word descriptive has another meaning here from when it was used to describe the qualitative research results. Explanatory research. When theories are well developed and the objective is to explain the phenomena with theories. Our objective of this research is to look for new theories about positioning brands in the Chinese market because the existing theories are not enough any more due to the complex economic situation in China. Our research is based on expanding the existing theories; therefore we regard it as a mixture of explorative and descriptive.

2.4 Case Study

There are different types of qualitative research such as ethnography, grounded theory, case study, phenomenology, and narrative analysis. We have used the type of case study. A case study is an empirical inquiry that investigates a contemporary phenomenon within its real-life context. It is a preferred strategy when how or why questions are being asked, and when the investigator has little control over events (Yin 2003). By concentrating upon one single example, this approach seeks to describe it in depth (Merriam 2002). We have chosen Saab as our example since this case has many characteristics that are representative for many companies. For example, Saab is a big company it has limited resources to establish their brand in China. The annual reports show that during recent years, Saab has been making huge yearly losses, which means that unlike other big companies such as Ericsson, Nokia and Volvo who have had huge profit when they entered Chinese market, Saab has to plan every step carefully and to always take the economy into consideration. If they fail the losses would be even bigger, which in turn will make them even more restricted by resources in the future (Hggstrm 2004, Lin 2004). The Chinese market is special compared to other markets. China, with its large size and population, together with the extremely fast economical growth, provides the world with a totally new market where new theories are needed to be able understand and interpret the 5

phenomena. The market potentials are high, the demands are large, and the situation is complex (Chan 1999). Through this case study we can apply the existing theories on global marketing, concerning positioning automobile brands in the Chinese market and to improve them so that they are more adapted to the complex situation of today.

2.5 Data Collection

There are traditionally three approaches for collecting the data for analysis: documentation, observation and interviews (Merriam 2002). We have focused on documents and interviews in our case. Information from the Internet belongs to documents actually (Merriam 2002). Here we present it separately as the Internet has played an important role in our work. Documents After contacting the company, some informative material was received, such as the company presentation, including the products and the Chinese automotive market, together with some experts analysis of the Chinese market. However, the document information was very limited, and additional sources were necessary to achieve more information. Internet Investigation was also performed on the Internet, where more information was obtained. Such data, which are directly from the Internet and could very often be incorrect, were taken under consideration. Therefore, such information was tried to be authorized through reliable websites and databases. Using this method, useful information was gained, for example the Chinese consumers income and life style. It has also been useful to look at the professional analysts and advisors forecasts and analysis of global and Chinese automotive market. By studying Saabs yearly reports and comparing them with those of Volvos, it was found that Saab has been making huge losses a few years in a row, while Volvo has been generating profits. It was realized that Saab must take active measures to change the situation. Interviews Interviews were also performed with a few people. To get access to reliable information, after carefully considering their backgrounds like positions and experiences, it was found that the following people were suitable for the interviews: 1. Pontus Hggstrm, Global Business Development Manager at Saab in Sweden. 2. Hank Lin, National sales manager of Saab in Shanghai, China Interview is an effective way to acquire large amounts of data quickly (Yin 2003). Through the interviews, rich collection of data was gathered about the Chinese automobile market and about Saab. However, interview also has limitations (Marshall & Rossman 1999). 6

First, volumes of data that are obtained in short time are time-consuming to analyze. The data collected at the beginning were so diffuse that it enabled to cover much larger topics than that this thesis was aimed for, and it had to be narrowed down. Second, different people have different understandings and the results could be different if another person were chosen for the interview, especially when personal points of view were involved. The answer to the question: what do you think of Saabs marketing performance when China is concerned could be replied completely differently by two persons. One might think that Saab is doing well by making progress, while another person might think that Saab should take more active measures in the Chinese market. This thesis has tried to be as objective as possible. When subjective data were necessary we often had other sources, such as the documents to refer to. We believe that to a large extent we can rely on the results. Third, it has always been a dilemma for the interviewers if they should let the interviewees know the questions in advance so that they can be better prepared for the answers or just give the questions as surprises to search for spontaneous answers. The prepared answers, although often carrying more information, can also turn out to be more subjective and misleading while the sudden questions sometimes do not yield anything as the interviewees need time to find the answer. In this case, the people interviewed were prepared for the answers once the situation allowed. We believe that the advantage overweighed the negative side, as this thesis mostly looks for objective information,

2.6 Competitor Analysis Approach

When competitor analysis is regarded there is first a description of the competitive environment in the Chinese market today. This information is based on the interviews, which can be seen as subjective. However, the information has been critically evaluated and where possible tried to be confirmed by other sources. The competitors Mercedes, BMW, Audi and Volvo are further on analyzed with focus on their different brands. An attempt to contact these companies was made but the difficulty to reach the right persons and acquire complete information was hard. Therefore, the brand analysis is interpreted from the authors point of view with information from interviews and the different competitors home pages. Electronic mail was also sent to the competitors where brand questions were discussed. All the competitors homepages invite to customer contact and all the competitors say they appreciate customer viewpoints and comments. However, after sending electronic mail to these companies, only one reply was received - from BMW.

2.7 Quality in Qualitative Research

There are four standards for testing qualitative researches (Yin 2003).

Construct validity: The general concept of validity was defined as the degree to which a test measures what it claims, or purports, to be measuring (Gustavsson 2004). Construct validity is the experimental demonstration that a test is measuring the construct it claims to be measuring. The purpose is establishing correct operational measures for the research. In our case, the key issue is about the data collection, and to make the collected data as close to reality as possible, different data sources were used with no subjective judgments. This thesis can very confidently claim that the results come from nothing else but the data collected. Internal Validity: testing if the findings are congruent with reality. This research is based on the understanding and interpretation of reality. For qualitative researches, internal validity is considered as strength as the primary instruments for data collection are the authors. The authors are the direct viewers of the reality and are close to it (Merriam 2002). External Validity: establishing the domain to which a studys findings can be generalized. In this research work, this thesis has developed automobile marketing strategies in the Chinese market, but the results go far beyond to all the companies, big or small, with limited resources but interested in doing business in China. People can take this work as an example or reference when making their positioning decisions in China. Case study is sometimes a less preferred method to choose because it has received critics about generalization. It has been typically stated that single cases form poor base for generalizing. However, this statement is the result of mixing up the two research methods: the survey research and case study. A survey research generalizes a sample to a larger universe. For example, a manufacturer does a survey of the potential market before introducing a new product by asking a sample of individuals, and then tries to infer the ideas of all member of the population. The analogy to samples and universes doesnt apply to case study as survey research relies on statistical generalization while case study relies on analytical generalization, in which the results are generalized to a broader sense (Yin 2003). Reliability: referring to the extent to which the research findings can be replicated. This is to say, if the operations of the studies were repeated, the results should be the same. However, in reality, because human behaviour is never static, replication of qualitative study sometimes yields different results. The more important issue for qualitative method is that the results should be consistent with the data (Merriam 2002). As our data are from different sources which can verify each other, we believe that other investigators would arrive at similar conclusions if they repeat this research. Moreover, we believe that interview data are generally reliable because the people we have interviewed stay at the top level of Saab. They have good knowledge of the topic and the access to information. Lin, the Chinese national sales manager, has worked as car dealer for almost 20 years.

3 Theoretical Framework
In the increasingly competitive world of today, the brand and how to position the brand are becoming more and more important. Chatterjee et al. (2002) suggests a brand based strategy that differentiate the product and gives it a competitive advantage. This is the strategy adopted in this thesis. Positioning is based upon the assumption that one wants to differentiate the brand from the competitors. In order to position the brand, create value and meaning for the customer, build and maintain the brand, the brands identity is one of the pillars to build on (Uggla 2003). Kotler et al. (2001) defines the marketing process, in general, as the process of identifying the target consumers, analyzing the competitive environment, looking at demand and forecasts, performing a market segmentation, targeting the market (evaluating each segments attractiveness and choosing one or more) and finally positioning the brand in the minds of the consumers (Kotler et al. 2001). In order to position the brand and make it stand out in the competitive environment, the first thing to do is to analyze the market. The next step is to look at the brand and the brand identity, followed by a segmentation of the market in focus. The competitors also have to be identified and when this process is performed, the basis for the positioning is in place. This thesis goes through the theoretical issues regarding each step in this process as follows (Keller 2003, Kotler et al. 2001, Uggla 2003).

3.1 Market Analysis

When entering a foreign market, it is important to analyze the market to get solid information to use when developing strategies. Mahoney et al. (2001, p. 455) say that the following critical factors need to be analyzed:
The current and potential sizes of these markets. The levels of competition the firm will face. Their legal and political environments and socio cultural factors that may affect the firms operations and performance.

There are also a few other factors that need to be regarded in the points mentioned above. These are major differences relative to the companys previous experience, structural characteristics of the market, relevant trends, shift in nature of demand, if some companies gain on others loss, success factors and strategic options should all be considered in general when the market is analyzed (Mahoney et al. 2001).

3.2 Branding
In this chapter, different theories regarding branding, brand analysis and brand identity are presented.

3.2.1 Brand Analysis

The brand alone has no value for the customer but the brand acquires value for the consumer when they fulfill certain functions (Kapferer 2001). Kapferer (2001, p. 3) discusses the definition of a brand and say that:
Some people talk about the name by which a product is known, others about added value, image, expectation, values, still others about differentiation mark of the product and consumer badge. In fact, they are all right in their own way a brand is all of these things simultaneously. There is no brand without a product, a mark and an image (collective representation). The brand is both the part and the whole; it is the mark on the product or service, but it is also the overall value conveyed with promises of tangible and intangible satisfaction.

The overall essence is to create value for the customer. Kapferer (1997, p. 28) points out three areas of importance on which customer value is based on:
The qualities which are noticed by contact, before buying. The qualities which are noticed uniquely by experience, thus after buying. Credence qualities which cannot be verified even after consumption and which one has to take on trust.

These areas highlight the importance of brand awareness and positioning at the first point above. It also presses on the importance of post-buy value where Kapferer (1997) makes examples from the automobile market where style and performance can be assessed before buying but pleasure of driving, quality and reliability cannot fully be appreciated during a short test drive. In the third point Kapferer (1997) continues to describe the feeling of personal success and fulfillment achieved when owning a certain automobile. This can also be described as a sense of self-actualization according to the highest step in Maslows need hierarchy (Bartol et al. 2003, Kapferer 1997). When analyzing the brand, the first thing to sort out is the brand architecture. Aaker and Joachimsthaler (2000, p. 97) discuss the brand relationship spectrum where a company can use a house of brands strategy, with focus on the various brands the company holds to, on the other end of the spectrum, a branded house strategy where the master brand is in focus. In between are subbrands and endorsed brand strategies. This is used to get an overall idea of how to view the premium brands on the Chinese automobile market, whether they focus on positioning the company as a master brand or focus on positioning the individual models and which approach is the most suitable in the Chinese market (Aaker & Joachimsthaler 2000).

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Brand Relationship Spectrum

Branded House

Subbrands

Endorsed Brands

House of Brands

Figure 1: Brand Relationship Spectrum (Aaker & Joachimsthaler 2000, p. 105).

3.2.2 Brand Identity

Two of the most acknowledged authors in the area of brand identity are Aaker and Kapferer (Uggla 2003). Aaker defines brand identity as follows (Uggla 2003, p. 85):
Brand Identity is a unique set of brand associations that the brand strategist aspires to create or maintain. These associations represent what the brand stands for and imply a promise to customers from the organizational members.

In Aakers identity theory there are four central elements: essence, core identity, extended identity and the value promise. The essence is the brands inner core, whats behind the identity itself. Core identity is a number of core values or unique qualities that does not change. In extended identity there are a number of elements that can change over time. Finally, the value promise is what the brand can offer the user in terms of functional, emotional and self-expressing benefits. Aaker looks at brand identity from a company perspective and the positioning is the identity and value promise that the brand owner chooses to communicate (Uggla 2003). Kapferer is mostly known for his brand identity prism, where brand identity is defined in a prism with six facets. These facets look at brand identity both from a sender, and a receiver perspective. What the company can and want to show and how it is perceived with the recipient. Here too is positioning based on the brand identity (Uggla 2003). To view brand identity purely from a consumer perspective is done by Keller (2003, p. 60) when he describes customer based brand equity and defines it as
the differential effect that brand knowledge has on consumer response to the marketing of that brand. A brand is said to have positive customer-based brand equity when the consumers react more favorably to a product and the way it is marketed when the brand is identified than when it is not.

This is all about the associations the consumers attach to the brand and how the consumers receive these associations. The associations can vary in strength, where this is dependent on strength and quality of the information regarding the brand that has been processed in the mind of the consumers. The consumer can also have favorable associations, which are 11

desirable and appreciated from the consumers perspective. The final factor that affects the consumers tendency to perceive positive customer based brand equity is the uniqueness of the associations is to what degree the consumers think that the associations are unique, by the means of differentiation regarding competing brands (Keller 2003, Uggla 2003).

The brand identity prism This thesis uses the Kapferers (1997) brand identity prism to find the brand identity of the applied company and further on use it to position the companys brand. According to Apria (2004, p. 64), the prism gives the full picture of how the brand owner wants the target group to perceive the brands identity. In the left part of the prism are three dimensions aimed to externalize the brand which is done with the dimensions of physique, relationship and reflection. Physique is the brands characteristics, relationship reflects the relationship the brand has to its customers and reflection mirrors how customer image is perceived. In the right part, three dimensions to internalize the brand in the company and in the mind of the customer. These dimensions are personality, culture and self-image where personality describes the brands personality, culture describes the culture from where the products originate and self-image is the consumers internal mirror on whom the consumer wants to be when using the brand (Apria 2004, Kapferer 1997, Uggla 2003). The prism can also be seen in a time perspective where some of the facets remain the same as the markets and products develop. The essence of the brand should not be changed over time and culture, personality and consumers self-image should be kept the same as the products evolve to meet the changing demands of the market. The changeable facets of the prism should instead be physique, reflection and relationship (Kapferer 1997). Picture of sender

Externalization

Physique

Personality

Internalization

Relationship

Culture

Reflection

Self-image

Picture of recipient

Figure 2: The Kapferer brand identity prism (Kapferer 1997, p. 100).

