Premium Brands in the Automotive Industry

There are hundreds of brands in the automotive industry but just a few among them are premium car brands. These specific brands enjoy a fantastic reputation which allows them to charge a much higher price for their products. This paper therefore examines premium brands and their characteristics; it defines their success factors and their challenges. Furthermore this paper addresses the question "What justifies the price premium". According to the BBDO Brand Equity Drivers Model© the price premium is mainly justified through brand characteristics and brand values. The analysis based on two of the most successful premium car brands, BMW and Mercedes-Benz, shows that when the right characteristics and values are addressed the resulting brand strength justifies, in the eyes of the customer, a price premium of about 20%. §The target group of this paper is actually a very general one. Everyone, be it students or professionals, who is interested in the fields of Marketing and Branding with reference to the automotive industry should be able to enjoy reading this paper.