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

Indrayani, Siringoringo, and Saptariani (2008) analyzed the impact of price changes on customers’ brand loyalty sensitivity whereas Villarejo-Ramos and Sanchez-Franco (2005) tested the impact of price promotion and marketing communications on several dimensions of brand equity such as brand awareness, brand image, brand loyalty, and perceived quality.Even though there are quite a lot of existing research studies that aim to examine the impact of price changes on consumers’ purchasing behavior and the company’s brand equity (Buil et al.

, 2011; Chattopadhyay, Shivani, and Krishnan, 2009; Villarejo-Ramos and Sanchez-Franco, 2005; Yoo, Donthu and Lee, 2000), most of these studies were examining non-durable products or fast-moving consumer items like household cleaning products, food, and beverages, clothing and textile, or footwear. Since the cost of fast-moving items is relatively cheaper as compared to durable items, the research findings presented in these studies may not be applicable in the case of Toyota in Saudi Arabia.In relation to the impact of price changes on the purchasing habit of consumers, this study will seek to determine how consumers would respond to a sudden price adjustment in Toyota vehicles in Saudi Arabia.

In making this determination it is acknowledged throughout this study that consumers in Saudi Arabia are not the same. The diversity of Saudi Arabia’s consumer market is evidenced by the fact that in the country’s major cities, “all manner of modern consumer products” that were not previously available are now freely available (House, 2012, p. 131). The only products unavailable are products entertainment, alcohol, and books perceived by the government as “subversive” (House, 2012, p. 131).Throughout the course of this study, the readers are expected to gain a better understanding of how consumers would behave in response to incremental price changes in selected models of Toyota.

Furthermore, this study also seeks to determine the impact of price movement on the point-of-view of car owners and potential car buyers. To increase the competitive advantage of Toyota in the automotive industry in Saudi Arabia, this study will make use of the gathered primary and secondary research findings in designing several marketing strategies informing how Toyota can improve its future pricing strategies.1.1 Background of the Research ProblemAs a result of Saudi Arabia’s economic growth and development, Western countries have consistently competed for a share of the Saudi Market.

The automobile industry has been particularly interested in the Saudi market with sales in imported cars increasing annually even during the global financial crisis from 2007-2009 (Business Monitor, 2010). Given the consistent increase in the sale of imported vehicles, the market competition within the automotive industry in Saudi Arabia is very intense. It, therefore, follows that Toyota would want to distinguish its vehicles from the competition as a means of gaining a competitive edge. In seeking to gain a competitive edge it is useful to understand the factors that influence consumer purchasing behavior.

Understanding consumer purchasing behavior positions a firm so that it can identify and meet consumer expectations, desires, and needs.