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3.3 Segmentation
Market segmentation is believed to be the key strategic concept in marketing today, and the concept has existed since the beginning of trade. Identifying market segments and deciding on which one of them offers the greatest opportunity for a given product or service are in many ways key ingredients in a successful marketing strategy (Myers 1996). Market segmentation is a prerequisite for any branding and positioning efforts. In a new market the first step to introduce a brand is to find the different segments in order to know what attracts them, which models should be developed and what emphasize should be made (Chatterjee et al. 2002).

3.3.1 Criteria for effective segmentation

The target segments selected for a company should meet several criteria to be effective. First, the segments should be large and profitable enough to be worth the efforts of the marketing program to serve it. Too small segment does not pay well and can result in the risk of having too many segments to serve, causing unnecessary cost. Second, it is important that the segments are distinguishable from one another and respond differently to the companys different marketing-mix elements and marketing programs. Third, the segments should be accessible so that they can be reached effectively. Fourth, the size, the purchasing power and the profile of the segments should be measurable. Finally, effective programs should be able to be developed for segments and it is also important for the segments to be compatible with the companys resources and expertise (Kotler 2003).

3.3.2 Number of Segments

To chose the number of segments depends mainly on the objectives of the company, the competition situation, market requirement and of course the companys resources. For most brands, the more segments they want to serve, the higher the cost will be, as every segment requires a marketing program including advertising, tests and so on. Moreover, having two or more segments can lead to confusion when representations by a brand trying to reach many segments. This can mean inconsistence in communications and a weakened position with the consumers. A classical and often used solution to this is to make a line extension or product modification so that each target segment gets its needs satisfied (Myers 1996).

3.3.3 Types of Segmentation Variables

One useful distinction of the different types of variables that is used in segmentation is dependent variables and independent variables. Dependent variables are variables that need be explained or understood. Examples are product preference, usage rates, overall satisfaction or frequency of visiting stores. Independent variables are used to explain or predict the dependent variables. Examples are demographics and geographic data such as age, income, and self-explained attribute importance in consumer marketing and size (Myers 1996).

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To look for segments the variables are usually organized. One way is to sort them into four groups according to the geographic, demographic, psychographic characteristics, together with customer behaviors (Kotler 2003). Geographic segmentation Geographic segmentation divides the market into different units as nations, regions, countries, cities or neighborhoods (Kotler 2003). Needs and preferences often vary geographically. Countries that are close to each other may have more similarities than countries far from each other. Thus, there are the Europe market, the North America market and the Asia market. There are also differences between urban markets and rural markets. For example, in urban areas people may have more disposable income, thus a higher purchasing power (Keegan 1995). Demographic segmentation Demographics segmentation is based on measurable characteristics of populations. It includes variables such as age, gender, income, family size, family composition, education level and occupation (Kotler 2003). It also includes factors such as ownership of items like cars, pets and recreational equipments as well as the means and distance of travel to and from work (Myers 1996). The demographic variables are popular bases for identifying the differences between customers because customer preferences are often related to these variables. Moreover, demographic variables are either obvious or easy to measure (Kotler 2003). Psychographic segmentation Psychographics segmentation is the process of grouping people in terms of variables like social class, personality and lifestyle such as activities and interests. Which social group one belongs to strongly influence the choice for cars, clothing and home furnishing and so on. However, for a confident person with strong personality the influence is much less. The goods consumed express a persons lifestyle. The consumer lifestyle is given more and more attention when marketers segment their markets. A research firm classified auto buyers into six types according to the lifestyle: auto philes, sensible centrists, comfort seekers, auto cynics, necessity drivers, and auto phobes (Kotler 2003). For a company to obtain psychographic segments it often prepares a large group of statements and asks a sample of respondents to indicate the extent to which they agree or disagree with the statements (Myers 1996). Behavioral segmentation Behavioral segmentation focuses on whether or not people buy and use a product, how much they use it, as well as their attitude towards it. Customers can be grouped by the different benefits they look for from the product, like the quality and service they get from it. They can also be grouped by usage rate as heavy, medium, light and nonusers, or be grouped by user status as potential user, first-time user, regular user, ex-user or nonuser. Loyalty status is one 14

more of the variables than can categorize customers into non-, medium, strong, or absolute users. Finally, the consumers attitude towards a specific product can group them into enthusiastic, positive, indifferent, negative or hostile users (Kotler 2003).

3.4 Differentiation
Differentiation is a strategy, which means that a firm seeks to be unique in its industry along some dimensions that are widely valued by buyers (Porter 1985). The uniqueness that is valued is something apart from a low price. Differentiation can be based on the product itself, the delivery system, the marketing approach and a broad range of other factors. A firm that uses differentiation as its prime strategy aims at cost parity relative its competitors, by reducing costs in all areas that does not affect the differentiation. Differentiation leads to superior performance if the price premium achieved exceeds any added cost of being unique (Kotler 2003). The cost analysis must also consider the cost of sustaining a once achieved differentiation (Porter 1985). Product differentiation also means that a firm has brand identification and customer loyalties which steams from product differences or being the first into the industry (Porter 1998). Value chain Differentiation grows out of the value chain for the firm. Every value activity is a potential uniqueness for the firm. This means that for one firm it might be the superior research and technology that creates this while it might for another be the product positioning and image that is the key factor in differentiation. Also the strategy can come from the firms channels. A firm can enhance the role of channels in differentiation through for example a channel selection to achieve consistency in facilities, capabilities or image (Porter 1985). Buyer value and differentiation Uniqueness is worthless as a differentiation unless it is valuable to the buyer. A starting point to understand what the buyer value is a buyers value chain. This value chain consists of the activities that the buyer performance. A consumers value chain represents the sequence of activities performed by a household and its members in which the product or the service fits (Porter 1985). A firm creates value for a buyer that justifies premium price through two mechanisms: By lowering buyers costs By raising buyers performance For household consumers, the cost of a product includes financial costs as well as time and inconvenience costs. The time cost reflects the opportunity cost of using it elsewhere as well as eventual costs of annoyance or exertion. The buyer value results from lowering any of these costs. To raise the performance means improve their level of satisfaction. Status and prestige are important needs just as are the features of a product or its quality (Porter 1985).

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The value a firm creates for its buyers is determined by the whole sets of links between the buyers value chain and the firms value chain. The links relevant to the buyer depend on how the product is actually used, not necessarily how it was intended to be used (Porter 1985). Raising buyer performance depends on understanding what a desirable performance from their view point is. The needs of the buyer must be understood in order to raise it, and for consumers this is a function of better satisfying needs. Since it is often difficult for the consumers to understand how the supplier can lower their costs or raise their performance. The buyers perception is as important as the reality when communicating and determining the effective level of differentiation. A firm has to educate and inform the buyers to value certain aspects (Kotler 2003). Thus buyers use signals such as advertising, reputation, packaging, the professionalism, appearance, personality of the supplier employees and information provided in sales presentations to infer the value that the firm will or does create. Such factors can be called signals of value. Buyers will not pay for the value that they do not perceive. Therefore, the premium price a firm commands will reflect both the value actually delivered to its buyers and the extent to which the buyer perceives this value (Porter 1998). Identifying the value a firm creates for the buyer and the signals of value used by the buyer rests mainly in determining the identity of the real buyer. This can include such factors as prestige and the desire to avoid risk in the purchase by choosing a well-known brand. Use criteria Use criteria grow out of the links between the buyers value chain and the firms value chain. Use criteria can include intangibles such as style, prestige, perceived status particularly in consumer goods. Also use criteria may encompass the characteristics of distribution channelsdownstream value. Or the use criteria can encompass the actual product (Porter 1985). Signaling criteria A signalling criterion reflects the signals of value that influence the buyers perception of how well the firm can meet its use criteria. Examples of typical criteria of this type are: reputation or image, cumulative advertising, market share, outward appearance of the product. Signalling criteria is most important when buyers have trouble measuring a firms performance, if they purchase the product infrequently, or if they are first buyers. This criterion also grows out of the need to reinforce the buyers perception of a firm even after the purchase, because they need continued reassurance that they made a good decision in choosing the product or the firm (Porter 1985).

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Purchase criteria The identification of a buyers purchase criteria begins with identifying the decision maker and the other individuals that influence the decision maker. Use criteria must be identified first since they measure the source of buyer value and often determines signalling criteria. Internal knowledge of the buyers needs constitutes an initial source of use criteria. A firm can calculate the value of meeting each use criterion by estimating how it affects the buyers cost or performance. Signalling criteria can be identified by understanding the process the buyer uses to form judgements about a firms potential ability to meet use criteria, as well as how well it is actually meeting them. Two analytical steps can be useful to give insights into signals of value. One is analysing the process by which the buyer purchase, and this also includes the information sources consulted and the steps in reaching the decision. The other step is to identify significant points of contact between a firm and its buyers, before and after the purchase (Porter 1985).

3.5 Competition
When a company aims to target a specific segment in the market there are almost always competing companies who also target the same segment. The customers then have a number of products to choose from within the same category. It is therefore important to analyze the competitors that exist, or possibly will exist, in the competing market in order to make use of the knowledge when position the brand towards the target segments (Keller 2003, Mahoney et al. 2001). According to Keller (2003, p. 128) the competitive analysis consider a whole host of factors including the resources, capabilities, and likely intentions of various other firms. This thesis analyses the visible competitors in the Chinese market with products in the premium brand automobile segment and with models in accordance with Saabs regarding size.

3.6 Positioning
3.6.1 Developing a Positioning Strategy
Positioning is an important part of the marketing process and had its breakthrough in a series of articles by Ries and Trout in the 1970s (Apria 2004, p. 101). Positioning is the way to differentiate a product from other products, make it heard and seen in the over communicated market, and occupy a place for the product in the consumers mind. Positioning should not be seen as a single concept but is a part of the larger overall marketing process (Kotler et al. 2001). When the market segmentation is done and the competitive frame is set, the basis for the proper positioning is defined. An effective way for developing a positioning statement starts by examining the most important requirements for it. These can be divided into three categories: uniqueness, desirability and believability (Myers 1996).

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Uniqueness The most basic factor of positioning is being unique in some way. A company must stand apart in some meaningful way in the minds of the consumers. The company must find a niche not yet occupied, or if it share a niche with several others it must stand out in that niche (Myers 1996).

Importance/Desirability The next vital factor is that the product/service must be different in something that is important to the consumers. If truly superior features or benefits can be found for the product these are the most likely candidates for sellable uniqueness. When these are missing, this task becomes very difficult and companies often turn to imagery, celebrities and humor to position their product (Myers 1996). Believability Generally, the more reasonable the claim and the more objective the support for that claim is, the more believable it will be. A common error is to strive to register too many positions, to make too many claims for a company or a brand (Myers 1996). Keller (2003) describes a model for positioning the brand which rests on identifying and choosing segments, analyze competitors, look at brand identity and then have sufficient information to base the positioning on. His model is used to answer the two questions (Keller 2003, p. 59): What makes a strong brand? And how do you build a strong brand? Keller (2003, p. 131) say that proper positioning requires establishing the correct points-ofdifference and points-of-parity associations. Points-of-difference are, according to Keller (2003, p. 131) strong, favorable and unique brand associations for the brand which define attributes the product has that differ the product from its competitors. Similar occurring concepts are Unique Selling Proposition (USP) and Sustainable Competitive Advantage (SCA). Further on these points-of-difference can involve performance attributes or performance benefits (Keller 2003, p. 133) which focuses on either the pure attributes (e.g., performance or technical solutions) or benefits (e.g., user friendly technology or senses). Keller (2003, p. 133) says that Consumers actual brand choices often depend on the perceived uniqueness of brand associations. When choosing points-of-difference its important that the considerations match desirability and deliverability criteria. Desirability consists of relevance, distinctiveness and believability and these have to be accurate to make the points-of-difference desirable to the consumer. Deliverability consists of feasibility, communicability and sustainability, primarily to make the points-of-difference enduring (Keller 2003).

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Points-of-parity are according to Keller (2003) associations that categorize the brand with similar products. These associations also come in two forms, namely category and competitive. In order for the customer to understand where the brand categorically belongs, the first types of associations are used. This give the customer an idea on where the brand think it belongs compared to other products and represent, according to Keller (2003, p. 133) necessary conditions for brand choice. Competitive points-of-parity associations negate the competitors points-of-difference and when the brand put itself in the same category as another brand these associations are used to point out that our product is better than the competitors in the same category and gives the brand a strong position and a competitive advantage. It is however vital that the aspects the brand aspires and the category it claims to belong to is credible in order for the brand to be seen as a legitimate brand (Keller 2003). Along with establishing the points-of-difference and points-of-parity, its also important that the positioning, according to Kapferer (1997, p. 98) answers the four questions as follows:
A brand for what? This refers to the brand promise and the consumer benefit aspect. A brand for whom? This refers to the target aspects. A brand for when? This refers to the occasion when the product will be consumed. A brand against whom? This question defines the main competitors.

This thesis aims to try the theories of positioning by applying them on the premium automobile manufacturer Saab in order to establish the proper positioning to use when Saab is entering the Chinese automobile market. Based on the market information, segmentation, brand and brand identity and the competition, the positioning aim to find Saabs uniqueness, importance/desirability, believability, as well as establishing the points-of-difference and points-of-parity. All this should answer the questions of; A brand for what? A brand for whom? A brand for when? And a brand against whom? All of this in accordance with the above described theories (Myers 1996, Kapferer 1997, Keller 2003).

3.6.2 Implementing the Positioning Strategy

Kotler et al. (2001, p. 382) say that once it has chosen a position, the company must take strong steps to deliver and communicate the desired position to target consumers. This is a phase where the company design the marketing mix; product, place, price and promotion, to support the positioning strategy. It is important that the company actually deliver the aspired position, that is, if the company wants to position the products as high quality, they have to make sure that high quality is really communicated. Moreover it is of significance, in that case, that high quality goes all the way from product, through distributors, service people, and to choice of media and advertising, i.e. in high quality media. This is a major key in order to build a believable and consistent position (Kotler et al. 2001).

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4 China
China is a large country in both size and population. Since the Chinese government with Deng Xiaoping in the front line opened up the market in 1978, the Chinese market has seen an enormous economic boom (Laserre & Schutte 1999). With the establishment of Special Economic Zones (SEZ) where foreign investors could establish joint-venture companies, the worlds last unexploited market had opened its doors for the outside world. From a slow start with a few SEZ, to try the market approach and keep it under strict control, the number have during the years increased. Foreign Direct Investments (FDI) from foreign companies rushing to establish themselves on the market has fuelled the economic growth. The government has recently lightened up its policies and now allows foreign companies to establish fully foreign owned companies as well. With the growing market, the living standards and income among the domestic citizens have increased which open the door for increased domestic demand (China Daily 2003 h, Mahoney et al. 2001, Spence et al. 2004). It is in general not desired that the economy is growing too fast. The Chinese economy has been growing extremely fast and the government has recently taken successful actions to cool down the economy in order to avoid a hard landing, which means to avoid dramatic market recession (Lashinsky 2004).

4.1 China Profiles

Geography. After Canada and Russia, China is the third largest country in the world. It is situated in the eastern part of Asia, on the west coast of the Pacific Ocean. It has an area of 9.6 million square kilometers, which comprises about 6.5 % of the world total land area. The distance from east to west measures over 5,200 kilometers, and from north to south, over 5,500 kilometers (China-Window.com 2004). Population and its distribution. China has a population of 1.304 billion, accounting for 20.7% of the world population (United Nations Population Information Network 2004). The onechild policy from 1978 until now has effectively lowered the population growth rate, but the population size is still growing (Euromonitor 2003). Such a big population under booming economy creates huge demands. According to Lin (2004), the age group where most of the car buyers belong to is within 30-45. This age group stands for 24.7 % of the population (Euromonitor 2003). In recent years, the population is moving towards big cities where the living environment is good, the economy is comparatively well developed and employment opportunities are better. Chinas urbanization rate is around 30 % at present and it is growing. By 2010, the urbanization rate will reach 40 % (Chinagate 2004). Most wealthy areas in China are the coastlands and some plains, where many of the big cities are located (Euromonitor 2003). There are 660 cities in the country. In 2002, there were 171 cities having a population of over one million (National Bureau of Statistics of China 2004).

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Income. Chinese usually do not pay or pay just a little tax for their incomes, so the disposable income and the gross income have almost no difference. The income difference between the rural and urban areas is huge. According to National Bureau of Statistics (2004), the average income in urban areas was six times more than that of the rural areas. The GDP, gross domestic product, per residence in China is 840 USD in 2000 (The Swedish Institute of International Affairs 2004). The average income in China is around 500 USD per year (Euromonitor 2003). With such incomes, it is impossible for average households to own private cars, not to mention the rising oil price. However, the gap between the rich and the poor are extremely big. With a huge population base, when only a small proportion can afford a car, the demand will still be large (Kwan 2003). Education. Education is one factor in Saab users profile, therefore is relevant information in this research. It is paid great attention in China. Each child should accomplish a nine-year compulsory education according to the Compulsory Education Law. In year 2003, China has over 1,000 universities and 11 % of secondary school graduates go to universities. China plans to increase the number to 15 % in 2010 by building up new universities and reforming the present education system. Universities nowadays welcome adult students who did not have the chance to go to university after the secondary schools. This was impossible some years ago. It is also possible to study through distance learning to get university degrees. Moreover, various training centers are offering practical courses for adults. Meanwhile, young peoples enthusiasm for knowledge also has attracted many foreign universities to China. They offer courses in most needed areas like MBA (Masters degree of business administration), English learning and Information Technology. The Chinese people are getting more and more educated (Euromonitor 2003).

4.2 Chinese Automobile Market

In the year of 2000 there was a fast development in Chinas automobile industry with a sale of over 2.1 million units. Yet the car market is still in the early stages of growth. For every 1000 people, there are fewer than 10 cars on the road, comparing with 250 in Taiwan and 500 in Germany (Gao 2002). Chinas domestic car sales have been growing fast for the last decade, in some years by as much as 50 % (Survey: Car Industry 2004). This year the market has overtaken the German, as sales rush towards 5 million. General Motors and Volkswagen are the market leaders, and make a quarter and a third respectively of their global net profit here (Survey: Car Industry 2004). In the next 10 to 15 years, with stable prices, increase in consumer income, continuously improved car qualities and better roads, China will become the largest auto market in the world (China Economic Information Network 2004). China's demand for automobiles in 2020 is expected to reach 20.74 million units (China Daily 2004 c). Until the year 2001 when China joined WTO, Chinas car import business had been restricted very much by the Chinese governments foreign business policy that encouraged domestic export and restricted import. By quota system, only 30,000 vehicles a year were allowed 21

imported from foreign countries, and a tariff had to be paid for the imported cars. Until 1990, the tariff was 200 %, and between 1990 and 2001, it was 80 100 %. The tariff has resulted in the car prices staying high, which decreased demand. Even now, in 2004 and three years after China joined WTO, there is still a tariff of about 25 30 % for imported cars with a goal of reaching a maximum of 25% in 2006 (Gao 2002). In recent years, global carmakers have seen the potential in the Chinese market and have set up joint ventures with Chinese companies to produce cars locally. By doing so, they avoid tariff for imported cars, take advantage of the low-cost labour in China and reduce the freight rate. So far the joint ventures have been very successful. For example, with a history of less than 20 years in China, Volkswagens Chinese joint ventures in Changchun and Shanghai have produced more than half of the passenger cars sold in China. Chinas best-selling car has long been the 1970s model Volkswagen Santana, a car that has for long been out of production elsewhere, but has been profitably sold in China after a slight face lift. Other foreign joint ventures account for nearly all the rest a further 43 %. The space left for locally produced cars is very small with 3 % of the market (Gao 2002). Saab, as a purely imported car has extremely small market share. These joint ventures are costly. The capital investment were 1.5 billion $ for GMs plant in Shanghai and Volkswagens two facilities in their joint ventures cost about 1.7 billion $. But this investment has paid off. Since the tariffs were as high as 80 to 100 % the price tags were mostly 150 % of those sold in Europe and in the USA (Gao 2002). But as tariff is falling, so are the prices. The entering into the WTO cuts the import tariff drastically, putting a lot more pressure on the local producers. It also allows global automakers to own business in sales, service and distribution, and also loan services. This service is very important in a country where personal credit is scarce. Chinese consumers prefer branded goods (Euromonitor 2003). For most Chinese people, the purpose of buying a car is not so much the convenience of driving, but a means of displaying wealth and social status (Kwan 2003). Transport is cheap in China, accounting for only 5.3% of the average living expenditures (Euromonitor 2003). To fully show the high status, most Chinese buyers prefer big brands like BMW, Audi and Mercedes. These brands are very well recognized by Chinese. Waiters in front of luxury hotels or party locations hurry to welcome the guests arriving with cars of these brands and to park the cars for them. For lower level cars their enthusiasm was much less. Because very few people in China know about Saab, its not hard to imagine a waiters attitude towards Saab. Anyhow, Saab is a premium car, with proper marketing strategies, it is fully possible to make the image stronger (Lin 2004). Branded goods are desirable, but also have their price, which is still a big concern for many Chinese customers. According to a recent telephone survey conducted among 2,500 consumers in Beijing, Shanghai and Guangzhou, 7 % of Chinese households own a passenger car, and price plays an important roll for their car purchase decision process, with Value for 22

Money accounting for 36 % while Brand only accounts for 17 %. The vehicle performance, design, safety and comfort are not primary concerns (Business China 2004). From this point of view, offering good price can be a strategy for competition (Lin 2004).

Before entering the WTO After entering the WTO Tariffs 200% in 1980s, 80-100% 25% by 2006 in the 1990s ............................................................................................................................................... Import 30,000 vehicles a year Quota increased 20% a year, phased Quotas allowed for foreign car makers out by 2006 .. Local 40% in first year of production, No local-content ratio content increasing to 60%, 80% in second requirement and third year respectively .. Foreign Limited to wholesaling through joint- Will be allowed to own vehicle Particip. ventures, prohibited from consolidating wholesale, retail organizations, in sales, sales organizations of imports, joint integrated sales organizations distr. ventures permitted by 2006 . Auto Foreign, nonblank financial Foreign, nonblank financing permitted financing institutions prohibited from in selected cities, prior to gradual for Chinese providing financing national roll out domestic consumers

Table 1: Before and after entry into WTO (Chatterjee et al. 2002, p. 2)

4.3 The Luxury Brand Segment

In the luxury brand segment in compact and midsize automobiles, which is around 100 000 cars sold per year, there are only foreign brands present in the Chinese market. This segment represents around 5 % of the total amount of passenger cars sold in China in 2003 (China Daily 2004 a, Hggstrm 2004). According to China Daily (2004 f, p. 1) the luxury car sector is much less competitive in China than the low- and medium-end car segment, and has room for more players. This segment is estimated to be growing at around 12 % annually for the next eight years, considerably higher growth than the 8 % estimated growth in the passenger car segment in general (Hggstrm 2004). Estimates on the growth in the segment varies quite a lot and the most positive estimates growth rates of around 25 % annually over the next five years (China 23

Daily 2004 e). However, in the small and mid size car segment, not considered premium brand, there are mainly national automobile brands in the small car segment and national and a few foreign brands in the mid size car segment such as Toyota. Out of the total market for luxury premium brands the market share are as follows (Hggstrm 2004): Brand Market Share % Mercedes 15 BMW 12 Audi 60 Volvo 4 Saab 0.4 Others 8.6

Table 2: Market share per brand (Hggstrm 2004) The majority of luxury cars sold on the Chinese market today are premium midsize sedan cars where Saabs 9-5 sedan, Mercedes E-class, BMWs 5-series and Audis A6 models are representatives. Volvos S80 is in slightly larger and considered a premium large car but is in this thesis considered a competitor in the mid size segment as well (Auto Consumer guide 2004, Hggstrm 2004). These brands all have smaller premium compact sedan cars present on the Chinese market, which all sell in smaller volumes today, and these models are Saab 9-3, Mercedes C-class, BMW 3-series, Audi A4 and Volvo S40 (Auto Consumer guide 2004, Hggstrm 2004). Many actors in this segment already have, or plan to move their production into China. This gives them a lower manufacturing cost and they avoid import tariffs, which would be the case if they produced elsewhere and exported their cars to China. It also decreases the risk of currency fluctuations. (China Daily 2004 d, Gao 2002).

5 Theories Applied on the Chinese Auto Market

5.1 Branding in China
Only a small number of foreign companies have succeeded in building their brands in the Chinese market and have enhanced their status by adopting appropriate strategies and establishing suitable operations (Melewar et al. 2004). The currently unsuccessful approaches adopted by the western companies can be summarized mainly under two categories. In the first category are the companies that think they can use the same marketing strategy in the Chinese market as they do in the western market. The second category consists of the companies that await the entry and first want to observe how the entries of other companies are going (Melewar et al. 2004). The cultural background in China is too strong to be neglected in any way, and it cannot easily be changed by a western product or idea. The Chinese market is first of all best understood from the inside, which means after having stayed in the market for a while, which 24

is why the latter category of unsuccessful approaches never can learn how to apply strategies since they stay out of it (Riley 2002). It may seem that China is a country of promise when it comes to mass marketing since it has the largest population. This is not true due to the fact that china s status as a planned economic and political system not in any way matches the media systems in western when it comes to efficiency and effectiveness. A leading consultant (Soames Hines) noted that it took hundreds of phone calls to separate regional broadcasting centers for a national advertising campaign to be applied (Melewar et al. 2004). Cultural issues Individualism is the leading attitude among people in the west. Thus branding and targeting of individuals must meet this. In the Chinese society however, collectiveness is an important factor in the society, and it is likely to remain that way in the near future. It is for example common for three or four generations of the same family to live under one roof (Mines 2001). Chinese customers are highly aware of brands. Long-established brands are considered to be more reliant than newly entrants in the market. Furthermore foreign brands are widely held to be better than local ones. This provides foreign companies with a good opportunity to charge a premium price for products sold in china. More emphasize are today placed on the real value and not just the brand however and in this process, the word-of-mouth recommendations are very important. The Chinese consumers are today more and more concerned about the quality and value provided by the product (Ayala 1996). The Chinese consumers are also becoming much more sophisticated due to advances in technology and education level in the country. New technologies help consumers to exchange ideas and experiences with others in different market places and it helps them to find more information about a certain product on the internet. An important fact is that Chinese consumers want product information rather than product presentation in the stores. They are keen to see what is available in the marketplace and compare similar products (Melewar & Saunders 1999). Country-of-origin effect This effect can be defined as the impact which generalizations and perceptions about a country have on a persons evaluations of the countrys products and brands (Jaffe & Nebenzahl 2001). In order to harvest from this effect, there must be a match between the countrys cultural, political, social, economical and technological identity and the product. Since the 1980s the Chinese customers have had experiences with western products, and so it seems responsible to suggest that country-of-origin effects will in many cases be confined to positive experiences with particular brands (Usunier 2000). Kleppe et al. (2002) state that the extent to which a country image is multi faced influences the transference of country equity across different brands and products. 25

Language and aesthetics Chinese consumers tend to link the meaning of the brand to the product itself. This means that if a company uses a meaningful brand name that is associated with the product, it is much more likely to be remembered by the Chinese customer. For the Chinese, the aesthetics are usually based on their perceptions of nature. Therefore images of natural forms are highly attractive to the Chinese consumer. Mountains and animals are commonly used in brand imagery and visual displays. Abstract symbols are unlikely to be accepted because they are inconsistent with the Chinese culture. People love complicated forms and shapes and when it comes to colors, red is perceived to be the most cheerful color, and attracts peoples attention (Melewar & Saunders 1999). The most effective way to build a strong brand name on a new market is to adopt itself to the culture. Using local staff and cooperating with local players are good choices. Although combining the culture of the company with that of the country is a difficult task more and more companies are succeeding this task in the Chinese market. A company can only be successful by gaining in-depth understanding of the local culture and consumers attitudes (Hofstede 1994).

5.2 Segmentation
This chapter is based on the previous chapters on segmentation theory and the Chinese automobile market. The segmentation in the Chinese market is analyzed by using the same four categories as described in the theory chapter. The variables in each of the categories, as mentioned in the theories, are some times related to each other, within or cross the categories. For example, high education is often paid back by high income, and what a social group a person belongs to is often related to the facts about the person, like profession, education and income. The independent variables can also imply the dependent variables (Myers 1996) Geographic segmentation The majority of people with high enough income to afford a car live in the urban areas (Lin 2004). These high incomers are often business owners themselves. This is also true for the population with high education. A natural segment for the automobile industry to target is in the urban areas. The urban areas in China mostly lie on the coastlands in the east and south part and some plains (Euromonitor 2003). Demographics The age group that is the strongest buyers in the automobile market is within the age segment between 30 and 59. These people usually have established careers and stable incomes. They count for 40 % of the population (Euromonitor 2003). Most of the buyers are men instead of women for two reasons. One is that most of the drivers are men. Driving is not common in China and it is still regarded as an activity dominated by men. Another reason is that there are 26

more men who like to drive fast than women, and a premium brand enables them to do that (Lin 2004). The yearly average income in China was as low as 500USD in 2002 (Euromonitor 2003), so its impossible to target average people. The truly high incomers are often business owners or extraordinary employees living in urban areas, including some foreign investors. Many of these people have high educations, but not all. Some of them are self-made entrepreneurs. Another customer group of premium automobiles are government officials. A premium brand is suitable for showing their identities (Lin 2004). Dong and Helms (2001) segment the Chinese market into organizational purchasers, collage graduates, the urban middle class, rural residents or farmers, college students and the new rich entrepreneurs. Each has a different understanding of English, awareness of foreign brands and access to technologies such as the Internet. The most interesting group for positioning of a premium automobile brand is the new rich entrepreneurs since this is the group that can afford to buy a car. Psychographics Social class has a strong influence on the choice of cars. When a person buys a car, the people around would appreciate it if they think it was an expensive and tasteful choice. For this reason, many buyers want to show their wealth and good taste by buying a car of famous brand like Mercedes, BMW or Audi (Lin 2004). The lifestyle patterns for the segment are by many means different compared to similar group in the European or the US market. It is not as common for this group to use the car for sports activities and vacations as it is in the west. The car is for many primarily a status symbol that is used mainly for short transportations to and from work (Chatterjee et al. 2002). The car is a way to reflect ones personality and values are more important for the customers in the upper class than for the average people. The market has not completely matured yet in terms of clear pictures of the difference between the automobile brands for average people, therefore the mere fact of owning a car is a symbol enough. The exact brands reflection of for example sporty or safe has not yet grown to be of major importance for average people. The search for status is more about the looks than the safety and other more invisible attributes, since the average people are not as well aware about the differences of the brand. However, the average people are not customers. The customers are the wealthy upper class people who do know the status that different brands symbolises (Riley 2002). Tam and Tai (1997) also notes the emergence of several key psychographic factors. Traditionalists are the largest segment counting for 41 %, and are less open to new, foreign and premium brands. Strivers and Achievers counting for 20 % of the population have an average age of 31 years and are far more trendy and impulsive. Adapters are an older group of 27

traditionalists with more open view on new brands and count for 13 % of the population. Other similar systems of classification follow similar terms. It is important to note that geographical location affects tastes, preferences and income levels. Striver and Achievers who have a very high income or in other senses a lot of capital are most interesting for the foreign premium brands. Behavioral segmentation The buyer of a premium brand looks for the benefits they can get from it, such as the driving pleasure provided by the high quality and safety. Fuel economy was not paid much attention until recently when the oil price in the world market has been continuously increasing. Those who could afford a car did not care about fuel economy before (Lin 2004). Together with the economic development in China, the numbers of potential buyers are increasing. As price is still a big concern for the Chinese buyers, loyalty to a certain brand is not absolute. The buyers might jump between the brands depending on the price (Business China 2004). People usually have positive attitude towards premium brands. The drivers appreciate the high quality and the average people are aware of the wealth and the status it symbolizes. The price concern is of major interest to the average Chinese consumer and this differs from the western market. Although costumers in the premium segment do not put as much weight to this fact as a customer that just need any car, the cheapest one. The competition on the Chinese automobile market is much more about price and effort to keep it low and at the same time not risk the luxury aura (Riley 2002).

5.3 Positioning
In general, when it comes to positioning a brand in the Chinese market of today the most important thing is to build brand knowledge and increase brand awareness. Due to the recent opening of the markets and development in China the issue of brands in general is relatively unfamiliar, and consumers have to be provided with information of the brands existence. However, the Chinese consumers are aware of brands but with a limitation to big global brands and an establishment of an unknown brand demands informative actions. Many foreign companies have tried to use the same marketing and positioning strategy as they use in other markets but many have failed to establish their company or brand in the Chinese market. The cultural differences between China and many western countries are great and companies have to take the Chinese culture into consideration when entering the market. An example is the difference of individualism, as the norm in most western countries, versus collectivism as is the cultural norm in China.

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Another important element of positioning is to make use of the country-of-origin effect where unawareness can be helped if the brand proves to have a credible heritage from a country which reflects positive things that can be used when positioning the brand. Premium brands in China have a large symbolic meaning when it comes to stress a certain consumers belongingness to a social level in society or just to display success. Status and prestige are important issues not to be forgotten in the positioning, especially for premium brands. In spite of the differences, this thesis believe that the model of positioning, described and later on tried on a case study, is suitable to use in the Chinese market when it comes to position premium brands. In order to position a brand, the points-of difference and points of parity, where uniqueness, importance, desirability and believability is involved, is a general model that is well suitable for the Chinese market if country specific issues are considered. The questions of A brand for what, for whom, for when and against whom? are also important parts to sort out important positioning approaches.

5.4 Implementing the positioning strategy

When the positioning is in order, the next step is to implement the positioning strategy and communicate and deliver the desired position to the target consumers. To deliver the strategy, the following areas are of high importance: the design of the marketing mix, the tactical tools of product, price, place and promotion, (Kotler et al. 2001).

6 Case study Saab

This chapter aims to, through a case study; apply the theoretical framework on a company aiming to establish its brand in the Chinese market. This chapter also aims to identify the most important and useful theories when regarding positioning of a global premium brand in the Chinese market. The company, products and brand of Saab Automobile AB is first analysed followed by a competitor analysis. Saab is then compared to its competitors. In the following discussion and analysis, the positioning strategy for Saab is developed followed by a proposed implementation strategy.

6.1 Saab Automobile AB

Saab consider themselves to be a luxury premium brand and the main competitors in that segment in the Chinese market are, according to Hggstrm (2004), Mercedes, BMW, Audi and Volvo.

6.1.1 History of Saab Automobile AB

Saab was founded in Sweden in 1937, on a site in Trollhttan, to serve as a national manufacturer of military aircraft under license and was at that time called Svenska Aeroplan Aktiebolaget (Swedish Airplane Company). At that time, during demanding and challenging circumstances Saabs vision was, according to The Saab Network (2004), of a unique future, 29

firmly rooted in high engineering standards and the ability to rapidly develop advanced and innovative technologies (Saab International Site 2004, The Saab Network 2004). Saabs airline history consisted both of fads, innovations and fashion. During the years, Saab has been early to introduce innovations in its products and as an example Saab was the first to introduce an ejector seat in the aircraft Saab J21 (The Saab Network 2004). After the end of the Second World War the demand for aircrafts decreased and Saabs management wanted to use their acquired expertise and manufacturing capabilities on different areas. One of their projects was to build the first Saab automobile prototype, Saab 92, a task assigned to 15 aircraft engineers. The prototype was presented in 1947 and built with aircraft engineering expertise the car had some resemblance with airplanes, i.e good aerodynamics, and production started in 1949. Before production started, the Saab 92 had already won its first rally, which came to be another Saab tradition (Saab International Site 2004, The Saab Network 2004). More models followed and Saab was introduced in the United States in 1956 where Saab built its brand with focus around motor sports. This proved to be a successful strategy, proved Saabs durability and the US market is today Saabs largest automobile market. Later on, in 1960, Saab was also established in Britain (The Saab Museum 2004, The Saab Network 2004). Saab merged its operation in the end of the 60s with the Swedish Scania Vabis, a truck and bus manufacturer which made Saab part of a transportation conglomerate who shared resources and produced airplanes, cars, trucks and buses. Saab has also had cooperation with the Fiat group regarding the development of their 9000 model in the 80s. In 1990, the car division restructured into the independent company Saab Automobile AB, where GM bought 50 % and Investor 50 %. Saab is today fully owned by General Motors. Saab also made an attempt to merge with Volvo in 1977 but without success (Saab International Site 2004, The Saab Museum 2004, The Saab Network 2004). During the years Saab has been characterized by unconventional innovative solutions and attributes as safety, performance, driving pleasure, environmental concerns, reliability as well as a distinct styling (Saab International Site 2004, The Saab Network 2004).

6.1.2 Innovation and Safety

During the years Saab has always regarded safety, technical innovations and environmental concern as important parts in their philosophy. As a result, Saab has won a number of awards, in the area of safety, design, environmentally-friendliness, technology and innovations. Following are a few examples of technical milestones (Saab International Site 2004). 1958 First car manufacturer with seatbelts as standard. 30

1969 Removal of the ignition lock from the dashboard to, as nowadays characterize Saab, the centre between the seats in order to avoid knee injury in collisions. 1972 - Reinforced members in side doors, side impact protection. 1976 - One of the first to lambda sensor controlled 3-way catalyst converter (Saab International Site 2004, History - Innovations) to reduce emissions. 1976 - First car manufacturer with turbo charged engine with good durability and durability for everyday use, which previously had been a problem. 1991 - One of the first with CFC-free air conditioning as standard (CFC is considered to have negative effects on the atmosphere).

6.1.3 Saab Today

Saab is today a global automobile company. It manufactures markets and sells more than 130 000 cars per year in more than 60 countries. The sales in 2003 reached 28 billion SEK. The most important markets are North America (mainly United States) with almost 50 000 cars sold, Europe (excluding the Nordic countries) with 38 000 cars sold and the Nordic countries where 31 000 cars were sold in 2003. In the less focused markets of Asia Pacific, Latin America and Africa Saab sold 10 000 cars altogether in 2003 (Saab Automobile AB 2004). Saab in China has previously been sold through GM together with other GM brands and around 200 cars were sold in China in 2003. Saab has just opened a few showrooms of its own with the help from GM. Around 15-20 sales centers are planned to be established in China within a couple of years, mainly focusing on the major cities (Aronson 2004, Saab Automobile AB 2004, Telephone conversation with Pontus Hggstrm, Saab 14/9 -04). As being one of the smallest car manufacturers in the world, Saab has struggled to maintain profitability and GM has during its years owning Saab had to put in, according to Dagens Industri (January 23 2004), around 18 billion SEK in order to cover the losses. Saab has actively been working on trying to restructure and to improve efficiency to stabilize the costs. Saab is also being able to increasingly share costs and resources within the GM group (Saab Automobile AB 2004). Due to the previous lack of presence in China, the market assumingly lacks general knowledge and awareness of Saab products. Focus is therefore to primarily establish Saab as a brand and the master brand Saab is further on analyzed (Aaker & Joachimsthaler 2000).

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6.1.4 Branding and Brand Identity

In the automobile industry today, the number of car makers and models are growing in every product segment. The competition is increasing and companies are spending increasingly more money on marketing. To gain a competitive advantage and stand out of the crowd, branding is essential as well as to preserve the superior image of the brand. It is not just about marketing and advertising but the brand has to be anchored in the core values of the corporate culture and vision and brand management is essential for the brands survival (Chatterjee et al. 2002, Kapferer 1997). Kapferer (1997, p. 18) discusses the brand issue and brand management as follows:
Too often brands are examined through their component parts: the brand name, its logo, design and packaging, advertising or sponsorship, the level of image and brand awareness or, more recently, in terms of financial valuation. Real brand management, however, begins much earlier, with a strategy and an image. This identity must be defined and managed and is at the heart of brand management. It calls for new ways of thinking and methods of investigation.

Saab uses a global strategy regarding their branding, marketing and positioning and Saab doesnt adapt the brand and models to better fit a certain market. Saab work hard to maintain its identity and wants the associations of the brand to be similar all over the world which result in that the same message is spoken around the globe. The same type of ad can be presented both in the local newspaper in Los Angeles as in Shanghai (Hggstrm 2004). The main reason that makes this possible is that Saab is believed to attract the same type of customers no matter in which country the customer live. In other words, Saab believes their market segment is homogeneous and can be found in all countries across the globe. Saab is a global premium brand (Hggstrm 2004). As the basis for positioning Saab in China it is important to identify the identity of Saab. The identity is the essence of the brand and must stand consistent over time and is significant for Saab now and in the future. As Kapferer (1997, p. 169) say it continuity is essential to the brands formation and longevity. With the identity of the brand consistent over time its possible to According to Kapferer (1997, p. 99):
The identity is crucial for three reasons: a brand needs to be durable, to send out coherent signs and to be realistic. It is thus a defense against the risks of an idealized, fickle or opportunistic brand image.

However, as lifestyles, competitive position and customer expectations change over time, its important to adapt to the new conditions, improve the products and release new models to meet the changing demand for the company to survive. Still it is important to maintain the

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identity of the brand so that customers always know that the same identity and values are preserved in the new models (Kapferer 1997). The brand identity, as follows, is identified by interview with Hggstrm (2004) and Lin (2004). Out of the models six facets the important parts to maintain consistent are personality, culture and self-image while the slightly changeable facets in the prism are physique, reflection and relationship which can be used to adapt the brand to meet changes in the future (Kapferer 1997).

Picture of sender

Externalization

Physique

Personality

Internalization

Relationship

Culture

Reflection

Self-image

Picture of recipient

Figure 2 revisited: The Kapferer brand identity prism (Kapferer 1997, p. 100). 1. Physique One of the most important elements in Saabs identity is to have well designed cars. Saab also work hard with the MMI (Man Machine Interface) which is the way the driver perceive the car when driving, i.e. sound, vibrations and steering response which give the car good driving performance. The driving performance is, as a result rated quite high among customers. 2. Personality Saab is an understated brand. It offers driving pleasure, safety, and good value for money, being slightly cheaper than its competitors but is a well established global premium brand. Saab can be seen as a sincere brand when it offers good quality in everything from choice of material to reliability, warranty and service. Saab also works by the devise of function before form.

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3. Relationship Like most other automobile brand, Saab wants to have an enduring, positive relationship with its customers. However, this might be extra important in China when the market is new and sales has to focused much on attracting new customers. Word of mouth is important and the brand has to be well perceived and ensure the promise to its first-time customers. Its also important to be trustworthy in terms of quality, warranty and service when many customers buy their first car. The choice of partners for the showroom and the sales-people are extremely important for Saab in order to give a good initial view of the company for the potential customer. In China, relationship, or Guanxi is a more essential part in doing business than in western countries (Fang 1998). 4. Culture Saab has a unique history from the airline industry. During the years Saab has always prioritized innovations, design, individuality and a high degree of technology in their cars. The Scandinavian heritage also puts its mark on the brand. Scandinavian is often signified with good design, functionality, ergonomic, understated and discreet. The cars are also built where other automobile brands test their cars. The harsh climate in Sweden results in enduring cars that have the capability to withstand the different seasons with all the effects of that. As a few examples can functionality of door, heating capabilities and lighting be mentioned. 5. Reflection The Chinese customer is well-off, has a high degree of education, is an urban citizen and between 30 and 40. This person has a good own taste, identity and a high degree of awareness. The Saab driver often has a creative profession such as photographer, marketing, pilot, small business, free thinker and artist in some way. People who buy Saab often travel a lot and could have lived abroad for some time where he/she came into contact with Saab. 6. Self-image The person driving a Saab likes to be seen as having good taste and being a strong individualist. This person is well-off with a high degree of awareness and does not have to buy the average status premium brand. The person also knows that Saab is a good car which offers a high degree of technology, individuality and design.

6.1.5 Products
Saab has today four models in its product portfolio build on two sizes of chassis. The sizes are in accordance with the numbering, that is 9-3 as a slightly smaller model and 9-5 as a slightly larger model. Each model can be delivered, as usual in the auto industry, with a number of different equipment, engines and interiors to fit the customers specifications (Saab International Site 2004). 34

Saab 9-3 Sport Sedan This model was introduced in 2002 and is a substitute for the older 9-3. The 9-3 is Saabs model in the middle-class premium segment for sedan cars. The 9-3 is, according to Saab Automobile AB (2004, p. 3) aimed for younger, professional- or business-focused customers who look for a sporty car with dynamic performance (Saab Automobile AB 2004, Saab International Site 2004). Saab 9-3 Convertible This model is upgraded and was released in 2003. The car is based on the same chassis as the 9-3 Sport Sedan and is, according to Saab Automobile AB (2004, p. 3) designed to give the same famous driving experience and stability and has recognizable distinct and Scandinavian design. This model is the prestige model in Saabs portfolio and is a well engineered, safe car and this model has already been well received on the market and has won the safety award of five stars in the EuroNCAP collision test program. This model has recently been introduced on the Chinese market (Hggstrm 2004, Saab Automobile AB 2004, Saab International Site 2004). Saab 9-5 Sedan The 9-5 model is a slightly larger car and is, according to Saab Automobile AB (2004, p. 4) a dynamic premium car, signified by high performance and advanced driving performance with a close interaction between driver and vehicle. This model is also, in true Saab spirit signified with high safety features and has also won the safety award of five stars in the EuroNCAP collision test program in 2003. This model stands for 80 % of Saabs sales in China in 2003 (Hggstrm 2004, Saab Automobile AB 2004, Saab International Site 2004). Saab 9-5 Wagon This model is the same car as the 9-5 Sedan but is separated when it is a wagon. This model is not planned to be presented in China but the three models presented above is (Saab Automobile AB 2004, Saab International Site 2004). There are also two special models, the 9-7x and the 9-2x presented in 2003, co-developed with GM who are only assigned for the US market. The first model is a larger Sport Utility Vehicle and the second is a smaller sporty wagon both with four wheel drive. These models are not considered important in this thesis, when the Chinese market is in focus (Saab Automobile AB 2004, Saab International Site 2004).

6.2 Competitor Analysis

In the luxury premium brand segment in China the major competitors for Saab are; Mercedes, BMW, Audi and Volvo (Hggstrm 2004, Lin 2004). Their brands are described and the competitors are analyzed regarding their resources, capabilities, and likely intentions as follows. 35

6.2.1 Mercedes
Mercedes is a globally well known luxury brand and are planning local production in China. Mercedes established in Hong Kong in 1986 with the wholly owned Mercedes-Benz China Ltd. However, it is not really considered a car for governmental and institutional people which is the image Audi has today in China. Mercedes is still a brand symbolizing high status. The market share in China of around 15 % is relatively low today and likely to increase in the future (Hggstrm 2004, Lin 2004, Mercedes-Benz 2004). The brand Mercedes wants to impress in design, style, advanced technology and driving dynamics and to show the shape of things to come. Through the perfect blend of forms and materials they want to produce an irresistible whole. Safety is also highly important and with advanced technology, Mercedes want to set the standard in safety (Mercedes-Benz 2004). Mercedes have a long history and has for more than 100 years been the name of the worlds most innovative car brand. The famous star is a world wide known symbol and one of the worlds best known trademarks. As a well-known premium brand, it symbolizes high status. Mercedes is for the connoisseur, a person who appreciates the luxuries of life (Mercedes-Benz 2004). Resources As being a large and profitable car manufacturer together with the merger with Chrysler, Mercedes has vast resources to put into the establishment in China (Mercedes-Benz 2004). According to China Daily (2004 d, p. 2), the sales on the Chinese mainland grew by 60 % during the first five months of this year. Having an already established operation in China makes it easy for Mercedes to expand its sales network. Capabilities Being a large volume global car manufacturer with over one million cars sold in 2003, Mercedes has the knowledge, experience and resources to make take a competitive position in China (ConceptCar 2004). Mercedes are planning local production and is planning to increase the number of its sales networks from 42 in June to more than 50 at the end of 2004 and plan to build 150 sales networks in China over the next five to 10 years (China Daily 2004 d, p. 3). Likely intentions Mercedes are putting a lot of effort into the Chinese market and say theyre extremely excited about that as it explains how well-received our cars and brands are in China (China Daily 2004 d, p. 1)

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6.2.2 BMW
BMW produce their cars locally in China. BMW is also a globally well known luxury brand which, in China, symbolizes the same things as in the rest of the world: sporty, quality, status and performance (BMW International 2004, Hggstrm 2004, Lin 2004). The brand BWW automobiles are designed with passion and engineered for pleasure, and the key elements are design and comfort, safety and performance. Through learning from experience and with enthusiasm for new ideas, BMW has the courage to push the limits in automotive engineering (BMW International 2004). BMW has also a long history in producing sporty cars but has during the years produced everything from the simplest driving machines to very potent sports cars and luxury limousines. BMW is an ideal car for people with high demands regarding standard. These are cars for well-off, successful career people with a good taste and high demands on performance and technology in a package designed for driving (BMW International 2004). Resources Also being a large and profitable car manufacturer with more than 900 000 cars sold in 2003 worldwide (ConceptCar 2004), BMW has good resources to put into the establishment in China (BMW International 2004). Capabilities BMW have started production in China of its 3- and 5-series sedans in a joint venture with China Brilliance Auto in Shenyang (China Daily 2004 d, p. 4), which lowers the manufacturing cost and give them a good possibility to compete on price in the Chinese market. BMW have today 24 auto dealers in China and plan to have 41 by the end of this year. Likely intentions BMW are planning to produce three more models in China and more than double its sales network in 2005 (China Daily 2004 f). In an article in China Daily (2004 f, p.1) they say that they are doing much better than Mercedes-Benz, which is our strongest rival in China.

6.2.3 Audi
Audi has been established in China for more than ten years of local production and the Audi A6 was the first foreign premium brands, produced and sold in China. Audi today has local production in China. The manufacture of A6 there started in 2000. Audi has managed to establish the brand as a car for governmental, highly positioned people. Audi was the first automobile brand to be able to have as a company car which gave them a high market share and very good status. Audi has today more than 48 official dealerships in China (Audi 2004, China Daily 2004 d, Hggstrm 2004, Lin 2004). 37

The brand Vorsprung durch Technik (Lead by technique) is the devise of Audi and encapsulates the companys ambition in developing cars. By challenging existing concepts and adopting innovative ones they provide exquisite cars. Design, safety and technology are important attributes not only to cars shape, but to build the image of the brand (Audi 2004). Audi has a long and many-faceted tradition in building cars. Design and advanced technology has been very important during the years. It is a car for people in high positions, often in governments. To drive an Audi in China today is a definite sign of high status (Audi 2004, Lin 2004). Resources Audi is the biggest car manufacturer in the category in China and with a profitable global sales of 770 000 cars in 2003 (Audi 2004, ConceptCar 2004) Audi has good resources and a strong position in China. Capabilities Audi has the most experience in the group of producing locally in China and already have a strong competitive advantage when it has a 60 % market share (China Daily 2004 g). Likely intentions Audi is introducing its biggest and most expensive model, Audi A8, and consider China to be of great strategic importance for Audi, as it is the fastest growing market on the current automobile scene (China Daily 2004 g, p. 1). Audi also plan to expand its dealer network in China over the next two years to achieve a full territorial coverage.

6.2.4 Volvo
Volvo doesnt have any local production in China. Volvo builds its reputation on safety and the large S80 model is considered a prestigious ride in the backseat car (Hggstrm 2004, Lin 2004). The brand One of the most important attributes for Volvo is safety where a lot of effort also is put to achieve this. Environmental concern is another attribute in focus as well as quality which is synonymous with satisfied customers. The devise is Volvo for Life which both symbolises the importance of safety issues as well as a car for every generation. Design has also gained importance in recent years (Volvo 2004). Since the foundation of Volvo the core values of safety, environmental concern and quality has been the guiding light. Volvo is a car for customers in every phase of life but the most

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important category might be the family where the high safety appeal attracts families who want a safe car (Volvo 2004). Resources Volvo, with a global sales in 2003 of 415 000 cars in 2003, aim to increase sales to 600 000 within a couple of years. Volvo is making profit and China is an important market to increase the global sales number. Volvo also has through its owner Ford strong support and Ford already have production facilities in China with the joint venture with Chanan Motor Corporation in Chongqing Municipality and with Jiangling Motor in Jiangxi province (China Daily 2004 e). Capabilities Together with Fords other brands, Land Rover and Jaguar, Volvo plan to unite their sales networks in China. Today, the numbers of dealer locations are nine but will be 26, early next year (China Daily 2004 e). Volvo wants to double its sales networks in China within the next five years and is planning production in China. Likely intentions According to an interview in China Daily (2004 e, p. 1) Volvo say that China will be the No 1 priority market, and that the potential in China will be bigger than Japan in the long term for us. In the same interview it is said that Volvo will likely use Fords facilities in China to produce cars.

6.2.5 Other competitors

As the luxury car sector is less competitive in China today than other markets, theres room for more players to enter the market (China Daily 2004 f). Among the strongest competitors on its way to enter the market in the luxury segment, Toyota is a strong player and has to be regarded when analyzing the segment as they aim to be an important part in the worlds largest luxury car market. According to China Daily (2004 f, p. 1) Japans Toyota Motor Corp announced that it will build six franchised sales stores for its US-made luxury brand Lexus this year and increase the number to 14 by the middle of next year. Toyota also starts producing their luxury model Crown sedan in the next year together with its joint venture in China.

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6.3 Saab vs. Competitors

In the following, a short comparison of Saab versus its competitors is analyzed by identifying Saabs strengths and weaknesses.

6.3.1 Strength
1. Recently the concern for fuel economy is increasing. Saab as a fuel economical car has good marketing potentials. 2. Users are satisfied with Saab. Although when they bought the cars they didnt have a complete idea about the car, after having used it for a well they realized Saab was excellent. When they consider change cars after a few years, they are likely to come back to Saab.

6.3.2 Weakness
1. Saab has too few showrooms as the sale center. All the competitors have more showrooms, especially Audi. More showrooms mean better guarantee also as showrooms at the same time are centers for after-sale service. 2. Saab is not a recognized brand. Brands have social meanings. Consumers often buy cars of big brands to show identities. For example, BMW has a big name and are preferred by officials and business men as a symbol of identity. Volvo has a big name in China as it once had some famous activities like sponsoring golf. 3. Saab gives small visual impression. Most of the Chinese buyers believe big size gives big impression, hence higher their social identity. Saabs are rounded in the front and look smaller than the square-shaped cars although the inside is same big. One reason Volvo was accepted by the Chinese buyers is that Volvo looks big, taking Volvo S80 for an example.

7 Discussion and Analysis

Based on the above presented and analysed company and brand, the following segmentation, positioning and implementation strategy is developed. The process of reaching a suitable positioning and implementation strategy is based on the theoretical framework of this thesis.

7.1 Segmentation
Geographic segmentation The Saab segment in China, as the segments for the other premium automobile brands, lies in the urban areas that are located on the coastlands in the east and south part of China and some plains (Euromonitor 2003). Demographics segmentation The age group that is the strongest buyers in the automobile market is the 30-45 years olds (Lin 2004). They count for 24.7 % of the population (Euromonitor 2003). Most of the buyers of Saab are men instead of women. This is the same as the other premium car buyers (Lin 40

2004). Saab is not a familiar brand for Chinese people. The buyers usually have some initial knowledge of the brand when making their buying decisions. The buyers are usually those who have been abroad, like those who do business with foreign countries, who have lived or studies in Europe or America, or who come to China to do business like Hong Kong, Taiwan and foreign investors. These people usually have high educations also. One interesting fact is that Saab buyers, comparing with other car buyers, have a higher average education level. According to a Chinese automobile market survey, in the US 88% of Saab drivers have college education, while 66% for BMW and 58% for Mercedes. Globally 58% for Saab, 33% for BMW and even lower for Mercedes (Lin 2004). Psychographics segmentation Although for the average people owning a car is a symbol enough the wealthy upper class customers do know the status that different brands make (Riley 2002). To get appreciation from friends and business partners, many people like to buy famous brands like Mercedes, BMW and Audi. It needs special taste and personalities to buy a car like Saab that most of Chinese even do not know where it is from. The buyers are independent and self-confident persons (Lin 2004). Behavioral segmentation As Saab is a new brand with a history of only a few years in China, most of the Saab buyers are first-time users. They are in general satisfied with the benefits from the car because of its high quality, safety and fuel economy. Statistics of accidents show that Saab has less damage in accidents, especially comparing with the Chinese brands. Saab is also fuel economical. Recently the oil price in the world has been continuously increasing, and people are starting to pay more attention to fuels. Those who could afford a car did not care about fuels before (Lin 2004). Some buyers did not have a complete image about Saab when they bought it, but after using it for a while they realized the excellence. Therefore they have a positive attitude to the brand. When they consider changing cars after a few years, there are good possibilities that they come back to Saab, thus increasing the loyalty to the brand (Lin 2004).

7.2 Positioning
In this part the theories are applied on the Swedish car manufacturer Saab in order to find a suitable positioning for the brand in the Chinese market. The three categories (Myers 1996) of uniqueness, desirability and believability are integrated into Kellers (2003) points-ofdifference and points-of-parity in the following as these categories are helpful when identifying points-of-difference and points-of-parity built on the differentiation strategy. Points-of-difference Uniqueness

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The following points can be identified as unique elements of Saab as they are different from the competitors. Design Safety Airline heritage Swedish heritage Individualistic and understated

Importance/Desirability The primary and most important points to differ the brand are design and safety. Saabs unique design is something that must be highlighted in marketing activities. Saab should use the fact that they have a red lion as their symbol, since animals are commonly used in local brand imagery and visual displays. Red is also perceived to be the most cheerful color and attracts peoples attention. Safety is gaining more interest in China as the market develops and Saab has won a number of awards regarding safety, thus these two factors are raising the buyers performance and creating value which in turn leads to successful differentiation. The heritage of Sweden and the airline industry is of less importance in China today as the main goal is to establish Saab as a brand there. However, these are important features to add in marketing activities to differentiate the brand and serves as a receipt for the customer that they buy an old, established brand which is genuine and with high level of technology and excellent performance. The country- of-origin effect of the brand being Swedish is of course an exotic fact, although it is important to notice that the mere fact that the brand is foreign gains higher status and makes it be seen as a brand of higher quality. Although these factors are not primarily used in marketing they should be used to inform the customers of the background and history of Saab. Saab is a car for individualists that do not have the urge to be seen in a high status brand but appreciates and values the advanced technology and performance. China is more a collectivistic country than an individualistic country as many western countries. This make the individualistic characteristics of the Saab brand as it carries on a global level hard to highlight and gain customers on. However, Saab is an unusual and understated brand and shouldnt change that. This is worth building brand awareness on and as the economy develops, more and more influences the country and its likely that there will be more individualism in the future. The number of Chinese people who study, work and travel abroad also develop people and can bring the values of Saabs with them from other countries into China. This point does not have to be positioned but will make itself when Saab in fact has unusual design and is a small brand on the market.

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Believability With the primary focus to establish the position of a well designed and safe brand, and secondary display the heritage, the brand dont claim too many positions. As for design, most customers would probably agree that Saab is well designed and this claim is not in any way unbelievable. Regarding safety, the brand has won a number of awards and this can serve as a receipt, and be used in marketing activities. Design and safety are thus the most important signaling criteria for the, most often, novel Saab buyer lacking great information about the brand initially. Points-of-parity Within the category Saab competes, the following points are the ones considered essential in order for Saab to belong in that category (Hggstrm 2004, Lin 2004). These elements must be used as a basis in marketing activities but only to show that Saab belongs in that category. Performance Price Quality Warranty & service Technology

These features are not unique by character but are not supposed to be either. These are the collective unique attributes of all brands in the premium brand segment and these attributes are necessary and justify the brand to belong in the category. To ensure the believability of these attributes its important not to express these separately but to use them as a foundation for marketing. A brand for what? Saab is a brand that provides the individualistic customer a unique, high performing and well designed automobile. Saab is not a well recognized status brand to display ones success but for the customer who know and values an understated brand with excellent performance the brand give good value for money. A brand for whom? Saab is a brand for the well educated customer with good taste and with relatively high income. These are the segments that often are referred to as the new entrepreneurs that live in the urban area. The persons belonging to this segment who might be extra interested in Saab are the Strivers and the Achievers who are open for new brands and like trendy and exciting products. A brand for when?

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Saab is an all purpose car. The good driving performance makes it a car meant to be driven. Its also a practical car suitable for both routine everyday driving and vacation and leisure trips. A brand against whom? Saab is a brand for the customers who look for a luxury premium brand in china, but are not as interested in having their car as a show of symbol as they are interested in the performance and individuality that the brand stands for. To build brand knowledge and brand awareness is the most important thing for Saab in China. The brand has the potential to compete well within the category but regarding the Chinese values and preferences in the area of owning a car, Saab has to improve the awareness and knowledge and thereby the brands status. When more people recognize Saab, more people are likely to buy the brand as it gain status and awareness and also increases the status of the owner which is important in China today.

7.3 Implementing the Positioning Strategy

When the positioning is in order, the next step is to implement the positioning strategy and communicate and deliver the desired position to the target consumers. The importance is the design of the marketing mix, the tactical tools of product, price, place and promotion, to deliver the strategy. In this part, the marketing mix is discussed in short to give a few suggestions on how Saab can act in the premium brand segment in China (Kotler et al. 2001). Product The product is not just the physical product but also everything around it, ie services, persons, places and organization. Its important that Saabs showrooms with the sales people, after sales services and showroom locations are carefully chosen to be in line with the positioning. The aspired points-of-parity of performance, quality and technology should be the basis for the product offering. The points-of-difference, primarily design and safety, but also the heritage and the individualistic characteristics are the points that differ Saab from its competitors and must therefore be used in the product offering to show that Saab is a unique brand. Price The price for the products has to be in line with the competitors, but Saab has a disadvantage when BMW, Audi and soon Mercedes produce locally. This dramatically reduces the competitors manufacturing cost and they also avoid import tariffs, which Saab has to pay. Saab is produced in Sweden and when the Swedish Crown is very strong today, the US dollar very weak and the Chinese Yuan tied to the US dollar, this make the Saab automobiles expensive to produce, tariffs has to be added and competing on price is tough for Saab.

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Price for the customer is not only money but also the value perceived by the customer. When competing on price is out of the question, Saab has to add value for the customer. By having superior service, and providing benefits by owning the brand, Saab can add value for the customer other than the cost of purchase. Adding value has to be cost effective and can be done with open dialogs with the customers, special invitations to Saab owner evenings, lottery where you win a trip to Saab in Sweden and/or providing discount tickets to other events and happenings. Place The place is all the activities that make the product available for the customers. The most important thing is to continue setting up show rooms to increase the number of places where the company can display the cars. By having a denser show room network, the availability for the customers increases both for buying but also for service and after sales support. The show rooms have to be located on places too, in line with Saabs positioning, in terms of quality, design and technology. This means having show rooms on the right places, ie flashy business districts, high income of population areas, trendy and modern urban areas. Promotion The promotion activities aim to communicate the product to the right customers. Saab has to improve its brand knowledge, awareness and overall status. To enter a new market this is an unavoidable expenditure if the brand want to show its existence. By sponsoring events and happenings and participating in co-promotion and joint marketing Saab has to display its existence. Due to the lack of knowledge of automobile brands in general and Saab is particular makes promotion activities unavoidable if Saab wants to tell the market that it exist. Word of mouth might not be enough. Here too, the positioning has to be regarded so that the choice of event and overall message is consistent and display Saabs identity.

8 Conclusions
The Chinese market is huge in terms of population, size and growth and the market is different from what western companies are used to and the situation is complex. The recent opening of the market in 1978, the entrance into the WTO in 2001, and extreme development plays a major role and open the door for new ways to do business, establish and build brands. The automobile market in China has witnessed a huge growth in the last 10-15 years with 50% growth in some years. Although the number of cars per people is still low, the large population makes the market still huge. This has made the market the third largest automobile market in the world, with estimated sales of close to 5 million vehicles this year, where passenger cars stand for over 2 million. If the market continues to grow it will be the worlds largest auto market in the world within 10-15 years time. The Chinese consumers are also becoming more and more brand aware. With companies rushing to the market and with increasing competition the importance of branding is also 45

essential from the companies perspective, in order to differentiate the products and stand out. Foreign brands are generally considered to be of higher quality than domestic brands. The significance of quality is gaining higher interest besides the brand awareness. This fact should be considered and used when positioning the brand. In the luxury premium automobile brand segment the competition is also increasing. The main actors in this segment are foreign brands and a number of environmental factors affect the market. Some of the competitors produce their brands locally which give them a price advantage while others export their products from their respective production country, outside China. However, since the entering of WTO, the import tariffs are constantly being reduced, but it still makes it hard for companies, not producing in China to compete with companies which do. In China, the strongest buyers can be found in the urban areas. This group is between 30 and 59 years old, which represents 40% of the population. They usually have a stable income in the profession of business owners, foreign investors, entrepreneurs and government officials. This segment mostly consists of well educated men. The car is seldom bought for sports activities and vacations and is merely a status symbol, often used for short transportation. According to the criteria for effective segmentation, this segment is large enough to create profit. With a huge population base, only a small part of the population can afford cars, there would be enough potential buyers. For Saab, the important issue is to let people get to know the brand. This is fully possible because the dealers in China are expanding their selling centers and planning activities to reach the potential customers. These customers are also differentiable from other car buyers mainly in the aspect of personality. The most important things when it comes to positioning, in broad terms, are to increase brand knowledge and build brand awareness. Foreign premium brands are relatively new on the Chinese market and informative actions have to be made. The positioning strategy should not be copied from the ones used on other markets but should be adapted to the country and its local culture. In China, the cultural norm is more towards collectivism than individualism. The positioning should also build on the status and prestige connected to the brand and desired by customers who buy a premium brand to display their importance in society. Here the country-of-origin effect can be a strong element when conducting the positioning by means of differentiation. The brand has to answer the questions of a brand for what, for whom, for when and against whom? Finally the brand is positioned by identifying the brands unique, important, desirable and believable points-of-difference and points-of-parity. The Swedish automobile brand Saab, which is entering the Chinese market, is used as a case study to where the theoretical models of positioning is applied, in order to find a general positioning strategy for premium brands in the Chinese market. It is found that Saab has to base its positioning primarily on design and safety where these are elements where Saab is 46

different than its competitors and secondary to use its heritage as basis for positioning. The appropriate marketing strategy is to be based on differentiation. This is referred to as pointsof-difference in positioning. Points-of-parity are also used in the positioning but as a minimum requirement for the brand to be a credible actor in the segment it acts. This means, for Saab, to fulfill a certain level of quality, performance, price and service. When implementing the positioning strategy, it is important that the marketing mix of price, product, place and promotion are in line with the chosen positioning. The content is that brand knowledge within the luxury premium brand segment on the automobile market is today low, and it is essential to build brand awareness in China today. This is crucial, no matter which category, product or segment the company aim to sell or distribute. A firm has to educate and inform its potential buyers of the value and that is the big challenge for Saab. This is a game where stakes are high, the company has to spend money and you have to be seen to have your existence recognized. The Chinese customers also regard brands to be essential in order to display ones own status and belongingness, especially in premium brand segments. Many of Saabs existing customers witnessed great satisfaction and that good reputation as a strong signaling criterion should be used in the positioning process.

9 Recommendations
In order for a global automobile brand to be successful the positioning of the brand is of high importance in the Chinese market. To position the brand, the following process is hereby recommended. 1. Analyze the market in terms of population, income, education, growth, legal/political factors and cultural differences. 2. Analyze the own brand in terms of brand identity. 3. Identify the target customers (segmentation). Important variables are demographics, psychographics, product-related attributes and usage patterns. 4. To differentiate the product, first identify the value chain and find the buyer value through the signaling, use and purchase criterions. From these facts you can extract the uniqueness. 5. Analyze the competitors in terms of resources, capabilities and likely intentions. 6. Establish positioning strategy in terms of identifying points-of-parity and points-of difference and regard uniqueness, desirability and believability to prove that the brand belong within the category it acts and to differentiate the brand from its competitors.

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7. Implement the strategy by communicating and delivering the chosen positioning to the consumers. Make sure the marketing mix supports the positioning strategy.

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10 Reference list
10.1 Literature and Articles
Aaker, D & Joachimsthaler, E 2000, Brand Leadership, Simon & Schuster UK Ltd, London. Apria, T 2004, Brand Relations Management: Bridging the Gap Between Brand Promise and Brand Delivery, Liber AB, Sweden. Aronson, C 2004, Saab Automobile rullar in i Kina, Dagens Industri, 28 May 2004, viewed 10 October 04, http://www.di.se/nyheter/. Ayala, J, Lai, R & Mok, B 1996, Winning Chinas consumer market in the 21st century, The McKinsey Quarterly, 1996 Number 2. Bartol, K, Tein, M, Matthew, G & Martin, D 2003, Management: a Pacific Rim focus, enhanced edn, McGraw Hill, Sydney. Business China 2004, Brand Loyalty for Chinese Car Buyers, viewed 18 November 04 http://www.businesschina.com.cn/archives/2004/06/. Chatterjee, A, Jauchious, M, Kaas, H W & Satpathy, A 2002, Revving up auto branding, The McKinsey Quarterly, 2002 Number 1. Chennai 2004, The miracle and mystery of China, Businessline, 11 October 04. Chan, T S 1999, Consumer behavior in Asia: issues and marketing practice, International Business Press, New York. China Daily 2004 a, Vulnerability behind auto boom, viewed 19 September 04, http://www.chinadaily.com.cn/english/doc/2004-06/01/content_335573.htm. China Daily 2004 b, Auto output forecast drops sharply, viewed 16 September 04, http://www.chinadaily.com.cn/english/doc/2004-09/16/content_374956.htm. China Daily 2004 c, Auto demand to reach 20m in 2020, viewed 20 November 04, http://www.chinadaily.com.cn/en/doc/2004-01/23/content_300798.htm. China Daily 2004 d, Buyers go bananas over luxury vehicles, viewed 30 November 04, http://www.chinadaily.com.cn/english/doc/2004-06/17/content_340272.htm.

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China Daily 2004 e, Volvo driving for tripling of auto sales, viewed 30 November 04, http://www.chinadaily.com.cn/english/doc/2004-06/09/content_337919.htm. China Daily 2004 f, BMW eyes bigger market share, viewed 1 December 04, http://www.chinadaily.com.cn/english/doc/2004-04/12/content_322507.htm. China Daily 2004 g, Audi strives to be market leader, viewed 1 December 04, http://www.chinadaily.com.cn/english/doc/2004-05/18/content_331486.htm. China Daily 2003 h, FDI patterns set to change, viewed 29 November 04, http://www.chinadaily.com.cn/en/doc/2003-05/28/content_166792.htm. China Economic Information Network 2004, Auto Industry in China, viewed 18 November 04, http://www1.cei.gov.cn/ce/e_report/hy/qc.htm. Dagens Industri 23 January 2004, Frlusterna fortstter fr Saab Automobile, viewed 10 October 04, http://www.di.se/nyheter/. Dong, J & Helms, M 2001, Brand Name Translation model: a case analysis of US brands in China, Journal of Brand Management, vol. 9, no. 2. Euromonitor 2003, Consumer Lifestyles in China (February 2003), viewed 1 April 04, http://80-www.euromonitor.com.ezproxy.cqu.edu.au/gmid/default.asp. Fang, T 1998, Chinese business negotiating style, SAGE Publications Ltd., London, United Kingdom. Gao, P 2002, A tune up for Chinas auto industry, The McKinsey Quarterly, 2002 Number 1. Gustavsson, B 2004, Kunskapande Metoder i samhllsvetenskapen, Studentlitteratur, Lund. Hofstede, G 1994, The business of international business is culture, International Business Review, vol. 3, no. 1. Jaffe, D E & Nebenzahl, D I 2001, National Image and Competitive Advantage: The theory and practice of Country-Of-Origin Effect, Copenhagen Business School Press, Copenhagen. Kapferer, J N 2001, [Re]inventing the brand Can top brands survive the new market realities?, Kogan Page, London.

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Kapferer, J N 1997, Strategic Brand Management Creating and Sustaining Brand Equity Long Term, Second edn, Kogan Page, London. Keegan, W J 1995, Global Marketing Management, Prentice Hall, New Jersey. Keller, K L 2003, Strategic Brand Management Building, measuring and managing brand equity, Second edn, Pearson Education Inc New Jersey. Kleppe, I, Iversen, N & Stensaker, G 2002, Country images in marketing strategies: Conceptual issues and an empirical Asian illustration, Brand Management, vol. 10, no 1. Kotler, P, Armstrong, G, Saunders, J & Wong, V 2001, Principles of Marketing, Third European Edition, Prentice Hall, Europe. Kotler, P 2003, Marketing Management, Prentice Hall, New Jersey. Kwan, C H 2003, Behind China's Car Ownership Boom - Uneven Distribution of Wealth rather than Rising Income, China in transition, viewed 21 November 04 http://www.rieti.go.jp/en/china/03080801.html. Laserre P & Schutte H 1999, Strategies for Asia Pacific Beyond the crisis, Palgrave New York. Lashinsky, A 2004, How to bet on Chinas Growth, Fortune, vol. 150, no. 7, pp. 181-183. Mahoney, Trigg, Griffin & Pustay 2001, International Business A managerial perspective, 2th edn, Pearson Education, Australia. Marshall, C & Rossman, G 1999, Designing Qualitative Research, SAGE Publications Inc, Thousand Oaks, California. Melewar, T C, Meadows, M, Zheng, W & Rickards, R 2004, The influence or culture on brand building in the Chinese market: A brief insight, Journal of Brand Management, vol. 11, no. 6, pp. 449-461. Melewar, T C & Saunders, J 1999, International Corporate Visual Identity:Standardisation or Location, Journal of International Business Studies, vol. 30, no. 3. Merriam, S B 2002, Qualitative Research in Practice, John Wiley & Sons Inc, San Fransisco. Mines, S 2001, Culture Shock, Brand Strategy, no. 153, November.

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Myers, J 1996, Segmentation and Positioning for strategic marketing decisions, American Marketing Ass., USA. Pedgett, D K 1998, Qualitative Methods in Social Work Research Challenges and Rewards, SAGE publications Inc, Thousand Oaks, California. Porter, M 1985, Competitive Advantage Creating and Sustaining Superior Performance, The Free Press, New York. Porter, M 1998, Competitive Strategy Techniques for analyzing industries and competitors, The Free Press, New York. Riley, K 2002, Motor Vehicles in China: The impact of demographic and economic changes, Population and Environment, vol. 23, no. 5, p. 479. Schlevogt, K A 2000, The branding revolution in China, The China Business Review, vol. 27, no. 3, pp. 52-57. Spence, S, Taylor III, A, Lustgarten, A, Gunther, M & Dumaine, B 2004, Imaging Chinas Future, Fortune, vol. 150, no. 7, pp. 213-218. Survey: Car Industry 2004, The Economist, September 2nd 2004. Tam, J & Tai, S 1997, The psychographic segmentation of the female market in greater China, International Marketing Review, vol. 15, no. 1. Taylor III, A 2004, Shanhai Auto wants to be the worlds next great car company, Fortune, vol. 150, no. 7, pp. 103-107. Thurn T 1996, Vetenskapsteori fr nybrjare, Team offset, Malm, 1996. Uggla, H 2003, Organisation av varumrken fr kapitalisering och affrsutveckling, Liber Ekonomi AB, Sweden. Usunier, J C 2000, Marketing Across Cultures, Prentice Hall, Harlow, United Kingdom. Yin, R 2003, Case Study Research, Design and Methods, Third edn, SAGE Publications Inc, Thousand Oaks, California. dman, P J 1979, Tolkning, frstelse, vetande : hermeneutik i teori och praktik, AWE/Geber, Stockholm.

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10.2 Internet
Audi 2004, Audi World Site, viewed 16 November 04, http://www.audi.com/com/en/home.jsp. Auto Consumer guide 2004, New Car Reviews & Pricing, viewed 9 November 04, http://auto.consumerguide.com/auto/new/. BMW International 2004, International BMW Website, viewed 15 November 04, http://www.bmw.com/generic/com/en/index.html. Chinagate 2004, viewed 05 December 04 http://us.tom.com/english/26.htm. China-Window.com 2004, viewed 05 December 04 http://www.china-window.com/. ConceptCar 2004, Global Car Sales Figures, viewed 1 December 04, http://features.conceptcar.co.uk/global-sales-figures/index.php. Mercedes-Benz 2004, International Home Page, viewed 15 November 04, http://www.mercedes-benz.com/com/e/home/index.html. National Bureau of Statistics of China 2004, viewed 10 November 04, http://www.stats.gov.cn. United Nations Population Information Network 2004, viewed 5 December 04, http://www.un.org/popin/data.html. Saab International Site 2004, History, viewed 13 September 04, http://www.saab.com/main/GLOBAL/en/historical.xml. The Saab Network 2004, From Wings To Wheels Saabs Unique history, viewed 13 October 04, http://www.saabnet.com/tsn/models/1994/pr7.html. The Saab Museum 2004, Saab Milestones, viewed 13 October 04, http://www.saabmuseum.com/milestones/index.html. The Swedish Institute of International Affairs 2004, viewed 10 November 04, www.ui.se/fakta/asien/kina.htm. Volvo 2004, Volvo Cars, viewed 16 November 04, 53

http://www.volvocars.com/.

10.3 Other publications

Saab Automobile AB 2004, Annual Report 2004.

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Appendix A - Interviews
1.0 Interview with Pontus Hggstrm 2004-11-03
1. Interview information: name, position, length of stay within the company? - Pontus Hggstrm, Global Business Development Manager, at Saab since 1992. 2. What parameters customers value on Saab? (Graded 1-5, 1=not important, 5=very important). Design 4 Safety 3 Fuel economy 2 Performance 4 Driving performance 4 Comfort 3* Price 4** Quality 3*** Warranty & service 4 Technology 3 Luggage space 2 *Comfort is not a big issue but Hggstrm mean that there still are a lot of people with private chauffeur in China today while Saab is more a car you want to drive yourself, still though a premium car with status. ** Saab is priced slightly beneath BMW and Mercedes in China and this is, according to Hggstrm a good position where Saab can catch customers who maybe want to buy a premium car but consider Saab to offer better value for money. The pricing is also set as to how much the brand can take, in terms of status and brand value. An interesting observation is that Volvo is priced higher than BMW in China which is the opposite to the general pricing in the rest of the world. ***It is a big thing to buy and own a car in China today with a lot of personal effort put into the purchase decision. Whilst we in Sweden dump our car for service early in the morning to pick it up when its ready, an owner of a car in China can stay while the car is up for service, bring lunch and keep an eye on it. To sum up, the most important parameters are design, performance, driving performance, price and warranty & service. The most important feature of these, according to Hggstrm is design, which is the parameter Saab also wants to lift up when positioning. 55

3. Category What competing brands play in the same category as Saab? - Mercedes, BMW, Audi and Volvo, where Volvo and BMW is the closest competitors, according to Hggstrm. o Mercedes are planning production in China, is not really considered a car for governmental and institutional people which is more the image Audi has. Still a car symbolizing high status and a known brand. o BMW also have production in China. Well known brand which symbolizes basically the same things as in the rest of the world: sporty, quality, status and performance. o Audi also have production in China and have been established for a relatively long time. Have established their car as a car for governmental, highly positioned people. Was the first car to be able to have as a company car which gave them a high market share and very good status. o Volvo dont have any production in China and Hggstrm is a bit unsure what their position is but they build their reputation on safety and their large S80 model is considered a prestigious ride in the backseat car. Where would you put these brands in terms of growth rate and market share? Market size of the luxury car segment is around 100 000 cars sold per year with an estimated growth of around 12 % yearly (8 % in general among passenger cars). Estimated to be continuously growing at the same rate for the next eight years.

Market share per brand and estimated growth within segment of brands. Brand Mercedes BMW Audi Volvo Saab (Toyota)* Market 15 12 60 4 0.4 8.6 Share % Growth Higher** Higher*** Lower**** Higher**** Higher***** within segment *Not really considered a part of the luxury segment but interesting to be considered. ** Relatively low market share and can increase share. *** Relatively low market share and can increase share. **** High market share and hard to maintain it. Increased competition and less importance of governmental positioning.

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***** Relatively low market share and can increase share. Put efforts into establishing their brand in China. ****** Low market share and good possibilities for increasing market share. Establishing their brand in China, setting up a number of showrooms and put a lot of effort in establishing the brand. What differs Saab towards its competitors? History, design, individuality, heritage from airline industry and Scandinavian. Scandinavian is signified with design, ergonomic, good taste, understated, discreet and functional. What key associations customers attach to Saab? Individuality, design, driveability and safety.

4. Customers How does Saab create value for the customers? - Saab turn to customers who can afford and have a good taste but maybe not have the urge to be seen with a status car. Saab is an understated car, an alternative and different. New generations of people enter the potential segment and they do not necessarily need to be seen with a status car with the recognition of, ie BMW. Do you think customers have a clear image of Saab? Most foreign brands are relatively unknown on the Chinese market due to its history and recent development. Its a lot about creating awareness and recognition and to teach the customers about brands. Associations are an important part of brand recognition, ie German is often associated with quality, status and well-built cars. Scandinavian does not have as strong associations as German has. Saab is however a recognized global luxury brand, but a small one. Typical customers? 1. Man/woman 2. Urban/countryside 3. Age 20 30, 30 40, 40 50, 50 4. Initial knowledge of the Brand The Chinese customer is close to Saabs global customer profile. This profile says that the Saab customer is a person with an income and education level higher than the average. He/she has a good own taste, identity and a high awareness. Often within a creative profession such as photographer, marketing, pilot, small business, free thinker and artist in some way. People who buy Saab often travel a lot and could have lived abroad for some time where he/she came into contact with Saab. 57

1. Man 2. Urban 3. 30-40 years old 4. Some with initial knowledge but also a large share that come into the showroom and come in contact with Saab for the first time. Test-drives are important to attract these customers. When it comes to the high level of education of the customers it puts a lot of responsibility on the sales people who have to be well familiar with the technicalities of the car. The high education level is not really used in advertising but Saab put more effort into attracting customers on events and happenings. For example, golf competitions and at hotels where Saab believes they can reach the right segment. They also try to make their advertising intellectually stimulating. What relationship does Saab want to have with its customers? (pos-neg, volunteercompulsory, deep- superficial, enduring-short term, formal-informal). Every automobile brand wants to have an enduring, positive relationship with its customers however it might be extra important in China when the market is new and sales has to focused much on attracting new customers. Word of mouth is important and the brand has to be well perceived and ensure the promise to its customers. The choice of partners for the showroom and the sales-people are extremely important for Saab in order to give a good initial view of the company for the potential customer. How would you describe Saabs identity in terms of 1. Physique the brands characteristics 2. Personality human or animal 3. Culture from where the product originate / heritage 4. Relationship to its customers 5. Reflection how do you perceive customers image of Saab 6. Self image who the customers want to be when using the product 1. Good design, dynamic driving performance, MMI (Man Machine Interface) which is the way the driver perceive the car when driving, ie sound, vibrations, steering response etc. 2. Understatement, driving pleasure and sincerity (in terms of quality, choice of material etc). 3. Scandinavian, history, heritage from airline industry, individuality, innovation and design. Saab is built where others test cars, which shows in example on lightning, heating and door handles. Saab also work by the device Function before form which means that function is considered more important than form. 58

4. See previous and later. 5. See previous and later. 6. Well-off, good taste and strong individualist. 5. China market How much do you put into the establishment of the brand in China? - China is the strongest growing automobile market in the world and Saab together with GM put a lot of effort into the establishment. Saab is opening a number of showrooms and has a strong organization in China which makes up a very larger part of Saabs total organization, considering the number of cars sold in China today. - Saabs showrooms in China is a kind of franchise business where the owner of a showroom buy a concept (business-case) which defines a number of things, ie how the showroom must look. Saab is in charge of the national marketing and advertising as well as the strategic issues and the showroom owner is responsible for the tactic issues with local advertising (under Saabs supervision), attracting customers and performing events. Saab keep regular track of their showroom owners business operations. Do you have one global marketing strategy? Yes, in line with the previous and later on discussed issues in the interview regarding sales, market share and positioning. The same message is to be spoken to the customer around the globe. The same type of ad can be presented both in the local newspaper in Los Angeles as in Shanghai. Saab wants people allover the globe to have the same associations of Saab. What types of automobiles are sold in China today (wagon, Suv, small)? The main segments in the Chinese market are small and medium cars, which stand for 90 % of the market. These are mostly local brands along with Japanese brands. GM also has some models in that segment, such as Buick and Chevrolet but these are based on the Korean brand Daewoo. In the luxury segment there are mostly large sedan models sold, for example Saab 9-5 (80% of Saabs models in sales), Mercedes E-class, BMW 5 series, Audi A6 and Volvo S80. The SUV segment exists but is rather small. Among luxury cars and the smaller models the sales is smaller. Saab has its 9-3, Mercedes C-class, BMW 3 series, Audi A4 and Volvo S60. Is Saab a global premium brand? Yes. What are Saabs plans for China? Establishment of around 10-15 brand new, exclusive showrooms within the end of next year with a sales of around 100-200 cars each per year. This gives total sales in

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China of around 1000-3000 cars per year within two years. To be more specific, Saab aim to sell 2000 cars in China per year within two years.

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2.0 Interview with Pontus Hggstrm 2004-11-17

1. What are the advantages and disadvantages of local production? - The major advantage to produce locally is to avoid import tariffs on the imported vehicles but also to avoid currency fluctuations. This is today around 30 % but is likely to be decreased when WTO is pushing for lower tariffs and a new policy from the Chinese government is to be released in January next year on the guidelines for the automobile industry in China. There are mainly two reasons why the Chinese government wants foreign companies to produce locally in China. The first is because in general, China wants to bring as much technological knowledge into the country as possible. The other reason is that they want to open the door for Chinese companies producing spare parts for the automobile industry. Its in general a good strategy to build the cars where they are to be sold. However, it can be discussed if local production is cheaper for the big companies. There are demands for local content if the cars are built in China. This means that companies producing in China have to buy certain part locally which reduces the economies of scale that they usually have when they buy from their main suppliers.

2. What is the situation regarding the general price picture, supply and demand in China? - Previously, demand on the market was high and prices were not up for discounting. In April, May when the government cooled down the economy by decreasing lending auto sales dropped drastically. This made the price picture fluctuate as there suddenly appeared to be an oversupply of cars on the market. Another reason for demand to drop, or not grow in the same rate as before, can be that people wait to buy a car because of the soon to be released policy which might have a positive effect on automobile pricing benefiting consumers. Prices among competitors can decrease if they are produced locally. For example BMW reduced the price for their 3-series when it started to produce locally. This could mean that Mercedes, who is planning to produce in China, could lower their prices and put pressure on the competition, however this is pure speculations.

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3.0 Interview with Hank Lin 2004-11-01, 2004-11-08

1. Interview information: name, position, length of stay within the company. We have interviewed Mr. Hank Lin, the National sales manager of Saab in Shanghai, China. He has worked as car dealer in China for almost 20 years. He entered GM 2003 for establishing Saab in China. 2. Saabs establishment Since 2001, after Saab was bought by GM, Saab cars were placed in the same showroom for sale as the other GM cars such as Cadillac and Opel. These cars had a few models for each brand, while Saab had only S-95. Therefore other cars filled far bigger spaces in the showroom and could easily draw attentions from the customers, while Saab was often ignored. Another big hinder for Saab to enter the Chinese market was the foreign trade policy by the Chinese Government, which encouraged export and restricted import. For each imported car an import permit was required. This permit was neutral, which meant that one car of any brand could be imported with one permit. As a result the car dealers were only interested in easily sold cars with good payoffs, for example, BMW, Mercedes and Toyota. Moreover, the permit was only issued to domestic companies. GM as a foreign company could not be given the permit directly, and to make business possible, GM had to buy permit from local companies who had it but didnt intend to use it by themselves, thus the cost went up. The import permit has very much restricted China from buying cars from other countries. Fortunately, with China joining WTO this permit will be removed. 3. What parameters customers value on Saab? (Graded 1-5, 1=not important, 5=very important). Design 4 Safety 4 Fuel economy 3 Performance 3 Comfort 4 Price 5 Quality 4 Warranty & service 3 Technology 3 Luggage space 3 Additional Comments:

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Design: A good design is of course preferable, but how famous a brand is is more interesting for Chinese buyers Fuel economy: Almost no attention was paid for fuels before as the fuels were cheap in China and those who could afford a car didnt care about the fuel cost. But recently the oil price in the world is increasing all the time. People are starting to pay attention to it now. Performance: Most of the customers have no clear idea about what performance means. Only after having bought the car and have used it for a while they realize Saab is a wonderful car. Comfort: No big attention was paid before, but now increasing. Price: The most important issue above all. Quality: Like performance, there is not so much knowledge about quality. What the customers can see directly matters most. Technology: Little knowledge on technology therefore new generation of technology is not appreciated much. Luggage space: Chinese usually do not travel much with large luggage. 4. Category What competing brands play in the same category as Saab? The biggest competitors are BMW, Audi and Volvo, especially BMW and Audi. These cars have stable prices. Both BMW and Audi have factories in China. The Chinese produced Audi have similar prices as Saab and the BMW has recently decreased the price till even below Saab. Volvo is about 3-5 % more expensive. Because of the slightly higher price level and the smaller amount than BMW and Audi, Volvo is a relatively smaller competitor than BMW and Audi. Mercedes is also a competitor, but because the big price difference, its not a competitor as strong as the others. Where would you put these brands in terms of growth rate and market share The amount sold per year and the estimated growth rate are shown in the following table: Brand BMW Audi Volvo Mercedes Saab (Toyota)* Amount 5000 15000 2500 6000-7000 200 Growth Big 400% for within Stable growth of 10-15% per year growth next year segment from next year BMW and Audi: The growth is limited to the local produced cars, and no growth for imported ones. Lager growth is possible if they introduce new models. Volvo: Having a history of 12 years already and famous for its safety, therefore far bigger amount than Saab. Mercedes: Higher price level. But will be locally produced from next year, then the price will be lower and the amount will likely increase. 63

What differs Saab towards its competitors? Disadvantages: 4. Saab has too few showrooms as the sale center. All the competitors have more showrooms, especially Audi. More showrooms means better guarantee also as showrooms at the same time are centers for after-sale service. 5. Saab is not a recognized brand. Brands have social meanings. Consumers often buy cars of big brands to show identities. For example, BMW has a big name and are preferred by officials and business men as a symbol of identity. Waiters in front of high standard hotels or party locations hurry to welcome the guests arriving with luxury cars and to park cars for them. For low level car drivers their enthusiasm was much less. Because very few people in China know about Saab, its not hard to imagine the waiters attitude to a Saab driver. Volvo has a big name in China as it once had some famous activities like sponsoring golf. 6. Saab gives small visual impression. Most of the Chinese buyers believe big size gives big impression, hence higher their social identity. Saabs are rounded in the front and look smaller than the square-shaped cars although the inside is same big. One reason Volvo was accepted by the Chinese buyers is that Volvo looks big, taking Volvo S-80 as an example. Advantages: 3. Recently the concern for fuel economy is increasing. Saab as a fuel economical car has good marketing potentials. 4. Saab is also a safe car. Statistics of accidents show that Saab has less damage in accidents, especially comparing with the Chinese produced cars. 5. Users are satisfied with Saab. Although when they bought the cars they didnt have a complete idea about the car, after having used it for a well they realized Saab was excellent. When they consider change cars after a few years, they are likely to come back to Saab.

What key associations customers attach to Saab? Individuality, safety and good performance.

5. Customers How does Saab create value for the customers? Not showing identity although the identity is right there. Do you think customers have a clear image of Saab? Not at all. The Chinese dealers once made a marketing research and people usually even didnt know where Saab was from.

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Typical customers? 1. Man/woman: Man. First, because there are more male drivers in China. Second, men like to drive at higher speed than women and Saab enables them to do that. 2. Urban/countryside. Urban people. Although the trend is rich people are moving to the rural area of the cities for better environment, still most of the well-off ones living in the city. 3. Age 20 30, 30 40, 40 50, 50 : 30-45 4. Initial knowledge of the Brand: The buyers have some knowledge about Saab from the right beginning, as the buyers are usually those who have been abroad, like those who do business with foreign countries, who have studies in Europe or America, or who comes to China to do business like Hong Kong, Taiwan and foreign investors. What relationship does Saab want to have with its customers? (pos-neg, volunteercompulsory, deep- superficial, enduring-short term, formal-informal). Its optical to establish enduring long-term relationship with the customers. As mentioned earlier, customers are very satisfied with Saab after having used it for a while although at the beginning they didnt really have a good knowledge about the car. They will be likely to come back to Saab when they what to change to a new car in the future. When more cars are sold, it will be easily for people to see a Saab in the street, thus more and more people will get to know Saab. How would you describe Saabs identity in terms of 1. Physique the brands characteristics 2. Personality human or animal 3. Culture from where the product originate / heritage 4. Relationship to its customers 5. Reflection how do you perceive customers image of Saab 6. Self image who the customers want to be when using the product 7. Good design and performance. Saab goes 22,000 km per year on average, while the average of all the cars is 10,000 15,000 km per year. 8. Personality. According to Chinese culture, modest is a merit. Therefore a lot of people dont want to show that they are better off than the others. Saab fits in as a perfect choice for the wealthy modest people. 9. Most of the people dont even know where it is from. 10. See previous and later. 11. See previous and later. 12. Well-off, confident, not showing-off.

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How much do you put into the establishment of the brand in China? The establishment of Saab in China is almost all at the cost of the car dealers. Saab has been making losses for GM recent years. Therefore Saab cannot offer much economic support for this establishment in China. Instead they offer favorable price to make the dealers interested. The car dealers choose Saab among all the foreign cars because of the price. The car dealer at the top level in China has taken the cost of introducing Saab to China. It costs about five millions SEK to build a car showroom, and one more million for the inside equipment and the car initial parts that will be used for after-sale service. GM invests a bit to increase peoples recognition for its other cars, but never on Saab.

Do you have any marketing strategy in China? Yes, the dealers do have some plans. To let the customers get to know Saab was the first step to increase the sale. Saab dealers in China have reached an agreement with Saab factory last year to introduce S-93 to China and for both S-95 and S-93 introduce different models like arc and convertibles. Separate showrooms are planed only for Saab cars. There will be two kinds of showrooms. One is Saab Unlimited. They are not only showrooms, but also the centers for after-sale service and the sellers of Saab spare parts. Seven of Saab Unlimited are already built in the large cities or under construction. Another is Saab City Center. As the name suggests, they are located in the center of the cities, which is good for impressing the customers. Now there are 15 big cities having Saab City Center, some of them are still under construction, but almost finished. The sales amount last year was 200; this year is estimated to be an increase of 30% to 260; next year with the new showrooms the sale will increase dramatically by 3 times of this year. Saab in China doesnt use mass media for promotion because of the very limited budget. Mass media is not effective on this matter anyhow. Nowadays only a minority of the people can afford a car. To buy a car is a big choice, which differs from everyday shopping where mass media can be effective. Only those having special tastes and knowledge about Saab will find their interests in it. At present, Saab dealers are focused on two strategies. One is the independent showrooms from the other GM cars; another is all kinds of activities for introducing Saab to the customers, such as car exhibition and sport sponsoring activity like golf.

What types of automobiles are sold in China today (wagon, Suv, small)? When the imported cars are concerned, big cars are more welcome as they represent better high status and wealth.

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Is Saab a global premium brand? Yes. What are Saabs plans for China? Let the customers clearly know what kind of car Saab is. Customers usually communicate with each other about their buying decisions, it will be helpful to let more and more people know about Saab. Position right. Saab doesnt have a showy design. The buyers are usually welleducated and confident about themselves. They didnt get rich over a nigh and dont want to be looked high by the others. These people are Saabs target in the near future in China on this early stage of establishment.

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